485APOS
                            Post-Effective Amendment

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933              [X]

     File No. 2-91229

     Pre-Effective Amendment No.                                     [ ]

     Post-Effective Amendment No. 37                                 [X]

                             and/or

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

     File No. 811-4025

     Amendment No. 38                                                [X]

                        (Check appropriate box or boxes.)


                        AMERICAN CENTURY MUNICIPAL TRUST
       _________________________________________________________________
               (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:  December 20, 2002

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 December 20, 2002 pursuant to paragraph (a)(1)
     [ ] 75 days after filing pursuant to paragraph (a)(2)
     [ ] on (date) pursuant to paragraph (a)(2) of rule 485.

If appropriate, check the following box:

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





















Your
American Century
prospectus

INVESTOR CLASS
High-Yield Municipal Fund

DECEMBER 20, 2002


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


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

American Century Investment Services, Inc.




                                American Century
                                  Investments

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

Dear Investor,

American Century is committed to helping people make the most of their financial
opportunities. That's why we are focused on achieving superior results and
building long-term relationships with investors. We believe our relationship
with you begins with providing a prospectus that's easy to read, and more
importantly, that gives you the information you need to have confidence in the
investment decisions you have made or are soon to make.

This year you'll find some new information in your Prospectus to take note of.
The Securities and Exchange Commission (SEC) has adopted a rule requiring mutual
funds to disclose standardized after-tax returns. We've added this information
to the Fund Performance History section. It is included to help you understand
the impact that taxes may have on mutual fund performance. Please note that
disclosure of after-tax returns is not required for money market funds or funds
offered only in tax-deferred accounts, such as variable annuities.

Naturally, you may have questions about investing after you read through the
Prospectus. Our Web site, www.americancentury.com, offers information that could
answer many of your questions. Or, an Investor Relations Representative will be
happy to help weekdays, 7 a.m. to 7 p.m., and Saturdays, 9 a.m. to 2 p.m.
Central time. Give us a call at 1-800-345-2021.

Sincerely,


/s/Mark Killen
Mark Killen
Senior Vice President
American Century Investment Services, Inc.




Table of Contents

AN OVERVIEW OF THE FUND ...................................................    2
FUND PERFORMANCE HISTORY ..................................................    3
FEES AND EXPENSES .........................................................    5
OBJECTIVES, STRATEGIES AND RISKS ..........................................    6
BASICS OF FIXED-INCOME INVESTING ..........................................    8
MANAGEMENT ................................................................   10
INVESTING WITH AMERICAN CENTURY ...........................................   12
SHARE PRICE AND DISTRIBUTIONS .............................................   18
TAXES .....................................................................   19
MULTIPLE CLASS INFORMATION ................................................   21
FINANCIAL HIGHLIGHTS ......................................................   22

               [graphic of triangle]

               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 ARE THE FUND'S INVESTMENT OBJECTIVES?

The fund seeks high current income and investment returns that are exempt from
federal income tax.

The fund also seeks capital appreciation as a secondary objective.

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

The fund managers invest most of the fund's assets in long-term (longer than 10
years) and intermediate-term (five to 10 years) DEBT SECURITIES, including junk
and private activity bonds issued by cities, counties and other municipalities,
and U.S. territories. A more detailed description about the fund's investment
strategies and risks begins on page 5.

*  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.

*  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.

*  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.

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

               [graphic of triangle]

               DEBT SECURITIES include fixed-income investments such as notes,
               bonds, commercial paper and U.S. Treasury securities.

WHO MAY WANT TO INVEST IN THE FUND?

This fund may be a good investment if you are

*  seeking current tax-free income
*  seeking diversification by investing in a fixed-income mutual fund
*  comfortable with the fund's other investment risks

WHO MAY NOT WANT TO INVEST IN THE FUND?

The fund may not be a good investment if you are

*  investing through an IRA or other tax-advantaged retirement plan
*  investing for long-term growth
*  looking for the added security of FDIC insurance

               [graphic of triangle]

               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.


2


FUND PERFORMANCE HISTORY

Annual Total Returns

The following bar chart shows the performance of the fund's Investor Class
shares for each full calendar year in the life of the fund. 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.

HIGH-YIELD MUNICIPAL FUND -- INVESTOR CLASS(1)(2)

            High-Yield Municipal
2001         6.50%
2000         7.29%
1999        -2.03%

(1)  As of September 30, 2002, the end of the most recent calendar quarter, the
     fund's year-to-date return was ____%.

(2)  From March 31, 1998, to October 31, 1999, all or a portion of the fund's
     management fee was waived. As a result, the fund's returns are higher
     than they would have been had the waiver not been in effect.

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

                               Highest                    Lowest
--------------------------------------------------------------------------------
High-Yield Municipal           3.19% (2Q 2002)            -1.34% (3Q 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.

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.


                                                                              3


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 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, 2001                 1 year     Life of Fund(1)
-----------------------------------------------------------------------------------------
High-Yield Municipal(2)
Return Before Taxes                                           6.50%      4.82%
Return After Taxes on Distributions                           6.55%      4.79%
Return After Taxes on Distributions and Sale of Fund Shares   6.22%      4.93%

Lehman Brothers Long-Term Municipal Bond Index                4.79%      5.08%
(reflects no deduction for fees, expenses or taxes)
-----------------------------------------------------------------------------------------

(1)  The inception date for the fund is March 31, 1998.

(2)  From March 31, 1998, to October 31, 1999, all or a portion of the fund's
     management fee was waived. As a result, the fund's returns are higher than
     they would have been had the waiver not been in effect.

The performance information on this page 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 at
1-800-345-2021 or visit us at www.americancentury.com.


4


FEES AND EXPENSES

There are no sales loads, fees or other charges

*  to buy fund shares directly from American Century
*  to reinvest dividends in additional shares
*  to exchange into the same class of shares of other American Century funds
*  to redeem your shares other than a $10 fee to redeem by wire

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

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

(1)  Applies only to investors whose total investments with American Century are
     less than $10,000. See Account Maintenance Fee under Investing with
     American Century for more details.

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

                         Management   Distribution and Service   Other         Total Annual Fund
                         Fee(1)       (12b-1) Fees               Expenses(2)   Operating Expenses
--------------------------------------------------------------------------------------------------
High-Yield Municipal     0.64%        None                       0.00%         0.64%
--------------------------------------------------------------------------------------------------

(1)  Based on assets of all the classes of the fund during the fund's most
     recent fiscal year. The fund has a stepped fee schedule. As a result, the
     fund's management fee rate generally decreases as fund assets increase
     and increases as fund assets decrease.

(2)  Other expenses, which include the fees and expenses of the fund's
     independent trustees and their legal counsel, as well as interest,
     were less than 0.005% for the most recent fiscal year.

EXAMPLES

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

*  invest $10,000 in the fund
*  redeem all of your shares at the end of the periods shown below
*  earn a 5% return each year
*  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
------------------------------------------------------------------------------
High-Yield Municipal         $65         $205        $356        $797
------------------------------------------------------------------------------


                                                                              5


OBJECTIVES, STRATEGIES AND RISKS

WHAT ARE THE FUND'S INVESTMENT OBJECTIVES?

High-Yield Municipal seeks high current income that is exempt from federal
income tax. Capital appreciation is a secondary objective.

HOW DOES THE FUND PURSUE ITS INVESTMENT OBJECTIVES?

The fund managers invest at least 80% of the fund's assets in LONG-TERM and
INTERMEDIATE-TERM MUNICIPAL SECURITIES with interest payments exempt from
federal income tax. Cities, counties and other municipalities in the 50 states
and U.S. territories usually issue these securities for public projects, such as
schools and roads.

               [graphic of triangle]

               LONG-TERM debt securities are those with maturities longer than
               10 years. INTERMEDIATE-TERM debt securities are those with
               maturities between five and 10 years.

               [graphic of triangle]

               A MUNICIPAL SECURITY is a debt obligation issued by or on behalf
               of a state, its political subdivisions, agencies or
               instrumentalities, the District of Columbia or a U.S. territory
               or possession.

The fund managers also may buy long- and intermediate-term debt securities with
interest 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 hospitals and athletic stadiums.

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

The fund managers also may buy unrated securities if they determine such
securities meet the investment objectives of the fund.

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

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.

The fund managers attempt to keep the WEIGHTED AVERAGE MATURITY of the fund at
10 years or longer.

               [graphic of triangle]

               WEIGHTED AVERAGE MATURITY is a tool the fund managers  use to
               approximate the remaining term to maturity of a fund's
               investment portfolio.


6


WHAT ARE THE PRINCIPAL RISKS OF INVESTING IN THE FUND?

When interest rates change, the fund's share value will be affected. Generally,
when interest rates rise, the fund's share value will decline. The opposite is
true when interest rates decline. This interest rate risk is higher for
High-Yield Municipal than for funds that have shorter weighted average
maturities, such as short-term and intermediate-term funds.

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. Adverse
economic, political and other developments may be more likely to cause an issuer
of low-quality bonds to default on its obligation to pay interest and principal
due under its securities.

The fund may invest part of its assets 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.

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 municipal markets. High-Yield Municipal may have a higher
level of risk than funds that invest in a larger universe of securities.

At any given time the value of your shares of the fund 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.

               [graphic of triangle]

               Income from the fund may be subject to the alternative minimum
               tax. For more information, see Taxes in this Prospectus.


                                                                              7


BASICS OF FIXED-INCOME INVESTING

DEBT SECURITIES

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

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

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

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

*  evaluating current economic conditions and assessing the risk of inflation

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

WEIGHTED AVERAGE MATURITY

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

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

                            Amount of        Percent of   Remaining    Weighted
                            Security Owned   Portfolio    Maturity     Maturity
--------------------------------------------------------------------------------
Debt Security A             $100,000         25%          4 years      1 year
--------------------------------------------------------------------------------
Debt Security B             $300,000         75%          12 years     9 years
--------------------------------------------------------------------------------
Weighted Average Maturity                                              10 years
--------------------------------------------------------------------------------

TYPES OF RISK

The basic types of risk the 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 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.


8


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.

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

Debt securities rated in one of the highest four categories by a nationally
recognized securities rating organization are considered investment grade.
Although they are considered investment grade, an investment in these debt
securities still involves some credit risk because even a AAA rating is not a
guarantee of payment. For a complete description of the ratings system, see the
Statement of Additional Information. The 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.

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.

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.


                                                                              9


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 two-thirds of the trustees are independent of the fund's advisor; that
is, they are not employed by and have no financial interest in the advisor.

THE INVESTMENT ADVISOR

The fund's investment advisor is American Century Investment Management, Inc.
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 fund
and directing the purchase and sale of its investment securities. The advisor
also arranges for transfer agency, custody and all other services necessary for
the fund to operate.

For the services it provided to the fund, the advisor received a unified
management fee of 0.64% of the average net assets of the Investor class shares
of the fund. The rate of the management fee for the fund is determined daily on
a class-by-class basis using a two-step formula that takes into account the
fund's strategy (money market, bond or equity) and the total amount of mutual
fund assets the advisor manages. The management fee is 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.

THE FUND MANAGEMENT TEAM

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

The portfolio managers on the Municipal Bond team are identified below.

G. DAVID MACEWEN

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


10


STEVEN M. PERMUT

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

ROBERT J. MILLER

Mr. Miller, Portfolio Manager, has been a member of the team since April 2000.
He joined American Century in June 1998 as a Senior Municipal Analyst. Before
joining American Century, he was a Managing Director for Washington Square
Holdings, LLC from May 1997 to June 1998. He has a bachelor's degree in business
administration-finance from San Jose State University and an MBA from New York
University.

KENNETH M. SALINGER

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

Code of Ethics

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

FUNDAMENTAL INVESTMENT POLICIES

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


                                                                             11


INVESTING WITH AMERICAN CENTURY

SERVICES AUTOMATICALLY AVAILABLE TO YOU

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

CONDUCTING BUSINESS IN WRITING

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

YOUR RESPONSIBILITY FOR UNAUTHORIZED TRANSACTIONS

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

WAYS TO MANAGE YOUR ACCOUNT
--------------------------------------------------------------------------------
ONLINE
--------------------------------------------------------------------------------

www.americancentury.com

OPEN AN ACCOUNT

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

EXCHANGE SHARES

Exchange shares from another American Century account.

MAKE ADDITIONAL INVESTMENTS

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

SELL SHARES*

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

* Online redemptions up to $25,000 per day.


12


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

Investor Relations
1-800-345-2021

Business, Not-For-Profit and
Employer-Sponsored Retirement Plans
1-800-345-3533

Automated Information Line
1-800-345-8765

OPEN AN ACCOUNT

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

EXCHANGE SHARES

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

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

OPEN AN ACCOUNT

Call to set up your account or mail a completed application to the address
provided in the By mail or fax section. Give your bank the following
information to wire money.

* Our bank information
    Commerce Bank N.A.
    Routing No. 101000019
    Account No. Please call for the appropriate account number
* The fund name
* Your American Century account number, if known*
* Your name
*For additional investments only

MAKE ADDITIONAL INVESTMENTS

Follow the By wire-Open an account instructions

SELL SHARES

You can receive redemption proceeds by wire or electronic transfer.

EXCHANGE SHARES

Not available.


                                                                             13


--------------------------------------------------------------------------------
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.
--------------------------------------------------------------------------------
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 privilege, you can purchase shares on a regular
basis. You must invest at least $600 per year per account.

SELL SHARES

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

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

4500 Main Street                       4917 Town Center Drive
Kansas City, Missouri                  Leawood, Kansas
8 a.m. to 5:30 p.m., Monday - Friday   8 a.m. to 6 p.m., Monday - Friday
                                       8 a.m. to noon, Saturday

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


14


MINIMUM INITIAL INVESTMENT AMOUNTS

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


ACCOUNT MAINTENANCE FEE

We charge a $12.50 semiannual account maintenance fee to investors whose total
investments with American Century are less than $10,000. We will determine the
amount of your total investments twice per year, generally the last Friday in
October and April. If your total investments are less than $10,000 at that time,
we will redeem shares automatically in one of your accounts to pay the $12.50
fee. Please note that you may incur a tax liability as a result of the
redemption. In determining your total investment amount, we will include your
investments in American Century funds held in all PERSONAL ACCOUNTS and IRAs
including SEP-, SARSEP- and SIMPLE-IRAs (but no other retirement plan 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 www.americancentury.com/info/demo.

               [graphic of triangle]

               PERSONAL ACCOUNTS include individual accounts, joint accounts,
               UGMA/UTMA accounts, personal trusts, Education Savings Accounts
               (formerly Education IRAs) and traditional, Roth and Rollover
               IRAs. If you have only business, business retirement,
               employer-sponsored or American Century Brokerage accounts, you
               are currently not subject to this fee, but you may be subject to
               other fees.

REDEMPTIONS

Your redemption proceeds will be calculated using the NET ASSET VALUE (NAV) next
determined after we receive your transaction request in good order. Each time
you make an investment with American Century, there is a seven-day holding
period before you can redeem those shares, unless you provide us with
satisfactory proof that your purchase funds have cleared. This seven-day holding
period begins the day after your investment is processed. However, investments
by wire require only a one-day holding period.

               [graphic of triangle]

               A fund's NET ASSET VALUE, or NAV, is the price of the fund's
               shares.

In addition, we reserve the right to delay delivery of redemption proceeds--up
to seven days--or to honor certain REDEMPTIONS with securities, rather than
cash, as described in the next section.

               [graphic of triangle]

               A REDEMPTION is the sale of all or a portion of the shares in an
               account, including those sold as a part of an exchange to another
               American Century account.


                                                                             15


SPECIAL REQUIREMENTS FOR LARGE REDEMPTIONS

If, during any 90-day period, you redeem fund shares worth more than $250,000
(or 1% of the value of a fund's assets if that amount is less than $250,000), we
reserve the right to pay part or all of the redemption proceeds in excess of
this amount in readily marketable  securities instead of in cash. The fund
managers would select these securities from the fund's portfolio. A payment in
securities can help the fund's remaining shareholders  avoid tax liabilities
that they might otherwise have incurred had the fund sold securities prematurely
to pay the entire redemption amount in cash.

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

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

REDEMPTION OF SHARES IN LOW-BALANCE ACCOUNTS

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

MODIFYING OR CANCELING AN INVESTMENT

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

ABUSIVE TRADING PRACTICES

We do not permit market timing or other abusive trading practices in our funds.

Excessive, short-term (market timing) or other abusive trading practices may
disrupt portfolio management strategies and harm fund performance. To minimize
harm to the fund and its shareholders, we reserve the right to reject any
purchase order (including exchanges) from any investor we believe has a history
of abusive trading or whose trading, in our judgment, has been or may be
disruptive to the fund. In making this judgment, we may consider trading done in
multiple accounts under common ownership or control.


16


INVESTING THROUGH FINANCIAL INTERMEDIARIES

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

*  minimum investment requirements
*  exchange policies
*  fund choices
*  cutoff time for investments

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

               [graphic of triangle]

               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, American Century will pay the
service provider a fee for performing those services.

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 fund.

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

RIGHT TO CHANGE POLICIES

We reserve the right to change any stated investment requirement, including
those that relate to purchases, exchanges and redemptions. We also may alter,
add or discontinue  any service or privilege. Changes may affect all investors
or only those in certain classes or groups.


                                                                             17


SHARE PRICE AND DISTRIBUTIONS

SHARE PRICE

American Century determines the NAV of the fund as of the close of regular
trading on the New York Stock Exchange (usually 4 p.m. Eastern time) on each day
the Exchange is open. On days when the Exchange is closed (including certain
U.S. holidays), we do not calculate the NAV. A fund share's NAV is the current
value of the fund's assets, minus any liabilities, divided by the number of fund
shares outstanding.

If current market prices of securities owned by a fund are not readily available
by an independent pricing source, the advisor may determine their fair value in
accordance with procedures adopted by the fund's Board. For example, if an event
occurs after the close of the exchange on which a fund's portfolio securities
are principally traded that is likely to have changed the value of the
securities, the advisor may determine the securities' fair value.

We will price your purchase, exchange or redemption at the NAV next determined
after we receive your transaction request in GOOD ORDER.

               [graphic of triangle]

               GOOD ORDER means that your instructions have been received in the
               form required by American Century. This may include, for example,
               providing the fund name and account number, the amount of the
               transaction and all required signatures.

DISTRIBUTIONS

Federal tax laws require the fund to make distributions to its shareholders in
order to qualify as a "regulated investment company." Qualification as a
regulated investment company means that the fund will not be subject to state or
federal income tax on amounts distributed. The distributions generally consist
of dividends and interest received by the fund, as well as CAPITAL GAINS
realized by the fund on the sale of its investment securities. The fund pays
distributions from net income monthly. The fund generally pay distributions of
capital gains, if any, once a year, usually in December. The fund may make more
frequent distributions, if necessary, to comply with Internal Revenue Code
provisions.

               [graphic of triangle]

               CAPITAL GAINS are increases in the values of capital assets, such
               as stock, from the time the assets are purchased.

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.

We will reinvest distributions unless you elect to receive them in cash.


18


TAXES

Tax-Exempt Income

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

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

Taxable Income

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

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

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

*  Temporary Investments. Some temporary investments, such as securities loans
   and repurchase agreements, can generate taxable income.

                                     Tax Rate for 10%
Type of Distribution                 and 15% Brackets      All other Brackets
--------------------------------------------------------------------------------
Short-term capital gains             Ordinary income rate  Ordinary income rate
--------------------------------------------------------------------------------
Long-term capital gains (1-5 years)  10%                   20%
--------------------------------------------------------------------------------
Long-term capital gains (> 5 years)  8%                    20%(1)
--------------------------------------------------------------------------------

(1)  The reduced rate for these gains will not begin until 2006, because the
     security holding period must start after December 31, 2000. Once the
     security has been held for more than 5 years the rate will be 18%.

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. For taxable accounts, American Century
will inform you or your financial intermediary of the tax status of fund
distributions for each calendar year in an annual tax mailing (Form 1099-DIV).

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


                                                                             19


Taxes on Transactions

Your redemptions--including exchanges to other American Century funds--are
subject to capital gains tax. The table above can provide a general guide for
your potential tax liability when selling or exchanging fund shares. Short-term
capital gains are gains on fund shares you held for 12 months or less. Long-term
capital gains are gains on fund shares you held for more than 12 months. If your
shares decrease in value, their sale or exchange will result in a long-term or
short-term capital loss. However, you should note that loss realized upon the
sale or exchange of shares held for six months or less will be treated as a
long-term capital loss to the extent of any distribution of long-term capital
gain and will be disallowed to the extent of any distribution of tax-exempt
income to you with respect to those shares. If a loss is realized on the
redemption of fund shares, the reinvestment in additional fund shares within 30
days before or after the redemption may be subject to the wash sale rules of the
Internal Revenue Code. This may result in a postponement of the recognition of
such loss for federal income tax purposes.

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

Buying a Dividend

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

The risk in buying a dividend is that the fund's portfolio may build up taxable
gains throughout the period covered by a distribution, as securities are sold at
a profit. The 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.


20


MULTIPLE CLASS INFORMATION

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

The other classes have different fees, expenses and/or minimum investment
requirements from the class offered by this prospectus. The difference in the
fee structures between the classes is the result of their separate arrangements
for shareholder and distribution services and not the result of any difference
in amounts charged by the advisor for core investment advisory services.
Accordingly, the core investment advisory expenses do not vary by class.
Different fees and expenses will affect performance. For additional information
concerning the A, B or C Class shares, call us at 1-800-378-9878. You also can
contact a sales representative or financial intermediary who offers that class
of shares.

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


                                                                             21


FINANCIAL HIGHLIGHTS

UNDERSTANDING THE FINANCIAL HIGHLIGHTS

The table on the next page itemizes what contributed to the changes in share
price during the most recently ended fiscal year. It also shows the changes in
share price for this period in comparison to changes over the last five fiscal
years or less, if the fund is not five years old.

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

*  share price at the beginning of the period
*  investment income and capital gains or losses
*  distributions of income and capital gains paid to investors
*  share price at the end of the period

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

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

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

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

*  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 accountants. Their Independent Accountants' Report and the financial
statements are included in the fund's Annual Report, which is available upon
request.


22


HIGH-YIELD MUNICIPAL FUND
Investor Class

FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED MAY 31 (EXCEPT AS NOTED)

Per-Share Data

                                                      2002     2001     2000      1999      1998(1)
--------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period                 $9.62    $9.32   $10.12     $10.08     $9.99
                                                --------------------------------------------------
Income From Investment Operations
  Net Investment Income                               0.53     0.53     0.51       0.54      0.09
  Net Realized and Unrealized Gain (Loss)             0.25     0.30    (0.79)      0.07      0.09
                                                --------------------------------------------------
  Total From Investment Operations                    0.78     0.83    (0.28)      0.61      0.18
                                                --------------------------------------------------
Distributions
  From Net Investment Income                         (0.53)   (0.53)   (0.51)     (0.54)    (0.09)
  From Net Realized Gains                               --       --    (0.01)     (0.03)       --
                                                --------------------------------------------------
  Total Distributions                                (0.53)   (0.53)   (0.52)     (0.57)    (0.09)
                                                --------------------------------------------------
Net Asset Value, End of Period                       $9.87    $9.62    $9.32     $10.12    $10.08
                                                ==================================================
  Total Return(2)                                     8.25%    9.13%   (2.81)%     6.18%     1.81%

Ratios/Supplemental Data

                                                      2002     2001      2000      1999      1998(1)
-----------------------------------------------------------------------------------------------------
Ratio of Operating Expenses to Average Net Assets     0.64%    0.64%  0.52%(3)  0.01%(3)        --(3)
Ratio of Net Investment Income to Average Net Assets  5.39%    5.59%  5.31%(3)  5.28%(3)  5.38%(3)(4)
Portfolio Turnover Rate                                 28%      50%      60%       92%          44%
Net Assets, End of Period (in thousands)            $36,162  $29,342  $28,189   $42,068      $18,788

(1)  March 31, 1998 (inception) through May 31, 1998.

(2)  Total return assumes reinvestment of net investment income and capital
     gains distributions, if any. Total returns for periods less than one year
     are not annualized.

(3)  ACIM voluntarily agreed to pay all expenses of the fund from March 31, 1998
    (inception) through April 30, 1999. In May 1999, ACIM began adding expenses
    at a rate of 0.10% of average daily closing net assets per month until
    October 31, 1999. In absence of the waiver, the annualized ratio of
    operating expenses to average net assets would have been 0.64% for all
    three periods and the annualized ratio of net investment income to average
    net assets would have been 5.19%, 4.65%, and 4.74%, for the same periods,
    respectively.

(4)  Annualized.


                                                                             23


NOTES


24


NOTES


                                                                             25


MORE INFORMATION ABOUT THE FUND IS CONTAINED IN THESE DOCUMENTS

Annual and Semiannual Reports

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

Statement of Additional Information (SAI)

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

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

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

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

On the Internet           * EDGAR database at www.sec.gov
                          * By email request at publicinfo@sec.gov

By mail                   SEC Public Reference Section
                          Washington, D.C. 20549-0102

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

Fund Reference               Fund Code       Ticker         Newspaper Listing
-------------------------------------------------------------------------------
High-Yield Municipal
     Investor Class          942             ABHYX          HiYldMu
-------------------------------------------------------------------------------

Investment Company Act File No. 811-4025

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


0212
SH-PRS-xxxxx
















Your
American Century
prospectus

A CLASS
B CLASS
C CLASS

High-Yield Municipal Fund

DECEMBER 20, 2002



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


American Century Investment Services, Inc.




                                American Century
                                  Investments

                                P.O. Box 419385
                                Kansas City, MO
                                   64141-6385

Dear Investor,

American Century is committed to providing you with an easy-to-read prospectus
that gives you the information you need to make confident investment decisions.

This year, you'll notice that we've combined information about three classes of
shares into one prospectus. These classes are all offered primarily through
employer-sponsored retirement plans, or through institutions such as banks,
broker-dealers and insurance companies.

It's important for you to be aware of which class of shares you own or are
considering for purchase while you're reading through your prospectus. Certain
restrictions may apply to one class or another, and different classes may have
different fees, expenses or minimum investment requirements.

Read carefully through the Fund Performance History, Investing with American
Century, and Financial Highlights sections, as they reflect the most significant
differences between the classes. Some sections have separate pages for the
different classes.

After you've reviewed your prospectus, should you have any questions, please
call your investment professional, who will be happy to assist you.

Sincerely,


/s/W. Gordon Snyder
W. Gordon Snyder
President, Chief Marketing Officer
American Century Investment Services, Inc.




Table of Contents

AN OVERVIEW OF THE FUND ...................................................    2
FUND PERFORMANCE HISTORY ..................................................    3
FEES AND EXPENSES .........................................................    5
OBJECTIVES, STRATEGIES AND RISKS ..........................................    7
BASICS OF FIXED-INCOME INVESTING ..........................................    9
MANAGEMENT ................................................................   12
INVESTING WITH AMERICAN CENTURY ...........................................   14
SHARE PRICE AND DISTRIBUTIONS .............................................   21
TAXES .....................................................................   22
MULTIPLE CLASS INFORMATION ................................................   24
PERFORMANCE INFORMATION OF OTHER CLASS ....................................   25

               [graphic of triangle]

               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 ARE THE FUND'S INVESTMENT OBJECTIVES?

The fund seeks high current income and investment returns that are exempt from
federal income tax.

The fund also seeks capital appreciation as a secondary objective.

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

The fund managers invest most of the fund's assets in long-term (longer than 10
years) and intermediate-term (five to 10 years) DEBT SECURITIES, including junk
and private activity bonds, issued by cities, counties and other municipalities,
and U.S. territories. A more detailed description about the fund's investment
strategies and risks begins on page 7.

*  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.

*  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.

*  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.

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

               [graphic of triangle]

               DEBT SECURITIES include fixed-income investments such as notes,
               bonds, commercial paper and U.S. Treasury securities.

WHO MAY WANT TO INVEST IN THE FUND?

This fund may be a good investment if you are

*  seeking current tax-free income
*  seeking diversification by investing in a fixed-income mutual fund
*  comfortable with the fund's other investment risks

WHO MAY NOT WANT TO INVEST IN THE FUND?

The fund may not be a good investment if you are

*  investing through an IRA or other tax-advantaged retirement plan
*  investing for long-term growth
*  looking for the added security of FDIC insurance

               [graphic of triangle]

               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

When the A, B or C Class of the fund has investment results for a full calendar
year, this section will feature charts that show

*  Annual Total Returns
*  Highest and Lowest Quarterly Returns
*  Average Annual Total Returns for each class of the fund offered by this
   prospectus, including a comparison of these returns to a benchmark index

The performance of the fund's Investor Class shares for each full calendar year
in the life of the fund is shown below. 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 have been lower than
those shown. The return of the fund's other classes of shares will differ from
those shown in the chart, depending on the expenses of those classes.

HIGH-YIELD MUNICIPAL - INVESTOR CLASS(1) (2)

            High-Yield Municipal
2001         6.50%
2000         7.29%
1999        -2.03%

(1)  As of September 30, 2002, the end of the most recent calendar quarter, the
     fund's Investor Class year-to-date return was ___%.

(2)  From March 31, 1998, to October 31, 1999, all or a portion of the fund's
     management fee was waived. As a result, the fund's returns are higher
     than they would have been had the waiver not been in effect.

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

                                        Highest             Lowest
--------------------------------------------------------------------------------
High-Yield Municipal (Investor Class)   3.19% (2Q 2002)    -1.34% (3Q 1999)
--------------------------------------------------------------------------------


                                                                              3


AVERAGE ANNUAL TOTAL RETURNS

The following table shows the average annual total returns of the fund's
Investor Class shares calculated three different ways. Because the fund's A, B
and C Class shares did not have a full calender year's worth of performance they
are not included.

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.

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

For the calendar year ended December 31, 2001                 1 year    Life of Fund(1)
---------------------------------------------------------------------------------------
High-Yield Municipal(2)
Return Before Taxes                                           6.50%     4.82%
Return After Taxex on Distributions                           6.55%     4.79%
Return After Taxes on Distributions and Sale of Fund Shares   6.22%     4.93%
Lehman Brothers Long-Term Municipal Bond Index                4.79%     5.08%
(reflects no deduction for fees, expenses or taxes)
---------------------------------------------------------------------------------------

(1)  The inception date for the fund's Investor Class is March 31, 1998.

(2)  From March 31, 1998, to October 31, 1999, all or a portion of the fund's
     management fee was waived. As a result, the fund's returns are higher than
     they would have been had the waiver not been in effect.

The performance information on this page 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 at
1-800-378-9878.


4


FEES AND EXPENSES

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

SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)

                                                                  A Class    B Class    C Class
--------------------------------------------------------------------------------------------------
Maximum Sales Charge (Load) Imposed on Purchases                  4.50%      None       None
    (as a percentage of offering price)
--------------------------------------------------------------------------------------------------
Maximum Deferred Sales Charge (Load)                              None(1)    5.00%(2)   0.75%(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)
--------------------------------------------------------------------------------------------------

(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% in the first year after purchase, declines over the
     next five years and is eliminated after six years.

(3)  This charge is eliminated after one year.

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

                          Management    Distribution and Service    Other           Total Annual Fund
                          Fee(1)        (12b-1) Fees(2)             Expenses(3)     Operating Expenses
-------------------------------------------------------------------------------------------------------
High-Yield Municipal
    A Class               0.64%         0.25%                       0.00%           0.89%
-------------------------------------------------------------------------------------------------------
    B Class               0.64%         1.00%                       0.00%           1.64%
-------------------------------------------------------------------------------------------------------
    C Class               0.64%         0.75%                       0.00%           1.64%
-------------------------------------------------------------------------------------------------------

(1)  Based on assets of all classes of the fund during the fund's most recent
     fiscal year. The fund has a stepped fee schedule. As a result, the fund's
     management fee rate generally decreases as fund assets increase and
     increases as assets decrease.

(2)  The 12b-1 fee is designed to permit investors to purchase shares through
     broker-dealers, banks, insurance companies and other financial
     intermediaries. A portion of the fee is used to compensate such financial
     intermediaries for ongoing recordkeeping and administrative services that
     would otherwise be performed by an affiliate of the advisor, and a portion
     is used to compensate them for distribution and other shareholder services.
     For more information, see Service and Distribution Fees, page 24.

(3)  Other expenses, which include the fees and expenses of the fund's
     independent directors and their legal counsel, as well as interest, are
     expected to be less than 0.005% for the current fiscal year.


                                                                              5


EXAMPLE

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

*  invest $10,000 in the fund
*  redeem all of your shares at the end of the periods shown below
*  earn a 5% return each year
*  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
-------------------------------------------------------------------------------
High-Yield Municipal
    A Class                  $537        $720         $920         $1,493
-------------------------------------------------------------------------------
    B Class                  $666        $814         $1,086       $1,731
-------------------------------------------------------------------------------
    C Class                  $219        $438         $757         $1,658
-------------------------------------------------------------------------------

You would pay the following expenses if you did not redeem your shares.

                             1 year      3 years      5 years      10 years
-------------------------------------------------------------------------------
High-Yield Municipal
    A Class                  $537        $720         $920         $1,493
-------------------------------------------------------------------------------
    B Class                  $166        $514         $886         $1,731
-------------------------------------------------------------------------------
    C Class                  $141        $438         $757         $1,658
-------------------------------------------------------------------------------


6


OBJECTIVES, STRATEGIES AND RISKS

WHAT ARE THE FUND'S INVESTMENT OBJECTIVES?

High-Yield Municipal seeks high current income that is exempt from federal
income tax. Capital appreciation is a secondary objective.

HOW DOES THE FUND PURSUE ITS INVESTMENT OBJECTIVES?

The fund managers invest at least 80% of the fund's assets in LONG-TERM and
INTERMEDIATE-TERM MUNICIPAL SECURITIES with interest payments exempt from
federal income tax. Cities, counties and other municipalities in the 50 states
and U.S. territories usually issue these securities for public projects, such as
schools and roads.

               [graphic of triangle]

               LONG-TERM DEBT SECURITIES are those with maturities longer than
               10 years. INTERMEDIATE-TERM DEBT SECURITIES are those with
               maturities between five and 10 years.

               [graphic of triangle]

               A MUNICIPAL SECURITY is a debt obligation issued by or on behalf
               of a state, its political subdivisions, agencies or
               instrumentalities, the District of Columbia or a U.S. territory
               or possession.

The fund managers also may buy long- and intermediate-term debt securities with
interest 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 hospitals and athletic stadiums.

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

The fund managers also may buy unrated securities if they determine such
securities meet the investment objectives of the fund.

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


                                                                              7


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.

The fund managers attempt to keep the WEIGHTED AVERAGE MATURITY of the fund at
10 years or longer.

               [graphic of triangle]

               WEIGHTED AVERAGE MATURITY is a tool the fund managers  use to
               approximate the remaining term to maturity of a fund's
               investment portfolio.

WHAT ARE THE PRINCIPAL RISKS OF INVESTING IN THE FUND?

When interest rates change, the fund's share value will be affected. Generally,
when interest rates rise, the fund's share value will decline. The opposite is
true when interest rates decline. This interest rate risk is higher for
High-Yield Municipal than for funds that have shorter weighted average
maturities, such as short-term and intermediate-term funds.

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. Adverse
economic, political and other developments may be more likely to cause an issuer
of low-quality bonds to default on its obligation to pay interest and principal
due under its securities.

The fund may invest part of its assets 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.

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 municipal markets. High-Yield Municipal may have a higher
level of risk than funds that invest in a larger universe of securities.

At any given time the value of your shares of the fund 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.

               [graphic of triangle]

               Income from the fund may be subject to the alternative minimum
               tax. For more information, see Taxes in this Prospectus.


8


BASICS OF FIXED-INCOME INVESTING

DEBT SECURITIES

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

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

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

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

*  evaluating current economic conditions and assessing the risk of inflation

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

WEIGHTED AVERAGE MATURITY

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

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

                            Amount of        Percent of   Remaining    Weighted
                            Security Owned   Portfolio    Maturity     Maturity
--------------------------------------------------------------------------------
Debt Security A             $100,000         25%          4 years      1 year
--------------------------------------------------------------------------------
Debt Security B             $300,000         75%          12 years     9 years
--------------------------------------------------------------------------------
Weighted Average Maturity                                              10 years
--------------------------------------------------------------------------------

TYPES OF RISK

The basic types of risk the 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 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.


                                                                              9


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.

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

Debt securities rated in one of the highest four categories by a nationally
recognized securities rating organization are considered investment grade.
Although they are considered investment grade, an investment in these debt
securities still involves some credit risk because even a AAA rating is not a
guarantee of payment. For a complete description of the ratings system, see the
Statement of Additional Information. The 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.

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 and
a less stable cash flow.

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.


10


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 two-thirds of the directors are independent of the fund's advisor;
that is, they are not employed by and have no financial interest in the advisor.

THE INVESTMENT ADVISOR

The fund's investment advisor is American Century Investment Management, Inc.
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 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 average net assets of each class of
shares. The rate of the management fee for the fund is determined daily on a
class-by-class basis using a two-step formula that takes into account the fund's
strategy (money market, bond or equity) and the total amount of mutual fund
assets the advisor manages. The management fee is 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.

The A, B and C Classes of the fund were not in operation during the fiscal year
ended May 31, 2002. Each class will pay the advisor a unified management fee
calculated by adding the appropriate Investment Category and Complex Fees from
the following schedules:

Investment Category Fee Schedule        Complex Fee Schedule (A, B and C Class)

Category Assets         Fee Rate        Complex Assets            Fee Rate
---------------         --------        --------------            --------
First $1 billion        0.5200%         First $2.5 billion        0.3100%
Next $5 billion         0.4600%         Next $7.5 billion         0.3000%
Next $15 billion        0.4160%         Next $15.0 billion        0.2985%
Next $25 billion        0.3690%         Next $25.0 billion        0.2970%
Next $50 billion        0.3420%         Next $50.0 billion        0.2960%
Next $150 billion       0.3390%         Next $100.0 billion       0.2950%
Thereafter              0.3380%         Next $100.0 billion       0.2940%
                                        Next $200.0 billion       0.2930%
                                        Next $250.0 billion       0.2920%
                                        Next $500.0 billion       0.2910%
                                        Thereafter                0.2900%


                                                                             11


THE FUND MANAGEMENT TEAMS

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

The portfolio managers on the Municipal Bond team are identified below.

G. DAVID MACEWEN

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

STEVEN M. PERMUT

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

ROBERT J. MILLER

Mr. Miller, Portfolio Manager, has been a member of the team since April 2000.
He joined American Century in June 1998 as a Senior Municipal Analyst. Before
joining American Century, he was a Managing Director for Washington Square
Holdings, LLC from May 1997 to June 1998. He has a bachelor's degree in business
administration-finance from San Jose State University and an MBA from New York
University.

KENNETH M. SALINGER

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

CODE OF ETHICS

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

FUNDAMENTAL INVESTMENT POLICIES

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


12


INVESTING WITH AMERICAN CENTURY

CHOOSING A SHARE CLASS

The shares offered by this prospectus are intended for purchase by participants
in employer-sponsored retirement or savings plans and for persons purchasing
shares through investment advisors, broker-dealers, banks, insurance companies
and other financial intermediaries that provide various administrative and
distribution services.

American Century Advisor Funds may offer the following four classes of shares: A
Class, B Class, C Class and Advisor Class. The fund offers the A, B and C
Classes through this prospectus. Although each class of shares represents an
interest in the same fund, each has a different cost structure, as described
below. Which class is right for you depends on many factors, including how long
you plan to hold the shares, how much you plan to invest, the fee structure of
each class, and how you wish to compensate your financial advisor for the
services provided to you. Your financial advisor can help you choose the option
that is most appropriate.

The following chart provides a summary description of each class offered by this
prospectus:

A Class                                 B Class
--------------------------------------------------------------------------------
Initial sales charge(1)                 No initial sales charge
--------------------------------------------------------------------------------
Generally no CDSC(2)                    Contingent deferred sales charge on
                                        redemptions within six years
--------------------------------------------------------------------------------
12b-1 fee of 0.25%                      12b-1 fee of 1.00%
--------------------------------------------------------------------------------
No conversion feature                   Convert to A Class shares eight years
after purchase
--------------------------------------------------------------------------------
Generally more appropriate              Purchase orders limited to amounts
for long-term investors                 less than $250,000
--------------------------------------------------------------------------------

C Class
--------------------------------------------------------------------------------
No initial sales charge
--------------------------------------------------------------------------------
Contingent deferred sales charge on redemptions within one year
--------------------------------------------------------------------------------
12b-1 fee of 0.75%
--------------------------------------------------------------------------------
No conversion feature
--------------------------------------------------------------------------------
Purchase orders limited to amounts less than $1,000,000; generally more
appropriate for short-term investors
--------------------------------------------------------------------------------

(1)  The sales charge for A Class shares decreases depending on the size of your
     investment, and may be waived for some purchases. There is no sales charge
     for purchases of $1,000,000 or more.

(2)  A CDSC of 1.00% will be charged on certain purchases of $1,000,000 or more
     that are redeemed within one year of purchase.

MINIMUM INITIAL INVESTMENT AMOUNTS (FOR ALL CLASSES)

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


                                                                             13


CALCULATION OF SALES CHARGES

A CLASS

A Class shares are sold at their offering price, which is net asset value plus
an initial sales charge.  This sales charge varies depending on the amount of
your investment, and is deducted from your purchase before it is invested. The
sales charges and the amounts paid to your financial advisor are:

                             Sales Charge      Sales Charge        Amount paid to
                             as a % of         as a % of Net       Financial Advisor as
Purchase Amount              Offering Price    Amount Invested     a % of Offering Price
-----------------------------------------------------------------------------------------
Less than $50,000            4.50%             4.71%               4.00%
-----------------------------------------------------------------------------------------
$50,000 - $99,999            4.50%             4.71%               4.00%
-----------------------------------------------------------------------------------------
$100,000 - $249,999          3.50%             3.63%               3.00%
-----------------------------------------------------------------------------------------
$250,000 - $499,999          2.50%             2.56%               2.00%
-----------------------------------------------------------------------------------------
$500,000 - $999,999          2.00%             2.04%               1.75%
-----------------------------------------------------------------------------------------
$1,000,000 - $3,999,999      0.00%             0.00%               1.00%(1)
-----------------------------------------------------------------------------------------
$4,000,000 - $9,999,999      0.00%             0.00%               0.50%(1)
-----------------------------------------------------------------------------------------
$10,000,000 or more          0.00%             0.00%               0.25%(1)
-----------------------------------------------------------------------------------------

(1)  For purchases over $1,000,000 by qualified retirement plans, no upfront
     amount will be paid to financial advisors.

There is no front-end sales charge for purchases of $1,000,000 or more, but if
you redeem your shares within one year of purchase you will pay a 1.00% deferred
sales charge, subject to the exceptions listed on page 15.

Reductions and Waivers of Sales Charges for A Class

You may qualify for a reduction or waiver of certain sales charges, but you or
your financial advisor must provide such information to American Century at the
time of purchase in order to take advantage of such reduction or waiver.

You and your immediate family (your spouse and your children under the age of
21) may combine investments to reduce your A Class sales charge in the
following ways:

Account Aggregation.  Investments made by you and your immediate family may be
aggregated if made for your own account(s) and/or certain other accounts, such
as:

*  Certain trust accounts
*  Solely controlled business accounts
*  Single-participant retirement plans
*  Endowments or foundations established and controlled by you or an immediate
   family member

Concurrent Purchases. You may combine simultaneous purchases in A, B or C Class
shares of any two or more American Century Advisor Funds to qualify for a
reduced A Class sales charge.

Rights of Accumulation. You may take into account the current value of your
existing holdings in A, B or C Class shares of any American Century Advisor Fund
to determine your A Class sales charge.


14


Letter of Intent. A Letter of Intent allows you to combine all non-money market
fund purchases of all A, B and C Class shares you intend to make over a 13-month
period to determine the applicable sales charge. At your request, purchases made
during the previous 90 days may be included; however, capital appreciation,
capital gains and reinvested dividends do not apply toward these combined
purchases. A portion of your account will be held in escrow to cover additional
A Class sales charges that will be due if your total investments over the
13-month period do not qualify for the applicable sales charge reduction.

Waivers for Certain Investors. The sales charge on A Class shares may be waived
for:

*  certain financial intermediaries who have selling agreements for the American
   Century Advisor Funds, and those intermediaries' employees and sales
   representatives

*  present or former officers, directors and employees (and their families) of
   American Century

*  qualified retirement plan purchases

*  IRA Rollovers from any American Century Advisor Fund held in a qualified
   retirement plan

*  certain other investors as deemed appropriate by American Century

B CLASS

B Class shares are sold at their net asset value without an initial sales
charge. However, if you redeem your shares within six years of purchase you will
pay a contingent deferred sales charge (CDSC). There is no CDSC on shares
acquired through reinvestment of dividends or capital gains.

Years after Purchase      CDSC as a % of Original Purchase Price
-------------------------------------------------------------------------------
1st year                  5.00%
-------------------------------------------------------------------------------
2nd year                  4.00%
-------------------------------------------------------------------------------
3rd year                  3.00%
-------------------------------------------------------------------------------
4th year                  3.00%
-------------------------------------------------------------------------------
5th year                  2.00%
-------------------------------------------------------------------------------
6th year                  1.00%
-------------------------------------------------------------------------------
After 6th year            None
-------------------------------------------------------------------------------

B Class shares will automatically convert to A Class shares in the month of the
eight-year anniversary of the purchase date.

C CLASS

C Class shares are sold at their net asset value without an initial sales
charge. However, if you redeem your shares within 12 months of purchase you will
pay a CDSC of 0.75% of the original purchase price or the value at redemption,
whichever is less.


                                                                             15


CALCULATION OF CDSC

To minimize the amount of the CDSC you may pay when you redeem shares, the fund
will first redeem shares acquired through reinvested dividends and capital gain
distributions, which are not subject to a CDSC. Shares that have been in your
account long enough that they are not subject to a CDSC are redeemed next. For
any remaining redemption amount, shares will be sold in the order they were
purchased (earliest to latest).

CDSC WAIVERS

The contingent deferred sales charge on A Class shares for purchases of over
$1,000,000, B Class and C Class shares may be waived in the following cases:

*  redemptions through systematic withdrawal plans not exceeding 12% each year
   of the original purchase cost, for B Class shares, or the lesser of the
   original purchase cost or the current market value of the fund account, for
   A and C Class shares
*  distributions from IRAs due to attainment of age 59-1/2 for A and C Class
   shares only
*  required minimum distributions from retirement accounts upon reaching age
   70-1/2
*  tax-free returns of excess contributions to IRAs
*  redemptions due to death or post-purchase disability
*  exchanges, unless the shares acquired by exchange are redeemed within the
   original CDSC period (12 months for A and C Class shares, and 6 years for B
   Class shares)
*  IRA rollovers from any American Century Advisor Fund held in a qualified
   retirement plan, for A Class shares only
*  if no broker was compensated for the sale

BUYING AND SELLING SHARES

Your ability to purchase, exchange and redeem shares will depend on the policies
of the financial intermediary through which you do business. Some policy
differences may include

*  minimum investment requirements
*  exchange policies
*  fund choices
*  cutoff time for investments

In addition, your financial intermediary may charge a transaction fee for the
purchase or sale of fund shares. Please contact your intermediary or plan
sponsor for a complete description of its policies. Copies of the fund's annual
report, semiannual report and Statement of Additional Information are available
from your intermediary or plan sponsor.


16


The fund has authorized certain FINANCIAL INTERMEDIARIES to accept orders on the
fund's behalf. American Century has contracts with these intermediaries
requiring them to track the time investment orders are received and to comply
with procedures relating to the transmission of orders. Orders must be received
by the intermediary on the 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.

               [graphic of triangle]

               FINANCIAL INTERMEDIARIES include banks, broker-dealers, insurance
               companies and investment advisors.

REINSTATEMENT PRIVILEGE

Within 90 days of a redemption of any A or B Class shares, you may reinvest all
of the redemption proceeds in A Class shares of any American Century Advisor
Fund at the then-current net asset value without paying an initial sales charge.
Any CDSC you paid on an A Class redemption that you are reinvesting will be
credited to your account.  You or your financial advisor must notify the fund's
transfer agent in writing at the time of the reinvestment to take advantage of
this privilege, and you may use it only once.

EXCHANGING SHARES

You may exchange shares of the fund for shares of the same class of another
American Century Advisor Fund without a sales charge if you meet the following
criteria:

*  The exchange is for a minimum of $100
*  For an exchange that opens a new account, the amount of the exchange must
   meet or exceed the minimum account size requirement for the fund receiving
   the exchange

For purposes of computing any applicable CDSC on shares that have been
exchanged, the holding period will begin as of the date of purchase of the
original fund owned. Exchanges from a money market fund are subject to a sales
charge on the fund being purchased, unless the money market fund shares were
acquired by exchange from a fund with a sales charge or by reinvestment of
dividends or capital gains distributions.

MODIFYING OR CANCELING AN INVESTMENT

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


                                                                             17


ABUSIVE TRADING PRACTICES

We do not permit market timing or other abusive trading practices in our funds.

Excessive, short-term (market timing) or other abusive trading practices may
disrupt portfolio management strategies and harm fund performance. To minimize
harm to the fund and its shareholders, we reserve the right to reject any
purchase order (including exchanges) from any investor we believe has a history
of abusive trading or whose trading, in our judgment, has been or may be
disruptive to the fund. In making this judgment, we may consider trading done in
multiple accounts under common ownership or control.

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.

REDEMPTIONS

If you sell your B or C Class or, in certain cases, A Class shares within a
certain time after their purchase, you will pay a sales charge the amount of
which is contingent upon the amount of time you have held your shares, as
described above.

Your redemption proceeds will be calculated using the NET ASSET VALUE (NAV) next
determined after we receive your transaction request in good order. Each time
you make an investment with American Century, there is a seven-day holding
period before you can redeem those shares, unless you provide us with
satisfactory proof that your purchase funds have cleared. This seven-day holding
period begins the day after your investment is processed. However, investments
by wire require only a one-day holding period.

               [graphic of triangle]

               A fund's NET ASSET VALUE, or NAV, is the price of the fund's
               shares.

In addition, we reserve the right to delay delivery of redemption proceeds--up
to seven days--or to honor certain REDEMPTIONS with securities, rather than
cash, as described in the next section.

               [graphic of triangle]

               A REDEMPTION is the sale of all or a portion of the shares in an
               account, including those sold as a part of an exchange to another
               American Century account.


18


SPECIAL REQUIREMENTS FOR LARGE REDEMPTIONS

If, during any 90-day period, you redeem fund shares worth more than $250,000
(or 1% of the value of a fund's assets if that amount is less than $250,000), we
reserve the right to pay part or all of the redemption proceeds in excess of
this amount in readily marketable securities instead of in cash. The fund
managers would select these securities from the fund's portfolio. A payment in
securities can help the fund's remaining shareholders avoid tax liabilities that
they might otherwise have incurred had the fund sold securities prematurely to
pay the entire redemption amount in cash.

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

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

REDEMPTION OF SHARES IN LOW-BALANCE ACCOUNTS

If your account balance falls below the minimum initial investment amount for
any reason other than as a result of market fluctuation, we will notify you and
give you 90 days to meet the minimum. If you do not meet the deadline, American
Century reserves the right to redeem the shares in the account and send the
proceeds to your address of record. Please note that shares redeemed in this
manner may be subject to a sales charge if held less than the applicable time
period. You also may incur tax liability as a result of the redemption.

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.


                                                                             19


SHARE PRICE AND DISTRIBUTIONS

SHARE PRICE

American Century determines the NAV of the fund as of the close of regular
trading on the New York Stock Exchange (usually 4 p.m. Eastern time) on each day
the Exchange is open. On days when the Exchange is closed (including certain
U.S. holidays), we do not calculate the NAV. A fund share's NAV is the current
value of the fund's assets, minus any liabilities, divided by the number of fund
shares outstanding.

If current market prices of securities owned by a fund are not readily available
from an independent pricing source, the advisor may determine their fair value
in accordance with procedures adopted by the fund's Board. For example, if an
event occurs after the close of the exchange on which a fund's portflio
securities are principally traded that is likely to have changed the value of
the securities, the advisor may determine the securities' fair value.

We will price your purchase, exchange or redemption at the NAV next determined
after we receive your transaction request in GOOD ORDER.

               [graphic of triangle]

               GOOD ORDER means that your instructions have been received in the
               form required by American Century. This may include, for example,
               providing the fund name and account number, the amount of the
               transaction and all required signatures.

DISTRIBUTIONS

Federal tax laws require the fund to make distributions to its shareholders in
order to qualify as a "regulated investment company." Qualification as a
regulated investment company means that the fund will not be subject to state or
federal income tax on amounts distributed. The distributions generally consist
of dividends and interest received by the fund, as well as CAPITAL GAINS
realized by the fund on the sale of its investment securities. The fund pays
distributions from net income monthly. The fund generally pays distributions of
capital gains, if any, once a year, usually in December. The fund may make more
frequent distributions, if necessary, to comply with Internal Revenue Code
provisions.

               [graphic of triangle]

               CAPITAL GAINS are increases in the values of capital assets, such
               as stock, from the time the assets are purchased.

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.

We will reinvest distributions unless you elect to receive them in cash.


20


TAXES

TAX-EXEMPT INCOME

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

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

TAXABLE INCOME

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

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

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

*  Temporary Investments. Some temporary investments, such as securities loans
   and repurchase agreements, can generate taxable income.

                                     Tax Rate for 10%
Type of Distribution                 and 15% Brackets      All other Brackets
--------------------------------------------------------------------------------
Short-term capital gains             Ordinary income rate  Ordinary income rate
--------------------------------------------------------------------------------
Long-term capital gains (1-5 years)  10%                   20%
--------------------------------------------------------------------------------
Long-term capital gains (> 5 years)  8%                    20%(1)
--------------------------------------------------------------------------------

(1)  The reduced rate for these gains will not begin until 2006, because the
     security holding period must start after December 31, 2000. Once the
     security has been held for more than 5 years the rate will be 18%.

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. For taxable accounts, American Century
will inform you or your financial intermediary of the tax status of fund
distributions for each calendar year in an annual tax mailing (Form 1099-DIV).

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


                                                                             21


TAXES ON TRANSACTIONS

Your redemptions--including exchanges to other American Century funds--are
subject to capital gains tax. The table above can provide a general guide for
your potential tax liability when selling or exchanging fund shares. Short-term
capital gains are gains on fund shares you held for 12 months or less. Long-term
capital gains are gains on fund shares you held for more than 12 months. If your
shares decrease in value, their sale or exchange will result in a long-term or
short-term capital loss. However, you should note that loss realized upon the
sale or exchange of shares held for six months or less will be treated as a
long-term capital loss to the extent of any distribution of long-term capital
gain and will be disallowed to the extent of any distribution of tax-exempt
income to you with respect to those shares. If a loss is realized on the
redemption of fund shares, the reinvestment in additional fund shares within 30
days before or after the redemption may be subject to the wash sale rules of the
Internal Revenue Code. This may result in a postponement of the recognition of
such loss for federal income tax purposes.

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

BUYING A DIVIDEND

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

The risk in buying a dividend is that the fund's portfolio may build up taxable
gains throughout the period covered by a distribution, as securities are sold at
a profit. The 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.


22


MULTIPLE CLASS INFORMATION

American Century offers four classes of the fund through financial
intermediaries: A Class, B Class, C Class and Investor Class. The shares offered
by this Prospectus are A, B and C Class shares, which are offered primarily
through employer-sponsored retirement plans or through institutions like banks,
broker-dealers and insurance companies.

The other class has different fees, expenses and/or minimum investment
requirements from the classes offered by this prospectus. The difference in the
fee structures between the classes is the result of their separate arrangements
for shareholder and distribution services and not the result of any difference
in amounts charged by the advisor for core investment advisory services.
Accordingly, the core investment advisory expenses do not vary by class.
Different fees and expenses will affect performance.  For additional information
concerning the other class of shares not offered by this prospectus, call us at
1-800-378-9878.

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

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

SERVICE AND DISTRIBUTION FEES

Investment Company Act Rule 12b-1 permits mutual funds that adopt a written plan
to pay certain expenses associated with the distribution of their shares out of
fund assets. Each class offered by this prospectus has a 12b-1 plan. The plans
provide for annual fees of 0.25% for A Class, 1.00% for B Class and 0.75% for C
Class. The advisor, as paying agent for the fund, pays all or a portion of such
fees to the investment advisors, banks, broker-dealers and insurance companies
that make the classes available. Because these fees are paid out of the fund's
assets on an ongoing basis, over time these fees will increase the cost of your
investment and may cost you more than other types of sales charges. The higher
fees for B and C Class shares may cost you more over time than paying the
initial sales charge for A Class shares. For additional information about the
plans and their terms, see Multiple Class Structure in the Statement of
Additional Information.

In addition, the advisor or the fund's distributor may make payments for various
services or other expenses out of its past profits or other available sources.
Such expenses may include distribution services, shareholder services or
marketing, promotional or related expenses. The amount of these payments is
determined by the advisor or the distributor and is not paid by you.


                                                                             23


PERFORMANCE INFORMATION OF OTHER CLASS

The following financial information is provided to show the performance of the
fund's original class of shares. This class, the Investor Class, has a total
expense ratio that is lower than the A, B and C Classes. If the A, B and C
Classes had existed during the periods presented, their performance would have
been lower because of the additional expense.

The table on the next page itemizes what contributed to the changes in the
Investor Class share price during the most recently ended fiscal year. It also
shows the changes in share price for this period in comparison to changes over
the last five fiscal years, or less, if the share class is not five years old.

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

*  share price at the beginning of the period
*  investment income and capital gains or losses
*  distributions of income and capital gains paid to investors
*  share price at the end of the period

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

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

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

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

*  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 accountants. Their Independent Accountants' Report and the financial
statements are included in the fund's Annual Report, which is available upon
request.


24


HIGH-YIELD MUNICIPAL FUND
Investor Class

FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED MAY 31 (EXCEPT AS NOTED)

Per-Share Data

                                               2002        2001        2000        1999         1998(1)
--------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period          $9.62       $9.32      $10.12       $10.08        $9.99
                                            ------------------------------------------------------------
Income From Investment Operations
  Net Investment Income                        0.53        0.53        0.51         0.54         0.09
  Net Realized and Unrealized Gain (Loss)      0.25        0.30       (0.79)        0.07         0.09
                                            ------------------------------------------------------------
  Total From Investment Operations             0.78        0.83       (0.28)        0.61         0.18
                                            ------------------------------------------------------------
Distributions
  From Net Investment Income                  (0.53)      (0.53)      (0.51)       (0.54)       (0.09)
  From Net Realized Gains                        --          --       (0.01)       (0.03)          --
                                            ------------------------------------------------------------
  Total Distributions                         (0.53)      (0.53)      (0.52)       (0.57)       (0.09)
                                            ------------------------------------------------------------
Net Asset Value, End of Period                $9.87       $9.62       $9.32       $10.12       $10.08
                                            ==========================================================
  Total Return(2)                              8.25%       9.13%      (2.81)%       6.18%        1.81%

Ratios/Supplemental Data

                                               2002        2001        2000         1999        1998(1)
--------------------------------------------------------------------------------------------------------
Ratio of Operating Expenses to
Average Net Assets                            0.64%        0.64%     0.52%(3)    0.01%(3)        --(3)

Ratio of Net Investment Income to
Average Net Assets                            5.39%        5.59%     5.31%(3)    5.28%(3)  5.38%(3)(4)

Portfolio Turnover Rate                         28%          50%         60%         92%          44%

Net Assets, End of Period
(in thousands)                              $36,162      $29,342     $28,189     $42,068      $18,788


(1)  March 31, 1998 (inception) through May 31, 1998.

(2)  Total return assumes reinvestment of net investment income and capital
     gains distributions, if any. Total returns for periods less than one year
     are not annualized.

(3)  ACIM voluntarily agreed to pay all expenses of the fund from March 31, 1998
    (inception) through April 30, 1999. In May 1999, ACIM began adding expenses
    at a rate of 0.10% of average daily closing net assets per month until
    October 31, 1999. In absence of the waiver, the annualized ratio of
    operating expenses to average net assets would have been 0.64% for all
    three periods and the annualized ratio of net investment income to average
    net assets would have been 5.19%, 4.65%, and 4.74%, for the same periods,
    respectively.

(4)  Annualized.


                                                                             25


MORE INFORMATION ABOUT THE FUND IS CONTAINED IN THESE DOCUMENTS

ANNUAL AND SEMIANNUAL REPORTS

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

STATEMENT OF ADDITIONAL INFORMATION (SAI)

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

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

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

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

On the Internet           * EDGAR database at www.sec.gov
                          * By email request at publicinfo@sec.gov

By mail                   SEC Public Reference Section
                          Washington, D.C. 20549-0102

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

Fund Reference               Fund Code         Ticker       Newspaper Listing
--------------------------------------------------------------------------------
High-Yield Municipal
     A Class                 142               N/A          HiYldMu
--------------------------------------------------------------------------------
     B Class                 318               N/A          HiYldMu
--------------------------------------------------------------------------------
     C Class                 442               N/A          HiYldMu
--------------------------------------------------------------------------------

Investment Company Act File No. 811-4025

AMERICAN CENTURY INVESTMENTS
P.O. Box 419385
Kansas City, Missouri 64141-6385
1-800-378-9878

0212
SH-PRS-xxxxx





















Florida Municipal Money Market Fund
Florida Municipal Bond Fund
Arizona Municipal Bond Fund
Tax-Free Money Market Fund
Tax-Free Bond Fund
High-Yield Municipal Fund



                                                               December 20, 2002

                                                                American Century
                                                                 Municipal Trust

This Statement of Additional Information adds to the discussion in the funds'
Prospectuses dated October 1, 2002 and December 20, 2002, but is not a
prospectus. The Statement of Additional Information should be read in
conjunction with the funds' current Prospectuses. If you would like a copy of a
Prospectus, please contact us at the address or telephone numbers listed on the
back cover or visit American Century's Web site at www.americancentury.com.


This Statement of Additional Information incorporates by reference certain
information that appears in the funds' annual and semiannual reports, which are
delivered to all shareholders. You may obtain a free copy of the funds' annual
or semiannual reports by calling 1-800-345-2021.



                                                     American Century Investment
                                                                  Services, Inc.








TABLE OF CONTENTS

The Funds' History.............................................................2
Fund Investment Guidelines.....................................................2
      Florida Municipal Money Market Fund and
   Florida Municipal Bond Fund.................................................3
      Arizona Municipal Bond Fund..............................................4
      Tax-Free Money Market Fund and Tax-Free Bond Fund .......................4
      High-Yield Municipal Fund................................................5
      Credit Quality and Maturity Guidelines...................................5
Fund Investments and Risks.....................................................7
      Investment Strategies and Risks..........................................7
      Investment Policies.....................................................19
      Temporary Defensive Measures............................................21
      Portfolio Turnover......................................................21
Management....................................................................22
      The Board of Trustees...................................................24
      Ownership of Fund Shares................................................27
      Code of Ethics..........................................................27
The Funds' Principal Shareholders.............................................28
Service Providers.............................................................29
      Investment Advisor......................................................29
      Transfer Agent and Administrator........................................32
      Distributor.............................................................32
Other Service Providers.......................................................32
      Custodian Banks.........................................................32
      Independent Accountants.................................................32
Brokerage Allocation..........................................................33
Information About Fund Shares.................................................33
      Multiple Class Structure................................................34
      Buying and Selling Fund Shares..........................................36
      Valuation of a Fund's Securities........................................36
Taxes 37
      Federal Income Tax......................................................37
How Fund Performance Information is
      Calculated..............................................................39
      Performance Comparisons.................................................42
      Permissible Advertising Invormation.....................................42
      Multiple Class Performance Advertising..................................43
Financial Statements..........................................................43
Explanation of Fixed-Income Securities
      Ratings.................................................................43





THE FUNDS' HISTORY

American Century Municipal Trust is a registered open-end management investment
company that was organized as a Massachusetts business trust on May 1, 1984.
From then until January 1997, it was known as Benham Municipal Income Trust.
Throughout this Statement of Additional Information we refer to American Century
Municipal Trust as the Trust.

Each fund described in this Statement of Additional Information is a separate
series of the Trust and operates for many purposes as if it were an independent
company. Each fund has its own investment objective, strategy, management team,
assets, and tax identification and stock registration number.

Fund                                  Ticker Symbol            Inception Date
----                                  -------------            --------------
Florida Municipal Money Market        BEFXX                    04/11/94
Florida Municipal Bond                ACBFX                    04/11/94
Arizona Municipal Bond                BEAMX                    04/11/94
Tax-Free Money Market                 BNTXX                    07/31/84
Tax-Free Bond                         TWTIX                    03/02/87
High-Yield Municipal
         Investor Class               ABHYX                    03/31/98
         A Class                      N/A                      N/A
         B Class                      N/A                      N/A
         C Class                      N/A                      07/24/02

FUND INVESTMENT GUIDELINES

This section explains the extent to which the funds' advisor, American Century
Investment Management, Inc., can use various investment vehicles and strategies
in managing a fund's assets. Descriptions of the investment techniques and risks
associated with each appear in the section, Investment Strategies and Risks,
which begins on page XX. In the case of the funds' principal investment
strategies, these descriptions elaborate upon discussions contained in the
Prospectuses.

Each fund (except High-Yield Municipal, Florida Municipal Bond and Arizona
Municipal Bond) is diversified as defined in the Investment Company Act of 1940
(the Investment Company Act). Diversified means that, with respect to 75% of its
total assets, each fund will not invest more than 5% of its total assets in the
securities of a single issuer or own more than 10% of the outstanding voting
securities of a single issuer.

Tax-Free Money Market and Florida Municipal Money Market operate pursuant to
Rule 2a-7 under the Investment Company Act, which permits the valuation of
portfolio securities on the basis of amortized cost. To rely on the rule, the
fund must be diversified with regard to 100% of its assets other than securities
issued or guaranteed by the U. S. government. For purposes of Rule 2a-7,
diversified means that the fund must not invest more than 5% of its total assets
in securities of a single issuer, or, with respect to 75% of assets, more than
10% of assets in securities guaranteed by a single guarantor, other than the
U.S. government, although it may invest up to 25% of its total assets in
securities of a single issuer that are rated in the highest credit quality
category for a period of up to three business days after purchase. The fund also
must not invest more than (a) the greater of 1% of its total assets or $1
million in securities issued by a single issuer that are rated in the second
highest credit quality category. The fund is considered diversified under the
Investment Company Act provided that it complies with the definition of
diversified under Rule 2a-7.

To meet federal tax requirements for qualification as a regulated investment
company, each fund must limit its investments so that at the close of each
quarter of its taxable year

(1) no more than 25% of its total assets are invested in the securities of a
single issuer (other than the U.S government or a regulated investment company),
and

(2) with respect to at least 50% of its total assets, no more than 5% of its
total assets are invested in the securities of a single issuer (other than the
U.S government or a regulated investment company) or it does not own more than
10% of the outstanding voting securities of a single issuer.

In general, within the restrictions outlined here and in the funds'
Prospectuses, the fund managers have broad powers to decide how to invest fund
assets, including the power to hold them uninvested.

So long as a sufficient number of acceptable securities are available, the fund
managers intend to keep the funds fully invested. However, under exceptional
conditions, the funds may assume a defensive position, temporarily investing all
or a substantial portion of their assets in cash or short-term securities.

For an explanation of the securities ratings referred to in the Prospectuses and
this Statement of Additional Information, see Explanation of Fixed-Income
Securities Ratings beginning on page 43.


FLORIDA MUNICIPAL MONEY MARKET FUND

Florida Municipal BOND Fund

The Florida Municipal Money Market Fund and Florida Municipal Bond Fund seek to
obtain as high a level of current income exempt from regular federal income tax
as is consistent with prudent investment management and conservation of
shareholders' capital. In addition, fund shares are intended to be exempt from
the Florida intangibles personal property tax.

The funds are designed for individuals in upper tax brackets seeking income free
from regular federal income tax, although the funds may generate some taxable
income. The funds also provide an investment that is intended to be exempt from
the Florida intangibles personal property tax. Because of this emphasis on
tax-exempt income, the funds by themselves do not constitute a balanced
investment plan.

Each fund intends to remain fully invested in municipal obligations (obligations
issued by or on behalf of a state, its political subdivisions, agencies and
instrumentalities). As a fundamental policy, each fund will invest at least 80%
of its net assets in obligations with interest exempt from federal income tax
and Florida intangibles personal property tax. The funds are not limited,
however, in their investments in securities that are subject to the federal
Alternative Minimum Tax (AMT).

The funds sometimes invest in obligations of the Commonwealth of Puerto Rico and
its public corporations (as well as the U.S. territories of Guam and the Virgin
Islands) that are exempt from federal income tax and Florida intangibles
personal property tax. The funds may also invest in (1) obligations issued by
other states and their political subdivisions, and (2) U.S. government
securities.

Each fund is authorized under normal conditions to invest as much as 100% of its
net assets in municipal obligations for which the interest is a tax preference
item for purposes of the AMT. If you are or become subject to the AMT, a portion
of your income distributions that are exempt from the regular federal income tax
may not be exempt from the AMT. Interest from AMT bonds is considered to be
exempt from federal income tax for purposes of the 80% policy noted above.

A fund may need to sell certain investments near the end of each calendar year
so that on January 1 of each year, its portfolio consists only of investments
that are exempt from the Florida intangibles personal property tax. As a result,
a fund could incur additional costs or taxable income or gains.

Arizona Municipal BOND Fund

Arizona Municipal Bond seeks to obtain as high a level of current income exempt
from Arizona and regular federal income tax as is consistent with prudent
investment management and conservation of shareholders' capital.

Arizona Municipal Bond is designed for individuals in upper tax brackets seeking
income free from Arizona state and regular federal income taxes, although the
fund may generate some taxable income. Because of this emphasis on tax-exempt
income, the fund by itself does not constitute a balanced investment.

The fund intends to remain fully invested in municipal obligations (obligations
issued by or on behalf of a state, its political subdivisions, agencies and
instrumentalities). As a fundamental policy, the fund will invest at least 80%
of its net assets in obligations with interest exempt from federal and Arizona
state income tax. The fund is not limited, however, in its investments in
securities that are subject to the AMT.

The fund sometimes invests in obligations of the Commonwealth of Puerto Rico and
its public corporations (as well as the U.S. territories of Guam and the Virgin
Islands) that are exempt from federal and Arizona state income taxes. The fund
may also invest in (1) obligations issued by other states and their political
subdivisions, and (2) U.S. government securities.

The fund is authorized under normal conditions to invest as much as 100% of its
net assets in municipal obligations for which the interest is a tax preference
item for purposes of the AMT. If you are or become subject to the AMT, a portion
of your income distributions that are exempt from the regular federal income tax
may not be exempt from the AMT. Interest from AMT bonds is considered to be
exempt from federal income tax for purposes of the 80% policy noted above.

Tax-Free Money Market Fund

Tax-Free BOND Fund

Tax-Free Money Market Fund and Tax-Free Bond Fund seek as high a level of
current income exempt from regular federal income tax as is consistent with
prudent investment management and conservation of shareholders' capital.

Each fund intends to remain fully invested in municipal obligations, although
for temporary defensive purposes, each may invest a portion of its assets in
U.S. government securities, the interest income on which is subject to federal
income tax. The municipal obligations in which the funds may invest include
securities issued by U.S. territories or possessions, such as Puerto Rico,
provided that the interest on these securities is exempt from regular federal
income tax.

The funds may invest up to 20% of their total assets in municipal obligations
for which the interest is a tax preference item for purposes of the AMT. If you
are or become subject to the AMT, a portion of your income distributions that
are exempt from the regular federal income tax may not be exempt from the AMT.

High-Yield Municipal Fund

High-Yield Municipal Fund seeks to provide as high a level of current income
exempt from federal income tax as is consistent with its investment policies,
which permit investment in lower-rated and unrated securities. As a secondary
objective, the fund seeks capital appreciation.

The fund intends to remain fully invested in municipal obligations (obligations
issued by or on behalf of a state or its political subdivisions, agencies and
instrumentalities). The fund also may invest in securities issued by U.S.
territories or possessions, such as Puerto Rico, provided that the interest on
these securities is exempt from regular federal income tax. As a fundamental
policy, the fund will invest at least 80% of its net assets in obligations with
interest exempt from regular federal income tax. The fund is not limited,
however, in its investments in securities that are subject to the AMT.

The fund is authorized, under normal conditions, to invest as much as 100% of
its net assets in municipal obligations for which the interest is a tax
preference item for purposes of the AMT. If you are or become subject to the
AMT, a portion of your income distributions that are exempt from regular federal
income tax may not be exempt from the AMT.

The fund intends to remain fully invested in municipal obligations, although for
temporary defensive purposes, it may invest a portion of its assets in U.S.
government securities, the interest income on which is subject to federal income
tax.

Credit Quality and Maturity Guidelines


The Money Market Funds

Tax-Free Money Market Fund and Florida Municipal Money Market Fund seek to
maintain a $1.00 share price, although there is no guarantee they will be able
to do so. Shares of the funds are neither insured nor guaranteed by the U.S.
government.

The funds have obtained private insurance that primarily protects the money
market funds against default of principal or interest payments on the
instruments they hold and against bankruptcy by issuers and credit enhancers of
these instruments. Although the funds will be charged premiums by an insurance
company for coverage of specified types of losses related to default or
bankruptcy on certain securities, the funds may incur losses regardless of the
insurance. The insurance does not guarantee or insure that the funds will be
able to maintain a stable net asset value of $1.00 per share.

The money market funds may be appropriate for investors seeking share price
stability who can accept the lower yields that short-term obligations typically
provide.

In selecting investments for the money market funds, the advisor adheres to
regulatory guidelines concerning the quality and maturity of money market fund
investments as well as to internal guidelines designed to minimize credit risk.
In particular, each fund:

*  buys only U.S. dollar-denominated obligations with remaining maturities of
   397 days or less (and variable- and floating-rate obligations with demand
   features that effectively shorten their maturities to 397 days or less);

*  maintains a dollar-weighted average portfolio maturity of 90 days or less;

*  restricts its investments to high-quality obligations determined by the
   advisor, pursuant to guidelines established by the Board of Trustees, to
   present minimal credit risks.

To be considered high-quality, an obligation must be:

*  a U.S. government obligation; or

*  rated (or of an issuer rated with respect to a class of short-term
   obligations), within the two highest rating categories for short-term debt
   obligations by at least two nationally recognized statistical rating agencies
   (or one if only one has rated the obligation); or

*  an unrated obligation judged by the advisor, pursuant to guidelines
   established by the Board of Trustees, to be of quality comparable to the
   securities listed above.

The fund managers intend to buy only obligations that are designated as
first-tier securities as defined by the SEC; that is, securities rated, when
acquired, within the highest category designated by a rating agency.

Non-Money Market Funds (except High-Yield Municipal)

Tax-Free Bond, Arizona Municipal Bond and Florida Municipal Bond have identical
policies governing the quality of securities in which they may invest.

In terms of credit quality, each of these funds restricts its investments to

*  municipal bonds rated, when acquired, within the four highest categories
   designated by a rating agency

*  municipal notes (including variable-rate demand obligations) and tax-exempt
   commercial paper rated, when acquired, within the two highest categories
   designated by a rating agency

*  unrated obligations judged by the advisor, under the direction of the Board
   of Trustees, to be of quality comparable to the securities listed above.

High-Yield Municipal Fund

High-Yield Municipal invests primarily in long- and intermediate-term municipal
obligations. Although High-Yield Municipal typically invests a significant
portion of its assets in investment-grade bonds, the advisor does not adhere to
specific rating criteria in selecting investments for this fund. The fund
invests in securities rated or judged by the advisor to be below
investment-grade quality (for example, bonds rated BB/Ba or lower, which are
sometimes referred to as junk bonds) or unrated bonds.

Many issuers of medium- and lower-quality bonds choose not to have their
obligations rated and a large portion of High-Yield's portfolio may consist of
obligations that, when acquired, were not rated. Unrated securities may be less
liquid than comparable rated securities and may involve the risk that the
portfolio managers may not accurately evaluate the security's comparative credit
quality. Analyzing the creditworthiness of issuers of lower-quality, unrated
bonds may be more complex than analyzing the creditworthiness of issuers of
higher-quality bonds. There is no limit to the percentage of assets that the
fund may invest in unrated securities. The fund also may invest in securities
that are in technical or monetary default.

High-Yield Municipal may invest in investment-grade municipal obligations if the
advisor considers it appropriate to do so. Investments of this nature may be
made due to market considerations (for example, a limited supply of medium- and
lower-grade municipal obligations) or to increase liquidity of the fund.
Investing in high-grade obligations may lower the fund's return.

High-Yield Municipal may purchase private activity municipal securities. The
interest from these securities is treated as a tax-preference item in
calculating federal AMT liability. Under normal circumstances, it is possible
that a substantial portion of the fund's total assets will be invested in
private activity securities. Therefore, the fund is better suited for investors
who do not expect alternative minimum tax liability. See Taxes, page XX.

FUND INVESTMENTS AND RISKS

INVESTMENT STRATEGIES AND RISKS

This section describes investment vehicles and techniques that the fund managers
can use in managing a fund's assets. It also details the risks associated with
each, because each investment vehicle and technique contributes to a fund's
overall risk profile.

Concentration in Types of Municipal Activities

From time to time, a significant portion of a fund's assets may be invested in
municipal obligations that are related to the extent that economic, business or
political developments affecting one of these obligations could affect the other
obligations in a similar manner. For example, if a fund invested a significant
portion of its assets in utility bonds and a state or federal government agency
or legislative body promulgated or enacted new environmental protection
requirements for utility providers, projects financed by utility bonds could
suffer as a group. Additional financing might be required to comply with the new
environmental requirements, and outstanding debt might be downgraded in the
interim. Among other factors that could negatively affect bonds issued to
finance similar types of projects are state and federal legislation regarding
financing for municipal projects, pending court decisions relating to the
validity or means of financing municipal projects, material or manpower
shortages and declining demand for projects or facilities financed by the
municipal bonds.

About the Risks Affecting Arizona Municipal Securities

As noted in the Prospectus, the Arizona Municipal Bond Fund is susceptible to
events that affect issuers of Arizona municipal obligations. These include
possible adverse effects of Arizona constitutional amendments, legislative
measures, voter initiatives and other matters described below.

The following information about risk factors is provided in view of the fund's
policy of concentrating its assets in Arizona municipal securities. This
information is based on certain official statements of the state of Arizona
published in connection with the issuance of specific Arizona municipal
securities as well as from other publicly available sources. It does not
constitute a complete description of the risks associated with investing in
securities of these issuers. While the advisor has not independently verified
the information contained in the official statements, it has no reason to
believe the information is inaccurate.

Located in the country's sunbelt, Arizona's population has been, and is
projected to continue to be, one of the fastest growing in the United States.
Over the last several decades, the state has outpaced most other regions of the
country in population and personal income growth, gross state product and job
creation.

Geographically, Arizona is the nation's sixth largest state in terms of area. It
is divided into three distinct topographic regions: the northern third, which is
high plateau country traversed by deep canyons, such as Grand Canyon National
Park; central Arizona, which is rugged, mountainous and heavily forested; and
the southern third, which encompasses desert areas and flat, fertile
agricultural lands in valleys between mountains rich in mineral deposits. These
topographic areas all have different climates, which have distinctively
influenced development in each region.

The Phoenix metropolitan area is the state's primary economic center as it
represents approximately two-thirds of the state's population. The Tucson area,
while of secondary importance, also is a major economic area in the state.

The Arizona economy continues to diversify away from its historical reliance on
the mining and agricultural employment sectors. Significant job growth has
occurred in the areas of aerospace and high technology, construction, finance,
insurance and real estate. Despite the recent slowdown, Arizona's economy has
grown in recent years and is among the fastest growing economies in the nation.

Under its constitution, the state of Arizona is not permitted to issue general
obligation bonds secured by the full faith and credit of the state. However,
certain agencies and instrumentalities of the state are authorized to issue
bonds secured by revenues from specific projects and activities, and the state
and local governmental units may enter into lease transactions. The particular
source of payments and security for an Arizona municipal obligation is detailed
in the instrument itself and in related offering materials.

The state and local governmental units are subject to limitations imposed by
Arizona law with respect to ad valorem taxation, bonded indebtedness, the amount
of annual increases in taxes, and other matters. These limitations may affect
the ability of the issuers to generate revenues to satisfy their debt
obligations. There are periodic attempts in the form of voter initiatives and
legislative proposals to further limit the amount of annual increases in taxes
that may be levied without voter approval. If such a proposal were enacted,
there might be an adverse impact on state or local government financing.

Arizona's ballot initiatives, health and education equity litigation, combined
with long-term expenditure pressure stemming from the boom in population growth
has created fiscal and economic uncertainties for the state. In addition, the
relatively large concentration of jobs in the high tech sector has exposed the
state's finances to some instability.

Arizona is experiencing a general economic slowdown to its revenues, while
facing high expenditure needs. The state's high tech sector has contracted,
resulting in lower tax receipts and job creation. Following to the September 11,
2001, terrorist attacks, the state's tourism industry has been negatively
affected. The state's general fund revenues for fiscal 2001 and 2002 have been
weaker by approximately $1.7 billion. Compared to original adopted budget
estimates, 2002 revenues are expected to come in approximately 11% lower, with
2003 revenues projected to be 16% lower than original estimates.

The Supreme Court of Arizona has determined that Arizona's taxation of dividends
paid from investments in the state is unconstitutional. Arizona is now liable
for refunds to certain taxpayers affected by the outcome of litigation. The
financial impact of this liability is uncertain and it is likely the final
amount will be paid over a number of years, adding stress to the state's cash
reserves. Additional liabilities may arise from currently pending litigation
related to the state's alleged underfunding of the School Facilities Board
Building Renewal Fund and from litigation related to funding of bilingual
education programs.

A potential long-term credit concern for all states is the impact of eCommerce
on tax collections. The proliferation of eCommerce spending could potentially
negatively impact municipal credit quality since eCommerce spending is exempt
from sales taxes. The most vulnerable bonds would be credits secured solely by
sales tax revenues.

About the Risks Affecting Florida Municipal Securities

As noted in the Prospectus, the Florida Municipal Money Market and Florida
Municipal Bond funds are susceptible to events that affect issuers of Florida
municipal obligations. These include possible adverse affects of Florida
constitutional amendments, legislative measures, voter initiatives and other
matters described below.

The following information about risk factors is provided in view of the funds'
policies of concentrating their assets in Florida municipal securities. This
information is based on independent municipal credit reports relating to
securities offerings of Florida issuers and other publicly available sources. It
does not constitute a complete description of the risks associated with
investing in securities of these issuers. While the advisor has not
independently verified this information, it has no reason to believe the
information is inaccurate.

Because the funds invest primarily in Florida municipal securities, they will be
affected by political and economic conditions and developments within the state
of Florida. In general, the credit quality and credit risk of any issuer's debt
depend on the state and local economy, the health of the issuer's finances, the
amount of the issuer's debt, the quality of management and the strength of legal
provisions in debt documents that protect debt holders. Credit risk is usually
lower whenever the economy is strong, growing and diversified, financial
operations are sound, and the debt burden is reasonable.

The state of Florida's economy is characterized by a large service sector, a
dependence on the tourism and construction industries and a large retirement
population. The management of rapid growth has been the major challenge facing
state and local governments. Florida's population has grown rapidly and it is
now the fourth largest state; this growth is expected to continue, but at
reduced rates. The retiree component is expected to continue to be a major
factor. As this growth continues, the demand for both public and private
services will increase, which may strain the service sector's capacity and
impede the state's budget balancing efforts. For example, school districts have
experienced difficulty in funding school construction as the districts have been
unable to obtain voter approval to issue debt to finance the necessary school
construction.

One of the fastest growing states, Florida's economy has centered on the growing
trade and services industry, further influenced by tourism and agriculture. The
state is outperforming the nation in employment and income growth. Florida ranks
twentieth among all states in personal per capita income, with a 2001 per capita
income that is about 94% of the U.S figure.

The state's large and increasingly diverse economy continues to outperform the
national economy. Florida is the nation's fourth most populous state with an
estimated 2002 population of approximately 16.7 million. While growth has slowed
from its rapid pace of the 1980s, Florida continues to experience population and
employment growth in excess of the national average due to strong in-migration.
For the period 1990 to 2000, the state's population grew by approximately 23.5%,
compared to a 12.3% increase for the nation. Approximately 85% of Florida's
population growth over the last decade has come from in-migration from both
retirees and working age population. From 1992 to 2000, Florida's total
employment grew by 19.9% compared to a 13.7% increase for the nation.

The state's economy is currently recovering, albeit at a very slow pace, from
the negative shocks of the September 11, 2001, terrorist attacks on the tourism
industry. For the 12 months ended June 2002, the state's employment was down
approximately 0.1%. The Miami and Jacksonville areas have posted job gains of
slightly under 1.0% for that period, while the Tampa and Orlando areas have
posted job losses of approximately 1.0%. Florida is well positioned to take
advantage of any rebound in tourism given its role as one of the premiere
tourist destinations in the country and its increasing role as an international
business center.

Debt levels in the state of Florida are moderate to high, reflecting the
tremendous capital demands associated with rapid population growth. Florida is
unusual among states in that all general obligation full faith and credit debt
issues of municipalities must be approved by public referendum and are,
therefore, relatively rare. Most debt instruments issued by local municipalities
and authorities have a narrower pledge of security, such as a sales tax stream,
special assessment revenue, user fees, utility taxes or fuel taxes. Credit
quality of such debt instruments tends to be somewhat lower than that of general
obligation debt. The state of Florida issues general obligation debt for a
variety of purposes; however, the state constitution requires a specific revenue
stream to be pledged to state general obligation bonds as well.

The state of Florida is heavily dependent upon sales tax, which makes the
state's general fund vulnerable to recession. This dependence upon sales tax,
combined with economic recession, has resulted in budgetary shortfalls in the
past. Florida has reacted to preserve an adequate financial position primarily
through expenditure reductions. State officials, however, still face tremendous
capital and operating pressures due to the growth that will continue to strain
the state's narrow revenue base. As a counterbalance to the dependence on the
historically volatile sales tax, the state enacted a constitutional amendment
establishing a Budget Stabilization Fund and has since made yearly deposits to
that Fund. For fiscal year 2003, the state set aside $959 million for the fund,
meeting the required minimum fund level of 5% of general fund revenues. General
Fund revenues and sales tax revenues are budgeted to increase by 3.3% and 5.3%,
respectively, in fiscal year 2003. Sales tax revenues declined by 1.6% in fiscal
year 2002. General fund spending is budgeted to increase by 7.2% in fiscal year
2003, after declining by 1.4% in fiscal year 2002. The 2003 budget also includes
approximately $765 million in surplus (not included in the Budget Stabilization
Fund) carried forward from the 2002.

The state also has established a constitutional state revenue limitation to
restrain the growth of spending. To date, this cap has not yet posed a
constraint. The cap, which became effective in fiscal 1996, limits the amount of
taxes and other revenues that can be raised by the state in any fiscal year. It
allows annual revenue to grow by the average annual growth in personal income
over the previous five years. Exempted from the cap are revenues that are
directly pledged to bonds, including any new debt issuances. The cap does not
appear to have become a major impediment to the state raising sufficient annual
revenue to fund state expenditure growth. The legislature may increase the
revenue cap by a two-thirds vote of each house.

A potential long-term credit concern for all states is the impact of eCommerce
on tax collections. The proliferation of eCommerce spending could potentially
negatively impact municipal credit quality since eCommerce spending is exempt
from sales taxes. The most vulnerable bonds would be credits secured solely by
sales tax revenues.

About the Risks Affecting Puerto Rico Municipal Securities

From time to time, the funds invest in obligations of the Commonwealth of Puerto
Rico and its public corporations, which are exempt from federal, state and city
or local income taxes. The majority of the Commonwealth's debt is issued by the
major public agencies that are responsible for many of the island's public
functions, such as water, wastewater, highways, telecommunications, education
and public construction. As of March 31, 2002, public sector debt issued by the
Commonwealth and its public corporations totaled $29.5 billion.

Since the 1980s, Puerto Rico's economy and financial operations have paralleled
the economic cycles of the United States. The island's economy, particularly the
manufacturing sector, has experienced substantial gains in employment. Much of
these economic gains have been attributable in part to favorable treatment under
Section 936 of the federal Internal Revenue Code for U.S. corporations doing
business in Puerto Rico (see discussion below). The number of persons employed
in Puerto Rico during fiscal year 2001 averaged slightly above 1 million, which
is down 1.7% from 2000. The unemployment rate has risen to nearly 13% in 2002,
up from 10.1% in 2000.

Debt ratios for the Commonwealth are high as it assumes much of the
responsibility for local infrastructure. Sizable infrastructure programs are
ongoing to upgrade the island's water, sewer and road systems. The
Commonwealth's general obligation debt is secured by a first lien on all
available revenues. The Commonwealth seeks to correlate the growth in public
sector debt to the growth of the economic base available to service that debt.
Between fiscal years 1997 and 2002, debt increased approximately 37.3% while
gross product rose approximately 19%.

The current ratio of tax-supported debt to aggregate personal income is almost
49%, about twenty times the average level of the fifty states, and more than
four times as high as the most heavily indebted of the states. The ratio is
affected by the low levels of income in Puerto Rico (per capita income is about
one-third the U.S. average) and by the large absolute amount of debt.

The Commonwealth finished fiscal year 2001 with an operating loss of $78 million
(approximately 1.1% of general fund revenues) which resulted in an ending cash
balance of $125 million. The commonwealth is currently estimating an operating
surplus for fiscal 2002 of $16 million and budgeting break-even performance for
the fiscal year 2003.

In fiscal year 2002, the general fund experienced a slight increase in tax
revenues (unlike most states). Positive results from a program of increased tax
collection and enforcement (most of which is one-time in nature) have helped
fiscal year 2002 revenues. However, there has been increased dependence on
one-time revenues, mostly from transfers from several other funds into the
general fund.

On May 30, 2002, Standard and Poor's downgraded the Commonwealth from a rating
of A to a rating of A-. Along with the downgrade, Standard and Poor's removed
The Commonwealth from Negative Credit Watch and placed a stable outlook. The
downgrade reflects five years of deficit operations and the use of deficit
financing and back loading of debt to eliminate a large accumulated operating
deficit, including the deficit financing used to close the fiscal year 2001
revenue gap. These actions eliminated the Commonwealth's debt flexibility.

As a result of 1995 federal legislation, tax credits provided by Section 936 of
the Internal Revenue Code are being phased out over a ten-year period ending in
tax year 2005. Section 936 has offered an important economic development
incentive for Puerto Rico, providing a particular impetus for the manufacturing
sector. For U.S. corporations doing business in Puerto Rico, Section 936
generally eliminated the U.S. tax on income related to their island operations.
It granted these corporations tax credits to offset federal tax liability on
earnings from Puerto Rico operations (active income) and permitted them to
invest such earnings in qualified investments in Puerto Rico (passive income)
with interest earned free from U.S. tax. As a result of the 1996 legislation,
the active income credit has been reduced and is no longer available to new or
expanded operations in Puerto Rico. It will also be phased out entirely after
tax year 2005. The passive income credit has already been eliminated entirely.

To offset the loss of the 936 tax credit, in 1998, the Commonwealth passed the
Tax Incentives Law that provided for various tax reduction/incentives. While
this law may promote development, it must be balanced by the costs of the
development in terms of lost tax dollars. The danger Puerto Rico faces is being
too generous with tax incentives, whereby, government revenues are negatively
impacted by development incentives.

Another long-term issue, with broad implications for the Commonwealth, is the
question of political status - specifically, the potential for a transition to
statehood, as contemplated by proposed federal legislation in 1999 and the
subject of a non-binding plebiscite in Puerto Rico in December 1998. The
statehood option in the 1998 plebiscite received the support of 45.6% of the
voters, about the same percentage of support in the previous plebiscite in 1993.

A potential long-term credit concern for Puerto Rico is the impact of eCommerce
on tax collections. The proliferation of eCommerce spending could potentially
impact municipal credit quality since eCommerce spending is exempt from sales
taxes. The most vulnerable bonds would be credits secured solely by sales tax
revenues.

A final risk factor with the Commonwealth is the large amount of unfunded
pension liabilities. The two main public pension systems are largely
underfunded. The combined funded ratio of the two plans is 35% with a total
unfunded liability of $8 billion. A measure enacted by the legislature in 1990
is designed to address the solvency of the plans over a 50-year period.

Municipal Notes

Municipal notes are issued by state and local governments or government entities
to provide short-term capital or to meet cash flow needs.

Tax anticipation notes (TANs) are issued in anticipation of seasonal tax
revenues, such as ad valorem property, income, sales, use and business taxes,
and are payable from these future taxes. TANs usually are general obligations of
the issuer. General obligations are backed by the issuer's full faith and credit
based on its ability to levy taxes for the timely payment of interest and
repayment of principal, although such levies may be constitutionally or
statutorily limited as to rate or amount.

Revenue anticipation notes (RANs) are issued with the expectation that receipt
of future revenues, such as federal revenue sharing or state aid payments, will
be used to repay the notes. Typically, these notes also constitute general
obligations of the issuer.

Bond anticipation notes (BANs) are issued to provide interim financing until
long-term financing can be arranged. In most cases, the long-term bonds provide
the money for repayment of the notes.

Tax-exempt commercial paper is an obligation with a stated maturity of up to 365
days (most commonly ranging from two to 270 days)issued to finance seasonal cash
flow needs or to provide short-term financing in anticipation of longer-term
financing.

Revenue anticipation warrants, or reimbursement warrants, are issued to meet the
cash flow needs of state governments at the end of a fiscal year and in the
early weeks of the following fiscal year. These warrants are payable from
unapplied money in the state's General Fund, including the proceeds of revenue
anticipation notes issued following enactment of a state budget or the proceeds
of refunding warrants issued by the state.

Municipal Bonds

Municipal bonds, which generally have maturities of more than one year when
issued, are designed to meet longer-term capital needs. These securities have
two principal classifications: general obligation bonds and revenue bonds.

General obligation (GO) bonds are issued by states, counties, cities, school
districts, towns and regional districts to fund a variety of public projects,
including construction of and improvements to schools, highways, and water and
sewer systems. GO bonds are backed by the issuer's full faith and credit based
on its ability to levy taxes for the timely payment of interest and repayment of
principal, although such levies may be constitutionally or statutorily limited
as to rate or amount.

Revenue bonds are not backed by an issuer's taxing authority; rather, interest
and principal are secured by the net revenues from a project or facility.
Revenue bonds are issued to finance a variety of capital projects, including
construction or refurbishment of utility and waste disposal systems, highways,
bridges, tunnels, air and sea port facilities, schools and hospitals.

Industrial development bonds (IDBs), a type of revenue bond, are issued by or on
behalf of public authorities to finance privately operated facilities. These
bonds are used to finance business, manufacturing, housing, athletic and
pollution control projects, as well as public facilities such as mass transit
systems, air and sea port facilities and parking garages. Payment of interest
and repayment of principal on an IDB depend solely on the ability of the
facility's operator to meet financial obligations, and on the pledge, if any, of
the real or personal property financed. The interest earned on IDBs may be
subject to the federal alternative minimum tax.

Variable- and Floating-Rate Obligations

Variable- and floating-rate demand obligations (VRDOs and FRDOs) carry rights
that permit holders to demand payment of the unpaid principal plus accrued
interest, from the issuers or from financial intermediaries. Floating-rate
securities, or floaters, have interest rates that change whenever there is a
change in a designated base rate. Variable-rate instruments provide for a
specified, periodic adjustment in the interest rate, which typically is based on
an index. These rate formulas are designed to result in a market value for the
VRDO or FRDO that approximates par value.

Obligations with Term Puts Attached

The funds may invest in fixed-rate bonds subject to third-party puts and
participation interests in such bonds that are held by a bank in trust or
otherwise, which have tender options or demand features attached. These tender
options or demand features permit the funds to tender (or put) their bonds to an
institution at periodic intervals and to receive the principal amount thereof.
The fund managers expect that the funds will pay more for securities with puts
attached than for securities without these liquidity features.

Some obligations with term puts attached may be issued by municipalities. The
fund managers may buy securities with puts attached to keep a fund fully
invested in municipal securities while maintaining sufficient portfolio
liquidity to meet redemption requests or to facilitate management of the fund's
investments. To ensure that the interest on municipal securities subject to puts
is tax-exempt to the funds, the advisor limits the funds' use of puts in
accordance with applicable interpretations and rulings of the Internal Revenue
Service (IRS).

Because it is difficult to evaluate the likelihood of exercise or the potential
benefit of a put, puts normally will be determined to have a value of zero,
regardless of whether any direct or indirect consideration is paid. Accordingly,
puts as separate securities are not expected to affect the funds' weighted
average maturities. When a fund has paid for a put, the cost will be reflected
as unrealized depreciation on the underlying security for the period the put is
held. Any gain on the sale of the underlying security will be reduced by the
cost of the put.

There is a risk that the seller of an obligation with a put attached will not be
able to repurchase the underlying obligation when (or if) a fund attempts to
exercise the put. To minimize such risks, the funds will purchase obligations
with puts attached only from sellers deemed creditworthy by the advisor under
the direction of the Board of Trustees.

Tender Option Bonds

Tender option bonds (TOBs) were created to increase the supply of high-quality,
short-term tax-exempt obligations, and thus they are of particular interest to
the money market funds. However, any of the funds may purchase these
instruments.

TOBs are created by municipal bond dealers who purchase long-term, tax-exempt
bonds in the secondary market, place the certificates in trusts, and sell
interests in the trusts with puts or other liquidity guarantees attached. The
credit quality of the resulting synthetic short-term instrument is based on the
put provider's short-term rating and the underlying bond's long-term rating.

There is some risk that a remarketing agent will renege on a tender option
agreement if the underlying bond is downgraded or defaults. Because of this, the
fund managers monitor the credit quality of bonds underlying the funds' TOB
holdings and intend to sell or put back any TOB if the ratings on the underlying
bond fall below the requirements under Rule 2a-7..

The fund managers also take steps to minimize the risk that a fund may realize
taxable income as a result of holding TOBs. These steps may include
consideration of (1) legal opinions relating to the tax-exempt status of the
underlying municipal bonds, (2) legal opinions relating to the tax ownership of
the underlying bonds, and (3)other elements of the structure that could result
in taxable income or other adverse tax consequences. After purchase, the fund
managers monitor factors related to the tax-exempt status of the fund's TOB
holdings in order to minimize the risk of generating taxable income.

When-Issued and Forward Commitment Agreements

The funds may engage in municipal securities transactions on a when-issued or
forward commitment basis in which the transaction price and yield are each fixed
at the time the commitment is made, but payment and delivery occur at a future
date.

For example, a fund may sell a security and at the same time make a commitment
to purchase the same or a comparable security at a future date and specified
price. Conversely, a fund may purchase a security and at the same time make a
commitment to sell the same or a comparable security at a future date and
specified price. These types of transactions are executed simultaneously in what
are known as dollar-rolls, cash-and-carry, or financing transactions. For
example, a broker-dealer may seek to purchase a particular security that a fund
owns. The fund will sell that security to the broker-dealer and simultaneously
enter into a forward commitment agreement to buy it back at a future date. This
type of transaction generates income for the fund if the dealer is willing to
execute the transaction at a favorable price in order to acquire a specific
security.

When purchasing securities on a when-issued or forward commitment basis, a fund
assumes the rights and risks of ownership, including the risks of price and
yield fluctuations. Market rates of interest on debt securities at the time of
delivery may be higher or lower than those contracted for on the when-issued
security. Accordingly, the value of that security may decline prior to delivery,
which could result in a loss to the fund. While the fund will make commitments
to purchase or sell securities with the intention of actually receiving or
delivering them, it may sell the securities before the settlement date if doing
so is deemed advisable as a matter of investment strategy.

In purchasing securities on a when-issued or forward commitment basis, a fund
will segregate cash, cash equivalents or other appropriate liquid securities on
its records in an amount sufficient to meet the purchase price. When the time
comes to pay for the when-issued securities, the fund will meet its obligations
with available cash, through the sale of securities, or, although it would not
normally expect to do so, by selling the when-issued securities themselves
(which may have a market value greater or less than the fund's payment
obligation). Selling securities to meet when-issued or forward commitment
obligations may generate taxable capital gains or losses.

As an operating policy, no fund will commit more than 50% of its total assets to
when-issued or forward commitment agreements. If fluctuations in the value of
securities held cause more than 50% of a fund's total assets to be committed
under when-issued or forward commitment agreements, the fund managers need not
sell such agreements, but they will be restricted from entering into further
agreements on behalf of the fund until the percentage of assets committed to
such agreements is below 50% of total assets.

Municipal Lease Obligations

Each fund may invest in municipal lease obligations. These obligations, which
may take the form of a lease, an installment purchase, or a conditional sale
contract, are issued by state and local governments and authorities to acquire
land and a wide variety of equipment and facilities. Generally, the funds will
not hold such obligations directly as a lessor of the property but will purchase
a participation interest in a municipal lease obligation from a bank or other
third party.

Municipal leases frequently carry risks distinct from those associated with
general obligation or revenue bonds. State constitutions and statutes set
requirements that states and municipalities must meet to incur debt. These may
include voter referenda, interest rate limits or public sale requirements.
Leases, installment purchases or conditional sale contracts (which normally
provide for title to the leased asset to pass to the government issuer) have
evolved as a way for government issuers to acquire property and equipment
without meeting constitutional and statutory requirements for the issuance of
debt.

Many leases and contracts include nonappropriation clauses, which provide that
the governmental issuer has no obligation to make future payments under the
lease or contract unless money is appropriated for such purposes by the
appropriate legislative body on a yearly or other periodic basis. Municipal
lease obligations also may be subject to abatement risk. For example,
construction delays or destruction of a facility as a result of an uninsurable
disaster that prevents occupancy could result in all or a portion of a lease
payment not being made.

Inverse Floaters

The funds (except the money market funds) may hold inverse floaters. An inverse
floater is a type of derivative security that bears an interest rate that moves
inversely to market interest rates. As market interest rates rise, the interest
rate on inverse floaters goes down, and vice versa. Generally, this is
accomplished by expressing the interest rate on the inverse floater as an
above-market fixed rate of interest, reduced by an amount determined by
reference to a market-based or bond-specific floating interest rate (as well as
by any fees associated with administering the inverse floater program).

Inverse floaters may be issued in conjunction with an equal amount of Dutch
Auction floating-rate bonds (floaters), or a market-based index may be used to
set the interest rate on these securities. A Dutch Auction is an auction system
in which the price of the security is gradually lowered until it meets a
responsive bid and is sold. Floaters and inverse floaters may be brought to
market by (1) a broker-dealer who purchases fixed-rate bonds and places them in
a trust or (2) an issuer seeking to reduce interest expenses by using a
floater/inverse floater structure in lieu of fixed-rate bonds.

In the case of a broker-dealer structured offering (where underlying fixed-rate
bonds have been placed in a trust), distributions from the underlying bonds are
allocated to floater and inverse floater holders in the following manner:

*  Floater holders receive interest based on rates set at a six-month interval
   or at a Dutch Auction, which is typically held every 28 to 35 days. Current
   and prospective floater holders bid the minimum interest rate that they are
   willing to accept on the floaters, and the interest rate is set just high
   enough to ensure that all of the floaters are sold.

*  Inverse floater holders receive all of the interest that remains, if any, on
   the underlying bonds after floater interest and auction fees are paid. The
   interest rates on inverse floaters may be significantly reduced, even to
   zero, if interest rates rise.

Procedures for determining the interest payment on floaters and inverse floaters
brought to market directly by the issuer are comparable, although the interest
paid on the inverse floaters is based on a presumed coupon rate that would have
been required to bring fixed-rate bonds to market at the time the floaters and
inverse floaters were issued.

Where inverse floaters are issued in conjunction with floaters, inverse floater
holders may be given the right to acquire the underlying security (or to create
a fixed-rate bond) by calling an equal amount of corresponding floaters. The
underlying security may then be held or sold. However, typically, there are time
constraints and other limitations associated with any right to combine interests
and claim the underlying security.

Floater holders subject to a Dutch Auction procedure generally do not have the
right to "put back" their interests to the issuer or to a third party. If a
Dutch Auction fails, the floater holder may be required to hold its position
until the underlying bond matures, during which time interest on the floater is
capped at a predetermined rate.

The secondary market for floaters and inverse floaters may be limited. The
market value of inverse floaters tends to be significantly more volatile than
fixed-rate bonds.

Lower-Quality Bonds

As indicated in the Prospectus, an investment in High-Yield Municipal carries
greater risk than an investment in the other funds because the fund may invest
without limitation in lower-rated bonds and unrated bonds judged by the advisor
to be of comparable quality (collectively, lower-quality bonds).

While the market values of higher-quality bonds tend to correspond to market
interest rate changes, the market values of lower-quality bonds tend to reflect
the financial condition of their issuers. The ability of an issuer to make
payment could be affected by litigation, legislation or other political events,
or the bankruptcy of the issuer. Lower-quality municipal bonds are more
susceptible to these risks than higher-quality municipal bonds. In addition,
lower-quality bonds may be unsecured or subordinated to other obligations of the
issuer.

Projects financed through the issuance of lower-quality bonds often carry higher
levels of risk. The issuer's ability to service its debt obligations may be
adversely affected by an economic downturn, weaker-than-expected economic
development, a period of rising interest rates, the issuer's inability to meet
projected revenue forecasts, a higher level of debt, or a lack of needed
additional financing.

The market for lower-quality bonds tends to be concentrated among a smaller
number of dealers than the market for higher-quality bonds. This market may be
dominated by dealers and institutions (including mutual funds), rather than by
individuals. To the extent that a secondary trading market for lower-quality
bonds exists, it may not be as liquid as the secondary market for higher-quality
bonds. Limited liquidity in the secondary market may adversely affect market
prices and hinder the advisor's ability to dispose of particular bonds when it
determines that it is in the best interest of a fund to do so. Reduced liquidity
also may hinder the advisor's ability to obtain market quotations for purposes
of valuing a fund's portfolio and determining its net asset value.

The advisor continually monitors securities to determine their relative
liquidity.

A fund may incur expenses in excess of its ordinary operating expenses if it
becomes necessary to seek recovery on a defaulted bond, particularly a
lower-quality bond.

Repurchase Agreements

Each fund may invest in repurchase agreements when they present an attractive
short-term return on cash that is not otherwise committed to the purchase of
securities pursuant to the investment policies of that fund.

A repurchase agreement occurs when, at the time a fund purchases an
interest-bearing obligation, the seller (a bank or a broker-dealer registered
under the Securities Exchange Act of 1934) agrees to purchase it on a specified
date in the future at an agreed-upon price. The repurchase price reflects an
agreed-upon interest rate during the time the fund's money is invested in the
security.

Because the security purchased constitutes collateral for the repurchase
obligation, a repurchase agreement can be considered a loan collateralized by
the security purchased. The fund's risk is the seller's ability to pay the
agreed-upon repurchase price on the repurchase date. If the seller defaults, the
fund may incur costs in disposing of the collateral, which would reduce the
amount realized thereon. If the seller seeks relief under the bankruptcy laws,
the disposition of the collateral may be delayed or limited. To the extent the
value of the security decreases, the fund could experience a loss.

The funds will limit repurchase agreement transactions to securities issued by
the U.S. government and its agencies and instrumentalities, and will enter into
such transactions with those banks and securities dealers who are deemed
creditworthy by the funds' advisor. Repurchase agreements maturing in more than
seven days would count toward a fund's 15% limit on illiquid securities.

Short-Term Securities

In order to meet anticipated redemptions, anticipated purchases of additional
securities for a fund's portfolio, or, in some cases, for temporary defensive
purposes, the non-money market funds may invest a portion of their assets in
money market and other short-term securities.

Examples of those securities include:

*  Securities issued or guaranteed by the U.S. government and its agencies and
   instrumentalities

*  Commercial Paper

*  Certificates of Deposit and Euro Dollar Certificates of Deposit

*  Bankers' Acceptances

*  Short-term notes, bonds, debentures or other debt instruments

*  Repurchase agreements

Under the Investment Company Act, a fund's investment in other investment
companies (including money market funds) currently is limited to (a) 3% of the
total voting stock of any one investment company; (b) 5% of the fund's total
assets with respect to any one investment company; and (c) 10% of a fund's total
assets in the aggregate. For the non-money market funds, these investments may
include investments in money market funds managed by the advisor.

Futures and Options

Each non-money market fund may enter into futures contracts, options or options
on futures contracts. Futures contracts provide for the sale by one party and
purchase by another party of a specific security at a specified future time and
price. Some futures and options strategies, such as selling futures, buying puts
and writing calls, hedge a fund's investments against price fluctuations. Other
strategies, such as buying futures, writing puts and buying calls, tend to
increase market exposure. The funds do not use futures and options transactions
for speculative purposes.

Although other techniques may be used to control a fund's exposure to market
fluctuations, the use of futures contracts may be a more effective means of
hedging this exposure. While a fund pays brokerage commissions in connection
with opening and closing out futures positions, these costs are lower than the
transaction costs incurred in the purchase and sale of the underlying
securities.

Futures contracts are traded on national futures exchanges. Futures exchanges
and trading are regulated under the Commodity Exchange Act by the Commodity
Futures Trading Commission (CFTC), a U.S. government agency. The funds may
engage in futures and options transactions based on securities indices such as
the Bond Buyer Index of Municipal Bonds, provided that the transactions are
consistent with the fund's investment objectives. The fund also may engage in
futures and options transactions based on specific securities, such as U.S.
Treasury bonds or notes.

Index futures contracts differ from traditional futures contracts in that when
delivery takes place, no stocks or bonds change hands. Instead, these contracts
settle in cash at the spot market value of the index. Although other types of
futures contracts by their terms call for actual delivery or acceptance of the
underlying securities, in most cases the contracts are closed out before the
settlement date. A futures position may be closed by taking an opposite position
in an identical contract (i.e., buying a contract that has previously been sold
or selling a contract that has previously been bought).

Unlike when a fund purchases or sells a bond, no price is paid or received by
the fund upon the purchase or sale of the future. Initially, the fund will be
required to deposit an amount of cash or securities equal to a varying specified
percentage of the contract amount. This amount is known as initial margin. The
margin deposit is intended to ensure completion of the contract (delivery or
acceptance of the underlying security) if it is not terminated prior to the
specified delivery date. A margin deposit does not constitute a margin
transaction for purposes of the fund's investment restrictions. Minimum initial
margin requirements are established by the futures exchanges and may be revised.
In addition, brokers may establish margin deposit requirements that are higher
than the exchange minimums. Cash held in the margin accounts generally is not
income-producing. However, coupon bearing securities, such as Treasury bills and
bonds, held in margin accounts generally will earn income. Subsequent payments
to and from the broker, called variation margin, will be made on a daily basis
as the price of the underlying debt securities or index fluctuates, making the
future more or less valuable, a process known as marking the contract to market.
Changes in variation margin are recorded by the fund as unrealized gains or
losses. At any time prior to expiration of the future, the fund may elect to
close the position by taking an opposite position. A final determination of
variation margin is then made; additional cash is required to be paid by or
released to the fund and the fund realizes a loss or gain.

Risks Related to Futures and Options Transactions

Futures and options prices can be volatile, and trading in these markets
involves certain risks. If the fund managers apply a hedge at an inappropriate
time or judge interest rate trends incorrectly, futures and options strategies
may lower a fund's return.

A fund could suffer losses if it were unable to close out its position because
of an illiquid secondary market. Futures contracts may be closed out only on an
exchange that provides a secondary market for these contracts, and there is no
assurance that a liquid secondary market will exist for any particular futures
contract at any particular time. Consequently, it may not be possible to close a
futures position when the fund managers consider it appropriate or desirable to
do so. In the event of adverse price movements, a fund would be required to
continue making daily cash payments to maintain its required margin. If the fund
had insufficient cash, it might have to sell portfolio securities to meet daily
margin requirements at a time when the fund managers would not otherwise elect
to do so. In addition, a fund may be required to deliver or take delivery of
instruments underlying futures contracts it holds. The fund managers will seek
to minimize these risks by limiting the contracts entered into on behalf of the
funds to those traded on national futures exchanges and for which there appears
to be a liquid secondary market.

A fund could suffer losses if the prices of its futures and options positions
were poorly correlated with its other investments, or if securities underlying
futures contracts purchased by a fund had different maturities than those of the
portfolio securities being hedged. Such imperfect correlation may give rise to
circumstances in which a fund loses money on a futures contract at the same time
that it experiences a decline in the value of its hedged portfolio securities. A
fund also could lose margin payments it has deposited with a margin broker, if,
for example, the broker became bankrupt.

Most futures exchanges limit the amount of fluctuation permitted in futures
contract prices during a single trading day. The daily limit establishes the
maximum amount that the price of a futures contract may vary either up or down
from the previous day's settlement price at the end of the trading session. Once
the daily limit has been reached in a particular type of contract, no trades may
be made on that day at a price beyond the limit. However, the daily limit
governs only price movement during a particular trading day and, therefore, does
not limit potential losses. In addition, the daily limit may prevent liquidation
of unfavorable positions. Futures contract prices have occasionally moved to the
daily limit for several consecutive trading days with little or no trading,
thereby preventing prompt liquidation of futures positions and subjecting some
futures traders to substantial losses.

Options On Futures

By purchasing an option on a futures contract, a fund obtains the right, but not
the obligation, to sell the futures contract (a put option) or to buy the
contract (a call option) at a fixed strike price. A fund can terminate its
position in a put option by allowing it to expire or by exercising the option.
If the option is exercised, the fund completes the sale of the underlying
security at the strike price. Purchasing an option on a futures contract does
not require a fund to make margin payments unless the option is exercised.

Although they do not currently intend to do so, the funds may write (or sell)
call options that obligate them to sell (or deliver) the option's underlying
instrument upon exercise of the option. While the receipt of option premiums
would mitigate the effects of price declines, the funds would give up some
ability to participate in a price increase on the underlying security. If a fund
were to engage in options transactions, it would own the futures contract at the
time a call were written and would keep the contract open until the obligation
to deliver it pursuant to the call expired.

Restrictions on the Use of Futures Contracts and Options

Each non-money market fund may enter into futures contracts, options or options
on futures contracts.

Under the Commodity Exchange Act, a fund may enter into futures and options
transactions (a) for hedging purposes without regard to the percentage of assets
committed to initial margin and option premiums or (b) for other than hedging
purposes, provided that assets committed to initial margin and option premiums
do not exceed 5% of the fund's total assets. To the extent required by law, each
fund will segregate cash, cash equivalents or other appropriate liquid
securities on its records in amount sufficient to cover its obligations under
the futures contracts and options. Municipal Bond Insurers

MUNICIPAL BOND INSURERS

Securities held by the funds may be (a) insured under a new-issue insurance
policy obtained by the issuer of the security or (b) insured under a secondary
market insurance policy purchased by the fund or a previous bond holder. The
following paragraphs provide some background on the bond insurance organizations
most frequently relied upon for municipal bond insurance in the United States.

AMBAC Indemnity Corporation (AMBAC Indemnity) is a Wisconsin-domiciled stock
insurance corporation. AMBAC Indemnity is a wholly owned subsidiary of AMBAC
Inc., a publicly held company. Moody's Investors Service, Inc. (Moody's) and
Standard & Poor's Corporation (S&P) have rated AMBAC Indemnity's claims-paying
ability Aaa and AAA, respectively.

Financial Guaranty Insurance Company (FGIC) is a wholly owned subsidiary of FGIC
Corporation, a Delaware corporation. FGIC's claims-paying ability was rated
Aaa/AAA/AAA by Moody's, S&P and Fitch, respectively.

Municipal Bond Investors Assurance (MBIA) Corporation is a monoline insurance
company organized as a New York corporation. MBIA's claims-paying ability was
rated Aaa/AAA/AAA by Moody's, S&P and Fitch, respectively. Financial Security
Assurance, Inc. (FSA) is a financial guaranty insurance company operated in New
York which became a separately capitalized Dexia subsidiary on July 5, 2000.
FSA's claims-paying ability was rated Aaa/AAA/AAA by Moody's, S&P and Fitch,
respectively.

XL Capital Assurance, Inc. (XLCA) was formed in 1999 as an indirect, wholly
owned New York-domiciled subsidiary of XL Capital Ltd. (XL Capital). XLCA's
claims-paying ability is rated Aaa/AAA/AAA by Moody's, S&P and Fitch,
respectively. Pursuant to an arms-length reinsurance treaty, XLCA cedes a
substantial amount of its exposure to XL Financial Assurance Ltd. (XLFA), a
Bermuda-domiciled financial guaranty reinsurer.

CDC IXIS Financial Guaranty North America (CIFG NA) is a wholly owned subsidiary
of CDC IXIS Financial Guaranty Holding. The parent of the holding company is CDC
IXIS, which is a AAA-rated French financial institution that owns 100% of the
holding company. All three companies are rated Aaa/AAA/AAA by Moody's, S&P and
Fitch, respectively.

Radian Asset Assurance, Inc. is the surviving entity and name for the former
Asset Guaranty. On Feb. 28, 2001, Radian Group, Inc., the holding company of
mortgage insurers Radian Guaranty, Inc. and Radian Insurance, Inc, acquired
Enhance Financial, the former parent of Asset Guaranty. On Feb. 4, 2002, Radian
Group, Inc. (NYSE:RDN) officially renamed its bond insurance subsidiaries to
begin with the name Radian. Therefore, the former Asset Guaranty Assurance Co.
has been renamed Radian Asset Assurance, Inc., which is rated AA by S&P and
Fitch only.

American Capital Access Holdings, Inc. is the parent company of ACA Financial
Guaranty Corp. (ACA). The parent of ACA is primarily owned by seven
institutional investors. ACA was established in 1997 as the sole dedicated
provider of A-rated credit enhancement to the municipal market but has since
expanded into the structured finance and alternative risk transfer markets. ACA
is rated A by S&P and Fitch only.

Restricted and Illiquid Securities

The funds may, from time to time, purchase restricted or illiquid securities,
including Rule 144A securities, when they present attractive investment
opportunities that otherwise meet the funds' criteria for selection. Rule 144A
securities are securities that are privately placed with and traded among
qualified institutional investors rather than the general public. Although Rule
144A securities are considered restricted securities, they are not necessarily
illiquid.

With respect to securities eligible for resale under Rule 144A, the staff of the
SEC has taken the position that the liquidity of such securities in the
portfolio of a fund offering redeemable securities is a question of fact for the
Board of Trustees to determine, such determination to be based upon a
consideration of the readily available trading markets and the review of any
contractual restrictions. Accordingly, the Board of Trustees is responsible for
developing and establishing the guidelines and procedures for determining the
liquidity of Rule 144A securities. As allowed by Rule 144A, the Board of
Trustees of the funds has delegated the day-to-day function of determining the
liquidity of Rule 144A securities to the advisor. The board retains the
responsibility to monitor the implementation of the guidelines and procedures it
has adopted.

Because the secondary market for such securities is limited to certain qualified
institutional investors, the liquidity of such securities may be limited
accordingly and a fund may, from time to time, hold a Rule 144A or other
security that is illiquid. In such an event, the advisor will consider
appropriate remedies to minimize the effect on such fund's liquidity.

INVESTMENT POLICIES

Unless otherwise indicated, with the exception of the percentage limitations on
borrowing, the policies described below apply at the time a fund enters into a
transaction. Accordingly, any later increase or decrease beyond the specified
limitation resulting from a change in a fund's net assets will not be considered
in determining whether it has complied with its investment policies.

Fundamental Investment Policies

The funds' fundamental investment policies are set forth below. These investment
policies may not be changed without approval of a majority of the outstanding
votes of shareholders of a fund, as determined in accordance with the Investment
Company Act.

Subject             Policy
-------             ------

Senior              A fund may not issue senior securities, except as permitted
                    under the Securities Investment Company Act.

Borrowing           A fund may not borrow money, except for temporary or
                    emergency purposes (not for leveraging or investment) in an
                    amount not exceeding 33-1/3% of the fund's total assets.

Lending             A fund may not lend any security or make any other loan if,
                    as a result, more than 33-1/3% of the fund's total assets
                    would be lent to other parties, except (i) through the
                    purchase of debt securities in accordance with its
                    investment objective, policies and limitations or (ii) by
                    engaging in repurchase agreements with respect to portfolio
                    securities.

Real                A fund may not purchase or sell real estate unless
Estate              acquired as a result of ownership of securities or other
                    instruments. This policy shall not prevent a fund from
                    investing in securities or other instruments backed by real
                    estate or securities of companies that deal in real estate
                    or are engaged in the real estate business.

Concentration       A fund may not concentrate its investments in securities of
                    issuers in a particular industry (other than securities
                    issued or guaranteed by the U.S. government or any of its
                    agencies or instrumentalities).

Underwriting        A fund may not act as an underwriter of securities issued by
                    others, except to the extent that the fund may be considered
                    an underwriter within the meaning of the Securities Act of
                    1933 in the disposition of restricted securities.

Commodities         A fund may not purchase or sell physical commodities unless
                    acquired as a result of ownership of securities or other
                    instruments, provided that this limitation shall not
                    prohibit the fund from purchasing or selling options and
                    futures contracts or from investing in securities or other
                    instruments backed by physical commodities.

Control             A fund may not invest for purposes of exercising control
                    over management.

For purposes of the investment restrictions relating to lending and borrowing,
the funds have received an exemptive order from the SEC regarding an interfund
lending program. Under the terms of the exemptive order, the funds may borrow
money from or lend money to other ACIM-advised funds that permit such
transactions. All such transactions will be subject to the limits for borrowing
and lending set forth above. The funds will borrow money through the program
only when the costs are equal to or lower than the costs of short-term bank
loans. Interfund loans and borrowings normally extend only overnight, but can
have a maximum duration of seven days. The funds will lend through the program
only when the returns are higher than those available from other short-term
instruments (such as repurchase agreements). The funds may have to borrow from a
bank at a higher interest rate if an interfund loan is called or not renewed.
Any delay in repayment to a lending fund could result in a lost investment
opportunity or additional borrowing costs.

For purposes of the investment restriction relating to concentration, a fund
shall not purchase any securities that would cause 25% or more of the value of
the fund's total assets at the time of purchase to be invested in the securities
of one or more issuers conducting their principal business activities in the
same industry, provided that

(a)      there is no limitation with respect to obligations issued or guaranteed
         by the U.S. government, any state, territory or possession of the
         United States, the District of Columbia or any of their authorities,
         agencies, instrumentalities or political subdivisions and repurchase
         agreements secured by such obligations,

(b)      wholly owned finance companies will be considered to be in the
         industries of their parents if their activities are primarily related
         to financing the activities of their parents,

(c)      utilities will be divided according to their services; for example,
         gas, gas transmission, electric and gas, electric, and telephone will
         each be considered a separate industry, and

(d)      personal credit and business credit businesses will be considered
         separate industries.

Nonfundamental Investment Policies

In addition, the funds are subject to the following investment policies that are
not fundamental and may be changed by the Board of Trustees.

Subject             Policy
-------             ------

Leveraging          A fund may not purchase additional investment securities at
                    any time during which outstanding borrowings exceed 5% of
                    the total assets of the fund.

Futures             A fund may enter into futures contracts and write and buy
and                 put and and call options relating to futures contracts. A
Options             fund may options not, however, enter into leveraged
                    transactions if it would be possible for the fund to lose
                    more money than it invested. The money market funds may not
                    purchase or sell futures contracts or call options. This
                    limitation does not apply to options attached to, or
                    acquired or traded together with, their underlying
                    securities, and does not apply to securities that
                    incorporate features similar to options or futures
                    contracts.

Liquidity           A fund may not purchase any security or enter into a
                    repurchase agreement if, as a result, more than 15% of its
                    net assets (10% for the money market funds) would be
                    invested in illiquid securities. Illiquid securities include
                    repurchase agreements not entitling the holder to payment of
                    principal and interest within seven days and securities that
                    are illiquid by virtue of legal or contractual restrictions
                    on resale or the absence of a readily available market.

Short               A fund may not sell securities short, unless it owns
Sales               or has the right to obtain securities equivalent in kind and
                    amount to the securities sold short, and provided that
                    transactions in futures contracts and options are not deemed
                    to constitute selling securities short.

Margin              A fund may not purchase securities on margin, except to
                    obtain such short-term credits as are necessary for the
                    clearance of transactions, and provided that margin payments
                    in connection with futures contracts and options on futures
                    contracts shall not constitute purchasing securities on
                    margin.

The Investment Company Act imposes certain additional restrictions upon the
funds' ability to acquire securities issued by insurance companies,
broker-dealers, underwriters or investment advisors, and upon transactions with
affiliated persons as defined by the Act. It also defines and forbids the
creation of cross and circular ownership. Neither the SEC nor any other agency
of the federal or state government participates in or supervises the management
of the funds or their investment practices or policies.

TEMPORARY DEFENSIVE MEASURES

For temporary defensive purposes, a fund may invest in securities that may not
fit its investment objective or its stated market. During a temporary defensive
period, a fund may direct its assets to the following investment vehicles:

(1)  interest-bearing bank accounts or Certificates of Deposit;

(2)  U.S. government securities and repurchase agreements collateralized by U.S.
     government securities; and

(3)  other money market funds.

PORTFOLIO TURNOVER

The portfolio turnover rate of each fund (except those of the money market
funds) is listed in the Financial Highlights table in the Prospectuses. Because
of the short-term nature of the money market funds' investments, portfolio
turnover rates are not generally used to evaluate their trading activities.

For Florida Municipal Bond, the lower portfolio turnover rate can be attributed
to a decrease in security selection opportunities that satisfied the fund's
investment criteria.

Management

The individuals listed below serve as trustees or officers of the funds. Those
listed as interested trustees are "interested" primarily by virtue of their
engagement as officers of American Century Companies, Inc. (ACC) or its
wholly-owned subsidiaries, including the funds' investment advisor, American
Century Investment Management, Inc. (ACIM); the funds' principal underwriter,
American Century Investment Services, Inc. (ACIS); and the funds' transfer
agent, American Century Services Corporation (ACSC).

The other trustees (more than two-thirds of the total number) are independent;
that is, they are not employees or officers of, and have no financial interest
in, ACC or any of its wholly-owned subsidiaries, including ACIM, ACIS and ACSC.

All persons named as officers of the funds also serve in similar capacities for
other funds advised by ACIM. Only officers with policy-making functions are
listed. No officer is compensated for his or her service as an officer of the
funds. The listed officers are interested persons of the funds.






                                                                                                           Number of
                                                                                                           Portfolios
                                                                                                           in Fund
                                            Length                                          Complex        Other
                           Position(s)      of Time                                         Overseen       Directorships
                           Held with        Served        Principal Occupation(s)           by             Held by
Name, Address (Age)        Funds            (years)       During Past 5 Years               Trustee        Trustee

----------------------------------------------------------------------------------------------------------------------
Interested Trustees
James E. Stowers III       Trustee,         6             Co-Chairman, ACC                  76
4500 Main Street           Chairman                       (September 2000 to present)                      None
Kansas City, MO 64111      of                             Co-Chief Investment Officer,
(43)                       the Board                      U.S. Equities (September 2000
                                                          to February 2001)
                                                          Chief Executive Officer, ACC
                                                          ACIM, ACSC and
                                                          other ACC subsidiaries
                                                          (June 1996 to September 2000)
                                                          President, ACC (January 1995
                                                          to June 1997)
                                                          President, ACIM and ACSC
                                                          (April 1993 to August 1997)

William M. Lyons           Trustee          4             Chief Executive Officer, ACC      39              None
4500 Main Street                                          and other ACC subsidiaries
Kansas City, MO 64111                                     (September 2000 to present)
(46)                                                      President, ACC (June 1997
                                                          to present)
                                                          Chief Operating Officer,
                                                          ACC (June 1996 to
                                                          September 2000)
                                                          General Counsel, ACC, ACIM,
                                                          ACIS, ACSC and other ACC
                                                          subsidiaries (June 1989 to
                                                          June 1998)
                                                          Executive Vice President,
                                                          ACC (January 1995
                                                          to June 1997)
                                                          Also serves as: Executive
                                                          Vice President and Chief
                                                          Operating Officer, ACIM,
                                                          ACSC and other ACC
                                                          subsidiaries, and
                                                          Executive Vice President
                                                          of other ACC subsidiaries

-------------------------------------------------------------------------------------------------------------------------------
Independent Trustees
Albert Eisenstat                Trustee         6                     General Partner,                  39     Independent Director,
1665 Charleston Road                                                  Discovery Ventures                       Sungard Data Systems
Mountain View, CA 94043                                               (Venture capital firm,                   (1991 to present)
(71)                                                                  1996 to 1998)                            Independent Director,
                                                                                                               Business Objects S/A
                                                                                                               (1994 to present)

Ronald J. Gilson                Trustee         6                     Charles J. Meyers Professor       39     None
1665 Charleston Road                                                  of Law and Business,
Mountain View, CA 94043                                               Stanford Law School
(55)                                                                  (1979 to present)
                                                                      Mark and Eva Stern
                                                                      Professor of Law and
                                                                      Business, Columbia
                                                                      University School of Law
                                                                      (1992 to present)
                                                                      Counsel, Marron, Reid &
                                                                      Sheehy (a San Francisco
                                                                      law firm, 1984 to present)
Kathryn A. Hall                  Trustee             0                President and Chief               38     Director, Princeton
1665 Charleston Road                                                  Investment Officer,                      University.
Mountain View, CA 94043                                               Offit Hall Capital                       Investment Company
(44)                                                                  Management, LLC                          and Stanford
                                                                      (April 2002 to present)                  Management Company
                                                                      President and Managing
                                                                      Director, Laurel Management
                                                                      Company, L.L.C.
                                                                      (1996 to April 2002)

Myron S. Scholes                 Trustee             21               Partner, Oak Hill Capital         39     Director, Dimensional
1665 Charleston Road                                                  Management, (1999-present)               Fund Advisors
Mountain View, CA 94043                                               Principal, Long-Term                     (investment advisor,
(61)                                                                  Capital Management                       1982 to present)
                                                                      (investment advisor,                     Director, Smith
                                                                      1993 to January 1999)                    Breeden Family of
                                                                      Frank E. Buck Professor                  Funds (1992 to
                                                                      of Finance, Stanford                     present)
                                                                      Graduate School of Business
                                                                      (1981 to present)

Kenneth E. Scott                 Trustee             30               Ralph M. Parsons Professor        39     Director, RCM Capital
1665 Charleston Road                                                  of Law and Business,                     Funds, Inc. (1994 to
Mountain View, CA 94043                                               Stanford Law School                      present)
(73)                                                                  (1972 to present)

Jeanne D. Wohlers                Trustee             17               Director and Partner,,            39     Director, Indus
1665 Charleston Road                                                  Windy Hill Productions, LP               International
Mountain View, CA 94043                                               (educational software,                   (software solutions,
(57)                                                                  1994 to 1998)                            January 1999 to
                                                                                                               present) Director,
                                                                                                               Quintus Corporation
                                                                                                               (automation solutions,
                                                                                                               1995 to present)
------------------------------------------------------------------------------------------------------------------------------------
Officers
William M. Lyons                 President           1                See entry above under             39     See entry above under
4500 Main Street                                                      "Interested Trustees".                   "Interested Trustees".
Kansas City, MO 64111
(46)

Robert T. Jackson                Executive           1                Chief Administrative Officer      Not        Not applicable
4500 Main St.                    Vice                                 and Chief Financial Officer,      applicable
Kansas City, MO 64111            President                            ACC (August 1997 to present)
(56)                             and                                  President, ACSC
                                 Chief                                (January 1999 to present)
                                 Financial                            Executive Vice President, ACC
                                 Officer                              (May 1995 to present)
                                                                      Also serves as: Executive Vice
                                                                      President and Chief Financial Officer,
                                                                      ACIM, ACIS and other ACC subsidiaries

Maryanne Roepke, CPA             Senior Vice         1                Senior Vice President and         Not        Not applicable
4500 Main St.                    President,                           Assistant Treasurer, ACSC         applicable
Kansas City, MO 64111            Treasurer
(46)                             and Chief
                                 Accounting
                                 Officer
David C. Tucker                  Senior Vice         1                Senior Vice President, ACIM,      Not        Not applicable
4500 Main St.                    President                            ACIS, ACSC and other ACC          applicable
Kansas City, MO 64111            and                                  subsidiaries
(44)                             General                              (June 1998 to present)
                                 Counsel                              General Counsel, ACC,
                                                                      ACIM, ACIS, ACSC and
                                                                      other ACC subsidiaries
                                                                      (June 1998 to present)
                                                                      Consultant to mutual
                                                                      fund industry
                                                                      (May 1997 to April 1998)

C. Jean Wade                     Controller          5                Vice President, ACSC              Not          Not applicable
4500 Main St.                                                         (February 2000 to present)        applicable
Kansas City, MO 64111                                                 Controller-Fund Accounting,
(38)                                                                  ACSC

Robert Leach                     Controller          4                 Vice President, ACSC             Not          Not applicable
4500 Main St.                                                          (February 2000 to present)       applicable
Kansas City MO 64111                                                   Controller-Fund Accounting,
(35)                                                                   ACSC

Jon Zindel                       Tax Officer         4                 Vice President, Corporate Tax,    Not         Not applicable
4500 Main Street                                                       ACSC (April 1998 to present)      applicable
Kansas City, MO 64111                                                  Vice President, ACIM, ACIS
(35)                                                                   and other ACC subsidiaries
                                                                       (April 1999 to present)
                                                                       President, American Century
                                                                       Employee Benefit Services, Inc.
                                                                       (January 2000 to December 2000)
                                                                       Treasurer, American Century
                                                                       Ventures, Inc.
                                                                       (December 1999 to January 2001)
                                                                       Director of Taxation, ACSC
                                                                       (July 1996 to April 1998)






THE BOARD OF TRUSTEES

The Board of Trustees and the Advisory Board oversee the management of the funds
and meet at least quarterly to review reports about fund operations. Although
the Board of Trustees does not manage the funds, it has hired the advisor to do
so. The trustees, in carrying out their fiduciary duty under the Investment
Company Act of 1940, are responsible for approving new and existing management
contracts with the funds' advisor. In carrying out these responsibilities, the
trustees and the Advisory Board review material factors to evaluate such
contracts, including (but not limited to) assessment of information related to
the advisor's performance and expense ratios, estimates of income and indirect
benefits (if any) accruing to the advisor, the advisor's overall management and
projected profitability, and services provided to the funds and their investors.

The board has the authority to manage the business of the funds on behalf of
their investors, and it has all powers necessary or convenient to carry out that
responsibility. Consequently, the trustees may adopt Bylaws providing for the
regulation and management of the affairs of the funds and may amend and repeal
them to the extent that such Bylaws do not reserve that right to the funds'
investors. They may fill vacancies in or reduce the number of board members, and
may elect and remove such officers and appoint and terminate such agents as they
consider appropriate. They may appoint from their own number and establish and
terminate one or more committees consisting of two or more trustees who may
exercise the powers and authority of the board to the extent that the trustees
determine. They may, in general, delegate such authority as they consider
desirable to any officer of the funds, to any committee of the board and to any
agent or employee of the funds or to any custodian, transfer or investor
servicing agent, or principal underwriter. Any determination as to what is in
the interests of the funds made by the trustees in good faith shall be
conclusive.


Committees

The board has four standing committees to oversee specific functions of the
funds' operations. Information about these committees appears in the table
below. The trustee first named serves as chairman of the committee.


                                                                                     Number of Meetings Held
Committee         Members                   Function                                 During Last Fiscal Year
---------         -------                   --------                                 -----------------------
Ended May 31, 2002

Audit             Kenneth E. Scott          The Audit Committee recommends                    5
                  Albert Eisenstat          the engagement of the
                  Jeanne D. Wohlers         funds' independent auditors and
                                            oversees its activities.
                                            The committee receives reports from
                                            the advisor's Internal Audit
                                            Department, which is accountable to
                                            the committee. The committee also
                                            receives reporting about compliance
                                            matters affecting the Trust.

Nominating        Kenneth E. Scott          The Nominating Committee primarily                1
                  Ronald J. Gilson          considers and recommends
                  Albert Eisenstat          individuals
                  Myron S. Scholes          for nomination as trustees. The
                  Jeanne D. Wohlers         names of potential trustee
                                            candidates are drawn from a
                                            number of sources, including
                                            recommendations from members
                                            of the board, management and
                                            shareholders. This committee
                                            also reviews and makes
                                            recommendations to the board with
                                            respect to the composition of board
                                            committees and other
                                            board-related matters, including its
                                            organization, size, composition,
                                            responsibilities, functions and
                                            compensation.

Portfolio         Myron S. Scholes          The Portfolio Committee reviews                   5
                  Ronald J. Gilson          quarterly the investment
                                            activities and strategies used to
                                            manage fund assets. The
                                            committee regularly receives reports
                                            from portfolio managers,
                                            credit analysts and other investment
                                            personnel concerning the funds'
                                            investments.

Quality           Ronald J. Gilson          The Quality of Service Committee                  5
of                Myron S. Scholes          reviews the level and quality of
Service           William M. Lyons          transfer agent and administrative
                                            services provided to the
                                            funds and their shareholders. It
                                            receives and reviews reports
                                            comparing those services to those of
                                            fund competitors and seeks to
                                            improve such services where feasible
                                            and appropriate.


Compensation of Trustees

The trustees serve as trustees or directors for eight American Century
investment companies. Each trustee who is not an interested person as defined in
the Investment Company Act receives compensation for service as a member of the
board of all eight such companies based on a schedule that takes into account
the number of meetings attended and the assets of the funds for which the
meetings are held. These fees and expenses are divided among the eight
investment companies based, in part, upon their relative net assets. Under the
terms of the management agreement with the advisor, the funds are responsible
for paying such fees and expenses.

The following table shows the aggregate compensation paid by the funds for the
periods indicated and by the eight investment companies served by this board to
each trustee who is not an interested person as defined in the Investment
Company Act.

Aggregate Trustee Compensation for Fiscal Year Ended May 31, 2002

                               Total Compensation             Total Compensation from the
Name of Trustee                from the Funds (1)             American Century Family of Funds (2)
---------------                ------------------             ------------------------------------
Albert A. Eisenstat            $21,530                        $74,500
Ronald J. Gilson               $23,786                        $81,750
Myron S. Scholes               $19,901                        $69,250
Kenneth E. Scott               $22,422                        $77,250
Jeanne D. Wohlers              $20,863                        $72,250
Kathryn A. Hall (3)            $23,907                        $68,667

1     Includes compensation paid to the trustees during the fiscal year ended
      May 31, 2002, and also includes amounts deferred at the election of the
      trustees under the American Century Mutual Funds' Independent Directors'
      Deferred Compensation Plan. The total amount of deferred compensation
      included in the preceding table is as follows: Mr. Eisenstat, $45,250; Mr.
      Gilson, $81,750; Mr. Scholes, $69,250; Mr. Scott, $63,375; and Ms.
      Wohlers, $18,315.

2     Includes compensation paid by the eight investment company members of the
      American Century family of funds served by this board.

3     Ms. Hall was paid as a member of the funds' Advisory Board.

The funds have adopted the American Century Mutual Funds' Independent Directors'
Deferred Compensation Plan. Under the plan, the independent trustees may defer
receipt of all or any part of the fees to be paid to them for serving as
trustees of the funds.

All deferred fees are credited to an account established in the name of the
trustees. The amounts credited to the account then increase or decrease, as the
case may be, in accordance with the performance of one or more of the American
Century funds that are selected by the trustee. The account balance continues to
fluctuate in accordance with the performance of the selected fund or funds until
final payment of all amounts are credited to the account. Trustees are allowed
to change their designation of mutual funds from time to time.

No deferred fees are payable until such time as a trustee resigns, retires or
otherwise ceases to be a member of the Board of Trustees. Trustees may receive
deferred fee account balances either in a lump-sum payment or in substantially
equal installment payments to be made over a period not to exceed 10 years. Upon
the death of a trustee, all remaining deferred fee account balances are paid to
the trustee's beneficiary or, if none, to the trustee's estate.

The plan is an unfunded plan and, accordingly, the funds have no obligation to
segregate assets to secure or fund the deferred fees. To date, the funds have
voluntarily funded their obligations. The rights of trustees to receive their
deferred fee account balances are the same as the rights of a general unsecured
creditor of the funds. The plan may be terminated at any time by the
administrative committee of the plan. If terminated, all deferred fee account
balances will be paid in a lump sum.

No deferred fees were paid to any trustee under the plan during the fiscal year
ended May 31, 2002.


Ownership of Fund Shares

The trustees owned shares in the funds as of December 31, 2001, as shown in the
tables below:


                                                                                Name of Trustees
--------------------------------------------------------------------------------------------------------------------

                                                        James E.         William M.      Albert          Ronald J.
                                                       Stowers III          Lyons       Eisenstat         Gilson
--------------------------------------------------------------------------------------------------------------------
Dollar Range of Equity Securities in the Funds:
Florida Municipal Money Market                              A                 A             A                A
Florida Municipal Bond                                      A                 A             A                A
Arizona Municipal Bond                                      A                 A             A                A
Tax-Free Money Market                                       E                 B             A                A
Tax-Free Bond                                               A                 A             A                A
High-Yield Municipal                                        A                 A             A                A

Aggregate Dollar Range of Equity
Securities in all Registered Investment
Companies Overseen by Trustees in
Family of Investment Companies                              E                 E             E                E
--------------------------------------------------------------------------------------------------------------------



                                                                            Name of Trustees
-----------------------------------------------------------------------------------------------------------------------------

                                                   Myron S.          Kenneth E.             Jeanne D.              Kathryn A.
                                                    Scholes             Scott                 Wohlers                 Hall
-----------------------------------------------------------------------------------------------------------------------------
Dollar Range of Equity Securities in the Funds:
Florida Municipal Money Market                         A                  A                      A                      A
Florida Municipal Bond                                 A                  A                      A                      A
Arizona Municipal Bond                                 A                  A                      A                      A
Tax-Free Money Market                                  A                  A                      A                      A
Tax-Free Bond                                          A                  A                      A                      A
High-Yield Municipal                                   A                  A                      A                      A


Aggregate Dollar Range of Equity
Securities in all Registered Investment
Companies Overseen by Trustees in
Family of Investment Companies                         E                  E                      E                      A

Ranges: A-none, B-$1-$10,000, C-$10,001-$50,000, D-$50,001-$100,000, E-More than $100,000






Code of Ethics


The funds, their investment advisor and principal underwriter have adopted a
code of ethics under Rule 17j-1 of the Investment Company Act and the code of
ethics permits personnel subject to the code to invest in securities, including
securities that may be purchased or held by the funds, provided that they first
obtain approval from the compliance department before making such investments.

THE FUNDS' PRINCIPAL SHAREHOLDERS

As of November 22, 2002, the following companies were the record owners of more
than 5% of the outstanding shares of any class of a fund:

Fund                                                 Shareholder and Percentage of Outstanding Shares Owned
----                                                 ------------------------------------------------------
Florida Municipal Money Market                       Peggy Myers Pers Rep
                                                     Shel Silverstein Estate
                                                     New York, New York                          XX%

Florida Municipal Bond                               Charles Schwab & Co. Inc.
                                                     San Francisco, California                   XX%
                                                     Morgan Guaranty Trust of New York
                                                     Newark, Delaware                            XX%

Arizona Municipal Bond                               Charles Schwab & Co., Inc.
                                                     San Francisco, California                   XX%
                                                     National Financial Services Corp.
                                                     New York, New York                          XX%
                                                     American Century Investment Management, Inc.
                                                     Kansas City, Missouri                       XX%

Tax-Free Bond                                        Charles Schwab & Co. Inc.
                                                     San Francisco, California                   XX%

High-Yield Municipal                                 American Enterprise Investment Services
                                                     Minneapolis, Minnesota                      XX%


The funds are unaware of any other shareholders, beneficial or of record, who
own more than 5% of any class of a fund's outstanding shares or more than 25% of
the voting securities of American Century Municipal Trust. As of Novmeber 22,
2002, the officers and trustees of the funds, as a group, owned less than 1% of
any class of a fund's outstanding shares.

SERVICE PROVIDERS

The funds have no employees. To conduct the funds' day-to-day activities, the
funds have hired a number of service providers. Each service provider has a
specific function to fill on behalf of the funds that is described below.

ACIM, ACSC and ACIS are wholly owned by ACC. James E. Stowers, Jr., Chairman of
ACC, controls ACC by virtue of his ownership of a majority of its voting stock.

INVESTMENT ADVISOR

American Century Investment Management, Inc. (ACIM) serves as the investment
advisor for each of the funds. A description of the responsibilities of the
advisor appears in the Prospectuses under the heading Management.

For services provided to each fund, the advisor receives a monthly fee based on
a percentage of the average net assets of a fund. The annual rate at which this
fee is assessed is determined monthly in a two-step process. First, a fee rate
schedule is applied to the assets of all the funds of its investment category
managed by the advisor (the Investment Category Fee). The three investment
categories are money market funds, bond funds and equity funds. When calculating
the fee for a money market fund, for example, all the assets of a money market
fund managed by the advisor are aggregated and the fee rate is applied to the
total. Second, a separate fee rate schedule is applied to the assets of all the
funds managed by the advisor (the Complex Fee). The amounts calculated using the
Investment Category Fee and the Complex Fee are then added to determine the
unified management fee payable by a fund to the advisor.

The schedules by which the unified management fee is determined are shown below.
The Investment Category Fees are determined according to the schedule below.

Investment Category Fee Schedule for Tax-Free Money Market and Florida Municipal
Money Market

Category Assets                          Fee Rate
---------------                          --------
First $1 billion                          0.2700%
Next $1 billion                           0.2270%
Next $3 billion                           0.1860%
Next $5 billion                           0.1690%
Next $15 billion                          0.1580%
Next $25 billion                          0.1575%
Thereafter                                0.1570%

Investment Category Fee Schedule for
Tax-Free Bond, Arizona Municipal Bond,
and Florida Municipal Bond

Category Assets                          Fee Rate
---------------                          --------
First $1 billion                          0.2800%
Next $1 billion                           0.2280%
Next $3 billion                           0.1980%
Next $5 billion                           0.1780%
Next $15 billion                          0.1650%
Next $25 billion                          0.1630%
Thereafter                                0.1625%

Investment Category Fee Schedule for High-Yield Municipal

Category Assets                          Fee Rate
---------------                          --------
First $1 billion                          0.4100%
Next $1 billion                           0.3580%
Next $3 billion                           0.3280%
Next $5 billion                           0.3080%
Next $15 billion                          0.2950%
Next $25 billion                          0.2930%
Thereafter                                0.2925%

The Complex Fee for the Investor, A, B and C Class shares is determined
according to the schedule below.

Complex Fee Schedule

Complex Assets                           Fee Rate
--------------                           --------
First $2.5 billion                        0.3100%
Next $7.5 billion                         0.3000%
Next $15 billion                          0.2985%
Next $25 billion                          0.2970%
Next $50 billion                          0.2960%
Next $100 billion                         0.2950%
Next $100 billion                         0.2940%
Next $200 billion                         0.2930%
Next $250 billion                         0.2920%
Next $500 billion                         0.2910%
Thereafter                                0.2900%

On the first business day of each month, the funds pay a management fee to the
advisor for the previous month at the specified rate. The fee for the previous
month is calculated by multiplying the applicable fee for the fund by the
aggregate average daily closing value of a fund's net assets during the previous
month. This number is then multiplied by a fraction, the numerator of which is
the number of days in the previous month and the denominator of which is 365
(366 in leap years).

The management agreement between the Trust and the advisor shall continue in
effect until the earlier of the expiration of two years from the date of its
execution or until the first meeting of fund shareholders following such
execution and for as long thereafter as its continuance is specifically approved
at least annually by

(1) the funds' Board of Trustees, or a majority of outstanding shareholder votes
(as defined in the Investment Company Act) and

(2) the vote of a majority of the trustees of the funds who are not parties to
the agreement or interested persons of the advisor, cast in person at a meeting
called for the purpose of voting on such approval.

The management agreement states that the funds' Board of Trustees or a majority
of outstanding shareholder votes may terminate the management agreement at any
time without payment of any penalty on 60 days' written notice to the advisor.
The management agreement shall be automatically terminated if it is assigned.

The management agreement states that the advisor shall not be liable to the
funds or their shareholders for anything other than willful misfeasance, bad
faith, gross negligence or reckless disregard of its obligations and duties.

The management agreement also provides that the advisor and its officers,
trustees and employees may engage in other business, render services to others,
and devote time and attention to any other business whether of a similar or
dissimilar nature.

Certain investments may be appropriate for the funds and also for other clients
advised by the advisor. Investment decisions for the funds and other clients are
made with a view to achieving their respective investment objectives after
consideration of such factors as their current holdings, availability of cash
for investment and the size of their investment generally. A particular security
may be bought or sold for only one client or fund, or in different amounts and
at different times for more than one but less than all clients or funds. In
addition, purchases or sales of the same security may be made for two or more
clients or funds on the same date. Such transactions will be allocated among
clients in a manner believed by the advisor to be equitable to each. In some
cases this procedure could have an adverse effect on the price or amount of the
securities purchased or sold by a fund.

The advisor may aggregate purchase and sale orders of the funds with purchase
and sale orders of its other clients when the advisor believes that such
aggregation provides the best execution for the funds. The Board of Trustees has
approved the policy of the advisor with respect to the aggregation of portfolio
transactions. Where portfolio transactions have been aggregated, the funds
participate at the average share price for all transactions in that security on
a given day and allocate transaction costs on a pro rata basis. The advisor will
not aggregate portfolio transactions of the funds unless it believes that such
aggregation is consistent with its duty to seek best execution on behalf of the
funds and the terms of the management agreement. The advisor receives no
additional compensation or remuneration as a result of such aggregation.

Unified management fees incurred by each fund for the fiscal periods ended May
31, 2002, 2001 and 2000, are indicated in the following tables.



Unified Management Fees(1)

Fund                                          2002               2001             2000
----                                          ----               ----             ----
Florida Municipal Money Market               $370,570         $413,133          $428,202
Florida Municipal Bond                       $267,226         $260,696          $242,677
Arizona Municipal Bond                       $297,741         $229,286          $208,939
Tax-Free Money Market                      $1,224,240       $1,174,251        $1,238,054
Tax-Free Bond                              $1,360,649         $835,937          $804,338
High-Yield Municipal                         $195,903         $190,724          $175,438

1 Net of reimbursements or waivers.

TRANSFER AGENT AND ADMINISTRATOR

American Century Services Corporation, 4500 Main Street, Kansas City, Missouri
64111, serves as transfer agent and dividend-paying agent for the funds. It
provides physical facilities, computer hardware and software, and personnel for
the day-to-day administration of the funds and the advisor. The advisor pays
ACSC for these services.

From time to time, special services may be offered to shareholders who maintain
higher share balances in our family of funds. These services may include the
waiver of minimum investment requirements, expedited confirmation of shareholder
transactions, newsletters and a team of personal representatives. Any expenses
associated with these special services will be paid by the advisor.

DISTRIBUTOR

The funds' shares are distributed by American Century Investment Services, Inc.
(ACIS), a registered broker-dealer. The distributor is a wholly owned subsidiary
of ACC and its principal business address is 4500 Main Street, Kansas City,
Missouri 64111.

The distributor is the principal underwriter of the funds' shares. The
distributor makes a continuous, best-efforts underwriting of the funds' shares.
This means that the distributor has no liability for unsold shares.

Certain financial intermediaries unaffiliated with the distributor or the funds
may perform various administrative and shareholder services for their clients
who are invested in the funds. These services may include assisting with fund
purchases, redemptions and exchanges, distributing information about the funds
and their performance, preparing and distributing client account statements, and
other administrative and shareholder services, and would otherwise be provided
by the distributor or its affiliates. The distributor may pay fees out of its
own resources to such financial intermediaries for the provision of these
services.

OTHER SERVICE PROVIDERS

CUSTODIAN BANKS

J.P. Morgan Chase and Co., 770 Broadway, 10th floor, New York, New York
10003-9598, and Commerce Bank, N.A., 1000 Walnut, Kansas City, Missouri 64105,
each serves as custodian of the funds' assets. The custodians take no part in
determining the investment policies of the funds or deciding which securities
are purchased or sold by the funds. The funds, however, may invest in certain
obligations of the custodians and may purchase or sell certain securities from
or to the custodians.

INDEPENDENT ACCOUNTANTS

PricewaterhouseCoopers LLP are the independent accountants of the funds. The
address of PricewaterhouseCoopers LLP is 1055 Broadway, 10th floor, Kansas City,
Missouri 64105. As the independent accountants of the funds,
PricewaterhouseCoopers provides services including

(1) auditing the annual financial statements for each fund,

(2) assisting and consulting in connection with SEC filings, and

(3) reviewing the annual federal income tax return filed for each fund.

BROKERAGE ALLOCATION

The funds generally purchase and sell debt securities through principal
transactions, meaning the funds normally purchase securities on a net basis
directly from the issuer or a primary market-maker acting as principal for the
securities. The funds do not pay brokerage commissions on these transactions,
although the purchase price for debt securities usually includes an undisclosed
compensation. Purchases of securities from underwriters typically include a
commission or concession paid by the issuer to the underwriter, and purchases
from dealers serving as market-makers typically include a dealer's mark-up
(i.e., a spread between the bid and asked prices). During the fiscal years ended
May 31, 2002, 2001 and 2000, the funds did not pay any brokerage commissions.

INFORMATION ABOUT FUND SHARES

The Declaration of Trust permits the Board of Trustees to issue an unlimited
number of full and fractional shares of beneficial interest without par value,
which may be issued in a series (or funds). Each of the funds named on the front
of this Statement of Additional Information is a series of shares issued by the
Trust. In addition, each series (or fund) may be divided into separate classes.
See Multiple Class Structure, which follows. Additional funds and classes may be
added without a shareholder vote.

Each fund votes separately on matters affecting that fund exclusively. Voting
rights are not cumulative, so that investors holding more than 50% of the
Trust's (all funds') outstanding shares may be able to elect a Board of
Trustees. The Trust undertakes dollar-based voting, meaning that the number of
votes a shareholder is entitled to is based upon the dollar amount of the
shareholder's investment. The election of trustees is determined by the votes
received from all Trust shareholders without regard to whether a majority of
shares of any one fund voted in favor of a particular nominee or all nominees as
a group.

Each shareholder has rights to dividends and distributions declared by the fund
he or she owns and to the net assets of such fund upon its liquidation or
dissolution proportionate to his or her share ownership interest in the fund.
Shares of each fund have equal voting rights, although each fund votes
separately on matters affecting that fund exclusively.

The Trust shall continue unless terminated by (1) approval of at least
two-thirds of the shares of each fund entitled to vote, or (2) by the Trustees
by written notice to shareholders of each fund. Any fund may be terminated by
(1) approval of at least two-thirds of the shares of that fund, or (2) by the
Trustees by written notice to shareholders of that fund.

Upon termination of the Trust or a fund, as the case may be, the Trust shall pay
or otherwise provide for all charges, taxes, expenses and liabilities belonging
to the Trust or the fund. Thereafter, the Trust shall reduce the remaining
assets belonging to each fund (or the particular fund) to cash, shares of other
securities or any combination thereof, and distribute the proceeds belonging to
each fund (or the particular fund) to the shareholders of that fund ratably
according to the number of shares of that fund held by each shareholder on the
termination date.

Shareholders of a Massachusetts business trust could, under certain
circumstances, be held personally liable for its obligations. However, the
Declaration of Trust contains an express disclaimer of shareholder liability for
acts or obligations of the Trust. The Declaration of Trust also provides for
indemnification and reimbursement of expenses of any shareholder held personally
liable for obligations of the Trust. The Declaration of Trust provides that the
Trust will, upon request, assume the defense of any claim made against any
shareholder for any act or obligation of the Trust and satisfy any judgment
thereon. The Declaration of Trust further provides that the Trust may maintain
appropriate insurance (for example, fidelity, bonding and errors and omissions
insurance) for the protection of the Trust, its shareholders, trustees,
officers, employees and agents to cover possible tort and other liabilities.
Thus, the risk of a shareholder incurring financial loss as a result of
shareholder liability is limited to circumstances in which both inadequate
insurance exists and the Trust is unable to meet its obligations.

MULTIPLE CLASS STRUCTURE

The corporation's Board of Trustees has adopted a multiple class plan (the
Multiclass Plan) pursuant to Rule 18f-3 adopted by the SEC. The plan is
described in the prospectus of any fund that offers more than one class.
Pursuant to such plan, the funds may issue up to four classes of shares:
Investor Class, A Class, B Class and C Class. Not all funds offer all four
classes.

The Investor Class of most funds is made available to investors directly without
any load or commission, for a single unified management fee. It is also
available through some financial intermediaries. The Investor Class of those
funds which have A and B Classes is not available directly at no load. The A, B
and C Classes also are made available through financial intermediaries, for
purchase by individual investors who receive advisory and personal services from
the intermediary. The total management fee is the same as for Investor Class,
but the A, B and C Class shares each are subject to a separate Master
Distribution and Individual Shareholder Services Plan (the A Class Plan, B Class
Plan and C Class Plan, respectively, the Plans) described below. The Plans have
been adopted by the funds' Board of Trustees in accordance with Rule 12b-1
adopted by the SEC under the Investment Company Act.

Rule 12b-1

Rule 12b-1 permits an investment company to pay expenses associated with the
distribution of its shares in accordance with a plan adopted by its Board of
Directors and approved by its shareholders. Pursuant to such rule, the Board of
Trustees and initial shareholder of the funds' A, B and C Classes have approved
and entered into the A Class Plan, B Class Plan and C Class Plan, respectively.
The Plans are described below.

In adopting the Plan, the Board of Trustees (including a majority of trustees
who are not interested persons of the funds [as defined in the Investment
Company Act], hereafter referred to as the independent trustees) determined that
there was a reasonable likelihood that the Plan would benefit the funds and the
shareholders of the affected class. Pursuant to Rule 12b-1, information with
respect to revenues and expenses under the Plan is presented to the Board of
Trustees quarterly for its consideration in connection with its deliberations as
to the continuance of the Plan. Continuance of the Plan must be approved by the
Board of Trustees (including a majority of the independent trustees) annually.
The Plan may be amended by a vote of the Board of Trustees (including a majority
of the independent trustees), except that the Plan may not be amended to
materially increase the amount to be spent for distribution without majority
approval of the shareholders of the affected class. The Plan terminates
automatically in the event of an assignment and may be terminated upon a vote of
a majority of the independent trustees or by vote of a majority of the
outstanding voting securities of the affected class.

All fees paid under the Plan will be made in accordance with Section 26 of the
Rules of Fair Practice of the National Association of Securities Dealers (NASD).

A Class Plan

As described in the Prospectus, the A Class shares of the funds are made
available to participants in employer-sponsored retirement or savings plans and
to persons purchasing through broker-dealers, banks, insurance companies and
other financial intermediaries that provide various administrative, shareholder
and distribution services. The funds' distributor enters into contracts with
various banks, broker-dealers, insurance companies and other financial
intermediaries, with respect to the sale of the funds' shares and/or the use of
the funds' shares in various investment products or in connection with various
financial services.

Certain recordkeeping and administrative services that are provided by the
funds' transfer agent for the Investor Class shareholders may be performed by a
plan sponsor (or its agents) or by a financial intermediary for A Class
investors. In addition to such services, the financial intermediaries provide
various individual shareholder and distribution services.

To enable the funds' shares to be made available through such plans and
financial intermediaries, and to compensate them for such services, the funds'
Board of Trustees has adopted the A Class Plan. Pursuant to the A Class Plan,
the A Class pays the Advisor, as paying agent for the fund, a fee equal to 1.00%
annually of the average daily net asset value of the A Class shares. The A Class
had not been offered as of May 31, 2002, and therefore no fees have been paid.

Payments may be made for a variety of individual shareholder services,
including, but not limited to:

(a)  providing individualized and customized investment advisory services,
     including the consideration of shareholder profiles and specific goals;

(b)  creating investment models and asset allocation models for use by
     shareholders in selecting appropriate funds;

(c)  conducting proprietary research about investment choices and the market in
     general;

(d)  periodic rebalancing of shareholder accounts to ensure compliance with the
     selected asset allocation;

(e)  consolidating shareholder accounts in one place; and

(f)  other individual services.

Individual shareholder services do not include those activities and expenses
that are primarily intended to result in the sale of additional shares of the
funds.

Distribution services include any activity undertaken or expense incurred that
is primarily intended to result in the sale of A Class shares, which services
may include but are not limited to:

(a)  the payment of sales commissions, on-going commissions and other payments
     to brokers, dealers, financial institutions or others who sell A Class
     shares pursuant to selling agreements;

(b)  compensation to registered representatives or other employees of the
     distributor who engage in or support distribution of the funds' A Class
     shares;

(c)  compensation to, and expenses (including overhead and telephone expenses)
     of, the distributor;

(d)  printing prospectuses, statements of additional information and reports for
     other than existing shareholders;

(e)  preparing, printing and distributing sales literature and advertising
     materials provided to the funds' shareholders and prospective shareholders;

(f)  receiving and answering correspondence from prospective shareholders,
     including distributing prospectuses, statements of additional information,
     and shareholder reports;

(g)  providing facilities to answer questions from prospective shareholders
     about fund shares;

(h)  complying with federal and state securities laws pertaining to the sale of
     fund shares;

(i)  assisting shareholders in completing application forms and selecting
     dividend and other account options;

(j)  providing other reasonable assistance in connection with the distribution
     of fund shares;

(k)  organizing and conducting sales seminars and payments in the form of
     transactional and compensation or promotional incentives;

(l)  profit on the foregoing;

(m)  paying service fees for providing personal, continuing services to
     investors, as contemplated by the Rules of Fair Practice of the NASD; and

(n)  such other distribution and services activities as the advisor determines
     may be paid for by the funds pursuant to the terms of the agreement between
     the corporation and the funds' distributor and in accordance with Rule
     12b-1 of the Investment Company Act.

B Class Plan

As described in the Prospectus, the B Class shares of the funds are made
available to participants in employer-sponsored retirement or savings plans and
to persons purchasing through broker-dealers, banks, insurance companies and
other financial intermediaries that provide various administrative, shareholder
and distribution services. The funds' distributor enters into contracts with
various banks, broker-dealers, insurance companies and other financial
intermediaries, with respect to the sale of the funds' shares and/or the use of
the funds' shares in various investment products or in connection with various
financial services.

Certain recordkeeping and administrative services that are provided by the
funds' transfer agent for the Investor Class shareholders may be performed by a
plan sponsor (or its agents) or by a financial intermediary for B Class
investors. In addition to such services, the financial intermediaries provide
various individual shareholder and distribution services.

To enable the funds' shares to be made available through such plans and
financial intermediaries, and to compensate them for such services, the funds'
Board of Trustees has adopted the B Class Plan. Pursuant to the B Class Plan,
the B Class pays the Advisor, as paying agent for the fund, a fee equal to 1.00%
annually of the average daily net asset value of the B Class shares. The B Class
had not been offered as of May 31, 2002, and therefore no fees have been paid.

Payments may be made for a variety of individual shareholder services,
including, but not limited to:

(a)  providing individualized and customized investment advisory services,
     including the consideration of shareholder profiles and specific goals;

(b)  creating investment models and asset allocation models for use by
     shareholders in selecting appropriate funds;

(c)  conducting proprietary research about investment choices and the market in
     general;

(d)  periodic rebalancing of shareholder accounts to ensure compliance with the
     selected asset allocation;

(e)  consolidating shareholder accounts in one place; and

(f)  other individual services.

Individual shareholder services do not include those activities and expenses
that are primarily intended to result in the sale of additional shares of the
funds.

Distribution services include any activity undertaken or expense incurred that
is primarily intended to result in the sale of B Class shares, which services
may include but are not limited to:

(a)  the payment of sales commissions, on-going commissions and other payments
     to brokers, dealers, financial institutions or others who sell B Class
     shares pursuant to selling agreements;

(b)  compensation to registered representatives or other employees of the
     distributor who engage in or support distribution of the funds' B Class
     shares;

(c)  compensation to, and expenses (including overhead and telephone expenses)
     of, the distributor;

(d)  printing prospectuses, statements of additional information and reports for
     other than existing shareholders;

(e)  preparing, printing and distributing sales literature and advertising
     materials provided to the funds' shareholders and prospective shareholders;

(f)  receiving and answering correspondence from prospective shareholders,
     including distributing prospectuses, statements of additional information,
     and shareholder reports;

(g)  providing facilities to answer questions from prospective shareholders
     about fund shares;

(h)  complying with federal and state securities laws pertaining to the sale of
     fund shares;

(i)  assisting shareholders in completing application forms and selecting
     dividend and other account options;

(j)  providing other reasonable assistance in connection with the distribution
     of fund shares;

(k)  organizing and conducting sales seminars and payments in the form of
     transactional and compensation or promotional incentives;

(l)  profit on the foregoing;

(m)  paying service fees for providing personal, continuing services to
     investors, as contemplated by the Rules of Fair Practice of the NASD; and

(n)  such other distribution and services activities as the advisor determines
     may be paid for by the funds pursuant to the terms of the agreement between
     the corporation and the funds' distributor and in accordance with Rule
     12b-1 of the Investment Company Act.

C Class Plan

As described in the Prospectus, the C Class shares of the funds are made
available to participants in employer-sponsored retirement or savings plans and
to persons purchasing through broker-dealers, banks, insurance companies and
other financial intermediaries that provide various administrative, shareholder
and distribution services. The funds' distributor enters into contracts with
various banks, broker-dealers, insurance companies and other financial
intermediaries, with respect to the sale of the funds' shares and/or the use of
the funds' shares in various investment products or in connection with various
financial services.

Certain recordkeeping and administrative services that are provided by the
funds' transfer agent for the Investor Class shareholders may be performed by a
plan sponsor (or its agents) or by a financial intermediary for C Class
investors. In addition to such services, the financial intermediaries provide
various individual shareholder and distribution services.

To enable the funds' shares to be made available through such plans and
financial intermediaries, and to compensate them for such services, the funds'
Board of Trustees has adopted the Plan. Pursuant to the Plan, the C Class pays
the Advisor, as paying agent for the fund, a fee equal to 0.75% annually of the
average daily net asset value of the funds' C Class shares. Because this class
did not have any assets as of May 31, 2002, no fees were paid under the Plan for
the most recent fiscal year.

Payments may be made for a variety of individual shareholder services,
including, but not limited to:

(a)      providing individualized and customized investment advisory services,
         including the consideration of shareholder profiles and specific goals;

(b)      creating investment models and asset allocation models for use by
         shareholders in selecting appropriate funds;

(c)      conducting proprietary research about investment choices and the market
         in general;

(d)      periodic rebalancing of shareholder accounts to ensure compliance with
         the selected asset allocation;

(e)      consolidating shareholder accounts in one place; and

(f)      other individual services.

Individual shareholder services do not include those activities and expenses
that are primarily intended to result in the sale of additional shares of the
funds.

Distribution services include any activity undertaken or expense incurred that
is primarily intended to result in the sale of C Class shares, which services
may include but are not limited to:

(a)      paying sales commissions, on-going commissions and other payments to
         brokers, dealers, financial institutions or others who sell C Class
         shares pursuant to selling agreements;

(b)      compensating registered representatives or other employees of the
         distributor who engage in or support distribution of the funds' C Class
         shares;

(c)      compensating and paying expenses (including overhead and telephone
         expenses) of, the distributor;

(d)      printing prospectuses, statements of additional information and reports
         for other-than-existing shareholders;

(e)      preparing, printing and distributing sales literature and advertising
         materials provided to the funds' shareholders and prospective
         shareholders;

(f)      receiving and answering correspondence from prospective shareholders,
         including distributing prospectuses, statements of additional
         information, and shareholder reports;

(g)      providing facilities to answer questions from prospective shareholders
         about fund shares;

(h)      complying with federal and state securities laws pertaining to the sale
         of fund shares;

(i)      assisting shareholders in completing application forms and selecting
         dividend and other account options;

(j)      providing other reasonable assistance in connection with the
         distribution of fund shares;

(k)      organizing and conducting of sales seminars and payments in the form of
         transactional and compensation or promotional incentives;

(l)      profit on the foregoing;

(m)      paying service fees for providing personal, continuing services to
         investors, as contemplated by the Rules of Fair Practice of the NASD;
         and

(n)      such other distribution and services activities as the advisor
         determines may be paid for by the fund pursuant to the terms of the
         agreement between the corporation and the funds' distributor and in
         accordance with Rule 12b-1 of the Investment Company Act.

Sales Charges

The sales charges applicable to the A, B and C Classes of the funds are
described in the prospectus for those classes in the section titled "Choosing a
Share Class." Shares of the A Class are subject to an initial sales charge,
which declines as the amount of the purchase increases pursuant to the schedule
set forth in the prospectus. This charge may be waived in the following
situations:

*        Qualified retirement plan purchases

*        Certain individual retirement account rollovers

*        Purchases by registered representatives and other employees of certain
         financial intermediaries (and their immediate family members) having
         sales agreements with the advisor or the distributor

*        Wrap accounts maintained for clients of certain financial
         intermediaries who have entered into agreements with American Century

*        Purchases by current and retired employees of American Century and
         their immediate family members (spouses and children under age 21) and
         trusts or qualified retirement plans established by those persons

*        Purchases by certain other investors that American Century deems
         appropriate, including but not limited to current or retired directors,
         trustees and officers of funds managed by the advisor, employees of
         those persons and trusts and qualified retirement plans established by
         those persons

There are several ways to reduce the sales charges applicable to a purchase of A
Class shares. These methods are described in the relevant prospectuses. You or
your financial advisor must indicate at the time of purchase that you intend to
take advantage of one of these reductions.

Shares of the A, B and C Classes are subject to a contingent deferred sales
charge upon redemption of the shares in certain circumstances. The specific
charges and when they apply are described in the relevant prospectuses. The
contingent deferred sales charge may be waived for certain redemptions by some
shareholders, as described in the prospectuses.

Shares of the A and B Classes of the funds have not been offered as of the date
of this Statement of Additional Information. Because the C Class did not have
any assets as of May 31, 2002, no fees were paid under the C Class Plan for the
most recent fiscal year.

Dealer Concessions

The funds' distributor expects to pay sales commissions to the financial
intermediaries who sell A, B and/or C Class shares of the fund at the time of
such sales. Payments for A Class shares will be as follows:

Purchase Amount                             Dealer Concession
---------------                             -----------------

less than $50,000                                5.00%
$50,000 - $99,999                                4.00%
$100,000 - $249,999                              3.25%
$250,000 - $499,999                              2.00%
$500,000 - $999,999                              1.75%
$1,000,000 - $3,999,999                          1.00%
$4,000,000 - $9,999,999                          0.50%
greater than $10,000,000                         0.25%

No concession will be paid on purchases by qualified retirement plans. Payments
will equal 4.00% of the purchase price of B Class shares and 0.75% of the
purchase price of the C Class shares sold by the intermediary. The distributor
will retain the 12b-1 fee paid by the C Class of funds for the first 13 months
after the shares are purchased. This fee is intended in part to permit the
distributor to recoup a portion of on-going sales commissions to dealers plus
financing costs, if any. After the first 13 months, the distributor will make
the C Class distribution and individual shareholder services fee payments
described above to the financial intermediaries involved on a quarterly basis.
In addition, B and C Class purchases and A Class purchases greater than
$1,000,000 are subject to a contingent deferred sales charge as described in the
prospectuses.

From time to time, the distributor may provide additional concessions to
dealers, including but not limited to payment assistance for conferences and
seminars, provision of sales or training programs for dealer employees and/or
the public (including, in some cases, payment for travel expenses for registered
representatives and other dealer employees who participate), advertising and
sales campaigns about a fund or funds, and assistance in financing
dealer-sponsored events. Other concessions may be offered as well, and all such
concessions will be consistent with applicable law, including the then-current
rules of the National Association of Securities Dealers, Inc. Such concessions
will not change the price paid by investors for shares of the funds.

BUYING AND SELLING FUND SHARES

Information about buying, selling and exchanging fund shares is contained in the
funds' prospectuses and in Your Guide to American Century Services. The
prospectuses and guide are available to investors without charge and may be
obtained by calling us.

VALUATION OF A FUND'S SECURITIES

All classes of the funds except the A Class are offered at their net asset
value, as described below. The A Class of the funds are offered at their public
offering price, which is the net asset value plus the appropriate sales charge.
This calculation may be expressed as a formula:

Offering Price = Net Asset Value/(1 - Sales Charge as a % of Offering Price)

For example, if the net asset value of a fund's A Class shares is $5.00, the
public offering price would be $5.00/(1-5%) = $5.26.

Each fund's net asset value per share (NAV) is calculated as of the close of
business of the New York Stock Exchange (the Exchange) each day the Exchange is
open for business. The Exchange usually closes at 4 p.m. Eastern time. The
Exchange typically observes the following holidays: New Year's Day, Martin
Luther King Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence
Day, Labor Day, Thanksgiving Day and Christmas Day. Although the funds expect
the same holidays to be observed in the future, the Exchange may modify its
holiday schedule at any time.

The advisor typically completes its trading on behalf of each fund in various
markets before the Exchange closes for the day. Each fund's NAV is calculated by
adding the value of all portfolio securities and other assets, deducting
liabilities and dividing the result by the number of shares outstanding.
Expenses and interest earned on portfolio securities are accrued daily.

Money Market Funds

Securities held by the money market funds are valued at amortized cost. This
method involves valuing an instrument at its cost and thereafter assuming a
constant amortization to maturity of any discount or premium paid at the time of
purchase. Although this method provides certainty in valuation, it generally
disregards the effect of fluctuating interest rates on an instrument's market
value. Consequently, the instrument's amortized cost value may be higher or
lower than its market value, and this discrepancy may be reflected in the fund's
yields. During periods of declining interest rates, for example, the daily yield
on fund shares computed as described above may be higher than that of a fund
with identical investments priced at market value. The converse would apply in a
period of rising interest rates.

The money market funds operate pursuant to Investment Company Act Rule 2a-7,
which permits valuation of portfolio securities on the basis of amortized cost.
As required by the Rule, the Board of Trustees has adopted procedures designed
to stabilize, to the extent reasonably possible, a money market fund's price per
share as computed for the purposes of sales and redemptions at $1.00. While the
day-to-day operation of each money market fund has been delegated to the fund
managers, the quality requirements established by the procedures limit
investments to certain instruments that the Board of Trustees has determined
present minimal credit risks and that have been rated in one of the two highest
rating categories as determined by a rating agency or, in the case of unrated
securities, of comparable quality. The procedures require review of each money
market fund's portfolio holdings at such intervals as are reasonable in light of
current market conditions to determine whether a money market fund's net asset
values calculated by using available market quotations deviate from the
per-share value based on amortized cost. The procedures also prescribe the
action to be taken by the advisor if such deviation should exceed .025%.

Actions the advisor and the Board of Trustees may consider under these
circumstances include (i) selling portfolio securities prior to maturity, (ii)
withholding dividends or distributions from capital, (iii) authorizing a
one-time dividend adjustment, (iv) discounting share purchases and initiating
redemptions in kind, or (v) valuing portfolio securities at market price for
purposes of calculating NAV.

Non-Money Market Funds

Securities held by the non-money market funds normally are priced by using data
provided by an independent pricing service, provided that such prices are
believed by the advisor to reflect the fair market value of portfolio
securities.

Because there are hundreds of thousands of municipal issues outstanding, and the
majority of them do not trade daily, the prices provided by pricing services are
generally determined without regard to bid or last sale prices. In valuing
securities, the pricing services generally take into account institutional
trading activity, trading in similar groups of securities, and any developments
related to specific securities. The methods used by the pricing service and the
valuations so established are reviewed by the advisor under the general
supervision of the Board of Trustees. There are a number of pricing services
available, and the advisor, on the basis of ongoing evaluation of these
services, may use other pricing services or discontinue the use of any pricing
service in whole or in part.

Securities not priced by a pricing service are valued at the mean between the
most recently quoted bid and ask prices provided by broker-dealers. The
municipal bond market is typically a "dealer market"; that is, dealers buy and
sell bonds for their own accounts rather than for customers. As a result, the
spread, or difference, between bid and asked prices for certain municipal bonds
may differ substantially among dealers.

Debt securities maturing within 60 days of the valuation date may be valued at
cost, plus or minus any amortized discount or premium, unless the trustees
determine that this would not result in fair valuation of a given security.
Other assets and securities for which quotations are not readily available are
valued in good faith at their fair value using methods approved by the Board of
Trustees.

TAXES

Federal Income Tax

Each fund intends to qualify annually as a regulated investment company under
Subchapter M of the Internal Revenue Code of 1986, as amended (the Code). By so
qualifying, a fund will be exempt from federal and state income taxes to the
extent that it distributes substantially all of its net investment income and
net realized capital gains (if any) to investors. If a fund fails to qualify as
a regulated investment company, it will be liable for taxes, significantly
reducing its distributions to investors and eliminating investors' ability to
treat distributions received from the funds in the same manner in which they
were realized by the funds.

Certain bonds purchased by the funds may be treated as bonds that were
originally issued at a discount. Original issue discount represents interest for
federal income tax purposes and can generally be defined as the difference
between the price at which a security was issued and its stated redemption price
at maturity. Original issue discount, although no cash is actually received by a
fund until the maturity of the bond, is treated for federal income tax purposes
as income earned by a fund over the term of the bond, and therefore is subject
to the distribution requirements of the Code. The annual amount of income earned
on such a bond by a fund generally is determined on the basis of a constant
yield to maturity that takes into account the semiannual compounding of accrued
interest. Original issue discount on an obligation with interest exempt from
federal income tax will constitute tax-exempt interest income to the fund.

In addition, some of the bonds may be purchased by a fund at a discount that
exceeds the original issue discount on such bonds, if any. This additional
discount represents market discount for federal income tax purposes. The gain
realized on the disposition of any bond having market discount generally will be
treated as taxable ordinary income to the extent it does not exceed the accrued
market discount on such bond (unless a fund elects to include market discount in
income in tax years to which it is attributable). Generally, market discount
accrues on a daily basis for each day the bond is held by a fund. Market
discount is calculated on a straight line basis over the time remaining to the
bond's maturity. In the case of any debt security having a fixed maturity date
of not more than one year from date of issue, the gain realized on disposition
generally will be treated as short-term capital gain.

As of May 31, 2002, the funds in the table below had the following capital loss
carryover. When a fund has a capital loss carryover, it does not make capital
gains distributions until the loss has been offset or expired.

Fund                                                          Capital Loss Carryover
----                                                          ----------------------
Florida Municipal Money Market               $42,703 (expiring in 2005 through 2010)
High-Yield Municipal                      $2,197,719 (expiring in 2008 through 2010)
Tax-Free Money Market                        $60,373 (expiring in 2008 through 2010)

Interest on certain types of industrial development bonds (small issues and
obligations issued to finance certain exempt facilities that may be leased to or
used by persons other than the issuer) is not exempt from federal income tax
when received by "substantial users" or persons related to substantial users as
defined in the Code. The term "substantial user" includes any "non-exempt
person" who regularly uses in trade or business part of a facility financed from
the proceeds of industrial development bonds. The funds may invest periodically
in industrial development bonds and, therefore, may not be appropriate
investments for entities that are substantial users of facilities financed by
industrial development bonds or "related persons" of substantial users.
Generally, an individual will not be a related person of a substantial user
under the Code unless he or his immediate family (spouse, brothers, sisters,
ancestors and lineal descendants) owns directly or indirectly in aggregate more
than 50% of the equity value of the substantial user.

Under the Code, any distribution of a fund's net realized long-term capital
gains designated by the fund as a capital gains dividend is taxable to you as
long-term capital gains, regardless of the length of time you have held your
shares in the fund. If you purchase shares in the fund and sell them at a loss
within six months, your loss on the sale of those shares will be treated as a
long-term capital loss to the extent of any long-term capital gains dividend you
received on those shares. Any such loss will be disallowed to the extent of any
tax-exempt dividend income you received on those shares. In addition, although
highly unlikely, the Internal Revenue Service may determine that a bond issued
as tax-exempt should in fact be taxable. If the funds were to hold such a bond,
they might have to distribute taxable income or reclassify as taxable income
previously distributed as tax-free.

Alternative Minimum Tax

While the interest on bonds issued to finance essential state and local
government operations is generally exempt from regular federal income tax,
interest on certain private activity bonds issued after August 7, 1986, while
exempt from regular federal income tax, constitutes a tax-preference item for
taxpayers in determining alternative minimum tax liability under the Code and
the income tax provisions of several states.

The funds each may invest in private activity bonds. The interest on private
activity bonds could subject a shareholder to, or increase liability under, the
federal alternative minimum tax, depending on the shareholder's tax situation.

All distributions derived from interest exempt from regular federal income tax
may subject corporate shareholders to, or increase their liability under, the
alternative minimum tax because these distributions are included in the
corporation's adjusted current earnings.

The Trust will inform fund shareholders annually of the amount of distributions
derived from interest payments on private activity bonds.

HOW FUND PERFORMANCE INFORMATION
IS CALCULATED

The funds may quote performance in various ways. Historical performance
information will be used in advertising and sales literature.

For the money market funds, seven-day current yield quotations are based on the
change in the value of a hypothetical investment (excluding realized gains and
losses from the sale of securities and unrealized appreciation and depreciation
of securities) over a seven-day period (base period) and stated as a percentage
of the investment at the start of the base period (base-period return). The
base-period return is then annualized by multiplying by 365/7 with the resulting
yield figure carried to at least the nearest hundredth of one percent.

Calculations of seven-day effective yield begin with the same base-period return
used to calculate current yield, but the return is then annualized to reflect
weekly compounding according to the following formula:


                           Effective Yield = [(Base-Period Return + 1)365/7] - 1

For non-money market funds, the SEC 30-day yield calculation is as follows:
                                      Yield = (2 [(a - b + 1)6 - 1])
                                                             cd

where a = dividends and interest earned during the period, b = expenses accrued
for the period (net of reimbursements), c = the average daily number of shares
outstanding during the period that were entitled to receive dividends, and d =
the maximum offering price per share on the last day of the period.

The funds also may quote tax-equivalent yields. Tax-equivalent yields for
Tax-Free Money Market, Tax-Free Bond and High-Yield Municipal are calculated
using the following equation:


                    Fund's Tax-Free Yield  =  Your Tax-Equivalent Yield
                   100% - Federal Tax Rate

Arizona Municipal Bond's tax-equivalent yield is based on the current double
tax-exempt yield and your combined federal and state marginal tax rate. Assuming
all the fund's dividends are tax-exempt in Arizona (which may not always be the
case) and that your Arizona taxes are fully deductible for federal income tax
purposes, you can calculate your tax equivalent yield for the fund using the
equation below.


                                       Fund's Double Tax-Free Yield
                            (100% - Federal Tax Rate) (100% - Arizona Tax Rate)
                                        = Your Tax-Equivalent Yield

Florida Municipal Money Market and Florida Municipal Bond's tax-equivalent yield
is based on each fund's tax-free yield, your federal income tax bracket and the
Florida intangibles personal property tax applicable to a taxable investment.
The formula is:


                   Fund's Tax-Free Yield  +    Florida Intangibles Tax Rate
                  100% - Federal Tax Rate
                                        = Your Tax-Equivalent Yield


Money Market Fund Tax-Equivalent Yields (seven-day period ended May 31, 2002)

                                         Tax-Equivalent    Tax-Equivalent     Tax-Equivalent      Tax-Equivalent
                         7-Day           Yield             Yield              Yield               Yield
                         Current         27% Tax           30% Tax            35% Tax             38.6% Tax
Fund                     Yield           Bracket           Bracket            Bracket             Bracket
----                     -----           -------           -------            -------             -------
Florida Municipal
Money Market             1.14%           1.56%             1.63%              1.75%               1.86%
Tax-Free
Money Market             1.31%           1.79%             1.87%              2.02%               2.13%


                                         Tax-Equivalent    Tax-Equivalent     Tax-Equivalent      Tax-Equivalent
                         7-Day           Yield             Yield              Yield               Yield
                         Effective       27% Tax           30% Tax            35% Tax             38.6% Tax
Fund                     Yield           Bracket           Bracket            Bracket             Bracket
----                     -----           -------           -------            -------             -------
Florida Municipal
Money Market             1.15%           1.58%             1.64%              1.77%               1.87%
Tax-Free
Money Market             1.32%           1.81%             1.89%              2.03%               2.15%

Non-Money Market Fund Tax-Equivalent Yields (30-day period ended May 31, 2002)

                                         Tax-Equivalent    Tax-Equivalent     Tax-Equivalent      Tax-Equivalent
                                         Yield             Yield              Yield               Yield
                         30-Day          27% Tax           30% Tax            35% Tax             38.6% Tax
Fund                     SEC Yield       Bracket           Bracket            Bracket             Bracket
----                     ---------       -------           -------            -------             -------
Florida
Municipal Bond           3.31%           4.53%             4.73%              5.09%               5.39%
Arizona
Municipal Bond (1)       3.21%           4.40%             4.59%              4.94%               5.23%
Tax-Free Bond            3.25%           4.45%             4.64%              5.00%               5.29%
High-Yield
Municipal                5.13%           7.03%             7.33%              7.89%               8.36%

1 Tax-equivalent yields based on combined federal and Arizona income tax rates
  are: 30.45% Tax Bracket, 4.61%; 33.30% Tax Bracket, 4.81%; 38.28% Tax Bracket,
  5.20%; and 41.69% Tax Bracket, 5.50%.


Total returns quoted in advertising and sales literature reflect all aspects of
a fund's return, including the effect of reinvesting dividends and capital gains
distributions (if any), and any change in the fund's NAV during the period.

Average annual total returns are calculated by determining the growth or decline
in value of a hypothetical historical investment in a fund during a stated
period and then calculating the annually compounded percentage rate that would
have produced the same result if the rate of growth or decline in value had been
constant throughout the period. For example, a cumulative total return of 100%
over 10 years would produce an average annual return of 7.18%, which is the
steady annual rate that would equal 100% growth on a compounded basis in 10
years. While average annual total returns are a convenient means of comparing
investment alternatives, investors should realize that the funds' performance is
not constant over time, but changes from year to year, and that average annual
total returns represent averaged figures as opposed to actual year-to-year
performance.

In addition to average annual total returns, each fund may quote unaveraged or
cumulative total returns reflecting the simple change in value of an investment
over a stated period, including periods other than one, five and 10 years.
Average annual and cumulative total returns may be quoted as percentages or as
dollar amounts and may be calculated for a single investment, a series of
investments, or a series of redemptions over any time period. Total returns may
be broken down into their components of income and capital (including capital
gains and changes in share price) to illustrate the relationship of these
factors and their contributions to total return. Because High-Yield Municipal C
Class did not have assets as of the fiscal year end, it is not included in the
chart below.

The following table shows the average annual total returns for the various
classes calculated three different ways for the periods indicated as of May 31,
2002. As a new class, performance information for High-Yield Municipal C Class
is not available as of the date of this Statement of Additional Information.

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 association 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. Returns 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.

Average Annual Total Returns (as of May 31, 2002)


Average Annual Total Returns - Investor Class

Fund                                    1 year         5 years       10 years     Life of Fund    Inception Date
----                                    ------         -------       --------     ------------    --------------
Florida Municipal Bond
Return Before Taxes                     5.98%          5.96%         N/A          6.13%           04/11/94
Return After Taxes on Distribution      5.53%          5.66%         N/A          5.92%
Return After Taxes on Distribution
Sale of Fund Shares                     5.31%          5.52%         N/A          5.78%

Arizona Municipal Bond
Return Before Taxes                     6.74%          5.79%         N/A          6.01%           04/11/94
Return After Taxes on Distribution      6.53%          5.64%         N/A          5.92%
Return After Taxes on Distribution
and Sale of Fund Shares                 5.80%          5.48%         N/A          5.74%

Tax-Free Bond
Return Before Taxes                     6.45%          5.81%         5.78%        5.86%           03/02/87
Return After Taxes on Distribution      6.13%          5.64%         5.58%        N/A (1)
Return After Taxes on Distribution
and Sale of Fund Shares                 5.65%          5.53%         5.51%        N/A (1)

High-Yield Municipal
Return Before Taxes                     8.25%          N/A           N/A          5.32%           03/31/98
Return After Taxes on Distribution      8.29%          N/A           N/A          5.30%
Return After Taxes on Distribition
and Sale of Fund Shares                 7.27%          N/A           N/A          5.33%

1 Only funds with performance history for less than 10 years show after-tax
  returns for life of fund.

Performance Comparisons

The funds' performance may be compared with the performance of other mutual
funds tracked by mutual fund rating services or with other indices of market
performance. This may include comparisons with funds that are sold with a sales
charge or deferred sales charge. Sources of economic data that may be used for
such comparisons may include, but are not limited to: U.S. Treasury bill, note
and bond yields, money market fund yields, U.S. government debt and percentage
held by foreigners, the U.S. money supply, net free reserves, and yields on
current-coupon GNMAs (source: Board of Governors of the Federal Reserve System);
the federal funds and discount rates (source: Federal Reserve Bank of New York);
yield curves for U.S. Treasury securities and AA/AAA-rated corporate securities
(source: Bloomberg Financial Markets); yield curves for AAA-rated, tax-free
municipal securities (source: Telerate); yield curves for foreign government
securities (sources: Bloomberg Financial Markets and Data Resources, Inc.);
total returns on foreign bonds (source: J.P. Morgan Securities Inc.); various
U.S. and foreign government reports; the junk bond market (source: Data
Resources, Inc.); the CRB Futures Index (source: Commodity Index Report); the
price of gold (sources: London a.m./p.m. fixing and New York Comex Spot Price);
rankings of any mutual fund or mutual fund category tracked by Lipper, Inc. or
Morningstar, Inc.; mutual fund rankings published in major, nationally
distributed periodicals; data provided by the Investment Company Institute;
Ibbotson Associates, Stocks, Bonds, Bills, and Inflation; major indices of stock
market performance; and indices and historical data supplied by major securities
brokerage or investment advisory firms. The funds also may utilize reprints from
newspapers and magazines furnished by third parties to illustrate historical
performance or to provide general information about the funds.

Permissible Advertising Information

From time to time, the funds may, in addition to any other permissible
information, include the following types of information in advertisements,
supplemental sales literature and reports to shareholders:

(1)      discussions of general economic or financial principles (such as the
         effects of compounding and the benefits of dollar-cost averaging);

(2)      discussions of general economic trends;

(3)      presentations of statistical data to supplement such discussions;

(4)      descriptions of past or anticipated portfolio holdings for one or more
         of the funds;

(5)      descriptions of investment strategies for one or more of the funds;

(6)      descriptions or comparisons of various savings and investment products
         (including, but not limited to, qualified retirement plans and
         individual stocks and bonds), which may or may not include the funds;

(7)      comparisons of investment products (including the funds) with relevant
         market or industry indices or other appropriate benchmarks;

(8)      discussions of fund rankings or ratings by recognized rating
         organizations; and

(9)      testimonials describing the experience of persons that have invested in
         one or more of the funds.

The funds also may include calculations, such as hypothetical compounding
examples, which describe hypothetical investment results. Such performance
examples will be based on an express set of assumptions and are not indicative
of the performance of any of the funds.

Multiple Class Performance Advertising

Pursuant to the Multiple Class Plan, the Trust may issue additional classes of
existing funds or introduce new funds with multiple classes available for
purchase. To the extent a new class is added to an existing fund, the advisor
may, in compliance with SEC and NASD rules, regulations and guidelines, market
the new class of shares using the historical performance information of the
original class of shares. When quoting performance information for the new class
of shares for periods prior to the first full quarter after inception, the
original class's performance will be restated to reflect the expenses of the new
class. For periods after the first full quarter after inception, actual
performance of the new class will be used.

Financial Statements

The financial statements have been audited by PricewaterhouseCoopers LLP,
independent accountants. Their Independent Accountants' Reports and the
financial statements included in the funds' Annual Reports for the fiscal year
ended May 31, 2002, are incorporated herein by reference.

Explanation of Fixed-Income Securities Ratings

As described in the Prospectus, the funds invest in fixed-income securities.
Those investments, however, are subject to certain credit quality restrictions,
as noted in the Prospectus and in this Statement of Additional Information. The
following is a summary of the rating categories referenced in the prospectus
disclosure.

RATINGS OF CORPORATE DEBT SECURITIES


Standard & Poor's

AAA - This is the highest rating assigned by S&P to a debt obligation. It
indicates an extremely strong capacity to pay interest and repay principal.

AA - Debt rated in this category is considered to have a very strong capacity to
pay interest and repay principal. It differs from the highest-rated obligations
only in small degree.

A - Debt rated A has a strong capacity to pay interest and repay principal,
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher-rated categories.

BBB - Debt rated in this category is regarded as having an adequate capacity to
pay interest and repay principal. While it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher-rated categories. Debt rated below BBB is
regarded as having significant speculative characteristics.

BB - Debt rated in this category has less near-term vulnerability to default
than other speculative issues. However, it faces major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions that could lead
to inadequate capacity to meet timely interest and principal payments. The BB
rating also is used for debt subordinated to senior debt that is assigned an
actual or implied BBB rating.

B - Debt rated in this category is more vulnerable to nonpayment than
obligations rated 'BB', but currently has the capacity to pay interest and repay
principal. Adverse business, financial, or economic conditions will likely
impair the obligor's capacity or willingness to pay interest and repay
principal.

CCC - Debt rated in this category is currently vulnerable to nonpayment and is
dependent upon favorable business, financial, and economic conditions to meet
timely payment of interest and repayment of principal. In the event of adverse
business, financial, or economic conditions, it is not likely to have the
capacity to pay interest and repay principal. The CCC rating category is also
used for debt subordinated to senior debt that is assigned an actual or implied
B or B- rating.

CC - Debt rated in this category is currently highly vulnerable to nonpayment.
This rating category is also applied to debt subordinated to senior debt that is
assigned an actual or implied CCC rating.

C - The rating C typically is applied to debt subordinated to senior debt, and
is currently highly vulnerable to nonpayment of interest and principal. This
rating may be used to cover a situation where a bankruptcy petition has been
filed or similar action taken, but debt service payments are being continued.

D - Debt rated in this category is in default. This rating is used when interest
payments or principal repayments are not made on the date due even if the
applicable grace period has not expired, unless S&P believes that such payments
will be made during such grace period. It also will be used upon the filing of a
bankruptcy petition for the taking of a similar action if debt service payments
are jeopardized.

Moody's Investors Service, Inc.

Aaa - This is the highest rating assigned by Moody's to a debt obligation. It
indicates an extremely strong capacity to pay interest and repay principal.

Aa - Debt rated in this category is considered to have a very strong capacity to
pay interest and repay principal and differs from Aaa issues only in a small
degree. Together with Aaa debt, it comprises what are generally known as
high-grade bonds.

A - Debt rated in this category possesses many favorable investment attributes
and is to be considered as upper-medium-grade debt. Although capacity to pay
interest and repay principal are considered adequate, it is somewhat more
susceptible to the adverse effects of changes in circumstances and economic
conditions than debt in higher-rated categories.

Baa - Debt rated in this category is considered as medium-grade debt having an
adequate capacity to pay interest and repay principal. While it normally
exhibits adequate protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay interest and
repay principal for debt in this category than in higher-rated categories. Debt
rated below Baa is regarded as having significant speculative characteristics.

Ba - Debt rated Ba has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial or economic conditions that could lead to inadequate
capacity to meet timely interest and principal payments. Often the protection of
interest and principal payments may be very moderate.

B - Debt rated B has a greater vulnerability to default, but currently has the
capacity to meet financial commitments. Assurance of interest and principal
payments or of maintenance of other terms of the contract over any long period
of time may be small. The B rating category is also used for debt subordinated
to senior debt that is assigned an actual or implied Ba or Ba3 rating.

Caa - Debt rated Caa is of poor standing, has a currently identifiable
vulnerability to default, and is dependent upon favorable business, financial
and economic conditions to meet timely payment of interest and repayment of
principal. In the event of adverse business, financial or economic conditions,
it is not likely to have the capacity to pay interest and repay principal. Such
issues may be in default or there may be present elements of danger with respect
to principal or interest. The Caa rating is also used for debt subordinated to
senior debt that is assigned an actual or implies B or B3 rating.

Ca - Debt rated in this category represent obligations that are speculative in a
high degree. Such debt is often in default or has other marked shortcomings.

C - This is the lowest rating assigned by Moody's, and debt rated C can be
regarded as having extremely poor prospects of attaining investment standing.

Fitch, Inc.

AAA - Debt rated in this category has the lowest expectation of credit risk.
Capacity for timely payment of financial commitments is exceptionally strong and
highly unlikely to be adversely affected by foreseeable events.

AA - Debt rated in this category has a very low expectation of credit risk.
Capacity for timely payment of financial commitments is very strong and not
significantly vulnerable to foreseeable events.

A - Debt rated in this category has a low expectation of credit risk. Capacity
for timely payment of financial commitments is strong, but may be more
vulnerable to changes in circumstances or in economic conditions than debt rated
in higher categories.

BBB - Debt rated in this category currently has a low expectation of credit risk
and an adequate capacity for timely payment of financial commitments. However,
adverse changes in circumstances and in economic conditions are more likely to
impair this capacity. This is the lowest investment grade category.

BB - Debt rated in this category has a possibility of developing credit risk,
particularly as the result of adverse economic change over time. However,
business or financial alternatives may be available to allow financial
commitments to be met. Securities rated in this category are not investment
grade.

B - Debt rated in this category has significant credit risk, but a limited
margin of safety remains. Financial commitments currently are being met, but
capacity for continued debt service payments is contingent upon a sustained,
favorable business and economic environment.

CCC, CC, C - Debt rated in these categories has a real possibility for default.
Capacity for meeting financial commitments depends solely upon sustained,
favorable business or economic developments. A CC rating indicates that default
of some kind appears probable; a C rating signals imminent default.

DDD, DD, D -The ratings of obligations in this category are based on their
prospects for achieving partial or full recovery in a reorganization or
liquidation of the obligor. While expected recovery values are highly
speculative and cannot be estimated with any precision, the following serve as
general guidelines. 'DDD' obligations have the highest potential for recovery,
around 90%- 100% of outstanding amounts and accrued interest. 'DD' indicates
potential recoveries in the range of 50%-90% and 'D' the lowest recovery
potential, i.e., below 50%.

Entities rated in this category have defaulted on some or all of their
obligations. Entities rated 'DDD' have the highest prospect for resumption of
performance or continued operation with or without a formal reorganization
process. Entities rated 'DD' and 'D' are generally undergoing a formal
reorganization or liquidation process; those rated 'DD' are likely to satisfy a
higher portion of their outstanding obligations, while entities rated 'D' have a
poor prospect of repaying all obligations.

To provide more detailed indications of credit quality, the Standard & Poor's
ratings from AA to CCC may be modified by the addition of a plus or minus sign
to show relative standing within these major rating categories. Similarly,
Moody's adds numerical modifiers (1, 2, 3) to designate relative standing within
its major bond rating categories.

Commercial Paper Ratings


S&P        Moody's             Description
---        -------             -----------
A-1         Prime-1            This indicates that the degree of safety regarding timely payment
            (P-1)              is strong. Standard & Poor's rates those issues determined
                               to possess extremely strong safety characteristics as A-1+.

A-2         Prime-2            Capacity for timely payment on commercial paper is satisfactory,
            (P-2)              but the relative degree of safety is not as high as for issues
                               designated A-1. Earnings trends and coverage ratios, while sound,
                               will be more subject to variation. Capitalization characteristics,
                               while still appropriated, may be more affected by external
                               conditions. Ample alternate liquidity is maintained.

A-3        Prime-3             This indicates satisfactory capacity for timely repayment. Issues
           (P-3)               that carry this rating are somewhat more vulnerable to the
                               adverse changes in circumstances than obligations carrying the
                               higher designations.


Note Ratings


S&P        Moody's             Description
---        -------             -----------
SP-1       MIG-1; VMIG-1       Notes are of the highest quality enjoying strong protection from
                               established cash flows of funds for their servicing or from established and
                               broad-based access to the market for refinancing, or both.

SP-2       MIG-2; VMIG-2       Notes are of high quality, with margins of protection ample, although not
                               so large as in the preceding group.

SP-3       MIG-3; VMIG-3       Notes are of favorable quality, with all security elements accounted for,
                               but lacking the undeniable strength of the preceding grades. Market access
                               for refinancing, in particular, is likely to be less
                               well-established.

SP-4       MIG-4; VMIG-4       Notes are of adequate quality, carrying specific risk but having protection
                               and not distinctly or predominantly speculative.





More information about the funds is contained in these documents


Annual and Semiannual Reports

The 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.

You can receive a free copy of the annual and semiannual reports, and ask any
questions about the funds, by contacting us at the address or one of the
telephone numbers listed below.

If you own or are considering purchasing fund shares through

* an employer-sponsored retirement plan

* a bank

* a broker-dealer

* an insurance company

* another financial intermediary

you can receive the annual and semiannual reports directly from them.

You can also get information about the funds 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            * EDGAR database at
                               www.sec.gov
                           * By email request at
                               publicinfo@sec.gov

By mail                    SEC Public Reference Section
                           Washington, D.C. 20549-0102

Investment Company Act File No. 811-4025


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

Investor Relations
1-800-345-2021 or 816-531-5575

Automated Information Line
1-800-345-8765

www.americancentury.com

Fax
816-340-7962

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

Business; Not-For-Profit and
Employer-Sponsored Retirement Plans
1-800-345-3533


SH-SAI-26820  0210















AMERICAN CENTURY MUNICIPAL TRUST


PART C   OTHER INFORMATION

Item 23  EXHIBITS (all exhibits not filed herewith are being incorporated herein
         by reference).

(a)      (1) Amended and Restated Declaration of Trust, dated March 9, 1998 and
         amended March 1, 1999 (filed electronically as Exhibit a to
         Post-Effective Amendment No. 27 to the Registration Statement of the
         Registrant on September 2, 1999, File No. 2-91229).

         (2) Amendment No. 1 to the Amended and Restated Agreement and
         Declaration of Trust, dated March 6, 2001 (filed electronically as
         Exhibit a2 to Post-Effective Amendment No. 31 to the Registration
         Statement of the Registrant on April 20, 2001, File No. 2-91229).

         (3) Amendment No. 2 to the Amended and Restated Agreement and
         Declaration of Trust dated August 1, 2001 (filed electronically as
         Exhibit a3 to Post-Effective Amendment No. 34 to the Registration
         Statement of the Registrant on September 28, 2001, File No. 2-91229).

         (4) Amendment No. 3 to the Amended and Restated Agreement and
         Declaration of Trust dated December 3, 2001 (filed electronically as
         Exhibit a4 to Post-Effective Amendment No. 35 to the Registration
         Statement of the Registrant on September 30, 2002, File No. 2-91229).

         (5) Amendment No. 4 to the Amended and Restated Agreement and
         Declaration of Trust dated May 8, 2002 (filed electronically as Exhibit
         a5 to Post-Effective Amendment No. 35 to the Registration Statement of
         the Registrant on September 30, 2002, File No. 2-91229).

(b)      Amended and Restated Bylaws, dated March 9, 1998 (filed electronically
         as Exhibit b2 to Post-Effective Amendment No. 23 to the Registration
         Statement of the Registrant on March 26, 1998, File No. 2-91229).

(c)      Registrant hereby incorporates by reference, as though set forth fully
         herein, Article III, Article IV, Article V, Article VI and Article VIII
         of Registrant's Amended and Restated Declaration of Trust, appearing as
         Exhibit (a) to this Post-Effective Amendment No. 31 to the Registration
         Statement on Form N-1A of the Registrant; and Article II, Article VII,
         Article VIII and Article IX of Registrant's Amended and Restated Bylaws
         appearing as Exhibit (b)(2) to Post-Effective Amendment No. 23 on Form
         N-1A of the Registrant.

(d)      (1) Management Agreement (Investor Class) between American Century
         California Tax-Free and Municipal Funds, American Century Municipal
         Trust, American Century Government Income Trust, American Century
         International Bond Funds, American Century Investment Trust, American
         Century Quantitative Equity Funds, American Century Target Maturities
         Trust and American Century Investment Management, Inc., dated August 1,
         1997 (filed electronically as Exhibit 5 to Post-Effective Amendment No.
         33 to the Registration Statement of American Century Government Income
         Trust on July 31, 1997, File No. 2-99222).

         (2) Amendment to the Management Agreement (Investor Class) between
         American Century California Tax-Free and Municipal Funds, American
         Century Municipal Trust, American Century Government Income Trust,
         American Century International Bond Funds, American Century Investment
         Trust, American Century Quantitative Equity Funds, American Century
         Target Maturities Trust and American Century Investment Management,
         Inc., dated March 31, 1998 (filed electronically as Exhibit 5b to
         Post-Effective Amendment No. 23 to the Registration Statement of the
         Registrant on March 26, 1998, File No. 2-91229).

         (3) Amendment to the Management Agreement (Investor Class) between
         American Century California Tax-Free and Municipal Funds, American
         Century Municipal Trust, American Century Government Income Trust,
         American Century International Bond Funds, American Century Investment
         Trust, American Century Quantitative Equity Funds, American Century
         Target Maturities Trust and American Century Investment Management,
         Inc., dated July 1, 1998 (filed electronically as Exhibit d3 to
         Post-Effective Amendment No. 39 to the Registration Statement of
         American Century Government Income Trust on July 28, 1999, File No.
         2-99222).

         (4) Amendment No. 1 to the Management Agreement (Investor Class)
         between American Century California Tax-Free and Municipal Funds,
         American Century Municipal Trust, American Century Government Income
         Trust, American Century International Bond Funds, American Century
         Investment Trust, American Century Quantitative Equity Funds, American
         Century Target Maturities Trust, American Century Variable Portfolios
         II, Inc. and American Century Investment Management, Inc., dated
         September 16, 2000 (filed electronically as Exhibit d4 to
         Post-Effective Amendment No. 30 to the Registration Statement of
         American Century California Tax-Free and Municipal Funds on December
         29, 2000, File No. 2-82734).

         (5) Amendment No. 2 to the Management Agreement (Investor Class)
         between American Century California Tax-Free and Municipal Funds,
         American Century Municipal Trust, American Century Government Income
         Trust, American Century International Bond Funds, American Century
         Investment Trust, American Century Quantitative Equity Funds, American
         Century Target Maturities Trust, American Century Variable Portfolios
         II, Inc. and American Century Investment Management, Inc., dated August
         1, 2001 (filed electronically as Exhibit d5 to Post-Effective Amendment
         No. 44 to the Registration Statement of American Century Government
         Income Trust on July 31, 2001, File No. 2-99222).

         (6) Amendment No. 3 to the Management Agreement (Investor Class)
         between American Century California Tax-Free and Municipal Funds,
         American Century Government Income Trust, American Century
         International Bond Funds, American Century Investment Trust, American
         Century Municipal Trust, American Century Quantitative Equity Funds,
         American Century Target Maturities Trust, American Century Variable
         Portfolios II, Inc. and American Century Investment Management, Inc.,
         dated December 3, 2001 (filed electronically as Exhibit d6 to
         Post-Effective Amendment No. 16 to the Registration Statement of the
         Registrant on November 30, 2001, File No. 33-65170).

         (7) Amendment No. 4 to the Management Agreement (Investor Class)
         between American Century California Tax-Free and Municipal Funds,
         American Century Government Income Trust, American Century
         International Bond Funds, American Century Investment Trust, American
         Century Municipal Trust, American Century Quantitative Equity Funds,
         American Century Target Maturities Trust, American Century Variable
         Portfolios II, Inc. and American Century Investment Management, Inc.,
         dated July 1, 2002 (filed electronically as Exhibit d7 to
         Post-Effective Amendment No. 17 to the Registration Statement of the
         Registrant on June 28, 2002, File No. 33-65170).

         (8) Management Agreement (C Class) between American Century Target
         Maturities Trust, American Century California Tax-Free and Municipal
         Funds, American Century Government Income Trust, American Century
         Investment Trust, American Century Quantitative Equity Funds, American
         Century Municipal Trust and American Century Investment Management
         Inc., dated September 16, 2000 (filed electronically as Exhibit d6 to
         Post-Effective Amendment No. 35 to the Registration Statement of
         American Century Target Maturities Trust on April 17, 2001, File No.
         2-94608).

         (9) Amendment No. 1 to the Management Agreement (C Class) between
         American Century Target Maturities Trust, American Century California
         Tax-Free and Municipal Funds, American Century Government Income Trust,
         American Century Investment Trust, American Century Quantitative Equity
         Funds, American Century Municipal Trust and American Century Investment
         Management Inc., dated August 1, 2001 (filed electronically as Exhibit
         d10 to Post-Effective Amendment No. 44 to the Registration Statement of
         American Century Government Income Trust on July 31, 2001, File No.
         2-99222).

         (10) Amendment No. 2 to the Management Agreement (C Class) between
         American Century Target Maturities Trust, American Century California
         Tax-Free and Municipal Funds, American Century Government Income Trust,
         American Century Investment Trust, American Century Quantitative Equity
         Funds, American Century Municipal Trust and American Century Investment
         Management, Inc., dated December 3, 2001 (filed electronically as
         Exhibit d13 to Post-Effective Amendment No. 16 to the Registration
         Statement of American Century Investment Trust on November 30, 2001,
         File No. 33-65170).

         (11) Amendment No. 3 to the Management Agreement (C Class) between
         American Century Target Maturities Trust, American Century California
         Tax-Free and Municipal Funds, American Century Government Income Trust,
         American Century Investment Trust, American Century Quantitative Equity
         Funds, American Century Municipal Trust and American Century Investment
         Management, Inc., dated July 1, 2002 (filed electronically as Exhibit
         d16 to Post-Effective Amendment No. 17 to the Registration Statement of
         American Century Investment Trust on June 28, 2002, File No. 33-65170).

         (12) Amendment No. 4 to the Management Agreement (C Class) between
         American Century Target Maturities Trust, American Century California
         Tax-Free and Municipal Funds, American Century Government Income Trust,
         American Century Investment Trust, American Century Quantitative Equity
         Funds, American Century Municipal Trust and American Century Investment
         Management, Inc., dated September 3, 2002 (filed electronically as
         Exhibit d12 to Post-Effective Amendment No. 34 to the Registration
         Statement of American Century California Tax-Free and Municipal Funds
         on October 10, 2002, File No. 2-82734).

         (13) Management Agreement (A Class) between American Century California
         Tax-Free and Municipal Funds, American Century Municipal Trust,
         American Century Investment Trust and American Century Investment
         Management, Inc., dated September 3, 2002 (filed electronically as
         Exhibit d13 to Post-Effective Amendment No. 34 to the Registration
         Statement of American Century California Tax-Free and Municipal Funds
         on October 10, 2002, File No. 2-82734).

         (14) Management Agreement (B Class) between American Century California
         Tax-Free and Municipal Funds, American Century Municipal Trust,
         American Century Investment Trust and American Century Investment
         Management, Inc., dated September 3, 2002 (filed electronically as
         Exhibit d14 to Post-Effective Amendment No. 34 to the Registration
         Statement of American Century California Tax-Free and Municipal Funds
         on October 10, 2002, File No. 2-82734).

(e)      (1) Amended and Restated Distribution Agreement between American
         Century California Tax-Free and Municipal Funds, American Century
         Capital Portfolios, Inc., American Century Government Income Trust,
         American Century International Bond Funds, American Century Investment
         Trust, American Century Municipal Trust, American Century Mutual Funds,
         Inc., American Century Quantitative Equity Funds, American Century
         Strategic Asset Allocations, Inc., American Century Target Maturities
         Trust, American Century Variable Portfolios, Inc., American Century
         Variable Portfolios II, Inc., American Century World Mutual Funds, Inc.
         and American Century Investment Services, Inc., dated September 3, 2002
         (filed electronically as Exhibit e1 to Post-Effective Amendment No. 35
         to the Registration Statement of the Registrant on September 30, 2002,
         File No. 2-91229).

(f)      Not applicable.

(g)      (1) Master Agreement by and between Twentieth Century Services, Inc.
         and Commerce Bank, N.A., dated January 22, 1997 (filed electronically
         as Exhibit b8e to Post-Effective Amendment No. 76 to the Registration
         Statement of American Century Mutual Funds, Inc. on February 28, 1997,
         File No. 2-14213).

         (2) Global Custody Agreement between American Century Investments and
         The Chase Manhattan Bank, dated August 9, 1996 (filed electronically as
         Exhibit b8 to Post-Effective Amendment No. 31 to the Registration
         Statement of American Century Government Income Trust on February 7,
         1997, File No. 2-99222).

         (3) Amendment to the Global Custody Agreement between American Century
         Investments and The Chase Manhattan Bank, dated December 9, 2000 (filed
         electronically as Exhibit g2 to Pre-Effective Amendment No. 2 to the
         Registration Statement of American Century Variable Portfolios II, Inc.
         on January 9, 2001, File No. 333-46922).

(h)      (1) Transfer Agency Agreement between American Century Investment
         Trust, American Century California Tax-Free and Municipal Funds,
         American Century Government Income Trust, American Century
         International Bond Funds, American Century Municipal Trust, American
         Century Quantitative Equity Funds, American Century Target Maturities
         Trust and American Century Services Corporation, dated August 1, 1997
         (filed electronically as Exhibit 9 to Post-Effective Amendment No. 33
         to the Registration Statement of American Century Government Income
         Trust on July 31, 1997, File No. 2-99222).

         (2) Amendment No. 1 to the Transfer Agency Agreement between American
         Century Investment Trust, American Century California Tax-Free and
         Municipal Funds, American Century Government Income Trust, American
         Century International Bond Funds, American Century Municipal Trust,
         American Century Quantitative Equity Funds, American Century Target
         Maturities Trust and American Century Services Corporation, dated June
         29, 1998 (filed electronically as Exhibit b9b to Post-Effective
         Amendment No. 23 to the Registration Statement of American Century
         Quantitative Equity Funds on June 29, 1998, File No. 33-19589).

         (3) Amendment No. 2 to the Transfer Agency Agreement between American
         Century Investment Trust, American Century California Tax-Free and
         Municipal Funds, American Century Government Income Trust, American
         Century International Bond Funds, American Century Municipal Trust,
         American Century Quantitative Equity Funds, American Century Target
         Maturities Trust, American Century Variable Portfolios II, Inc. and
         American Century Services Corporation, dated November 20, 2000 (filed
         electronically as Exhibit h4 to Post-Effective Amendment No. 30 to the
         Registration Statement of American Century California Tax-Free and
         Municipal Funds on December 29, 2000, File No. 2-82734).

         (4) Amendment No. 3 to the Transfer Agency Agreement between American
         Century Investment Trust, American Century California Tax-Free and
         Municipal Funds, American Century Government Income Trust, American
         Century International Bond Funds, American Century Municipal Trust,
         American Century Quantitative Equity Funds, American Century Target
         Maturities Trust, American Century Variable Portfolios II, Inc. and
         American Century Services Corporation, dated August 1, 2001 (filed
         electronically as Exhibit h5 to Post-Effective Amendment No. 44 to the
         Registration Statement of American Century Government Income Trust on
         July 31, 2001, File No. 2-99222).

         (5) Amendment No. 4 to the Transfer Agency Agreement between American
         Century Investment Trust, American Century California Tax-Free and
         Municipal Funds, American Century Government Income Trust, American
         Century International Bond Funds, American Century Municipal Trust,
         American Century Quantitative Equity Funds, American Century Target
         Maturities Trust, American Century Variable Portfolios II, Inc. and
         American Century Services Corporation, dated December 3, 2001 (filed
         electronically as Exhibit h6 to Post-Effective Amendment No. 16 to the
         Registration Statement of American Century Investment Trust on November
         30, 2001, File No. 33-65170).

         (6) Amendment No. 5 to the Transfer Agency Agreement between American
         Century Investment Trust, American Century California Tax-Free and
         Municipal Funds, American Century Government Income Trust, American
         Century International Bond Funds, American Century Municipal Trust,
         American Century Quantitative Equity Funds, American Century Target
         Maturities Trust, American Century Variable Portfolios II, Inc. and
         American Century Services Corporation, dated July 1, 2002 (filed
         electronically as Exhibit h6 to Post-Effective Amendment No. 17 to the
         Registration Statement of American Century Investment Trust on June 28,
         2002, File No. 33-65170).

         (7) Amendment No. 6 to the Transfer Agency Agreement between American
         Century Investment Trust, American Century California Tax-Free and
         Municipal Funds, American Century Government Income Trust, American
         Century International Bond Funds, American Century Municipal Trust,
         American Century Quantitative Equity Funds, American Century Target
         Maturities Trust, American Century Variable Portfolios II, Inc. and
         American Century Services Corporation, dated September 3, 2002 (filed
         electronically as Exhibit h8 to Post-Effective Amendment No. 35 to the
         Registration Statement of the Registrant on September 30, 2002, File
         No. 2-91229).

         (8) Credit Agreement between American Century Funds and The Chase
         Manhattan Bank, as Administrative Agent, dated as of December 18, 2001
         (filed electronically as Exhibit h9 to Post-Effective Amendment No. 33
         to the Registration Statement of American Century California Tax-Free
         and Municipal Funds on December 28, 2001, File No. 2-82734).

(i)      Opinion and Consent of Counsel (filed electronically as Exhibit i to
         Post-Effective Amendment No. 27 to the Registration Statement of the
         Registrant on September 2, 1999, File No. 2-91229).

(j)      (1) Consent of PricewaterhouseCoopers LLP, independent accountants (to
         be filed by amendment).

         (2) Power of Attorney, dated September 12, 2002 (filed electronically
         as Exhibit j4 to Post-Effective Amendment No. 35 to the Registration
         Statement of the Registrant, on September 30, 2002, File No. 2-91229).

         (3) Secretary's Certificate dated September 12, 2002 (filed
         electronically as Exhibit j5 to Post-Effective Amendment No. 35 to the
         Registration Statement of the Registrant on September 30, 2002, File
         No. 2-91229).

(k)      Not applicable.

(l)      Not applicable.

(m)      (1) Master Distribution and Individual Shareholder Services Plan of
         American Century Government Income Trust, American Century Investment
         Trust, American Century California Tax-Free and Municipal Funds,
         American Century Municipal Trust, American Century Target Maturities
         Trust and American Century Quantitative Equity Funds (C Class), dated
         September 16, 2000 (filed electronically as Exhibit m3 to
         Post-Effective Amendment No. 35 to the Registration Statement of
         American Century Target Maturities Trust on April 17, 2001, File No.
         2-94608).

         (2) Amendment No. 1 to the Master Distribution and Individual
         Shareholder Services Plan of American Century Government Income Trust,
         American Century Investment Trust, American Century California Tax-Free
         and Municipal Funds, American Century Municipal Trust, American Century
         Target Maturities Trust and American Century Quantitative Equity Funds
         (C Class), dated August 1, 2001 (filed electronically as Exhibit m5 to
         Post-Effective Amendment No. 44 to the Registration Statement of
         American Century Government Income Trust on July 31, 2001, File No.
         2-99222).

         (3) Amendment No. 2 to the Master Distribution and Individual
         Shareholder Services Plan of American Century Government Income Trust,
         American Century Investment Trust, American Century California Tax-Free
         and Municipal Funds, American Century Municipal Trust, American Century
         Target Maturities Trust and American Century Quantitative Equity Funds
         (C Class) dated December 3, 2001 (filed electronically as Exhibit m7 to
         Post-Effective Amendment No. 16 to the Registration Statement of
         American Century Investment Trust on November 30, 2001, File No.
         33-65170).

         (4) Amendment No. 3 to the Master Distribution and Individual
         Shareholder Services Plan of American Century Government Income Trust,
         American Century Investment Trust, American Century California Tax-Free
         and Municipal Funds, American Century Municipal Trust, American Century
         Target Maturities Trust and American Century Quantitative Equity Funds
         (C Class) dated July 1, 2002 (filed electronically as Exhibit m9 to
         Post-Effective Amendment No. 17 to the Registration Statement of
         American Century Investment Trust on June 28, 2002, File No. 33-65170).

         (5) Amendment No. 4 to Master Distribution and Individual Shareholder
         Services Plan of American Century Government Income Trust, American
         Century Investment Trust, American Century California Tax-Free and
         Municipal Funds, American Century Municipal Trust, American Century
         Target Maturities Trust and American Century Quantitative Equity Funds
         (C Class) dated September 3, 2002 (filed electronically as Exhibit m5
         to Post-Effective Amendment No. 35 to the Registration Statement of the
         Registrant on September 30, 2002, File No. 2-91229).

         (6) Master Distribution and Individual Shareholder Services Plan of
         American Century World Mutual Funds, Inc., American Century Mutual
         Funds, Inc., American Century Capital Portfolios, Inc., American
         Century Investment Trust, American Century Municipal Trust and American
         Century California Tax-Free and Municipal Funds (A Class) dated
         September 3, 2002 (filed electronically as Exhibit m6 to Post-Effective
         Amendment No. 34 to the Registration Statement of American Century
         California Tax-Free and Municipal Funds on October 10, 2002, File No.
         2-82734).

         (7) Master Distribution and Individual Shareholder Services Plan of
         American Century World Mutual Funds, Inc., American Century Mutual
         Funds, Inc., American Century Capital Portfolios, Inc., American
         Century Investment Trust, American Century Municipal Trust and American
         Century California Tax-Free and Municipal Funds (B Class) dated
         September 3, 2002 (filed electronically as Exhibit m7 to Post-Effective
         Amendment No. 34 to the Registration Statement of American Century
         California Tax-Free and Municipal Funds on October 10, 2002, File No.
         2-82734).

(n)      Amended and Restated Multiple Class Plan of American Century California
         Tax-Free and Municipal Funds, American Century Government Income Trust,
         American Century International Bond Funds, American Century Investment
         Trust, American Century Municipal Trust, American Century Target
         Maturities Trust, and American Century Quantitative Equity Funds,
         American Century Capital Portfolios, Inc., American Century Mutual
         Funds, Inc., American Century Strategic Asset Allocations, Inc. and
         American Century World Mutual Funds, Inc. dated September 3, 2002
         (filed electronically as Exhibit n to Post-Effective Amendment No. 35
         to the Registration Statement of the Registrant on September 30, 2002,
         File No. 2-91229).

(o)      Not applicable.

(p)      American Century Investments Code of Ethics (filed electronically as
         Exhibit p to Post-Effective Amendment No. 30 to the Registration
         Statement of American Century California Tax-Free and Municipal Funds
         on December 29, 2000, File No. 2-82734).

Item 24. Persons Controlled by or Under Control with Registrant - None.

Item 25. Indemnification.

As stated in Article VII, Section 3 of the Amended and Restated Agreement and
Declaration of Trust, incorporated herein by reference to Exhibit a to the
Registration Statement, "The Trustees shall be entitled and empowered to the
fullest extent permitted by law to purchase insurance for and to provide by
resolution or in the Bylaws for indemnification out of Trust assets for
liability and for all expenses reasonably incurred or paid or expected to be
paid by a Trustee or officer in connection with any claim, action, suit, or
proceeding in which he or she becomes involved by virtue of his or her capacity
or former capacity with the Trust. The provisions, including any exceptions and
limitations concerning indemnification, may be set forth in detail in the Bylaws
or in a resolution adopted by the Board of Trustees."

Registrant hereby incorporates by reference, as though set forth fully herein,
Article VI of the Registrant's Bylaws, amended and restated on March 9, 1998,
incorporated herein by reference to Exhibit b2 to Post-Effective Amendment No.
23 to the Registration Statement of the Registrant on March 26, 1998, File No.
2-91229.

The Registrant has purchased an insurance policy insuring its officers and
directors against certain liabilities which such officers and trustees may incur
while acting in such capacities and providing reimbursement to the Registrant
for sums which it may be permitted or required to pay to its officers and
trustees by way of indemnification against such liabilities, subject in either
case to clauses respecting deductibility and participation.

Item 26. Business and Other Connections of Investment Advisor.

None.

Item 27. Principal Underwriter.

I. (a) American Century Investment Services, Inc. (ACIS) acts as principal
underwriter for the following investment companies:

American Century California Tax-Free and Municipal Funds
American Century Capital Portfolios, Inc.
American Century Government Income Trust
American Century International Bond Funds
American Century Investment Trust
American Century Municipal Trust
American Century Mutual Funds, Inc.
American Century Quantitative Equity Funds
American Century Strategic Asset Allocations, Inc.
American Century Target Maturities Trust
American Century Variable Portfolios, Inc.
American Century Variable Portfolios II, Inc.
American Century World Mutual Funds, Inc.

          ACIS is registered with the Securities and Exchange Commission as a
broker-dealer and is a member of the National Association of Securities Dealers.
ACIS is located at 4500 Main Street, Kansas City, Missouri 64111. ACIS is a
wholly-owned subsidiary of American Century Companies, Inc.

          (b) The following is a list of the directors, executive officers and
partners of ACIS:

Name and Principal      Positions and Offices     Positions and Offices
Business Address*        with Underwriter            with Registrant
-----------------------------------------------------------------------

James E. Stowers, Jr.   Chairman and Director            none

James E. Stowers III    Co-Chairman and Director         Chairman and
                                                         Director

W. Gordon Snyder        President                        none

William M. Lyons        Chief Executive Officer,         President
                        Executive Vice President
                        and Director

Robert T. Jackson       Executive Vice President,        Executive Vice
                        Chief Financial Officer          President and
                        and Chief Accounting Officer     Chief Financial
                                                         Officer

Joseph Greene           Senior Vice President            none

Brian Jeter             Senior Vice President            none

Mark Killen             Senior Vice President            none

Tom Kmak                Senior Vice President            none

Dave Larrabee           Senior Vice President            none

Barry Mayhew            Senior Vice President            none

David C. Tucker         Senior Vice President      Senior Vice President
                        and General Counsel

* All addresses are 4500 Main Street, Kansas City, Missouri 64111

     (c) Not applicable.

Item 28. Location of Accounts and Records.

All accounts, books and other documents required to be maintained by Section
31(a) of the 1940 Act, and the rules promulgated thereunder, are in the
possession of Registrant, American Century Services Corporation and American
Century Investment Management, Inc., all located at 4500 Main Street, Kansas
City, Missouri 64111.

Item 29. Management Services - Not applicable.


Item 30. Undertakings - Not applicable.



















                                SIGNATURES

Pursuant to the requirements of the Investment Company Act of 1940, the
Registrant has duly caused this Amendment No. 38 to its Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Kansas City, State of Missouri, on the 10th day of October, 2002.

                      AMERICAN CENTURY MUNICIPAL TRUST (Registrant)


                      By: /*/William M. Lyons
                      William M. Lyons
                      President and Principal Executive Officer

Pursuant to the requirements of the Securities Act of 1933, this Post-Effective
Amendment No. 37 has been signed below by the following persons in the
capacities and on the dates indicated.

Signature                   Title                        Date
---------                   -----                        ----

*William M. Lyons           President, Trustee and       October 10, 2002
-------------------------   Principal Executive Officer
William M. Lyons

*Robert T. Jackson          Chief Financial Officer      October 10, 2002
-------------------------
Robert T. Jackson

*Maryanne Roepke            Senior Vice President,       October 10, 2002
-------------------------   Treasurer and Chief
Maryanne Roepke             Chief Accounting Officer

*James E. Stowers III       Trustee, Chairman of         October 10, 2002
-------------------------   the Board
James E. Stowers III

*Albert A. Eisenstat        Trustee                      October 10, 2002
-------------------------
Albert A. Eisenstat

*Ronald J. Gilson           Trustee                      October 10, 2002
-------------------------
Ronald J. Gilson

*Myron S. Scholes           Trustee                      October 10, 2002
-------------------------
Myron S. Scholes

*Kenneth E. Scott           Trustee                      October 10, 2002
-------------------------
Kenneth E. Scott

*Jeanne D. Wohlers          Trustee                      October 10, 2002
-------------------------
Jeanne D. Wohlers

*Kathryn A. Hall            Trustee                      October 10, 2002
-------------------------
Kathryn A. Hall

/s/Janet A. Nash
*by Janet A. Nash, Attorney in Fact (pursuant to a Power of Attorney dated
September 12, 2002).