UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


                                    FORM N-14

             REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933


[  ] Pre-Effective Amendment No.        [  ] Post-Effective Amendment No.
                                 -----                                    -----
                        (Check appropriate box or boxes)



Exact Name of Registrant as Specified in Charter:    Area Code and
                                                     Telephone Number:

      AMERICAN CENTURY MUNICIPAL TRUST                     (816) 531-5575
------------------------------------------------     ---------------------------


Address of Principal Executive Offices: (Number, Street, City, State, Zip Code)

                  4500 MAIN STREET, KANSAS CITY, MISSOURI 64111
--------------------------------------------------------------------------------


Name and Address of Agent for Service: (Number, Street, City, State, Zip Code)

      CHARLES A. ETHERINGTON, 4500 MAIN STREET, KANSAS CITY, MISSOURI 64111
--------------------------------------------------------------------------------


Approximate Date of Proposed Public Offering:            April 13, 2007
                                              ----------------------------------

Title of Securities Being Registered:


     ARIZONA MUNICIPAL BOND FUND
     FLORIDA MUNICIPAL BOND FUND
     TAX-FREE BOND FUND


Calculation of Registration  Fee under the Securities Act of 1933: No filing fee
is due because of reliance on Section 24(f).







                          American Century Investments
                                4500 Main Street
                              Kansas City, MO 64111

                                 April __, 2007



Dear Shareholder,

     I would like to invite you to an upcoming  special  meeting of shareholders
to be held on June 27, 2007 at 11:30 a.m.  Depending on the funds you hold,  you
are being asked to vote on proposed reorganizations and/or reclassifications.  A
brief  description  is below and more detailed  information  is contained in the
enclosed materials.  The Boards of Directors/Trustees of these funds,  including
all of the Independent  Directors/Trustees,  unanimously  approved and recommend
that you vote FOR the proposals.

     American  Century®  recently completed a review of its fund line-up and
share class offerings. As a result, we are proposing:

     1)   The reorganizations of the Arizona Municipal Bond Fund and the Florida
          Municipal Bond Fund into the Tax-Free Bond Fund; and

     2)   The  conversion of certain  share classes to a different  class of the
          same  fund   (sometimes   referred  to  as   reclassifications).   The
          reclassification  proposals  relate to share  classes that either have
          not  received  sufficient  demand  from  investors  or  whose  pricing
          structure differs from the industry standard.

     These  proposals  are  part of a  larger  set of  initiatives  designed  to
streamline  American  Century's mutual fund offerings and better align them with
investor  buying  preferences  and  market  opportunities.  If these  additional
initiatives  apply to your fund,  they will be presented for your  consideration
and approval in a separate set of proxy materials.

     Your  vote is  extremely  important,  no  matter  how  large or small  your
holdings.  Please review the enclosed  materials and vote online, by phone or by
signing and returning your proxy card(s) in the enclosed postage-paid  envelope.
If we do not hear from you after a reasonable  time, you may receive a call from
our proxy  solicitor,  Automatic Data Processing,  Inc. (ADP),  reminding you to
vote.  If you have any questions or need  assistance  in  completing  your proxy
card(s), please contact ADP at 1-877-256-6083.

     Thank you for investing with American Century Investments.


Sincerely,



American Century Investments








                             AMERICAN CENTURY FUNDS


                             ARIZONA MUNICIPAL BOND
                             FLORIDA MUNICIPAL BOND
                                  TAX-FREE BOND
                                DIVERSIFIED BOND
                                   HIGH-YIELD
                               PRIME MONEY MARKET
                                    UTILITIES


IMPORTANT NEWS FOR SHAREHOLDERS

While we encourage you to read all of the proxy materials, you will find a brief
overview of the  proposals  below.  The  overview and  accompanying  Q&A contain
limited  information,  should be read in conjunction  with, and are qualified by
reference  to the more  detailed  information  contained  elsewhere in the Proxy
Statement/Prospectus.

     o    Shareholders of Arizona  Municipal Bond and Florida Municipal Bond are
          being asked to approve the  reorganization  of each fund into Tax-Free
          Bond  (referred to as the  reorganizations).  If approved,  this would
          result in the  tax-free  reorganization  of those funds into  Tax-Free
          Bond.

     o    Some  shareholders  are being asked to approve a  conversion  of their
          shares  to a  different  class of the same  fund  (referred  to as the
          reclassifications).


QUESTIONS AND ANSWERS

Q.  WHEN WILL THE SPECIAL MEETING BE HELD?  WHO CAN VOTE?

A. The special  meeting will be held on Wednesday,  June 27, 2007, at 11:30 a.m.
Central  time at American  Century's  office at 4500 Main  Street,  Kansas City,
Missouri.  Please note, this will be a business  meeting only. No  presentations
about the funds are planned. If you owned shares of one of the impacted funds at
the close of business on April 13, 2007,  you are entitled to vote,  even if you
later sold the shares.  Each  shareholder  is entitled to one vote per dollar of
shares owned, with fractional dollars voting proportionally.

Q. WHAT ARE THE REORGANIZATIONS?

A. The  following  table  outlines the proposed  reorganizations  and shows what
Arizona  Municipal Bond and Florida  Municipal Bond shareholders will receive if
the reorganizations are approved:

-----------------------------------------   ------------------------------------
IF YOU OWN SHARES OF:                       YOU WILL RECEIVE SHARES OF:
-----------------------------------------   ------------------------------------
Arizona Municipal Bond                      Tax-Free Bond
Investor Class, A Class, B Class, C Class   Investor Class
-----------------------------------------   ------------------------------------
Florida Municipal Bond                      Tax-Free Bond
Investor Class, A Class, B Class, C Class   Investor Class

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


Q. HOW WILL THE REORGANIZATIONS AFFECT MY INVESTMENTS IN THE FUNDS?

A. If approved,  you will receive  shares of Tax-Free  Bond in exchange for your
shares  of   Arizona   Municipal   Bond  and   Florida   Municipal   Bond.   The
reorganizations:

     o    WILL NOT BE  TAXABLE  (See  INFORMATION  ABOUT THE  REORGANIZATIONS  -
          Federal Income Tax Consequences of the Reorganizations.);

     o    MAY REDUCE YOUR FUND  EXPENSES (The total  operating  expenses for the
          Investor  Class  shares  of  Tax-Free  Bond  to  be  received  in  the
          reorganizations  are  lower  than  those  of every  class  of  Arizona
          Municipal  Bond and  Florida  Municipal  Bond except  Investor  Class.
          Investor Class expenses are the same for each of the funds.); and

     o    WILL AFFECT  YOUR FUND'S  INVESTMENT  OBJECTIVE  (Tax-Free  Bond seeks
          current  income  that is exempt from  federal  income  taxes.  Arizona
          Municipal  Bond and Florida  Municipal  Bond share that  objective but
          also seek income that is exempt  from,  respectively,  Arizona  income
          taxes and the Florida intangible  personal property tax. However,  the
          potential state tax benefits of Florida Municipal Bond were eliminated
          when Florida repealed the intangible  personal  property tax effective
          January 1, 2007.).

Q. HOW WILL THE REORGANIZATIONS WORK?

A. The reorganizations will involve the following:

     o    the transfer of all of the assets and certain  liabilities  of Arizona
          Municipal Bond and Florida Municipal Bond to Tax-Free Bond in exchange
          for shares of the Investor  Class of Tax-Free  Bond having  equivalent
          value to the net assets transferred;

     o    the  pro  rata   distribution  of  shares  of  Tax-Free  Bond  to  the
          shareholders of record of Arizona Municipal Bond and Florida Municipal
          Bond; and

     o    the termination of Arizona  Municipal Bond and Florida  Municipal Bond
          following the reorganizations.

The  reorganizations  would take place on the  Closing  Date,  as defined in the
Proxy Statement/Prospectus.

Q.  WILL  I  HAVE  TO  PAY  ANY  SALES   CHARGES  ON  SHARES   RECEIVED  IN  THE
REORGANIZATIONS?

A. No. The Investor  Class shares to be received in the  reorganizations  do not
carry a front-end sales charge (load) or contingent deferred sales charge.

Q. WHAT ARE THE RECLASSIFICATIONS?

A. The following  table outlines the proposed  reclassifications  and shows what
shareholders will receive if the reclassifications are approved:


--------------------------------------- ----------------------------------------
IF YOU OWN SHARES OF:                   YOU WILL RECEIVE SHARES OF:
--------------------------------------- ----------------------------------------
Diversified Bond - Advisor Class        Diversified Bond - A Class
--------------------------------------- ----------------------------------------
Prime Money Market - Advisor Class      Prime Money Market - A Class
--------------------------------------- ----------------------------------------
High-Yield - Advisor Class              High Yield - A Class
--------------------------------------- ----------------------------------------
Tax-Free Bond - Advisor Class           Tax-Free Bond - Investor Class
--------------------------------------- ----------------------------------------
Utilities - Advisor Class               Utilities - Investor Class
--------------------------------------- ----------------------------------------


Q. HOW WILL THE RECLASSIFICATIONS AFFECT MY INVESTMENTS IN THE FUNDS?

A. If approved,  your shares will be converted to shares of a different class of
the same fund, as indicated in the table above. The reclassifications:

     o    will not cause you to be invested  in a  different  fund or change the
          investment objectives, policies or manager of your funds;

     o    will not be taxable; and

     o    will reduce your fund operating expenses if you receive Investor Class
          shares and will not change your fund operating expenses if you receive
          A Class shares.

Q. HOW WILL THE RECLASSIFICATIONS WORK?

A. If a  reclassification  is approved,  an amendment to the fund's  Articles of
Incorporation/Declaration  of Trust  will be filed  that will have the effect of
converting  the shares of the affected  class to shares of a different  class of
the same fund, as indicated in the table above.  This change would take place on
the Closing Date, as defined in the Proxy Statement/Prospectus.

Q.  WILL  I  HAVE  TO  PAY  ANY  SALES   CHARGES  ON  SHARES   RECEIVED  IN  THE
RECLASSIFICATIONS?

A. No.  Investor  Class shares do not carry a front-end  sales charge  (load) or
contingent  deferred sales charge.  Although A Class shares do carry a front-end
sales charge,  it will not apply to A Class shares that are received as a result
of a reclassification or that are subsequently purchased in the same accounts.

Q. HOW DOES THE BOARD OF DIRECTORS  OR BOARD OF TRUSTEES OF EACH FUND  RECOMMEND
THAT I VOTE?

A.  The  Boards  of   Directors/Trustees,   including  all  of  the  Independent
Directors/Trustees,  unanimously  recommend you vote FOR the reorganizations and
reclassifications.  For a  discussion  of the  factors the Board  considered  in
approving  the  reorganizations,  see "Reasons for the  Reorganizations."  For a
discussion   of  the   factors   the  Boards   considered   in   approving   the
reclassifications, see "Reasons for the Reclassifications."

Q. MY HOLDINGS IN THE FUNDS ARE SMALL, WHY SHOULD I VOTE?

A. Your vote makes a difference. If many shareholders do not vote their proxies,
your fund may not receive  enough votes to go forward with its special  meeting.
This means  additional  costs will be incurred to solicit votes to determine the
outcome of the proposals.

Q.  WHAT  HAPPENS  IF ANY OF THE  REORGANIZATIONS  OR  RECLASSIFICATIONS  IS NOT
APPROVED BY SHAREHOLDERS?

A. Each reorganization and  reclassification is a separate  transaction,  and is
not dependent upon the approval of any other reorganization or reclassification.
If a reorganization or reclassification  does not receive shareholder  approval,
American  Century may ask for Board  approval to liquidate  the affected fund or
class. In addition, if a significant number of reclassification proposals do not
receive  shareholder  approval,  then American  Century may elect not to proceed
with any of them.

Q. WHY ARE MULTIPLE PROXY CARDS ENCLOSED?

A. You will  receive  a proxy  card  for  each of the  funds in which  you are a
shareholder.  In  addition,  if you own  shares  of the  same  fund in  multiple
accounts  that are titled  differently,  you will  receive a proxy card for each
account.

Q. HOW DO I CAST MY VOTE?

A. You may vote online,  by phone,  by mail,  by fax or in person at the special
meeting. To vote online,  access the Web site listed on a proxy card. To vote by
telephone,  call the toll-free  number listed on a proxy card. To vote online or
by  telephone,  you will need the number that appears in the gray box on the xxx
side of each of your proxy cards.  To vote by mail,  complete,  sign and send us
the enclosed  proxy card(s) in the enclosed  postage-paid  envelope.  To vote by
fax,  complete  and sign the proxy  card(s) and fax both sides to the  toll-free
number  listed  on a proxy  card.  You also may vote in  person  at the  special
meeting on Wednesday,  June 27, 2007. If you need more  information  or have any
questions on how to cast your vote, call our proxy solicitor at 1-877-256-6083.

YOUR VOTE IS  IMPORTANT.  PLEASE  VOTE  TODAY AND AVOID THE NEED FOR  ADDITIONAL
SOLICITATION EXPENSES.





                             AMERICAN CENTURY FUNDS

                             ARIZONA MUNICIPAL BOND
                             FLORIDA MUNICIPAL BOND
                                  TAX-FREE BOND
                                DIVERSIFIED BOND
                                   HIGH-YIELD
                               PRIME MONEY MARKET
                                    UTILITIES

                                4500 MAIN STREET
                           KANSAS CITY, MISSOURI 64111

                   NOTICE OF A SPECIAL MEETING OF SHAREHOLDERS

                           TO BE HELD ON JUNE 27, 2007

To Our Shareholders:

NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders (the "Meeting") of
the American  Century Funds:  Arizona  Municipal Bond,  Florida  Municipal Bond,
Tax-Free Bond,  Diversified Bond,  High-Yield,  Prime Money Market and Utilities
will be held at 4500 Main  Street,  Kansas  City,  Missouri  on June 27, 2007 at
11:30 a.m., Central Time for the following purposes:

For shareholders of Arizona  Municipal Bond:

To approve an agreement and plan of reorganization  whereby effective August 31,
2007 or such other date as American Century may decide,  Arizona  Municipal Bond
will be reorganized into Tax-Free Bond. Both Arizona Municipal Bond and Tax-Free
Bond are series of American Century Municipal Trust.

For shareholders of Florida Municipal Bond:

To approve an agreement and plan of reorganization, whereby effective August 31,
2007 or such other date as American Century may decide,  Florida  Municipal Bond
will be reorganized into Tax-Free Bond. Both Florida Municipal Bond and Tax-Free
Bond are series of American Century Municipal Trust.


For Advisor Class shareholders of Diversified Bond, High-Yield,  and Prime Money
Market:

To approve the reclassification of the Advisor Class shares of Diversified Bond,
High-Yield and Prime Money Market,  each a series of American Century Investment
Trust,  whereby  effective August 31, 2007 or on such other date as the American
Century may decide,  all of the Advisor Class shares will be  reclassified  as A
Class shares of the same funds,  having a total net asset value ("NAV") equal to
the total NAV of his or her Advisor Class  holdings in the  applicable  funds on
the date of the reclassification..

For Advisor Class shareholders of Tax-Free Bond and Utilities:

To approve a  reclassification  of the Advisor Class shares of Tax-Free  Bond, a
series of American Century Municipal Trust, and Utilities,  a series of American
Century Quantitative Equity Funds, Inc., whereby, effective November 30, 2007 or
on such other date as  American  Century may  decide,  all of the Advisor  Class
shares will be  reclassified as Investor Class shares of the same funds , having
a total net asset  value  ("NAV")  equal to the total NAV of his or her  Advisor
Class holdings in the applicable funds on the date of the reclassification..

It is  not  anticipated  that  any  matters  other  than  the  approval  of  the
reorganizations and  reclassifications  will be brought before the meeting.  If,
however, any other business is properly brought before the Meeting, proxies will
be voted in accordance with the judgment of the persons designated as proxies.

The  Boards of  Directors/Trustees  of the  aforementioned  funds have fixed the
close of business on April 13, 2007, as the record date for the determination of
shareholders  entitled  to  notice  of,  and to  vote  at,  the  Meeting  or any
adjournment thereof.

YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING.  SHAREHOLDERS ARE REQUESTED AND
ENCOURAGED TO VOTE ONLINE,  BY PHONE,  OR BY DATING,  SIGNING AND RETURNING EACH
ENCLOSED PROXY CARD IN THE POSTAGE-PAID  ENVELOPE PROVIDED FOR THAT PURPOSE.  IF
YOU INTEND TO ATTEND THE MEETING IN PERSON,  YOU MAY REGISTER YOUR PRESENCE WITH
THE REGISTRAR AND VOTE YOUR SHARES IN PERSON,  EVEN IF YOU HAVE PREVIOUSLY VOTED
YOUR SHARES BY PROXY.

If you  properly  execute and return the  enclosed  proxy  card(s) in time to be
voted at the Meeting,  your shares  represented  by the proxies will be voted at
the Meeting in accordance with your instructions.  Unless revoked,  proxies that
have been returned by shareholders  without  instructions will be voted in favor
of the reorganizations and reclassifications.

The  enclosed   proxies  are  being   solicited  on  behalf  of  the  Boards  of
Directors/Trustees of the funds.

THE BOARD OF DIRECTORS/TRUSTEES OF EACH OF THE FUNDS UNANIMOUSLY RECOMMENDS THAT
THE   SHAREHOLDERS   OF   THE   FUNDS   VOTE   FOR   THE   REORGANIZATIONS   AND
RECLASSIFICATIONS.

By Order of the Boards of Directors/Trustees of the funds,






                     COMBINED PROXY STATEMENT AND PROSPECTUS

                                 April __, 2007

                                REORGANIZATION OF

                AMERICAN CENTURY ARIZONA MUNICIPAL BOND FUND AND
                  AMERICAN CENTURY FLORIDA MUNICIPAL BOND FUND
               EACH, A SERIES OF AMERICAN CENTURY MUNICIPAL TRUST


                    IN EXCHANGE FOR INVESTOR CLASS SHARES OF


                       AMERICAN CENTURY TAX-FREE BOND FUND
                  A SERIES OF AMERICAN CENTURY MUNICIPAL TRUST

                                     AND THE

            RECLASSIFICATION OF SHARE CLASSES OF THE FOLLOWING FUNDS:


ADVISOR  CLASS SHARES OF THE  FOLLOWING  FUNDS WILL BE  RECLASSIFIED  AS A CLASS
SHARES OF THE SAME FUNDS:


                     AMERICAN CENTURY DIVERSIFIED BOND FUND
                        AMERICAN CENTURY HIGH-YIELD FUND
                    AMERICAN CENTURY PRIME MONEY MARKET FUND
               EACH, A SERIES OF AMERICAN CENTURY INVESTMENT TRUST


ADVISOR CLASS SHARES OF THE  FOLLOWING  FUNDS WILL BE  RECLASSIFIED  AS INVESTOR
CLASS SHARES OF THE SAME FUNDS:


                       AMERICAN CENTURY TAX-FREE BOND FUND
                  A SERIES OF AMERICAN CENTURY MUNICIPAL TRUST

                                       AND

                         AMERICAN CENTURY UTILITIES FUND
          A SERIES OF AMERICAN CENTURY QUANTITATIVE EQUITY FUNDS, INC.

                      Each Fund has the following address:

                                4500 Main Street
                           Kansas City, Missouri 64111
                          Telephone No.: 1-877-345-8836

This document is a combined Proxy Statement and Prospectus and we refer to it as
the   Proxy    Statement/Prospectus.    We   are    sending   you   this   Proxy
Statement/Prospectus in connection with the Special Meeting of Shareholders (the
"Meeting") for the following  American  Century Funds:  Arizona  Municipal Bond,
Florida  Municipal  Bond,  Diversified  Bond,  High-Yield,  Prime Money  Market,
Tax-Free  Bond  and  Utilities  (hereinafter  collectively  referred  to as  the
"American Century Funds"). The Meeting will be held at 4500 Main Street,  Kansas
City,  Missouri on June 27, 2007, at 11:30 a.m., Central Time. We intend to mail
this Proxy  Statement/Prospectus,  the enclosed  Notice of a Special  Meeting of
Shareholders  and the enclosed  proxy card(s) on or about April 16, 2007, to all
shareholders entitled to vote at the Meeting.




At the Meeting,  we are asking  shareholders  of the American  Century  Funds to
consider the following proposals:
--------------------------------------------------------------------------------
Proposal 1: To approve an agreement and plan of reorganization whereby effective
on or about  August 31,  2007,  or on such other date as  American  Century  may
decide,  the American  Century Arizona  Municipal Bond Fund ("Arizona  Municipal
Bond"),  will be  reorganized  into the  American  Century  Tax-Free  Bond  Fund
("Tax-Free  Bond").  Both Arizona Municipal Bond and Tax-Free Bond are series of
American Century Municipal Trust.
--------------------------------------------------------------------------------
Proposal 2: To approve an agreement and plan of reorganization whereby effective
on or about  August 31,  2007,  or on such other date as  American  Century  may
decide,  the American  Century Florida  Municipal Bond Fund ("Florida  Municipal
Bond") will be reorganized  into Tax-Free Bond. Both Florida  Municipal Bond and
Tax-Free Bond are series of American Century Municipal Trust.
--------------------------------------------------------------------------------
Proposal 3: To approve the conversion or "reclassification" of the Advisor Class
shares of the American Century  Diversified Bond Fund ("Diversified  Bond"), the
American Century High-Yield Fund  ("High-Yield") and the Prime Money Market Fund
("Prime Money  Market"),  each a series of American  Century  Investment  Trust,
whereby  effective on or about August 31, 2007 or on such other date as American
Century may decide,  all of the Advisor Class shares will be  reclassified  as A
Class shares of the same respective Funds.
--------------------------------------------------------------------------------
Proposal  4: To approve  the  conversion  or  "reclassification"  of the Advisor
Shares of Tax-Free Bond, a series of American  Century  Municipal Trust, and the
American  Century  Utilities Fund  ("Utilities"),  a series of American  Century
Quantitative Equity Funds, Inc., whereby effective on or about November 30, 2007
or on such other date as American  Century may decide,  all of the Advisor Class
shares will be  reclassified  as Investor  Class  shares of the same  respective
Funds.
--------------------------------------------------------------------------------

Each of the above proposed  reorganizations  shall  hereinafter be  individually
referred  to  as  a  "Reorganization"  and  collectively   referred  to  as  the
"Reorganizations."   Each  of  the  above   proposed   reclassifications   shall
hereinafter be individually referred to as a "Reclassification" and collectively
referred to as the  "Reclassifications."  Each of the aforementioned Funds shall
individually  be  referred  to as an  "American  Century  Fund" or a "Fund"  and
collectively referred to as the "American Century Funds" or the "Funds." Each of
the above referenced corporations and trusts may hereinafter be referred to as a
"Corporation" and collectively referred to as the "Corporations."

Your Board is seeking your proxy to vote FOR the proposals.

--------------------------------------------------------------------------------
THESE  SECURITIES  HAVE NOT BEEN APPROVED OR  DISAPPROVED  BY THE SECURITIES AND
EXCHANGE COMMISSION, NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROXY  STATEMENT/PROSPECTUS.  ANY  REPRESENTATION  TO THE  CONTRARY IS A
CRIMINAL OFFENSE.
--------------------------------------------------------------------------------



This Proxy  Statement/Prospectus  is a proxy  statement of the American  Century
Funds for use in  connection  with the  solicitation  of your proxy to vote your
shares at the Meeting,  and serves as a prospectus for each applicable  American
Century  Fund under the  Securities  Act of 1933,  as amended  (the  "Securities
Act"), in connection with the issuance of shares to you pursuant to the terms of
the Reorganizations and/or Reclassifications.

This Proxy  Statement/Prospectus  sets forth concisely the information about the
American   Century   Funds  that  you  should   know  before   considering   the
Reorganizations  and/or  Reclassifications,  and should be  retained  for future
reference.  If you are a  shareholder  of  Arizona  Municipal  Bond  or  Florida
Municipal Bond this Proxy  Statement/Prospectus is accompanied by the prospectus
for Tax-Free Bond,  dated October 1, 2006. If you are a shareholder of any other
Fund(s), you will receive a prospectus of the Fund(s) you are currently invested
in along with this  Proxy  Statement/Prospectus.  The  Statement  of  Additional
Information,  dated April __, 2007, relating to this Proxy Statement/Prospectus,
contains additional information and has been filed by the American Century Funds
with the Securities and Exchange  Commission ("SEC") and is incorporated  herein
by reference.  In addition,  each of the following  documents is incorporated by
reference (and legally considered to be part of the Proxy Statement/Prospectus):

     1.   A prospectus for Diversified Bond dated August 1, 2006;

     2.   A prospectus for High-Yield dated August 1, 2006;

     3.   A  prospectus  for Prime  Money  Market  dated  August 1,  2006;

     4.   A prospectus for Tax-Free Bond dated October 1, 2006;

     5.   A prospectus for Utilities dated May 1, 2006;

     6.   A combined prospectus for Arizona Municipal Bond and Florida Municipal
          Bond dated October 1, 2006;

     7.   A statement of additional information for Diversified Bond, High-Yield
          and Prime Money Market Fund dated November 30, 2006;

     8.   A statement  of  additional  information  for Tax-Free  Bond,  Arizona
          Municipal Bond and Florida Municipal Bond dated October 1, 2006;

     9.   A statement of additional information for Utilities dated November 30,
          2006;

     10.  An annual  report  dated May 31, 2006 and a  semiannual  report  dated
          November 30, 2006 for Tax-Free Bond;

     11.  An annual  report  dated May 31, 2006 and a  semiannual  report  dated
          November  30, 2006 for Arizona  Municipal  Bond and Florida  Municipal
          Bond;

     12.  An annual  report dated March 31, 2006 and a  semiannual  report dated
          September 30, 2006 for Diversified Bond and High-Yield;

     13.  An annual  report dated March 31, 2006 and a  semiannual  report dated
          September 30, 2006 for Prime Money Market; and

     14.  An annual report dated December 31, 2006 for Utilities.

References  to the  above-listed  documents  include  any  supplements  to  such
documents in effect as of the date of this Proxy Statement/Prospectus. Copies of
these materials and other  information  about the Funds may be obtained  without
charge by writing to or calling American Century  Investments at the address and
telephone number shown above. They are also available electronically at American
Century's Web site at americancentury.com.

NO  PERSON  HAS  BEEN  AUTHORIZED  TO  GIVE  ANY  INFORMATION  OR  TO  MAKE  ANY
REPRESENTATIONS  OTHER THAN THOSE  CONTAINED IN THIS PROXY  STATEMENT/PROSPECTUS
AND IN THE MATERIALS EXPRESSLY INCORPORATED HEREIN BY REFERENCE AND, IF GIVEN OR
MADE,  SUCH OTHER  INFORMATION  OR  REPRESENTATIONS  MUST NOT BE RELIED  UPON AS
HAVING BEEN AUTHORIZED BY THE AMERICAN CENTURY FUNDS.

THE SHARES  OFFERED  BY THIS  PROXY  STATEMENT/PROSPECTUS  ARE NOT  DEPOSITS  OR
OBLIGATIONS  OF, OR  GUARANTEED  OR ENDORSED BY, ANY BANK.  THESE SHARES ARE NOT
FEDERALLY  INSURED BY, GUARANTEED BY,  OBLIGATIONS OF OR OTHERWISE  SUPPORTED BY
THE U.S.  GOVERNMENT,  THE FEDERAL DEPOSIT  INSURANCE  CORPORATION,  THE FEDERAL
RESERVE  BOARD OR ANY OTHER  GOVERNMENTAL  AGENCY.  AN  INVESTMENT  IN THE FUNDS
INVOLVES INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED.




                                TABLE OF CONTENTS

                                                                            PAGE

SUMMARY

     Introduction
     Closing Dates

PROPOSALS  WITH  RESPECT  TO  THE  APPROVAL  OF  THE  AGREEMENTS  AND  PLANS  OF
REORGANIZATION AND APPROVAL OF THE RECLASSIFICATIONS

    PROPOSALS  1 & 2 - To  Approve  the  Proposed  Reorganizations  of
      Florida Municipal Bond and Arizona Municipal Bond
        Reasons for the Proposed Reorganizations
        Comparison of Investment Objectives, Policies and Risks
        Purchase, Redemption and Exchange of Shares
        The Investment Advisor

    PROPOSAL 3 - To Approve the  Proposed  Reclassifications  of Advisor  Class
      shares as A Class shares
        Reasons for the Reclassifications of Advisor Class shares as A Class shares
        Consequences of the Reclassification
        Description of the Shares
        Investment Objectives, Policies and Risks
        Purchase, Redemption and Exchange of Shares
        Comparative Fee Tables
        Comparative Performance Tables

    PROPOSAL 4 - To Approve the  Proposed  Reclassifications  of Advisor  Class
      shares as Investor Class shares
        Reasons for the  Reclassifications of Advisor Class shares as Investor
        Class shares
        Consequences of the Reclassifications
        Description of the Shares
        Investment Objectives, Policies and Risks
        Purchase, Redemption and Exchange of Shares
        Comparative Fee Tables
        Comparative Performance Tables

INFORMATION ABOUT THE REORGANIZATIONS
        Terms of the Plans of Reorganization
        Costs of the Reorganizations
        Reasons for the Reorganizations
        Federal Income Tax Consequences of the Reorganizations
        Fund Capitalization
        Material Differences Between Rights of Shareholders

INFORMATION ABOUT THE RECLASSIFICATIONS
        Terms of the Reclassifications
        Costs of the Reclassifications
        Reasons for the Reclassifications
        Federal Income Tax Consequences
        Description of the Fund Shares: Advisor Class to A Class
        Calculation of Sales Charges
        Reductions and Waivers of Sales Charges for A Class Shares
        Calculation of Contingent Deferred Sales Charge Applicable to A Shares
        CDSC Waivers
        Reinstatement Privilege
        Rights of Shareholders
        Voting Rights of Shareholders
        Meetings of Shareholders
        Description of the Fund Shares: Advisor Class to Investor Class
        Shareholders Fees
        Rights of Shareholders
        Voting Rights of Shareholders
        Meetings of Shareholders
        Fund Capitalization

INFORMATION ABOUT THE AMERICAN CENTURY FUNDS
        General Information
        Date, Time and Place of Meeting
        Use and Revocation of Proxies
        Voting Rights and Required Vote
        Record Date and Outstanding Shares
        Security Ownership of Certain Beneficial Owners and Management of the Funds
        Other Service Providers

WHERE TO FIND ADDITIONAL INFORMATION

OTHER MATTERS AND DISCRETION OF ATTORNEYS NAMED IN THE PROXY

FORM OF AGREEMENT AND PLAN OF REORGANIZATION                           EXHIBIT A

FORM OF AMENDMENT TO THE CHARTER                                       EXHIBIT B

MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE                            EXHIBIT C

FINANCIAL HIGHLIGHTS                                                   EXHIBIT D






                                     SUMMARY

This  summary  is  qualified  in  its  entirety  by the  additional  information
contained  elsewhere  in this Proxy  Statement/Prospectus,  or  incorporated  by
reference  into this Proxy  Statement/Prospectus.  A form of the  Agreements and
Plans of Reorganization  pursuant to which the Reorganizations will be conducted
is attached to this Proxy  Statement/Prospectus  as Exhibit A. For more complete
information,   please  read  the   prospectuses   and  statement  of  additional
information of Diversified Bond,  High-Yield,  and Prime Money Market, series of
American Century  Investment Trust;  Arizona  Municipal Bond,  Florida Municipal
Bond and  Tax-Free  Bond,  series  of  American  Century  Municipal  Trust;  and
Utilities,  a series of American  Century  Quantitative  Equity Funds,  Inc., as
applicable, which accompany this Proxy Statement/Prospectus.

INTRODUCTION

This Proxy  Statement/Prospectus is furnished to you because you are entitled to
vote   on  one  or   more   of   the   proposals   described   in   this   Proxy
Statement/Prospectus that will be considered at the Meeting. The Meeting will be
held on June 27, 2007.

The following is a brief summary of the proposals that will be voted upon at the
Meeting:

1. It is being  proposed that Tax-Free Bond acquire all of the assets of Arizona
Municipal  Bond,  in exchange  for Investor  Class shares of Tax-Free  Bond (the
"Arizona/Tax-Free   Exchange").   Immediately   following  the  Arizona/Tax-Free
Exchange,  Arizona  Municipal Bond will  distribute the Investor Class shares of
Tax-Free  Bond to holders of the Investor  Class,  A Class,  B Class and C Class
shares  of   Arizona   Municipal   Bond,   respectively   (the   "Arizona   Fund
Distribution").  The Arizona/Tax-Free Exchange and the Arizona Fund Distribution
are collectively referred to in this Proxy  Statement/Prospectus as the "Arizona
Fund   Reorganization."   If   approved,   as  a  result  of  the  Arizona  Fund
Reorganization,  each holder of Investor  Class, A Class,  B Class,  and C Class
shares  of  Arizona  Municipal  Bond will  receive  the same  percentage  of the
aggregate number of Investor Class shares of Tax-Free Bond issued in the Arizona
Fund Reorganization as he or she owned in Arizona Municipal Bond, having a total
net asset value ("NAV")  equal to the total NAV of his or her Arizona  Municipal
Bond holdings on the Closing Date (as hereafter defined).

2. It is being  proposed that Tax-Free Bond acquire all of the assets of Florida
Municipal  Bond,  in exchange  for Investor  Class shares of Tax-Free  Bond (the
"Florida/Tax-Free   Exchange").   Immediately   following  the  Florida/Tax-Free
Exchange,  Florida  Municipal Bond will  distribute the Investor Class shares of
Tax-Free  Bond to holders of the Investor  Class,  A Class,  B Class and C Class
shares  of   Florida   Municipal   Bond,   respectively   (the   "Florida   Fund
Distribution").  The Florida/Tax-Free Exchange and the Florida Fund Distribution
are collectively referred to in this Proxy  Statement/Prospectus as the "Florida
Fund   Reorganization."   If   approved,   as  a  result  of  the  Florida  Fund
Reorganization,  each holder of  Investor  Class,  A Class,  B Class and C Class
shares  of  Florida  Municipal  Bond will  receive  the same  percentage  of the
aggregate number of Investor Class shares of Tax-Free Bond issued in the Florida
Fund  Reorganization  as he or she owned in the Florida  Municipal Bond having a
total NAV equal to the total NAV of his or her Florida  Municipal  Bond holdings
on the Closing Date (as hereafter defined).

3. It is being  proposed  that all of the Advisor  Class  shares of  Diversified
Bond,  High-Yield,  and Prime Money Market be  reclassified as A Class shares of
the same Funds.  If this  proposal is approved,  the  Reclassification  would be
effective  on the  Closing  Date (as  hereafter  defined).  As a result  of this
Reclassification,   each   shareholder  of  the  Advisor  Class  shares  of  the
aforementioned  Funds will become the owner of A Class shares of the same Funds,
having a total net asset  value NAV equal to the total NAV of his or her Advisor
Class holdings in the applicable Fund(s) on the date of the Reclassification.

4. It is being  proposed  that all of the Advisor  Class shares of Tax-Free Bond
and Utilities be  reclassified  as Investor  Class shares of the same Funds.  If
this  proposal is  approved,  the  Reclassification  would be  effective  on the
Closing Date (as  hereinafter  defined).  As a result of this  Reclassification,
each  shareholder of the Advisor Class shares of the  aforementioned  Funds will
become the owner of Investor Class shares of the same Funds,  having a total NAV
equal to the total NAV of his or her holdings of the  applicable  Fund(s) on the
date of the Reclassification.

Each  Board  of   Directors/Trustees   of  the  aforementioned  Funds  shall  be
collectively   referred   to   as   the   "Boards."   The   Boards,    including
Directors/Trustees  who are not  "interested  persons"  within  the  meaning  of
Section 2(a)(19) of the Investment Company Act of 1940, as amended ("1940 Act"),
have  concluded  that  the   Reorganizations   are  in  the  best  interests  of
shareholders of Arizona Municipal Bond, Florida Municipal Bond and Tax-Free Bond
and the  Reclassifications  are in the  best  interests  of the  Advisor  Class,
Investor Class, A Class and C Class shareholders.

Consummation of either  Reorganization  is not conditioned upon the consummation
of the other  Reorganization.  Consummation of any one  Reclassification  is not
conditioned  upon  the  consummation  of  any  other   Reclassification.   If  a
Reorganization  or  Reclassification  does  not  receive  shareholder  approval,
American  Century may ask for Board  approval to liquidate  the affected Fund or
class. In addition, if a significant number of Reclassification proposals do not
receive  shareholder  approval,  then American  Century may elect not to proceed
with any of them.

Each  Reclassification  will be a tax-free event under applicable  provisions of
the  Internal  Revenue  Code,  as  amended,  so that  no  gain  or loss  will be
recognized  by the  American  Century  Funds  or  the  American  Century  Funds'
shareholders.  As a condition to its  Reorganization,  each Fund will receive an
opinion of Reed Smith, LLP that the Reorganization will be considered a tax-free
"reorganization"  under  applicable  provisions of the Internal  Revenue Code of
1986, as amended,  so that no gain or loss will be recognized by either  Arizona
Municipal  Bond,  Florida  Municipal  Bond,  Tax-Free  Bond or their  respective
shareholders.  The tax basis of the shares of Tax-Free  Bond received by Arizona
Municipal Bond and Florida  Municipal Bond  shareholders will be the same as the
tax basis of their shares in Arizona Municipal Bond or Florida Municipal Bond.

CLOSING DATES

If all of the requisite approvals are obtained and certain conditions are either
met or waived,  it is anticipated that the  Reorganizations  will be consummated
following  the close of  business  on August  31,  2007 or on such other date as
American  Century  may decide  (the  "Closing  Date") and that  shareholders  of
Arizona  Municipal  Bond and  Florida  Municipal  Bond  will  receive  shares of
Tax-Free  Bond as of the next  business day  following  the Closing Date. If the
requisite  approvals are obtained,  the  Reclassification  in Proposal 3 will be
consummated  following  the close of business  on August 31, 2007 (the  "Closing
Date")  or  on  such  other  date  as  American  Century  may  decide,  and  the
Reclassifications  in  Proposal  4 will be  consummated  following  the close of
business on  November  30,  2007 (the  "Closing  Date") or on such other date as
American  Century  may  decide.   The   aforementioned   Closing  Dates  may  be
collectively referred to as the "Closing Dates."



PROPOSALS  WITH  RESPECT  TO  THE  APPROVAL  OF  THE  AGREEMENTS  AND  PLANS  OF
REORGANIZATION AND APPROVAL OF THE RECLASSIFICATIONS


PROPOSALS 1 & 2 - TO APPROVE THE PROPOSED REORGANIZATIONS OF ARIZONA
MUNICIPAL BOND AND FLORIDA MUNICIPAL BOND


                ARIZONA MUNICIPAL BOND AND FLORIDA MUNICIPAL BOND


REASONS FOR THE PROPOSED REORGANIZATIONS

The Board of Trustees of American  Century  Municipal  Trust  ("Municipal  Trust
Board") has determined that a combination of Florida  Municipal Bond and Arizona
Municipal Bond  (collectively,  the "Acquired  Funds") with Tax-Free Bond is the
best course of action for  shareholders  of the Acquired Funds. In reaching this
conclusion  the Municipal  Trust Board noted that the small size of the Acquired
Funds limits their ability to achieve certain  benefits of large asset size, and
that the  small  size has made it  difficult  for the  Acquired  Funds to remain
viable. In addition, with respect to Florida Municipal Bond, the Municipal Trust
Board  considered  the  adverse  impact  that  the  elimination  of the  Florida
intangibles  tax would  likely have on  investment  options and future  sales of
Florida Municipal Bond.

The following  tables show the total return  performance  of the Investor  Class
shares of both Florida  Municipal  Bond and Arizona  Municipal  Bond,  which are
based on net  asset  values,  for the past five  calendar  years  against  their
performance benchmark, net sales of Arizona Municipal Bond and Florida Municipal
Bond for each calendar year, and their net assets at each calendar year end.

-------------------------------- ---------- ---------- ----------- ---------- ----------
ARIZONA MUNICIPAL BOND              2002       2003        2004       2005       2006
-------------------------------- ---------- ---------- ----------- ---------- ----------
INVESTOR CLASS SHARES              9.06%      3.94%       2.75%       2.34%      3.92%
-------------------------------- ---------- ---------- ----------- ---------- ----------
LEHMAN BROTHERS MUNICIPAL 5-YEAR   9.00%      4.19%       2.95%       1.07%      3.38%
GENERAL OBLIGATIONS  INDEX
-------------------------------- ---------- ---------- ----------- ---------- ----------
NET SALES OF FUND SHARES         $ 10.59     $ (5.86)    $(6.23)     $(0.14)   $(2.75)
                                  million    million     million     million   million
-------------------------------- ---------- ---------- ----------- ---------- ----------
FUND NET ASSETS                     $72        $66        $59         $58         $55
                                  million    million    million     million     million
-------------------------------- ---------- ---------- ----------- ---------- ----------


-------------------------------- ---------- ---------- ----------- ---------- ----------
FLORIDA MUNICIPAL BOND              2002       2003        2004       2005       2006
-------------------------------- ---------- ---------- ----------- ---------- ----------
INVESTOR CLASS SHARES              9.34%      3.99%       2.54%       2.04%       3.75%
-------------------------------- ---------- ---------- ----------- ---------- ----------
LEHMAN BROTHERS MUNICIPAL 5-YEAR   9.00%      4.19%       2.95%       1.07%       3.38%
GENERAL OBLIGATIONS  INDEX
-------------------------------- ---------- ---------- ----------- ---------- ----------
NET SALES OF FUND SHARES         $ 14.52    $(8.23)       $ 3.44   $ (13.95)  $ (8.59)
                                  million    million     million     million    million
-------------------------------- ---------- ---------- ----------- ---------- ----------
FUND NET ASSETS                     $69        $60        $63         $48        $40
                                  million    million     million    million     million
-------------------------------- ---------- ---------- ----------- ---------- ----------

As the  tables  illustrate,  despite  the  satisfactory  performance  of Arizona
Municipal  Bond  and  Florida  Municipal  Bond  relative  to  their  performance
benchmark,  net sales of the Acquired  Funds' shares and the Acquired Funds' net
assets have not grown, but rather declined.

The advisor to the Acquired Funds, American Century Investment Management,  Inc.
("American  Century" or the "Advisor")  believes that the  Reorganizations  will
result in a more  viable  investment  for  Arizona  Municipal  Bond and  Florida
Municipal Bond shareholders.  As shown below in the "Comparative Fee Tables," an
additional  benefit  to certain  shareholders  of the  Acquired  Funds will be a
significant  reduction in expenses as a result of the  Reorganizations.  None of
the Acquired  Funds'  shareholders'  expenses  will  increase as a result of the
Reorganizations.

The Municipal Trust Board has voted to recommend to  shareholders,  the approval
of the Reorganizations. In considering the Reorganizations,  the Municipal Trust
Board took into consideration a number of factors,  including: (1) the viability
of the Acquired Funds absent  approval of the proposed  Reorganizations  and the
relative compatibility of the investment objectives, policies and limitations of
the Acquired  Funds and Tax-Free Bond;  (2) the greater  long-term  viability of
Tax-Free Bond and, in the case of Florida  Municipal  Bond, the redundancy  with
Tax-Free Bond given the repeal of the Florida's  intangible tax; (3) the adverse
impact that the elimination of the Florida  intangibles tax would likely have on
investment options and future sales of Florida Municipal Bond; (4) the fact that
the  Reorganizations  are  expected  to be  "tax-free"  for  federal  income tax
purposes (and that the Funds will receive an opinion of counsel to this effect);
(5) that the proposed  Reorganizations may result in lower fees, as a percentage
of net assets,  for certain  shareholders of Florida  Municipal Bond and Arizona
Municipal Bond; and (6) the undertaking by American Century to pay all costs and
expenses of preparing,  printing and mailing this Proxy Statement/Prospectus and
solicitation expenses of the Reorganizations.

The  Municipal  Trust Board  concluded to  recommend  that the  shareholders  of
Arizona   Municipal  Bond  and  Florida  Municipal  Bond  vote  to  approve  the
Reorganizations.  Pursuant to Rule 17a-8 under the 1940 Act, the Municipal Trust
Board,  including a majority of the  Trustees  who are not  interested  persons,
separately  determined that participation in the transaction will be in the best
interests of Florida  Municipal  Bond  shareholders  and Arizona  Municipal Bond
shareholders and that the interests of such shareholders would not be diluted as
a result of effecting the Reorganizations.

The Municipal  Trust Board likewise  approved the  Reorganizations  on behalf of
Tax-Free  Bond.  Pursuant to Rule 17a-8 under the 1940 Act, the Municipal  Trust
Board,  including a majority of the  Trustees  who are not  interested  persons,
determined that participation in the  Reorganizations  was in the best interests
of Tax-Free Bond's shareholders and that the interests of existing Tax-Free Bond
shareholders would not be diluted as a result of effecting the  Reorganizations.
Approval  of the  shareholders  of Tax-Free  Bond is not  required to effect the
Reorganizations.

As a condition to its Reorganization,  each Fund will receive an opinion of Reed
Smith,   LLP  that   the   Reorganization   will  be   considered   a   tax-free
"reorganization"  under  applicable  provisions of the Internal  Revenue Code of
1986,  as  amended,  so  that no gain or  loss  will be  recognized  by  Arizona
Municipal  Bond,  Florida  Municipal  Bond,  Tax-Free  Bond or their  respective
shareholders.  The tax basis of the shares of Tax-Free  Bond received by Arizona
Municipal Bond and Florida  Municipal Bond  shareholders will be the same as the
tax basis of their shares in Arizona Municipal Bond or Florida Municipal Bond.

Consummation of one of the  Reorganizations is not a condition to the closing of
the other Reorganization. If one or both Reorganizations are not approved by the
Acquired Funds'  shareholders,  American Century may ask the Board for authority
to liquidate one or both Funds.


COMPARISON OF INVESTMENT OBJECTIVES, POLICIES AND RISKS

INVESTMENT OBJECTIVES

The investment  objectives of Arizona  Municipal Bond and Florida Municipal Bond
differ  materially  from that of Tax-Free  Bond,  as indicated by the  following
table.

---------------------------- ---------------------------------------------------
American Century Fund        Investment Objective
---------------------------- ---------------------------------------------------
Arizona Municipal Bond       Seeks safety of principal and high current income
                             that is exempt from federal and Arizona income
                             taxes.
---------------------------- ---------------------------------------------------
Florida Municipal Bond       Seeks safety of principal and high current income
                             that is exempt from federal income tax and Florida
                             intangible personal property tax.
---------------------------- ---------------------------------------------------
Tax-Free Bond                Seeks safety of principal and high current income
                             that is exempt from federal income tax.
---------------------------- ---------------------------------------------------

The material  difference in investment  objectives is that,  while Tax-Free Bond
only seeks to be exempt from federal income taxes,  Arizona  Municipal Bond also
seeks to be exempt from  Arizona  income taxes and Florida  Municipal  Bond also
seeks to be exempt from the Florida  intangible  personal property tax. However,
Florida has repealed its intangible  personal  property tax effective January 1,
2007.

INVESTMENT EXPOSURE

Each Fund  primarily  invests in  "quality  debt  securities"  (a  quality  debt
security is one that has been rated by an  independent  rating agency in its top
four credit quality  categories or determined by the Advisor to be of comparable
credit  quality)  and will invest at least 80% of its assets in debt  securities
with interest payments exempt from regular federal income tax. Cities,  counties
and other  municipalities  in the 50 states  and U.S.  territories  (such as the
Commonwealth of Puerto Rico) usually issue these securities for public projects,
such as schools and roads.

Arizona  Municipal  Bond will  invest at least  80% of its  assets in  municipal
securities  issued by cities,  counties and other  municipalities in Arizona and
U.S.  territories with interest  payments exempt from Arizona income tax as well
as regular federal income tax. Historically, Florida Municipal Bond has invested
at least 80% of its assets in municipal  securities  issued by cities,  counties
and other  municipalities in Florida and U.S. territories with interest payments
exempt from the Florida  intangible  personal  property  tax, as well as regular
federal income tax.  However,  since Florida  repealed its  intangible  personal
property tax, effective January 1, 2007, the Fund may invest to a greater extent
in municipal securities issued by states other than Florida.

Each Fund also may buy quality 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.  No more than 20% of any
Fund's assets may be invested in these securities.

Although each Fund invests primarily in investment grade  securities,  up to 20%
of the value of each Fund's net assets may be invested in below investment-grade
securities (BB and below).  The Funds also may invest in securities which, while
not rated,  are determined by the Advisor to be of comparable  credit quality to
those rated below investment-grade.

In the event of  exceptional  market or  economic  conditions,  a 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 a Fund assumes a defensive
position it will not be  pursuing  its  investment  objective  and may  generate
taxable income.

The  Advisor is not  limited  to a specific  weighted  average  maturity  range.
However,  the Advisor monitors a Fund's weighted average maturity,  and seeks to
adjust it as  appropriate,  taking  into  account  market  conditions  and other
relevant factors.

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

COMPARISON OF RISKS

The risks associated with investing in the Funds are similar.

Each  Fund may  invest  all of its  assets  in  securities  rated in the  lowest
investment-grade  category  (for  example,  Baa or BBB).  The  issuers  of these
securities  are more  likely to pose a credit  risk,  that is, to have  problems
making interest and principal payments, than issuers of higher-rated securities.
Each  Fund  may  also  invest  part of its  assets  in  securities  rated  below
investment-grade  or that are  unrated.  By  definition,  the issuers of many of
these securities may have problems making interest and principal payments. Below
investment-grade  municipal bonds are vulnerable to real or perceived changes in
the business climate and can be less liquid and more volatile.

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

When interest  rates change,  a 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.  Funds with longer weighted average maturities
are more sensitive to interest rate changes.

Because  the  Funds  invest  primarily  in  municipal  securities,  they will be
sensitive to events that affect municipal markets.

ARIZONA MUNICIPAL BOND

Because  Arizona   Municipal  Bond  invests   primarily  in  Arizona   municipal
securities,  it will be  sensitive  to events  that  affect  Arizona's  economy.
Arizona Municipal Bond may have a higher level of risk than Funds that invest in
a larger universe of securities.

FLORIDA MUNICIPAL BOND

Prior to the repeal of Florida's  intangible  personal  property tax,  effective
January 1, 2007,  Florida Municipal Bond invested primarily in Florida municipal
securities.  To the extent it continues to do so, it will be sensitive to events
that affect Florida's economy. Florida Municipal Bond may have a higher level of
risk than Funds that invest in a larger universe of securities.

For more  information  on the risks of  investing  in the Funds  please  see the
prospectuses for the Funds,  which are incorporated by reference into this Proxy
Statement/Prospectus.  The  prospectus  for Tax-Free  Bond is included with this
Proxy Statement/Prospectus.

PURCHASE, REDEMPTION AND EXCHANGE OF SHARES

The  following  table  highlights  certain  purchase,  redemption  and  exchange
features of Arizona  Municipal  Bond and Florida  Municipal  Bond as compared to
such features of the Investor Class shares of Tax-Free Bond.

------------------------- ----------------------------------------- ----------------------------------
PURCHASE, REDEMPTION      ARIZONA MUNICIPAL BOND AND FLORIDA        TAX-FREE BOND -
AND EXCHANGE FEATURES     MUNICIPAL BOND                            INVESTOR CLASS SHARES
------------------------- ----------------------------------------- ----------------------------------
Initial Sales Charge      A Class shares: 4.50% is the maximum      Investor Class shares: None
(as a percentage of       sales charge applicable to A Class
offering price)           shares (subject to the availability of
                          waivers and reduced sales charges)

                          B Class shares: None

                          C Class shares: None

                          Investor Class shares: None
------------------------- ----------------------------------------- ----------------------------------
Reductions and Waivers    o    Reductions in sales charge           Not applicable because there is no
of Initial Sales Charges       based upon amount invested.          initial sales charge on Investor
                               There are no front-end sales         Class shares.
                               charges for purchases of
                               $1,000,000 or more.

                          o    Rights of Accumulation/
                               Account Aggregation

                          o    Concurrent Purchases

                          o    Letter of Intent

                          o    Waivers for Certain Investors
------------------------- ----------------------------------------- ----------------------------------
Contingent Deferred       A Class shares: Investments of            Investor Class shares: None
Sales Charge (CDSC)       $1,000,000 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.

                          B Class shares:  5.00% during the first
                          year of purchase, declines over the
                          next five years as shown in the
                          prospectus, and is eliminated after six
                          years.

                          C Class shares: 1.00% may be imposed on
                          redemptions of certain C shares that
                          are redeemed within 12 months of
                          purchase.

                          Investor Class shares: None
------------------------- ----------------------------------------- ----------------------------------





------------------------- ----------------------------------------- ----------------------------------
PURCHASE, REDEMPTION      ARIZONA MUNICIPAL BOND AND FLORIDA        TAX-FREE BOND -
AND EXCHANGE FEATURES     MUNICIPAL BOND                            INVESTOR CLASS SHARES
------------------------- ----------------------------------------- ----------------------------------
CDSC Waivers              Any applicable CDSC may be waived in       Not Applicable
                          the following cases:

                          - redemptions through systematic
                          withdrawal plans not exceeding annually:

                          o    12% of the lesser of the
                               original purchase cost or current
                               market value for A Class shares;

                          o    12% of the original purchase
                               cost of B Class shares;

                          o    12% of the original purchase
                               cost or current market value for C
                               Class shares

                          - distributions from IRAs due to
                          attainment of age 59 1/2 for A Class
                          and for C Class shares;

                          - 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;

                          -IRA Rollovers from any American
                          Century Advisor Fund held in a
                          employer-sponsored retirement plan, for
                          A Class shares only;

                          -if no broker was compensated for the
                          sale.
------------------------- ----------------------------------------- --------------------------------------
Redemption Fees           None.  However, there is a $10 charge     Same as Arizona Municipal Bond and
                          to redeem your shares by wire.            Florida Municipal Bond
------------------------- ----------------------------------------- --------------------------------------
Maintenance Fee           A Class Shares:  None                     Investor Class Shares:  $12.50
                          B Class Shares: None                      semi-annual fee for investors whose
                          C Class Shares: None                      total eligible investments with
                          Investor Class Shares:  $12.50            American Century are less than
                          semiannual fee for investors whose        $10,000. (See the Fund's prospectus
                          total eligible investments with           for further information.)  This fee is
                          American Century are less than $10,000.   not applicable to shares held in a
                          (See the Funds' prospectus for further    financial intermediary or retirement
                          information.)                             plan account.
------------------------- ----------------------------------------- --------------------------------------
Purchases/Redemptions     By telephone, mail or fax, online, in     Same as Arizona Municipal Bond and
                          person, or automatically                  Florida Municipal Bond
------------------------- ----------------------------------------- --------------------------------------
Redemptions Policies      Reserves right to delay delivery of       Same as Arizona Municipal Bond and
                          redemption proceeds up to seven days.     Florida Municipal Bond
                          Any redemption request made within 15
                          days of an address change may be
                          required to be submitted in writing
                          with guaranteed signatures of all
                          authorized signers.  If bank
                          information is changed a 15-day holding
                          period may be imposed before the
                          proceeds are wired to the bank.

                          If, during any 90-day period, a
                          shareholder redeems Fund shares worth
                          more than $250,000 (or 1% of the value
                          of the Fund's assets, if that
                          percentage is less than $250,000) then
                          the Fund reserves the right to pay part
                          or all of the redemption proceeds in
                          excess of this amount in readily
                          marketable securities instead of cash.
                          Shareholders can avoid being paid in
                          securities if they provide an
                          unconditional instruction to redeem at
                          least 15 days prior to the date on
                          which the redemption transaction is to
                          occur.
------------------------- ----------------------------------------- --------------------------------------
Exchanges                 A Class, B Class and C Class shares:      Because there is no sales charge or
                          You may exchange shares of the Funds      CDSC on Investor Class shares,
                          for shares of the same class of another   shareholders may redeem and purchase
                          American Century Fund without a sales     shares into any other Advisor,
                          charge if you meet the following          Investor, or Institutional share
                          criteria:                                 class without incurring a sales
                                                                    charge.  However, investors will
                          o    The exchange is for a minimum        have to meet the applicable minimum
                               of $100                              initial investment when purchasing
                          o    For an exchange that opens a         new investments in these share
                               new account, the amount of the       classes.
                               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 change on the Fund being
                          purchased, unless the money market
                          shares were acquired by exchange from a
                          Fund with a sales charge or by
                          reinvestment of dividends or capital
                          gains distributions.

                          Investor Class Shares:
                          Because there is no sales charge or
                          CDSC on Investor Class shares,
                          shareholders may redeem and purchase
                          shares into any other Advisor,
                          Investor, or Institutional share class
                          without incurring a sales charge.
                          However, investors will have to meet
                          the applicable minimum initial
                          investment when purchasing new
                          investments in these share classes.
------------------------- ----------------------------------------- --------------------------------------
Dividends and             Distributions by the Fund generally       Same as Arizona Municipal Bond and
Distributions             consist of dividends and interest         Florida Municipal Bond
                          received by the Fund, as well as
                          capital gains realized by the Fund on
                          the sale of investment securities.

                          Each Fund pays distributions from net
                          income monthly.  Each Fund generally
                          pays capital gains distributions, if
                          any, once a year, usually in December.
                          A Fund may make more frequent
                          distributions, if necessary, to comply
                          with Internal Revenue Code provisions.

                          You will participate in Fund
                          distributions, when they are declared,
                          starting the next business day after
                          your purchase is effective.  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.

                          For investors investing through taxable
                          accounts, we will reinvest
                          distributions unless you elect to have
                          dividends and/or capital gains sent to
                          another American Century account, to
                          your bank electronically, or to your
                          home address or to another person or
                          address by check.
------------------------- ----------------------------------------- --------------------------------------

COMPARATIVE FEE TABLES

The Funds,  like all mutual funds,  incur certain expenses in their  operations.
These  expenses  include  management  fees, as well as the costs of  maintaining
accounts,   administration,   providing  shareholder  liaison  and  distribution
services  and other  activities.  Set forth in the tables  below is  information
regarding,  applicable  sales charges,  fees and expenses of the Funds,  and pro
forma fees for the Funds after giving effect to the Reorganizations.


ARIZONA MUNICIPAL BOND, FLORIDA MUNICIPAL BOND AND TAX-FREE BOND

SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)

                                               Arizona Municipal Bond                 Tax-Free
                                             and Florida Municipal Bond                 Bond
-------------------------------------- -------------------------------------------------------------
                                       INVESTOR  A CLASS    B CLASS   C CLASS     PRO FORMA
                                       CLASS                                      INVESTOR CLASS
----------------------------------------------------------------------------------------------------
Maximum Sales Charge (Load)              None      4.50%      None      None        None
   Imposed on Purchases
   (as a percentage of offering price)

Maximum Deferred Sales Charge (Load)     None     None(1)    5.00%(2)  1.00%(3)     None
   (as a percentage of the original
   offering price for B Class shares
   or the lower of the original
   offering price or redemption
   proceeds for A and C Class shares)

Maximum Account Maintenance Fee         $25(4)    None        None      None        $25(4)


(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)  THE CHARGE IS 5.00% DURING THE FIRST YEAR AFTER PURCHASE, DECLINES OVER THE
     NEXT FIVE YEARS AS SHOWN IN THE FUNDS' PROSPECTUS,  AND IS ELIMINATED AFTER
     SIX YEARS.

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

(4)  APPLIES ONLY TO INVESTORS  WHOSE TOTAL ELIGIBLE  INVESTMENTS  WITH AMERICAN
     CENTURY ARE LESS THAN $10,000.  SEE Account Maintenance Fee UNDER Investing
     Directly with American Century IN THE FUNDS' PROSPECTUSES FOR MORE DETAILS.
     THE FEE IS NOT  APPLICABLE  TO SHARES HELD IN A FINANCIAL  INTERMEDIARY  OR
     RETIREMENT PLAN ACCOUNT.





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

                                        DISTRIBUTION AND
                          MANAGEMENT    SERVICE (12B-1)    OTHER        TOTAL ANNUAL FUND
                          FEE(1)         FEES(2)           EXPENSES(3)  OPERATING EXPENSES
------------------------------------------------------------------------------------------
Arizona Municipal Bond

   Investor Class          0.48%            None            0.01%            0.49%
------------------------------------------------------------------------------------------
   A Class                 0.48%            0.25%           0.01%            0.74%
------------------------------------------------------------------------------------------
   B Class                 0.48%            1.00%           0.01%            1.49%
------------------------------------------------------------------------------------------
   C Class                 0.48%            1.00%           0.01%            1.49%
------------------------------------------------------------------------------------------
Florida Municipal Bond

   Investor Class          0.48%            None            0.01%            0.49%
------------------------------------------------------------------------------------------
   A Class                 0.48%            0.25%           0.01%            0.74%
------------------------------------------------------------------------------------------
   B Class                 0.48%            1.00%           0.01%            1.49%
------------------------------------------------------------------------------------------
   C Class                 0.48%            1.00%           0.01%            1.49%
------------------------------------------------------------------------------------------
Tax-Free Bond - Investor   0.48%            None            0.01%            0.49%
Class
------------------------------------------------------------------------------------------
   Tax Free Bond -         0.48%            None            0.01%            0.49%
   Investor Class Pro
   Forma after giving
   effect to the Arizona
   Municipal Bond
   Reorganization
------------------------------------------------------------------------------------------
   Tax-Free Bond -         0.48%            None            0.01%            0.49%
   Investor Class Pro
   Forma after giving
   effect to the Florida
   Municipal Bond
   Reorganization
------------------------------------------------------------------------------------------
   Tax-Free Bond -         0.48%            None            0.01%            0.49%
   Investor Class Pro
   Forma after giving
   effect to the Arizona
   Fund Reorganization and
   the Florida Municipal
   Bond Reorganization
-------------------------------------------------------------------------------------------

(1)  THE FUNDS PAY THE ADVISOR A SINGLE,  UNIFIED  MANAGEMENT  FEE FOR ARRANGING
     ALL SERVICES NECESSARY FOR THE FUNDS TO OPERATE.  THE FEE SHOWN IS BASED ON
     ASSETS  DURING A FUND'S MOST RECENT  FISCAL YEAR.  THE FUNDS HAVE A STEPPED
     FEE  SCHEDULE.  AS A  RESULT,  THE  FUNDS'  UNIFIED  MANAGEMENT  FEE  RATES
     GENERALLY DECREASE AS ASSETS INCREASE AND INCREASE AS ASSETS DECREASE.  FOR
     MORE  INFORMATION  ABOUT THE UNIFIED  MANAGEMENT  FEE,  SEE THE  INVESTMENT
     ADVISOR UNDER MANAGEMENT IN THE FUNDS' PROSPECTUSES.

(2)  THE 12B-1 FEE IS DESIGNED TO PERMIT  INVESTORS TO PURCHASE  SHARES  THROUGH
     BROKER-DEALERS,    BANKS,   INSURANCE   COMPANIES   AND   OTHER   FINANCIAL
     INTERMEDIARIES.   THE  FEE  MAY  BE  USED  TO  COMPENSATE   SUCH  FINANCIAL
     INTERMEDIARIES  FOR DISTRIBUTION AND OTHER SHAREHOLDER  SERVICES.  FOR MORE
     INFORMATION,  SEE MULTIPLE CLASS INFORMATION AND SERVICE,  DISTRIBUTION AND
     ADMINISTRATIVE FEES, IN THE FUNDS' PROSPECTUS.

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



Fee Examples

EXAMPLE

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

o  invest $10,000 in the Fund

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

o  earn a 5% return each year

o  incur the same operating expenses as shown above

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


                               1 YEAR     3 YEARS       5 YEARS        10 YEARS
--------------------------------------------------------------------------------
Arizona Municipal Bond

   Investor Class                $50        $157          $274             $615
--------------------------------------------------------------------------------
   A Class                      $522        $676          $842           $1,325
--------------------------------------------------------------------------------
   B Class                      $551        $769          $909           $1,566
--------------------------------------------------------------------------------
   C Class                      $151        $469          $809           $1,767
--------------------------------------------------------------------------------
Florida Municipal Bond

   Investor Class                $50        $157          $274             $615
--------------------------------------------------------------------------------
   A Class                      $522        $676          $842           $1,325
--------------------------------------------------------------------------------
   B Class                      $551        $769          $909           $1,566
--------------------------------------------------------------------------------
   C Class                      $151        $469          $809           $1,767
--------------------------------------------------------------------------------
Tax-Free Bond

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

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


                               1 YEAR     3 YEARS       5 YEARS        10 YEARS
--------------------------------------------------------------------------------
Arizona Municipal Bond

   Investor Class                $50        $157          $274             $615
--------------------------------------------------------------------------------
   A Class                      $522        $676          $842           $1,325
--------------------------------------------------------------------------------
   B Class                      $551        $769          $909           $1,566
--------------------------------------------------------------------------------
   C Class                      $151        $469          $809           $1,767
--------------------------------------------------------------------------------
Florida Municipal Bond

   Investor Class                $50        $157          $274             $615
--------------------------------------------------------------------------------
   A Class                      $522        $676          $842           $1,325
--------------------------------------------------------------------------------
   B Class                      $551        $769          $909           $1,566
--------------------------------------------------------------------------------
   C Class                      $151        $469          $809           $1,767
--------------------------------------------------------------------------------
Tax-Free Bond

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


ARIZONA MUNICIPAL BOND AND FLORIDA MUNICIPAL BOND ANNUAL TOTAL RETURNS

The  following  bar charts show the  performance  of the Funds'  Investor  Class
shares for each of the last 10 calendar  years.  They indicate the volatility of
the Funds' historical returns from year to year. Account fees and sales charges,
if applicable, are not reflected in the charts below. If they had been included,
returns would be lower than those shown. The returns of the Funds' other classes
of shares will differ from those shown in the charts,  depending on the expenses
of those classes.

Arizona Municipal Bond -- Investor Class (1)

(1)  AS OF MARCH 31, 2007,  ARIZONA MUNICIPAL BOND'S INVESTOR CLASS YEAR-TO-DATE
     RETURN WAS ___%.


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

                                      HIGHEST                       LOWEST
--------------------------------------------------------------------------------
Arizona Municipal Bond             4.13% (3Q 2002)              -1.85% (2Q 2004)
--------------------------------------------------------------------------------




Florida Municipal Bond -- Investor Class (1)

(1)  AS OF MARCH 31, 2007,  FLORIDA MUNICIPAL BOND'S INVESTOR CLASS YEAR-TO-DATE
     RETURN WAS ____%.


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

                                      HIGHEST                       LOWEST
--------------------------------------------------------------------------------
Florida Municipal Bond             4.49% (3Q 2002)              -2.07% (2Q 2004)
--------------------------------------------------------------------------------

Average Annual Total Returns

The  following  table  shows the  average  annual  total  returns  of the Funds'
Investor Class shares  calculated three different ways.  Additional  tables show
the average  annual total returns of the Funds' other share  classes  calculated
before the impact of taxes.  Returns  assume the  deduction  of all sales loads,
charges and other fees associated with a particular  class.  Your actual returns
may vary depending on the circumstances of your investment.  Return Before Taxes
shows the actual change in the value of Fund shares over the time periods shown,
but does not  reflect the impact of taxes on Fund  distributions  or the sale of
Fund shares.  The two  after-tax  returns  take into  account  taxes that may be
associated  with owning Fund shares.  Return After Taxes on  Distributions  is a
Fund's actual performance, adjusted by the effect of taxes on distributions made
by the Fund during the periods shown.  Return After Taxes on  Distributions  and
Sale of Fund Shares is further  adjusted to reflect the tax impact on any change
in the  value of Fund  shares  as if they  had been  sold on the last day of the
period.

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

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



INVESTOR CLASS

FOR PERIODS ENDED DECEMBER 31, 2006            1 YEAR    5 YEARS    10 YEARS
--------------------------------------------------------------------------------
Arizona Municipal Bond

Return Before Taxes                            3.92%      4.37%      4.85%

Return After Taxes on Distributions            3.92%      4.28%      4.73%

Return After Taxes on Distributions            3.98%      4.27%      4.70%
   and Sale of Fund Shares

Lehman Brothers Municipal 5-Year               3.38%      4.09%      4.70%
  General Obligation Index
   (reflects no deduction for fees,
   expenses or taxes)
--------------------------------------------------------------------------------
Florida Municipal Bond

Return Before Taxes                            3.75%      4.30%      4.98%

Return After Taxes on Distributions            3.75%      4.22%      4.79%

Return After Taxes on Distributions            3.88%      4.20%      4.76%
   and Sale of Fund Shares

Lehman Brothers Municipal 5-Year               3.38%      4.09%      4.70%
  General Obligation Index
   (reflects no deduction for fees,
   expenses or taxes)
--------------------------------------------------------------------------------




A CLASS

FOR PERIODS ENDED DECEMBER 31, 2006            1 YEAR    5 YEARS    LIFE OF CLASS(1)
--------------------------------------------------------------------------------
Arizona Municipal Bond

Return Before Taxes                           -1.01%       N/A       0.66%

Lehman Brothers Municipal 5-Year               3.38%       N/A       1.98%(2)
  General Obligation Index
   (reflects no deduction for fees,
   expenses or taxes)
--------------------------------------------------------------------------------
Florida Municipal Bond

Return Before Taxes                           -1.14%       N/A       0.40%

Lehman Brothers Municipal 5-Year               3.38%       N/A       1.98%(2)
   General Obligation Index
   (reflects no deduction for fees,
   expenses or taxes)
--------------------------------------------------------------------------------

(1)  THE INCEPTION DATE FOR THE A CLASS WAS FEBRUARY 27, 2004. ONLY CLASSES WITH
     PERFORMANCE HISTORY FOR LESS THAN 10 YEARS SHOW RETURNS FOR LIFE OF CLASS.

(2)  SINCE  FEBRUARY 28, 2004,  THE DATE  CLOSEST TO THE CLASS'S  INCEPTION  FOR
     WHICH DATA IS AVAILABLE.




B CLASS

FOR PERIODS ENDED DECEMBER 31, 2006            1 YEAR    5 YEARS    LIFE OF  CLASS(1)
--------------------------------------------------------------------------------
Arizona Municipal Bond

Return Before Taxes                           -1.11%       N/A       0.53%

Lehman Brothers Municipal 5-Year               3.38%       N/A       1.98%(2)
  General Obligation Index
   (reflects no deduction for fees,
   expenses or taxes)
--------------------------------------------------------------------------------
Florida Municipal Bond

Return Before Taxes                           -1.27%       N/A       0.22%

Lehman Brothers Municipal 5-Year               3.38%       N/A       1.98%(2)
  General Obligation Index
   (reflects no deduction for fees,
   expenses or taxes)
--------------------------------------------------------------------------------

(1)  THE INCEPTION DATE FOR THE B CLASS WAS FEBRUARY 27, 2004. ONLY CLASSES WITH
     PERFORMANCE HISTORY FOR LESS THAN 10 YEARS SHOW RETURNS FOR LIFE OF CLASS.

(2)  SINCE  FEBRUARY 28, 2004,  THE DATE  CLOSEST TO THE CLASS'S  INCEPTION  FOR
     WHICH DATA IS AVAILABLE.




C CLASS

FOR PERIODS ENDED DECEMBER 31, 2006            1 YEAR    5 YEARS    LIFE OF CLASS(1)
--------------------------------------------------------------------------------
Arizona Municipal Bond

Return Before Taxes                            2.89%       N/A        1.54%

Lehman Brothers Municipal 5-Year               3.38%       N/A        1.98%(2)
  General Obligation Index
   (reflects no deduction for fees,
   expenses or taxes)
--------------------------------------------------------------------------------
Florida Municipal Bond

Return Before Taxes                            2.72%       N/A        1.27%

Lehman Brothers Municipal 5-Year               3.38%       N/A        1.98%(2)
  General Obligation Index
   (reflects no deduction for fees,
   expenses or taxes)
--------------------------------------------------------------------------------

(1)  THE INCEPTION DATE FOR THE C CLASS WAS FEBRUARY 27, 2004. ONLY CLASSES WITH
     PERFORMANCE HISTORY FOR LESS THAN 10 YEARS SHOW RETURNS FOR LIFE OF CLASS.

(2)  SINCE  FEBRUARY 28, 2004,  THE DATE  CLOSEST TO THE CLASS'S  INCEPTION  FOR
     WHICH DATA IS AVAILABLE.



TAX FREE BOND ANNUAL TOTAL RETURNS

The following bar chart shows the  performance of Tax-Free Bond's Investor Class
shares for each of the last 10 calendar  years.  It indicates the  volatility of
the Fund's historical  returns from year to year. Account fees are not reflected
in the charts  below.  If they had been  included,  returns  would be lower than
those shown.  The returns of the shares of other  classes of Tax-Free  Bond will
differ from those shown in the chart, depending on the expenses of that class.

INVESTOR CLASS (1)

(1)  AS OF MARCH 31, 2007,  TAX-FREE BOND'S INVESTOR CLASS  YEAR-TO-DATE  RETURN
     WAS XX%.



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

                                HIGHEST                             LOWEST
--------------------------------------------------------------------------------
Tax-Free Bond                 4.51% (3Q 2002)                  -2.09% (2Q 2004)
--------------------------------------------------------------------------------


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

Return Before Taxes shows the actual change in the value of Fund shares over the
time  periods  shown,  but  does  not  reflect  the  impact  of  taxes  on  Fund
distributions  or the sale of Fund shares.  The two after-tax  returns take into
account taxes that may be associated with owning Fund shares. Return After Taxes
on Distributions is a Fund's actual performance, adjusted by the effect of taxes
on distributions made by the Fund during the periods shown. Return

After  Taxes on  Distributions  and Sale of Fund  Shares is further  adjusted to
reflect  the tax impact on any change in the value of Fund shares as if they had
been sold on the last day of the period.  After-tax returns are calculated using
the historical  highest federal marginal income tax rates and do not reflect the
impact  of  state  and  local  taxes.  Actual  after-tax  returns  depend  on an
investor's  tax  situation  and may differ from those shown.  After-tax  returns
shown are not relevant to investors  who hold Fund shares  through  tax-deferred
arrangements such as 401(k) plans or IRAs.  After-tax returns are shown only for
Investor Class shares. After-tax returns for other share classes will vary.

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


INVESTOR CLASS

FOR PERIODS ENDED DECEMBER 31, 2006           1 YEAR      5 YEARS     10 YEARS
--------------------------------------------------------------------------------
Return Before Taxes                           4.11%       4.44%       4.93%

Return After Taxes on Distributions           4.11%       4.42%       4.84%

Return After Taxes on Distributions           4.04%       4.34%       4.79%
   and Sale of Fund Shares

Lehman Brothers Municipal                     3.38%       4.09%       4.70%
   5-Year General Obligation Index
   (reflects no deduction for fees,
   expenses or taxes)
--------------------------------------------------------------------------------


THE INVESTMENT ADVISOR

The  Funds'   Advisor  has  been  managing   mutual  funds  since  1958  and  is
headquartered at 4500 Main Street, Kansas City, Missouri 64111.

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

For the  services  it  provides  to the Funds,  the  Advisor  receives a unified
management  fee based on a  percentage  of the daily net assets of each class of
shares of the Funds.  The management fee is calculated daily and paid monthly in
arrears.  Out of each Fund's fee,  the advisor pays all expenses of managing and
operating  that  Fund  except  brokerage  expenses,  taxes,  interest,  fees and
expenses of the  independent  trustees  (including  legal  counsel fees of legal
counsel to the independent trustees),  and extraordinary  expenses. A portion of
each  Fund's  management  fee may be paid by the Advisor to  unaffiliated  third
parties  who  provide  recordkeeping  and  administrative  services  that  would
otherwise be performed by an affiliate of the Advisor.

The  percentage  rate used to  calculate  the  management  fee for each class of
shares of a Fund is determined  daily using a  two-component  formula that takes
into  account  (i) the daily net assets of the  accounts  managed by the Advisor
that are in the same broad  investment  category as the Fund (the  Category Fee)
and (ii) the assets of all funds in the  American  Century  family of funds (the
Complex  Fee).  The statement of additional  information  of the Funds  contains
detailed information about the calculation of the management fee.


MANAGEMENT FEES PAID BY THE FUNDS TO
THE ADVISOR AS A PERCENTAGE OF
AVERAGE NET ASSETS FOR THE
FISCAL YEAR ENDED MAY 31, 2006    INVESTOR CLASS   A CLASS    B CLASS    C CLASS

Arizona Municipal Bond               0.48%          0.48%      0.48%      0.48%

Florida Municipal Bond               0.48%          0.48%      0.48%      0.48%

Tax-Free Bond                        0.48%           N/A        N/A        N/A

A discussion regarding the basis for the Municipal Trust Board's approval of the
Funds' investment advisory contracts with the Advisor is available in the Funds'
reports to shareholders dated May 31, 2006.


THE FUND MANAGEMENT TEAM

The Advisor uses teams of portfolio  managers and  analysts,  organized by broad
investment  categories  such  as  money  markets  and  municipal  bonds,  in its
management of fixed-income  funds.  Representatives  of these teams serve on the
firm's Macro Strategy Team, which is responsible for periodically  adjusting the
funds' strategic investment  parameters based on economic and market conditions.
The funds' lead portfolio  managers are responsible  for security  selection and
portfolio construction for the funds within these strategic parameters,  as well
as compliance with stated investment objectives and cash flow monitoring.  Other
members of the  investment  teams provide  research and  analytical  support but
generally  do not  make  day-to-day  investment  decisions  for the  Funds.  The
individuals listed below are primarily responsible for the day-to-day management
of the  funds.  As  shown  below,  the same  portfolio  managers  are  primarily
responsible  for  the  day-to-day  management  of the  Acquired  Funds  and  the
Acquiring Fund.

ARIZONA MUNICIPAL BOND
FLORIDA MUNICIPAL BOND
TAX-FREE BOND

ROBERT J. MILLER (LEAD PORTFOLIO MANAGER)
Mr. Miller, Vice President and Portfolio Manager,  has been a member of the Fund
management  teams since December 2001. He joined  American  Century in June 1998
and became a portfolio  manager in February 2001. He has a bachelor's  degree in
business  administration-finance  from San Jose State University and an MBA from
New York University.

STEVEN M. PERMUT (MACRO STRATEGY TEAM REPRESENTATIVE)
Mr.  Permut,  Senior Vice  President and Senior  Portfolio  Manager,  has been a
member of the Fund management  teams since July 2001. He joined American Century
in June 1987 and became a portfolio  manager in June 1990.  He has a  bachelor's
degree in business and geography from State University of New York - Oneonta and
an MBA in finance from Golden Gate University - San Francisco.

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



PROPOSAL 3 - TO APPROVE THE PROPOSED  RECLASSIFICATIONS  OF ADVISOR CLASS SHARES
AS A CLASS SHARES


               DIVERSIFIED BOND, PRIME MONEY MARKET AND HIGH-YIELD


REASONS FOR THE RECLASSIFICATIONS OF ADVISOR CLASS SHARES AS A CLASS SHARES

At its meeting on December 8, 2006, the American Century Investment Trust Board,
including  Trustees  who are not  "interested  persons"  within  the  meaning of
Section 2(a)(19) of the 1940 Act,  concluded that the  Reclassifications  are in
the best  interests  of the Advisor  Class  shareholders.  In  recommending  the
Reclassifications,  the Board  considered  that the total expense  ratios of the
Advisor  Class  and  the  A  Class  were  the  same  and   concluded   that  the
Reclassification would simplify and standardize the share class structure of the
Funds.

Each  Reclassification  will be a tax-free event under applicable  provisions of
the  Internal  Revenue  Code,  as  amended,  so that  no  gain  or loss  will be
recognized  by the  American  Century  Funds  or  the  American  Century  Funds'
shareholders.

CONSEQUENCES OF THE RECLASSIFICATIONS

If shareholders approve the  Reclassifications,  holders of Advisor Class shares
will have their shares  reclassified as A Class shares of the same Fund. The net
asset  value of your  investment  in the Fund  will not  change as a result of a
Reclassification.  A Class shares have the same total  expense  ratio as Advisor
Class  shares.  The sales charge will not apply to A Class shares  received as a
result of the Reclassification(s) or that are subsequently purchased in the same
accounts  (referred to hereinafter as "Load-waived A Class Shares").  It is also
anticipated  that  there  will not be any tax  consequences  as a result  of the
Reclassifications.  As previously noted, if the  Reclassifications are approved,
they will be effective on the Closing Date.

DESCRIPTION OF THE SHARES

Currently,  Advisor Class shares and A Class shares have identical total expense
ratios.  Load-waived A Class Shares are not subject to the sales charge. Other A
Class shares are subject to a maximum 4.50% sales charge,  unless another waiver
applies,  except for A Class  shares of Prime Money Market which are not subject
to any sales  charges.  The  applicable  management  and Rule 12b-1 fees for the
share classes are as follows:


                                                                   TOTAL MANAGEMENT
                                      MANAGEMENT                      FEE AND
AMERICAN CENTURY FUND     CLASS          FEE       RULE 12B-1 FEE  RULE 12B-1 FEE(1)
===================== ============= ============= ================ ================

Diversified Bond        Advisor        0.36%           0.50%          0.86%

                           A           0.61%           0.25%          0.86%
===================== ============= ============= ================ ================
Prime Money Market      Advisor        0.32%           0.50%          0.82%

                           A           0.57%           0.25%          0.82%
===================== ============= ============= ================ ================
High-Yield              Advisor        0.61%           0.50%          1.11%

                           A           0.86%           0.25%          1.11%
===================== ============= ============= ================ ================

(1)  Does not  include  "Other  Expenses."  See Annual Fund  Operating  Expenses
     table.


Separate   from  the   Reclassification   proposal   contained   in  this  Proxy
Statement/Prospectus,  the Boards recently approved a proposal to change the fee
structure  of the  Advisor  Class.  As an Advisor  Class  shareholder,  you will
receive a separate proxy  statement  describing  this proposal in greater detail
and will have an  opportunity  to vote on it. If the fee proposal is approved by
shareholders,  the Rule 12b-1 fee of the Advisor Class would be reduced 25 basis
points  from  0.50%  to  0.25%  and  the  corresponding   management  fee  would
simultaneously  increase 25 basis points resulting in no net change in the total
expense  ratio.  If the  shareholders  of the  Advisor  Class do not approve the
management  fee  change,  then the Rule 12b-1 fee would  remain at 0.50% and the
management fee would continue at its current level. The proposed modification to
the  Advisor  Class fee  structure  would  make the class more  consistent  with
industry   practice  and  American   Century's   internal   pricing   structure.
Irrespective  of whether the  shareholders  pass the proposal,  the total annual
Fund operating expense will not change.  However, if shareholders of the Advisor
Class  approve the  management  fee change,  the A Class and Advisor  Class will
share an  identical  fee  structure.  If the  Reclassification  is  approved  by
shareholders,  the Advisor  Class shares  would cease to exist;  the proposal to
change the fee  structure of the Advisor  Class  shares  would become moot;  and
therefore, even if approved, the change in fee structure would not take effect.


INVESTMENT OBJECTIVES, POLICIES AND RISKS

Since the Advisor Class and A Class shares of a Fund represent  interests in the
same portfolio, they share identical investment objectives,  policies and risks.
The investment objectives of these Funds are listed in the following table:

---------------------------- ---------------------------------------------------
AMERICAN CENTURY FUND        INVESTMENT OBJECTIVE
---------------------------- ---------------------------------------------------
Diversified Bond             Seeks high level of income by investing in
                             non-money market debt securities.
---------------------------- ---------------------------------------------------
Prime Money Market           Seeks to earn the highest level of current income
                             while preserving the value of the shareholder's
                             investment.
---------------------------- ---------------------------------------------------
High-Yield                   Seeks to earn a high level of current income while
                             achieving capital appreciation.
---------------------------- ---------------------------------------------------

Reference is hereby made to the Funds' prospectuses and statements of additional
information,  all of which are incorporated herein by reference. These documents
set  forth  in  full  the  investment   objectives,   policies,  and  investment
limitations of each Fund, and include a full discussion of the risks inherent in
investments in each Fund.

PURCHASE, REDEMPTION AND EXCHANGE OF SHARES

The  following  table  highlights  certain  purchase,  redemption  and  exchange
features of the Funds' Advisor Class and A Class shares.

------------------------------------- -----------------------------------  -----------------------------------
 PURCHASE, REDEMPTION AND                        ADVISOR CLASS                          A CLASS
     EXCHANGE FEATURES
------------------------------------- -----------------------------------  -----------------------------------
Initial Sales Charge (as a            None                                 Load-waived A Class Shares are
percentage of offering price)                                              not subject to the sales charge.
                                                                           See "Information about the
                                                                           Reclassifications--Reduction and
                                                                           Waiver of Sales Charges for A
                                                                           Class shares.

                                                                           The following apply to other A
                                                                           Class shares:

                                                                           o  4.50% is the maximum
                                                                              sales charge applicable
                                                                              (subject to the availability
                                                                              of waivers and reduced sales
                                                                              charges)

                                                                           o  No sales charge for
                                                                              purchases of $1 million or
                                                                              more
------------------------------------- -----------------------------------  -----------------------------------
Reductions and Waivers of Initial     Not Applicable                       o  Reductions in sales
Sales Charge                                                                  charge based upon amount
                                                                               invested

                                                                           o  Waivers for Certain
                                                                              Investors

                                                                           o  Rights of
                                                                              Accumulation/Account
                                                                              Aggregation

                                                                           o  Concurrent Purchases

                                                                           o  Letter of Intent

                                                                           For further discussion of
                                                                           reductions and waivers of initial
                                                                           sales charge, see "Description of
                                                                           Fund Shares: Advisor Class to A
                                                                           Class-Reductions and Waivers of
                                                                           Sales Charges for A Class shares."
------------------------------------- -----------------------------------  -----------------------------------
Contingent Deferred Sales Charge      None                                 o  Generally no contingent
(CDSC)                                                                        deferred sales charge.
                                                                              However, purchases of $1
                                                                              million or more that are
                                                                              redeemed within one year of
                                                                              purchase will be subject to a
                                                                              deferred sales charge of
                                                                              1.00%. For further discussion
                                                                              of CDSC, see "Description of
                                                                              Fund Shares--Calculation of
                                                                              Contingent Deferred Sales
                                                                              Charges and CDSC Waivers."
------------------------------------- -----------------------------------  -----------------------------------
Minimum Initial Investment            o  Employer sponsored                Same as Advisor Class
                                         retirement account: No minimum

                                      o  Broker-Dealer Sponsored
                                         Wrap program accounts and/or
                                         fee-based accounts: No minimum

                                      o  Coverdell Education
                                         Savings Accounts: $2000

                                      o  Financial
                                         Intermediaries: $250

                                      o  All other accounts: $2500
------------------------------------- -----------------------------------  -----------------------------------
Minimum Subsequent Investments        o  Financial                         Same as Advisor Class
                                         Intermediaries: No Minimum

                                      o  Employer-Sponsored
                                         Retirement Plans: No Minimum

                                      o  All other accounts: $50
------------------------------------- -----------------------------------  -----------------------------------
Redemption Fees                       None.  However, there is a $10       Same as Advisor Class
                                      charge to redeem your shares by
                                      wire.
------------------------------------- -----------------------------------  -----------------------------------
Purchases/Redemptions                 By mail, fax, telephone, online,     Same as Advisor Class
                                      in person or automatically.
------------------------------------- -----------------------------------  -----------------------------------
Redemption Policies                   The Fund reserves the right to       Same as Advisor Class
                                      delay delivery of redemption
                                      proceeds up to seven days.

                                      Any redemption request made
                                      within 15 days of an address
                                      change may be required to be
                                      submitted in writing with
                                      guaranteed signatures of all
                                      authorized signers. If bank
                                      information is changed a 15-day
                                      holding period may be imposed
                                      before the proceeds are wired to
                                      the bank.

                                      There is a $10 charge for
                                      redemption requests made by a
                                      wire transfer.

                                      The Fund reserves the right to
                                      redeem in kind (i.e. in
                                      securities rather than cash) if
                                      during any 90-day period you
                                      redeem Fund shares worth more
                                      than $250,000 or 1% of the value
                                      of the Fund's assets if that
                                      amount is less than $250,000.
------------------------------------- -----------------------------------  -----------------------------------
Exchanges                             Because there is no sales charge     Diversified Bond and High Yield:
                                      or CDSC on Advisor Class shares,
                                      shareholders may redeem and          You may exchange shares of the
                                      purchase shares into any other       Fund for A Class shares of
                                      Advisor, Investor, or                another American Century Fund
                                      Institutional share class without    without a sales charge if:
                                      incurring a sales charge.
                                      However, investors will have to      o  The exchange is for a
                                      meet the applicable minimum             minimum of $100; and
                                      initial investment when
                                      purchasing new investments in        o  If the exchange opens a
                                      these share classes.                    new account, the amount of
                                                                              the exchange must meet or
                                                                              exceed the minimum account
                                                                              size requirement for the Fund
                                                                              receiving the exchange

                                                                           Prime Money Market:

                                                                           If you purchase shares of the
                                                                           Prime Money Market directly, a
                                                                           sales charge will apply when you
                                                                           exchange into the A Class shares
                                                                           of another American Century
                                                                           Advisor Fund.
------------------------------------- ----------------------------------- -----------------------------------



COMPARATIVE FEE TABLES

The Funds,  like all mutual funds,  incur certain expenses in their  operations.
These  expenses  include  management  fees, as well as the costs of  maintaining
accounts,   administration,   providing  shareholder  liaison  and  distribution
services  and other  activities.  Set forth in the tables  below is  information
regarding  fees and expenses of the Funds and pro forma fees for the Funds after
giving effect to the Reclassifications.


DIVERSIFIED BOND


SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT) FOR ALL FUNDS

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

(1)  THIS SALES CHARGE WILL NOT APPLY TO LOAD-WAIVED A CLASS SHARES.

(2)  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.



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


                                                  DISTRIBUTION                  TOTAL ANNUAL
                                      MANAGEMENT  AND SERVICE      OTHER        FUND OPERATING
FUND NAME          CLASS              FEE(1)      (12B-1) FEES(2)  EXPENSES(3)  EXPENSES
----------------------------------------------------------------------------------------------
Diversified Bond   Advisor Class       0.36%          0.50%         0.01%          0.87%
----------------------------------------------------------------------------------------------
                   A Class             0.61%          0.25%         0.01%          0.87%
----------------------------------------------------------------------------------------------
                   Pro Forma A Class   0.61%          0.25%         0.01%          0.87%
----------------------------------------------------------------------------------------------

(1)  THE FUND PAYS THE ADVISOR A SINGLE,  UNIFIED  MANAGEMENT  FEE FOR ARRANGING
     ALL SERVICES  NECESSARY FOR THE FUND TO OPERATE.  THE FEE SHOWN IS BASED ON
     ASSETS  DURING THE FUND'S MOST RECENT  FISCAL YEAR.  THE FUND HAS A STEPPED
     FEE SCHEDULE. AS A RESULT, THE FUND'S UNIFIED MANAGEMENT FEE RATE GENERALLY
     DECREASES AS ASSETS  INCREASE AND  INCREASES AS ASSETS  DECREASE.  FOR MORE
     INFORMATION ABOUT THE UNIFIED  MANAGEMENT FEE,  INCLUDING AN EXPLANATION OF
     STRATEGY  ASSETS,  SEE "The  Investment  Advisor"  UNDER  MANAGEMENT IN THE
     FUNDS' PROSPECTUS.

(2)  THE 12B-1 FEE IS DESIGNED TO PERMIT  INVESTORS TO PURCHASE  SHARES  THROUGH
     BROKER-DEALERS,    BANKS,   INSURANCE   COMPANIES   AND   OTHER   FINANCIAL
     INTERMEDIARIES.   THE  FEE  MAY  BE  USED  TO  COMPENSATE   SUCH  FINANCIAL
     INTERMEDIARIES  FOR  DISTRIBUTION  AND  OTHER  SHAREHOLDER   SERVICES.   IN
     ADDITION,  HALF OF THE  ADVISOR  CLASS  12B-1 FEE  (0.25%)  IS FOR  ONGOING
     RECORDKEEPING   AND   ADMINISTRATIVE   SERVICES   PROVIDED   BY   FINANCIAL
     INTERMEDIARIES,  WHICH  WOULD  OTHERWISE  BE PAID BY THE ADVISOR OUT OF THE
     UNIFIED  MANAGEMENT FEE. THE ADVISOR HAS REDUCED ITS UNIFIED MANAGEMENT FEE
     BY 0.25% FOR ADVISOR CLASS SHARES, BUT THE FEE FOR CORE INVESTMENT ADVISORY
     SERVICES IS THE SAME FOR ALL CLASSES.  FOR MORE  INFORMATION,  SEE Multiple
     Class Information AND Service, Distribution and Administrative Fees, IN THE
     FUNDS' OF THE PROSPECTUS.

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



Fee Examples

EXAMPLE

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

o  invest $10,000 in the Fund

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

o  earn a 5% return each year

o  incur the same operating expenses as shown above

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


FUND NAME            CLASS              1 YEAR   3 YEARS    5 YEARS    10 YEARS
--------------------------------------------------------------------------------
Diversified Bond     Advisor Class        $89     $277       $481      $1,069
--------------------------------------------------------------------------------

                     A Class             $535     $714       $909      $1,471(1)
--------------------------------------------------------------------------------

                     Pro Forma A Class   $535     $714       $909      $1,471(1)
--------------------------------------------------------------------------------

(1)  THIS  NUMBER  INCLUDES  THE  SALES  CHARGE,  WHICH  IS  NOT  APPLICABLE  TO
     LOAD-WAIVED A CLASS SHARES.



PRIME MONEY MARKET

SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT) FOR ALL FUNDS


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

(1)  THIS CHARGE WILL NOT APPLY TO LOAD-WAIVED A CLASS SHARES.

(2)  INVESTMENTS IN A CLASS SHARES MAY BE SUBJECT TO A CONTINGENT DEFERRED SALES
     CHARGE OF 1.00% IN CERTAIN CIRCUMSTANCES.



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


                                                     DISTRIBUTION                     TOTAL ANNUAL
                                      MANAGEMENT     AND SERVICE           OTHER      FUND OPERATING
FUND NAME           CLASS             FEE(1)(2)(3)   (12B-1) FEES(4)(5)  EXPENSES(6)   EXPENSES
----------------------------------------------------------------------------------------------------
Prime Money Market  Advisor Class         0.32%          0.50%               0.02%       0.84%
----------------------------------------------------------------------------------------------------
                    A Class               0.57%          0.25%               0.02%       0.84%
----------------------------------------------------------------------------------------------------
                    Pro Forma A Class     0.57%          0.25%               0.02%       0.84%
----------------------------------------------------------------------------------------------------


(1)  THE FUND PAYS THE ADVISOR A SINGLE,  UNIFIED  MANAGEMENT  FEE FOR ARRANGING
     ALL SERVICES  NECESSARY FOR THE FUND TO OPERATE.  THE FEE SHOWN IS BASED ON
     ASSETS  DURING THE FUND'S MOST RECENT  FISCAL YEAR.  THE FUND HAS A STEPPED
     FEE SCHEDULE. AS A RESULT, THE FUND'S UNIFIED MANAGEMENT FEE RATE GENERALLY
     DECREASES AS FUND ASSETS  INCREASE AND  INCREASES AS FUND ASSETS  DECREASE.
     FOR MORE INFORMATION ABOUT THE UNIFIED  MANAGEMENT FEE, SEE "THE INVESTMENT
     ADVISOR" UNDER Management IN THE FUNDS' PROSPECTUS.

(2)  FROM JULY 29, 2005 TO JULY 31, 2006,  AMERICAN CENTURY VOLUNTARILY WAIVED A
     PORTION OF THE FUND'S MANAGEMENT FEE. TAKING INTO ACCOUNT THIS WAIVER,  THE
     MANAGEMENT  FEE AND TOTAL ANNUAL FUND  OPERATING  EXPENSES FOR A CLASS WERE
     0.55% AND 0.82%,  AND THE  MANAGEMENT  FEE AND TOTAL ANNUAL FUND  OPERATING
     EXPENSES  FOR ADVISOR  CLASS WERE 0.30% AND 0.82%,  RESPECTIVELY.  THIS FEE
     WAIVER  IS  VOLUNTARY  AND MAY BE  REVISED  OR  TERMINATED  AT ANY  TIME BY
     AMERICAN CENTURY WITHOUT NOTICE.

(3)  EFFECTIVE AUGUST 1, 2006,  AMERICAN CENTURY VOLUNTARILY WAIVED A PORTION OF
     THE FUND'S MANAGEMENT FEE. TAKING INTO ACCOUNT THIS WAIVER,  THE MANAGEMENT
     FEE AND TOTAL ANNUAL FUND OPERATING  EXPENSES FOR A CLASS WILL BE 0.52% AND
     0.79%, RESPECTIVELY; AND THE MANAGEMENT FEE AND TOTAL ANNUAL FUND OPERATING
     EXPENSES FOR ADVISOR CLASS WILL BE 0.27% AND 0.79%, RESPECTIVELY.  THIS FEE
     WAIVER  IS  VOLUNTARY  AND MAY BE  REVISED  OR  TERMINATED  AT ANY  TIME BY
     AMERICAN CENTURY WITHOUT NOTICE.

(4)  AMERICAN  CENTURY MAY VOLUNTARILY  WAIVE THE RECEIPT OF ALL OR A PORTION OF
     THE 12B-1 FEE, OR MAY  VOLUNTARILY  AGREE TO BEAR FUND EXPENSES,  TO ASSIST
     THE  MANAGER'S  EFFORTS  TO  MAINTAIN  A $1.00 NET ASSET  VALUE PER  SHARE.
     VOLUNTARY FEE WAIVERS OR EXPENSE  REIMBURSEMENTS  MAY BE IMPOSED TO ENHANCE
     THE  FUND'S  YIELD  DURING  PERIODS  WHEN FUND  OPERATING  EXPENSES  HAVE A
     SIGNIFICANT  IMPACT ON THE FUND'S YIELD DUE TO LOW INTEREST RATES. ANY SUCH
     FEE WAIVER IS VOLUNTARY AND TEMPORARY,  AND MAY BE REVISED OR TERMINATED AT
     ANY TIME BY AMERICAN CENTURY WITHOUT NOTICE. THERE IS NO GUARANTEE THAT THE
     FUND WILL MAINTAIN A $1.00 NET ASSET VALUE PER SHARE OR A POSITIVE YIELD.

(5)  THE 12B-1 FEE IS DESIGNED TO PERMIT  INVESTORS TO PURCHASE  SHARES  THROUGH
     BROKER-DEALERS,    BANKS,   INSURANCE   COMPANIES   AND   OTHER   FINANCIAL
     INTERMEDIARIES.   THE  FEE  MAY  BE  USED  TO  COMPENSATE   SUCH  FINANCIAL
     INTERMEDIARIES  FOR  DISTRIBUTION  AND  OTHER  SHAREHOLDER   SERVICES.   IN
     ADDITION,  HALF OF THE  ADVISOR  CLASS  12B-1 FEE  (0.25%)  IS FOR  ONGOING
     RECORDKEEPING   AND   ADMINISTRATIVE   SERVICES   PROVIDED   BY   FINANCIAL
     INTERMEDIARIES,  WHICH  WOULD  OTHERWISE  BE PAID BY THE ADVISOR OUT OF THE
     FUNDS'  UNIFIED  MANAGEMENT  FEE.  THE  ADVISOR  HAS  REDUCED  ITS  UNIFIED
     MANAGEMENT  FEE BY 0.25% FOR  ADVISOR  CLASS  SHARES,  BUT THE FEE FOR CORE
     INVESTMENT  ADVISORY  SERVICES  IS THE  SAME  FOR  ALL  CLASSES.  FOR  MORE
     INFORMATION,  SEE Multiple Class Information AND Service,  Distribution and
     Administrative Fees, IN THE PROSPECTUS.

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


Fee Examples

EXAMPLE

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

o  invest $10,000 in the Fund

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

o  earn a 5% return each year

o  incur the same operating expenses as shown above

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


FUND NAME            CLASS               1 YEAR   3 YEARS    5 YEARS   10 YEARS
--------------------------------------------------------------------------------
Prime Money Market   Advisor Class         $86     $268       $465      $1,034
--------------------------------------------------------------------------------
                     A Class               $86     $268       $465      $1,034
--------------------------------------------------------------------------------
                     Pro Forma A Class     $86     $268       $465      $1,034
--------------------------------------------------------------------------------


HIGH- YIELD

SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT) FOR ALL FUNDS

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

(1)  THIS SALES CHARGE WILL NOT APPLY TO LOAD-WAIVED A CLASS SHARES.

(2)  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.


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


                                                DISTRIBUTION                  TOTAL ANNUAL
                                MANAGEMENT      AND SERVICE       OTHER       FUND OPERATING
FUND NAME     CLASS             FEE(1)(2)(3)   (12B-1) FEES(4)   EXPENSES(5)    EXPENSES
---------------------------------------------------------------------------------------------
High-Yield    Advisor Class         0.61%           0.50%         0.01%         1.12%
---------------------------------------------------------------------------------------------
              A Class               0.86%           0.25%         0.01%         1.12%
---------------------------------------------------------------------------------------------
              Pro Forma A Class     0.86%           0.25%         0.01%         1.12%
---------------------------------------------------------------------------------------------

(1)  THE FUND PAYS THE ADVISOR A SINGLE,  UNIFIED  MANAGEMENT  FEE FOR ARRANGING
     ALL SERVICES  NECESSARY FOR THE FUND TO OPERATE.  THE FEE SHOWN IS BASED ON
     ASSETS  DURING THE FUND'S MOST RECENT  FISCAL YEAR.  THE FUND HAS A STEPPED
     FEE SCHEDULE. AS A RESULT, THE FUND'S UNIFIED MANAGEMENT FEE RATE GENERALLY
     DECREASES AS FUND ASSETS  INCREASE AND  INCREASES AS FUND ASSETS  DECREASE.
     FOR MORE INFORMATION ABOUT THE UNIFIED  MANAGEMENT FEE, SEE "THE INVESTMENT
     ADVISOR" UNDER MANAGEMENT IN THE FUNDS' PROSPECTUS.

(2)  FROM JULY 29, 2005 TO JULY 31, 2006,  AMERICAN CENTURY VOLUNTARILY WAIVED A
     PORTION OF THE FUND'S MANAGEMENT FEE. TAKING INTO ACCOUNT THIS WAIVER,  THE
     MANAGEMENT  FEE AND TOTAL ANNUAL FUND  OPERATING  EXPENSES FOR A CLASS WERE
     0.80% AND 1.06%, RESPECTIVELY; AND THE MANAGEMENT FEE AND TOTAL ANNUAL FUND
     OPERATING  EXPENSES FOR ADVISOR  CLASS WERE 0.55% AND 1.06%,  RESPECTIVELY.
     THIS FEE WAIVER IS VOLUNTARY  AND MAY BE REVISED OR  TERMINATED AT ANY TIME
     BY AMERICAN CENTURY WITHOUT NOTICE.

(3)  EFFECTIVE AUGUST 1, 2006,  AMERICAN CENTURY VOLUNTARILY WAIVED A PORTION OF
     THE FUND'S MANAGEMENT FEE. TAKING INTO ACCOUNT THIS WAIVER,  THE MANAGEMENT
     FEE AND TOTAL ANNUAL FUND OPERATING  EXPENSES FOR A CLASS WILL BE 0.79% AND
     1.05%, RESPECTIVELY; AND THE MANAGEMENT FEE AND TOTAL ANNUAL FUND OPERATING
     EXPENSES FOR ADVISOR CLASS WILL BE 0.54% AND 1.05%, RESPECTIVELY.  THIS FEE
     WAIVER  IS  VOLUNTARY  AND MAY BE  REVISED  OR  TERMINATED  AT ANY  TIME BY
     AMERICAN CENTURY WITHOUT NOTICE.

(4)  THE 12B-1 FEE IS DESIGNED TO PERMIT  INVESTORS TO PURCHASE  SHARES  THROUGH
     BROKER-DEALERS,    BANKS,   INSURANCE   COMPANIES   AND   OTHER   FINANCIAL
     INTERMEDIARIES.   THE  FEE  MAY  BE  USED  TO  COMPENSATE   SUCH  FINANCIAL
     INTERMEDIARIES  FOR  DISTRIBUTION  AND  OTHER  SHAREHOLDER   SERVICES.   IN
     ADDITION,  HALF OF THE  ADVISOR  CLASS  12B-1 FEE  (0.25%)  IS FOR  ONGOING
     RECORDKEEPING   AND   ADMINISTRATIVE   SERVICES   PROVIDED   BY   FINANCIAL
     INTERMEDIARIES,  WHICH  WOULD  OTHERWISE  BE PAID BY THE ADVISOR OUT OF THE
     UNIFIED  MANAGEMENT FEE. THE ADVISOR HAS REDUCED ITS UNIFIED MANAGEMENT FEE
     BY 0.25% FOR ADVISOR CLASS SHARES, BUT THE FEE FOR CORE INVESTMENT ADVISORY
     SERVICES IS THE SAME FOR ALL CLASSES.  FOR MORE  INFORMATION,  SEE MULTIPLE
     CLASS INFORMATION AND SERVICE, DISTRIBUTION AND ADMINISTRATIVE FEES, IN THE
     FUNDS' PROSPECTUS.

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


Fee Examples

EXAMPLE

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

o  invest $10,000 in the Fund

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

o  earn a 5% return each year

o  incur the same operating expenses as shown above

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


FUND NAME        CLASS                 1 YEAR   3 YEARS    5 YEARS     10 YEARS
--------------------------------------------------------------------------------
High-Yield       Advisor Class          $114      $355       $615      $1,356
--------------------------------------------------------------------------------
                 A Class                $559      $789     $1,037      $1,745(1)
--------------------------------------------------------------------------------
                 Pro Forma A Class      $559      $789     $1,037      $1,745(1)
--------------------------------------------------------------------------------

(1)  THIS  NUMBER  INCLUDES  THE  SALES  CHARGE,  WHICH  IS  NOT  APPLICABLE  TO
     LOAD-WAIVED A CLASS SHARES.


COMPARATIVE PERFORMANCE TABLES

AVERAGE ANNUAL TOTAL RETURNS

The following tables show the average annual total returns of the Funds' Advisor
Class and A Class  shares.  Returns  assume the  deduction  of all sales  loads,
charges and other fees associated with a particular  class.  Your actual returns
may vary depending on the  circumstances of your investment.  Money market funds
are not required to show the impact of taxes,  therefore the  information is not
included in the charts below for Prime Money Market.

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


DIVERSIFIED BOND
-------------------------------------------------------------------------------------------
                                             Advisor Class                 A Class(1)
-------------------------------------------------------------------------------------------
                                                           LIFE OF                 LIFE OF
FOR PERIODS ENDED DECEMBER 31, 2006   1 YEAR    5 YEARS    CLASS(2)     1 YEAR     CLASS(3)
-------------------------------------------------------------------------------------------
Return Before Taxes                    3.54%     4.03%     3.80%        -1.08%      1.92%
-------------------------------------------------------------------------------------------
Lehman Brother U.S. Aggregate Index    4.33%     5.06%     4.84%(4)      4.33%      3.86%
   (reflects no deduction for fees,
   expenses or taxes)
-------------------------------------------------------------------------------------------

(1)  RETURNS ASSUME THE DEDUCTION OF SALES LOADS.

(2)  THE INCEPTION DATE FOR THE ADVISOR CLASS IS DECEMBER 2, 2001.

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

(4)  SINCE  NOVEMBER 30, 2001,  THE DATE  CLOSEST TO THE CLASS'S  INCEPTION  FOR
     WHICH DATA IS AVAILABLE.



PRIME MONEY MARKET
-------------------------------------------------------------------------------------------
                                             Advisor Class                A Class(1)
-------------------------------------------------------------------------------------------
                                                           LIFE OF                LIFE OF
FOR PERIODS ENDED DECEMBER 31, 2006   1 YEAR    5 YEARS    CLASS(2)    1 YEAR     CLASS(3)
-------------------------------------------------------------------------------------------
Prime Money Market                   4.36%(4)   1.78%(4)     2.91%    4.37%(5)     2.01%(5)
-------------------------------------------------------------------------------------------

(1)  RETURNS ASSUME THE DEDUCTION OF SALES LOADS.

(2)  THE INCEPTION DATE FOR THE ADVISOR CLASS IS AUGUST 28, 1998.

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

(4)  RETURN  MAY HAVE BEEN  LOWER IF THE CLASS HAD NOT  WAIVED A PORTION  OF ITS
     MANAGEMENT FEE.

(5)  RETURN  MAY HAVE BEEN  LOWER IF THE CLASS HAD NOT  WAIVED A PORTION  OF ITS
     MANAGEMENT AND DISTRIBUTION AND SERVICE FEES.



HIGH-YIELD
------------------------------------------------------------------------------------
                                          Advisor Class              A Class(1)
------------------------------------------------------------------------------------
                                                  LIFE OF                  LIFE OF
FOR PERIODS ENDED DECEMBER 31, 2006   1 YEAR      CLASS(2)      1 YEAR     CLASS(3)
------------------------------------------------------------------------------------
Return Before Taxes                   7.88%(4)    7.98%(4)      3.02%(5)     7.84%
------------------------------------------------------------------------------------
CSFB High-Yield Index II             11.93%      11.42%(6)     11.93%       12.68%
   (reflects no deduction for
   fees, expenses or taxes)
------------------------------------------------------------------------------------

(1)  RETURNS ASSUME THE DEDUCTION OF SALES LOADS.

(2)  THE INCEPTION DATE FOR THE ADVISOR CLASS IS MARCH 8, 2002.

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

(4)  RETURN  MAY HAVE BEEN  LOWER IF THE CLASS HAD NOT  WAIVED A PORTION  OF ITS
     MANAGEMENT AND DISTRIBUTION AND SERVICE FEES.

(5)  RETURNS  MAY HAVE BEEN  LOWER IF THE CLASS HAD NOT  WAIVED A PORTION OF ITS
     MANAGEMENT AND DISTRIBUTION AND SERVICE FEES.

(6)  SINCE  FEBRUARY 28, 2002,  THE DATE  CLOSEST TO THE CLASS'S  INCEPTION  FOR
     WHICH DATA IS AVAILABLE.

For further information on the performance of the Fund, please see "Management's
Discussion of Fund Performance" attached hereto as Exhibit C.



PROPOSAL 4 - TO APPROVE THE PROPOSED  RECLASSIFICATIONS  OF ADVISOR CLASS SHARES
AS INVESTOR CLASS SHARES


                           TAX-FREE BOND AND UTILITIES


REASONS FOR THE  RECLASSIFICATIONS  OF ADVISOR  CLASS  SHARES AS INVESTOR  CLASS
SHARES

At its  meeting  on  December  8,  2006,  the  Boards of the  applicable  Funds,
including Trustees/Directors who are not "interested persons" within the meaning
of Section 2(a)(19) of the 1940 Act, concluded that the Reclassifications are in
the best interests of the Advisor Class  shareholders.  This  determination  was
made after the Board  considered  the  consistently  low  balance in the Advisor
Class of Tax-Free Bond, and concluded that the  Reclassification  of the Advisor
Class  shares of Tax-Free  Bond as Investor  Class shares of the same Fund would
result  in a  beneficial  decrease  in the  total  expense  ratio  for  affected
shareholders. Similarly, the Board of Directors of American Century Quantitative
Equity Funds,  Inc.  considered the low balance and  unprofitable  nature of the
Advisor  Class of  Utilities  and  concluded  that the  Reclassification  of the
Advisor  Class shares as Investor  Class shares would  benefit  shareholders  by
decreasing the total expense ratio for their shares.

Each  Reclassification  will be  considered  a tax-free  event under  applicable
provisions of the Internal  Revenue  Code,  as amended,  so that no gain or loss
will be recognized by the American  Century Funds or the American Century Funds'
shareholders.

CONSEQUENCES OF THE RECLASSIFICATIONS

If shareholders approve the  Reclassifications,  holders of Advisor Class shares
will have their shares  reclassified  as Investor Class shares of the same Fund.
The net asset value of your  investment  in the Fund will not change as a result
of a  Reclassification.  Investor  Class shares will have a lower total  expense
ratio than the Advisor Class share. It is anticipated that there will not be any
tax consequences as a result of the  Reclassification.  As previously  noted, if
the  Reclassification is approved,  it will be effective on the Closing Date. If
one or both of the  Reclassifications  are not approved by the shareholders,  we
may ask the Boards for authority to liquidate one or both of the Advisor Classes
of the Funds.

DESCRIPTION OF FUND SHARES

Currently,  the Investor Class shares have a total expense ratio 25 basis points
lower than that of Advisor  Class  shares.  Neither  share class is subject to a
sales charge.  Investor Class shareholders whose total eligible  investment with
American  Century  is  less  than  $10,000  may  be  subject  to a  $25  account
maintenance  fee.  This fee is not  applicable  to  shares  held in a  financial
intermediary  or retirement  plan account.  The  applicable  management and Rule
12b-1 fees for the share classes are as follows:


                                                                 TOTAL MANAGEMENT
                                     MANAGEMENT                       FEE AND
AMERICAN CENTURY FUND     CLASS         FEE      RULE 12B-1 FEE  RULE 12B-1 FEE(1)
===================== ============  ============ ==============  ===============
Tax-Free Bond            Advisor        0.23%        0.50%             0.73%

                        Investor        0.48%        None              0.48%
===================== ============= ===========  ==============  ===============
Utilities                Advisor        0.42%        0.50%             0.92%

                        Investor        0.67%        None              0.67%
===================== ============= ===========  ==============  ===============

(1) Does not include "Other Expenses." See Annual Fund Operating Expenses table.


Separate   from  the   Reclassification   proposal   contained   in  this  Proxy
Statement/Prospectus,  the Boards recently approved a proposal to change the fee
structure  of the  Advisor  Class.  As an Advisor  Class  shareholder,  you will
receive a separate proxy  statement  describing  this proposal in greater detail
and will have an  opportunity  to vote on it. If approved  by the Advisor  Class
shareholders,  the Rule 12b-1 fee of the Advisor Class would be reduced 25 basis
points  from  0.50%  to  0.25%  and  the  corresponding   management  fee  would
simultaneously increase 25 basis points, resulting in no net change to the total
expense  ratio.  If the  shareholders  of the  Advisor  Class do not approve the
management  fee  change,  then the Rule 12b-1 fee would  remain at 0.50% and the
management fee would continue at its current level. The proposed modification to
the  Advisor  Class fee  structure  would  make the class more  consistent  with
industry   practice  and  American   Century's   internal   pricing   structure.
Irrespective of whether the Advisor Class  shareholders  pass the proposal,  the
total  annual  Fund  operating  expense  will  not  change.  If  approved,   the
Reclassifications will result in the current Advisor Class shareholders having a
lower expense ratio. If approved,  the fee structure  change would not result in
current  Advisor  Class  shareholders  having  a  lower  expense  ratio.  If the
Reclassification  is approved by  shareholders,  the Advisor  Class shares would
cease to exist;  the proposal to change the fee  structure of the Advisor  Class
shares would become moot;  and  therefore,  even if approved,  the change in fee
structure would not take effect.

INVESTMENT OBJECTIVES, POLICIES AND RISKS

Since  the  Advisor  Class and the  Investor  Class  shares of a Fund  represent
interests in the same  portfolio,  they share identical  investment  objectives,
policies and risks.  The investment  objectives of these Funds are listed in the
following table:


----------------------------- --------------------------------------------------
AMERICAN CENTURY FUND         INVESTMENT OBJECTIVE
----------------------------- --------------------------------------------------
Tax-Free Bond                 Seeks safety of principal and high current income
                              that is exempt from federal income tax.
----------------------------- --------------------------------------------------
Utilities                     Seeks current income and long-term growth of
                              capital and income.
----------------------------- --------------------------------------------------


Reference is hereby made to the Funds' prospectuses and statements of additional
information,  all of which are incorporated herein by reference. These documents
set  forth  in  full  the  investment   objectives,   policies,  and  investment
limitations of each Fund, and include a full discussion of the risks inherent in
investments in each Fund.


PURCHASE, REDEMPTION AND EXCHANGE OF SHARES

The  following  table  highlights  certain  purchase,  redemption  and  exchange
features of the Advisor and Investor Classes of Tax-Free Bond and Utilities.

------------------------------------- ----------------------------------- -----------------------------------
 PURCHASE, REDEMPTION AND EXCHANGE              ADVISOR CLASS                       INVESTOR CLASS
              FEATURES
------------------------------------- ----------------------------------- -----------------------------------
Minimum Initial Investment for        o  Broker-Dealer Sponsored          Same as Advisor Class
Tax-Free Bond                            Wrap program accounts and/or
                                         fee-based accounts: No
                                         minimum

                                      o  Coverdell Educate
                                         Savings Accounts: $5000

                                      o  Financial
                                         Intermediaries: $250

                                      o  All other accounts: $5000
------------------------------------- ----------------------------------- -----------------------------------
Minimum Initial Investment for        o  Coverdell Educate                Same as Advisor Class
Utilities                                Savings Accounts: $2000

                                      o  All other accounts: $2500
------------------------------------- ----------------------------------- -----------------------------------
Minimum Subsequent Investments        o  Financial                        Same as Advisor Class
(applicable only to Tax-Free Bond)       Intermediaries: No Minimum

                                      o  All other accounts: $50
------------------------------------- ----------------------------------- -----------------------------------
Initial Sales Charge (as a            None                                Same as Advisor Class
percentage of offering price)
------------------------------------- ----------------------------------- -----------------------------------
Reductions and Waivers of Initial     Not Applicable                      Same as Advisor Class
Sales Charges
------------------------------------- ----------------------------------- -----------------------------------
Redemption Fees                       None.  However, there is a $10      Same as Advisor Class
                                      charge to redeem your shares by
                                      wire.
------------------------------------- ----------------------------------- -----------------------------------
Maintenance Fee                       Not Applicable                      Investor Class Shares:  $12.50
                                                                          semi-annual fee for investors
                                                                          whose total eligible investments
                                                                          with American Century is less
                                                                          than $10,000. (See the Fund's
                                                                          prospectus for further
                                                                          information).  This fee is not
                                                                          applicable to shares held in a
                                                                          financial intermediary or retirement
                                                                          plan account.
------------------------------------- ----------------------------------- -----------------------------------
Purchases/Redemptions                 By mail, fax, telephone, online,    Same as Advisor Class
                                      in person or automatically.
------------------------------------- ----------------------------------- -----------------------------------
Redemption Policies                   The Fund reserves the right to      Same as Advisor Class
                                      delay delivery of redemption
                                      proceeds up to seven days.

                                      Any redemption request made
                                      within 15 days of an address
                                      change may be required to be
                                      submitted in writing with
                                      guaranteed signatures of all
                                      authorized signers. If bank
                                      information is changed a 15-day
                                      holding period may be imposed
                                      before the proceeds are wired to
                                      the bank.

                                      There is a $10 charge for
                                      redemption requests made by a
                                      wire transfer.

                                      The Fund reserves the right to
                                      redeem in kind (i.e. in
                                      securities rather than cash) if
                                      during any 90-day period you
                                      redeem Fund shares worth more
                                      than $250,000 or 1% of the value
                                      of the Fund's assets if that
                                      amount is less than $250,000.
------------------------------------- ----------------------------------- -----------------------------------
Exchanges                             Because there is no sales charge    Same as Advisor Class
                                      or CDSC on Advisor Class shares,
                                      shareholders may redeem and
                                      purchase shares into any other
                                      Advisor, Investor, or
                                      Institutional share class without
                                      incurring a sales charge.
                                      However, investors will have to
                                      meet the applicable minimum
                                      initial investment when
                                      purchasing new investments in
                                      these share classes.
------------------------------------- ----------------------------------- -----------------------------------

COMPARATIVE FEE TABLES

The Funds,  like all mutual funds,  incur certain expenses in their  operations.
These  expenses  include  management  fees, as well as the costs of  maintaining
accounts,   administration,   providing  shareholder  liaison  and  distribution
services  and other  activities.  Set forth in the tables  below is  information
regarding  fees and expenses of the Funds and pro forma fees for the Funds after
giving effect to the Reclassifications.



TAX-FREE BOND

SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
--------------------------------------------------------------------------------
                                     Advisor Class   Investor Class    Pro Forma
                                                                       Investor
                                                                       Class
--------------------------------------------------------------------------------
   Maximum Account Maintenance Fee       N/A             $25(1)         $25(1)
--------------------------------------------------------------------------------

(1)  APPLIES ONLY TO INVESTORS  WHOSE TOTAL ELIGIBLE  INVESTMENTS  WITH AMERICAN
     CENTURY ARE LESS THAN $10,000.  SEE ACCOUNT MAINTENANCE FEE UNDER INVESTING
     DIRECTLY WITH AMERICAN  CENTURY IN THE FUNDS'  PROSPECTUS FOR MORE DETAILS.
     THIS FEE IS NOT  APPLICABLE TO SHARES HELD IN A FINANCIAL  INTERMEDIARY  OR
     RETIREMENT PLAN ACCOUNT.



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


                                               DISTRIBUTION                   TOTAL ANNUAL
                                 MANAGEMENT    AND SERVICE       OTHER        FUND OPERATING
FUND NAME      CLASS             FEE(1)        (12B-1) FEES(2)   EXPENSES(3)  EXPENSES
--------------------------------------------------------------------------------------------
Tax-Free Bond  Advisor Class          0.23%       0.50%             0.01%        0.74%
--------------------------------------------------------------------------------------------
               Investor               0.48%       None              0.01%        0.49%
--------------------------------------------------------------------------------------------
               Pro Forma Investor     0.48%       None              0.01%        0.49%
--------------------------------------------------------------------------------------------

(1)  THE FUND PAYS THE ADVISOR A SINGLE,  UNIFIED  MANAGEMENT  FEE FOR ARRANGING
     ALL SERVICES  NECESSARY FOR THE FUND TO OPERATE.  THE FEE SHOWN IS BASED ON
     ASSETS  DURING THE FUND'S MOST RECENT  FISCAL YEAR.  THE FUND HAS A STEPPED
     FEE SCHEDULE. AS A RESULT, THE FUND'S UNIFIED MANAGEMENT FEE RATE GENERALLY
     DECREASES AS ASSETS  INCREASE AND  INCREASES AS ASSETS  DECREASE.  FOR MORE
     INFORMATION ABOUT THE UNIFIED  MANAGEMENT FEE,  INCLUDING AN EXPLANATION OF
     STRATEGY  ASSETS,  SEe "The  Investment  Advisor"  UNDER  Management IN THE
     FUNDS' PROSPECTUS.

(2)  THE 12B-1 FEE IS DESIGNED TO PERMIT  INVESTORS TO PURCHASE  SHARES  THROUGH
     BROKER-DEALERS,    BANKS,   INSURANCE   COMPANIES   AND   OTHER   FINANCIAL
     INTERMEDIARIES.   THE  FEE  MAY  BE  USED  TO  COMPENSATE   SUCH  FINANCIAL
     INTERMEDIARIES  FOR  DISTRIBUTION  AND  OTHER  SHAREHOLDER   SERVICES.   IN
     ADDITION,  HALF OF THE  ADVISOR  CLASS  12B-1 FEE  (0.25%)  IS FOR  ONGOING
     RECORDKEEPING   AND   ADMINISTRATIVE   SERVICES   PROVIDED   BY   FINANCIAL
     INTERMEDIARIES,  WHICH  WOULD  OTHERWISE  BE PAID BY THE ADVISOR OUT OF THE
     UNIFIED  MANAGEMENT FEE. THE ADVISOR HAS REDUCED ITS UNIFIED MANAGEMENT FEE
     BY 0.25% FOR ADVISOR CLASS SHARES, BUT THE FEE FOR CORE INVESTMENT ADVISORY
     SERVICES IS THE SAME FOR ALL CLASSES.  FOR MORE  INFORMATION,  SEE Multiple
     Class Information AND Service, Distribution and Administrative Fees, IN THE
     FUNDS' PROSPECTUS.

(3)  OTHER  EXPENSES,  WHICH  INCLUDE  THE  FEES  AND  EXPENSES  OF  THE  FUND'S
     INDEPENDENT  DIRECTORS AND THEIR LEGAL COUNSEL,  AS WELL AS INTEREST,  WERE
     LESS THAN 0.005% FOR THE MOST RECENT FISCAL YEAR.


EXAMPLE

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

o invest $10,000 in the Fund

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

o earn a 5% return each year

o incur the same operating expenses as shown above

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


FUND NAME       CLASS                    1 YEAR   3 YEARS    5 YEARS    10 YEARS
--------------------------------------------------------------------------------
Tax-Free Bond   Advisor Class              $75      $236       $411       $916
--------------------------------------------------------------------------------
                Investor Class             $50      $157       $274       $615
--------------------------------------------------------------------------------
                Pro Forma Investor Class   $50      $157       $274       $615
--------------------------------------------------------------------------------



UTILITIES

SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
--------------------------------------------------------------------------------
                                     Advisor Class   Investor Class   Pro Forma
                                                                      Investor
                                                                       Class
--------------------------------------------------------------------------------
 Maximum Account Maintenance Fee         N/A             $25(1)         $25(1)
--------------------------------------------------------------------------------

(1)  APPLIES ONLY TO INVESTORS  WHOSE TOTAL ELIGIBLE  INVESTMENTS  WITH AMERICAN
     CENTURY ARE LESS THAN $10,000.  SEE ACCOUNT MAINTENANCE FEE UNDER INVESTING
     DIRECTLY WITH AMERICAN CENTURY FOR MORE DETAILS. THIS FEE IS NOT APPLICABLE
     TO SHARES HELD IN A FINANCIAL INTERMEDIARY OR RETIREMENT PLAN ACCOUNT.



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


                                             DISTRIBUTION                  TOTAL ANNUAL
                                 MANAGEMENT  AND SERVICE      OTHER        FUND OPERATING
FUND NAME    CLASS               FEE(1)      (12B-1) FEES(2)  EXPENSES(3)    EXPENSES
-----------------------------------------------------------------------------------------
Utilities    Advisor Class         0.42%         0.50%          0.01%       0.93%
-----------------------------------------------------------------------------------------
             Investor              0.67%         None           0.01%       0.68%
-----------------------------------------------------------------------------------------
             Pro Forma Investor    0.67%         None           0.01%       0.68%
-----------------------------------------------------------------------------------------

(1)  THE FUND PAYS THE ADVISOR A SINGLE,  UNIFIED  MANAGEMENT  FEE FOR ARRANGING
     ALL SERVICES  NECESSARY FOR THE FUND TO OPERATE.  THE FEE SHOWN IS BASED ON
     ASSETS  DURING THE FUND'S MOST RECENT  FISCAL YEAR.  THE FUND HAS A STEPPED
     FEE SCHEDULE. AS A RESULT, THE FUND'S UNIFIED MANAGEMENT FEE RATE GENERALLY
     DECREASES AS FUND ASSETS  INCREASE AND  INCREASES AS FUND ASSETS  DECREASE.
     FOR MORE INFORMATION ABOUT THE UNIFIED  MANAGEMENT FEE, SEE "The Investment
     Advisor" UNDER Management in the Funds' prospectus.

(2)  THE 12B-1 FEE IS DESIGNED TO PERMIT  INVESTORS TO PURCHASE  SHARES  THROUGH
     BROKER-DEALERS,    BANKS,   INSURANCE   COMPANIES   AND   OTHER   FINANCIAL
     INTERMEDIARIES.   THE  FEE  MAY  BE  USED  TO  COMPENSATE   SUCH  FINANCIAL
     INTERMEDIARIES  FOR  DISTRIBUTION  AND  OTHER  SHAREHOLDER   SERVICES.   IN
     ADDITION,  HALF OF THE  ADVISOR  CLASS  12B-1 FEE  (0.25%)  IS FOR  ONGOING
     RECORDKEEPING   AND   ADMINISTRATIVE   SERVICES   PROVIDED   BY   FINANCIAL
     INTERMEDIARIES,  WHICH  WOULD  OTHERWISE  BE PAID BY THE ADVISOR OUT OF THE
     UNIFIED  MANAGEMENT FEE. THE ADVISOR HAS REDUCED ITS UNIFIED MANAGEMENT FEE
     BY 0.25% FOR ADVISOR CLASS SHARES, BUT THE FEE FOR CORE INVESTMENT ADVISORY
     SERVICES IS THE SAME FOR ALL CLASSES.  FOR MORE  INFORMATION,  SEE Multiple
     Class Information AND Service, Distribution and Administrative Fees, IN THE
     FUNDS' PROSPECTUS.

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


EXAMPLE

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

o invest $10,000 in the Fund

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

o earn a 5% return each year

o incur the same operating expenses as shown above

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



FUND NAME      CLASS                    1 YEAR    3 YEARS     5 YEARS   10 YEARS
--------------------------------------------------------------------------------
Utilities      Advisor Class              $95       $296        $513      $1,139
               Investor Class             $69       $217        $378      $844
--------------------------------------------------------------------------------
               Pro Forma Investor Class   $69       $217        $378      $844
--------------------------------------------------------------------------------


COMPARATIVE PERFORMANCE TABLES

AVERAGE ANNUAL TOTAL RETURNS

The  following  tables  show the  average  annual  total  returns  of the Funds'
Investor Class and Advisor  shares.  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 benchmark is an unmanaged  index that has no operating costs and is included
in each table for performance comparison.


TAX-FREE BOND
                                           Advisor Class               Investor Class
------------------------------------------------------------------------------------------
FOR PERIODS ENDED DECEMBER 31, 2006                LIFE OF
                                         1 YEAR    CLASS(1)     1 YEAR  5 YEARS   10 YEARS
------------------------------------------------------------------------------------------
Return Before Taxes                      3.86%     3.39%         4.11%   4.44%     5.44%

Lehman Brothers Municipal                3.38%     2.93%(2)      3.38%   4.09%     5.53%
   5-Year General Obligation Index
   (reflects no deduction for fees,
   expenses or taxes)
------------------------------------------------------------------------------------------

(1)  THE INCEPTION DATE FOR TAX-FREE BOND ADVISOR CLASS IS JULY 29, 2005.

(2)  SINCE JULY 31, 2005,  THE DATE CLOSEST TO THE CLASS'S  INCEPTION  FOR WHICH
     DATA IS AVAILABLE.



UTILITIES
                                             Advisor Class                  Investor Class
---------------------------------------------------------------------------------------------------
                                                        LIFE OF
FOR PERIODS ENDED DECEMBER 31, 2006   1 YEAR   5 YEARS  CLASS(1)     1 YEAR    5 YEARS   10 YEARS
---------------------------------------------------------------------------------------------------
Return Before Taxes                   24.62%   9.44%     6.35%       24.99%    9.73%      9.69%

S&P 500(R) Index                      15.79%   6.19%     4.30%(2)    15.79%    6.19%      8.42%
   (reflects no deduction for fees,
   expenses or taxes)


(1)  THE INCEPTION DATE FOR THE ADVISOR CLASS IS JUNE 25, 1998.

(2)  SINCE JUNE 30, 1998,  THE DATE CLOSEST TO THE CLASS'S  INCEPTION  FOR WHICH
     DATA IS AVAILABLE.

For  further   information  on  the   performance  of  the  Funds,   please  see
"Management's Discussion of Fund Performance" attached hereto as Exhibit C.


INFORMATION ABOUT THE REORGANIZATIONS

TERMS OF THE AGREEMENTS AND PLANS OF REORGANIZATION

Set forth below is a summary of certain  material  terms of the  Agreements  and
Plans of Reorganization  ("Plans"). This summary is qualified in its entirety by
the terms and  provisions  of the form of Plan which is  attached  to this Proxy
Statement/Prospectus as Exhibit A.

The Plans provide that all of the assets of Arizona  Municipal  Bond and Florida
Municipal Bond will be transferred to Tax-Free Bond at 4:00 p.m.,  Eastern Time,
on the Closing Date of the Reorganizations  (which is expected to be on or about
August 31, 2007).  In exchange for the transfer of these  assets,  Tax-Free Bond
will  simultaneously  issue a number  of full and  fractional  shares to each of
Arizona  Municipal  Bond  and  Florida  Municipal  Bond  equal  in  value to the
aggregate net asset value of the respective  Funds calculated at the time of the
Reorganizations.  The Plans  contemplate  that the Acquired Funds will discharge
all of its  liabilities  and  obligations  prior to the Closing  Date other than
ordinary  course  liabilities  reflected in the Acquired  Fund's net asset value
incurred by the Acquired Fund prior to the Closing Date in  connection  with its
on-going business  operations  (including accrued fees and expenses and payables
for securities purchased or for shares redeemed). Tax-Free Bond shall not assume
or agree to pay, satisfy,  discharge or perform any contingent  liabilities,  or
any liabilities  arising under any plan adopted by the Acquired Funds under Rule
12b-1  with  respect  to the sale of the  Acquired  Funds'  shares  prior to the
Closing Date.

When  calculating the value of the assets of Arizona  Municipal Bond and Florida
Municipal Bond for purposes of each Reorganization, the net asset values will be
determined in accordance with Tax-Free  Bond's  valuation  procedures.  However,
since the  valuation  procedures  used by Tax-Free  Bond are  identical  in most
respects to those used by Arizona  Municipal  Bond and Florida  Municipal  Bond,
there are not  anticipated to be  differences  in the valuation  methods used to
value the securities held by Arizona  Municipal Bond and Florida  Municipal Bond
at the time of the Reorganizations.

Following  the  transfer  of assets in  exchange  for shares of  Tax-Free  Bond,
Arizona  Municipal Bond and Florida  Municipal  Bond will  distribute all of the
shares of  Tax-Free  Bond pro rata to their  shareholders  of record in complete
liquidation of Arizona Municipal Bond and Florida  Municipal Bond.  Shareholders
of Arizona  Municipal Bond and Florida  Municipal Bond owning shares at the time
of the  Reorganization  will receive the same percentage of the aggregate number
of  corresponding  Tax-Free  Bond  shares  issued as such  shareholder  owned in
Arizona   Municipal  Bond  and  Florida  Municipal  Bond  at  the  time  of  the
Reorganizations.  Such distribution will be accomplished by the establishment of
accounts in the names of each Arizona  Municipal Bond and Florida Municipal Bond
shareholder on the share records of Tax-Free Bond's transfer agent. Each account
will receive the respective pro rata number of full and fractional Tax-Free Bond
shares due to the  shareholder of Arizona  Municipal Bond and Florida  Municipal
Bond. Arizona Municipal Bond and Florida Municipal Bond will then be terminated.
Tax-Free Bond Fund does not issue share  certificates to shareholders.  Tax-Free
Bond shares to be issued will have no preemptive or conversion  rights. No sales
charge  will be imposed in  connection  with the  receipt of such  shares by the
shareholders of Arizona Municipal Bond or Florida Municipal Bond.

In connection with the  Reorganizations,  holders of shares of Arizona Municipal
Bond and Florida  Municipal Bond will receive  Investor Class shares of Tax-Free
Bond.  Shares of Tax-Free Bond to be issued to shareholders of Arizona Municipal
Bond  and  Florida  Municipal  Bond  under  the  Plans  will be  fully  paid and
non-assessable  when issued,  transferable  without restriction and will have no
subscription rights. Reference is hereby made to the prospectus of Tax-Free Bond
provided herewith for additional information about shares of Tax-Free Bond.

The Plans contain  customary  representations,  warranties and conditions.  Each
Plan  provides  that the  consummation  of the  Reorganizations  with respect to
Arizona  Municipal  Bond  and  Florida  Municipal  Bond  and  Tax-Free  Bond are
conditioned upon, among other things: (i) approval of the Reorganizations by the
shareholders of Arizona  Municipal Bond and Florida Municipal Bond; and (ii) the
receipt by Arizona Municipal Bond, Florida Municipal Bond and Tax-Free Bond Fund
of a tax  opinion to the effect  that the  Reorganizations  will be  tax-free to
Arizona   Municipal  Bond  and  Florida  Municipal  Bond  and  their  respective
shareholders,  and Tax-Free  Bond.  Any Plan may be  terminated  if,  before the
Closing  Date,  any  of  the  required   conditions   have  not  been  met,  the
representations  and  warranties are not true (and have not been cured within 30
days), or the Municipal Trust Board determines that a  Reorganization  is not in
the best  interest  of the  shareholders  of  Arizona  Municipal  Bond,  Florida
Municipal  Bond or Tax-Free  Bond,  respectively.  The  Reorganizations  are not
anticipated  to result in dilution  of the net asset value of Arizona  Municipal
Bond,  Florida  Municipal  Bond or Tax-Free  Bond  immediately  following  their
consummation.  Consummation of one of the  Reorganizations is not a condition to
the closing of the other Reorganization.

COSTS OF THE REORGANIZATIONS

The  expenses  of  each   Reorganization  will  be  paid  by  American  Century.
Reorganization  expenses include:  (a) expenses  associated with the preparation
and filing of this Proxy  Statement/Prospectus;  (b) postage; (c) printing;  (d)
accounting  fees;  (e)  legal  fees  incurred  in the  preparation  of the Proxy
Statement/Prospectus;   (f)   solicitation   costs;   and  (g)   other   related
administrative  or operational  costs. Any registration or licensing fee will be
borne by the American  Century Fund incurring such fee.  Arizona  Municipal Bond
and Florida  Municipal Bond will pay for any brokerage  charges  associated with
the  disposition  of  their  respective   portfolio   securities  prior  to  the
Reorganizations.

REASONS FOR THE REORGANIZATIONS

In determining to approve the  Reorganizations  and to recommend approval of the
Reorganizations  to shareholders of Arizona Municipal Bond and Florida Municipal
Bond, the Municipal  Trust Board made inquiries into all matters deemed relevant
and considered the following, among others items:

     o    The viability of Arizona  Municipal  Bond and Florida  Municipal  Bond
          absent approval of the proposed Reorganizations;

     o    The redundancy of Florida  Municipal Bond with Tax-Free Bond given the
          repeal of the Florida intangibles tax;

     o    The  commonalities in investment  objectives and principal  investment
          policies  of  Tax-Free  Bond and  Arizona  Municipal  Bond and Florida
          Municipal Bond;

     o    The federal income tax treatment of the Reorganizations;

     o    The  undertaking by American  Century to pay all the  above-referenced
          costs and expenses of the Reorganizations;

     o    The same portfolio managers are responsible for the Acquired Funds and
          Tax-Free Bond.

     Some of these factors are discussed in greater detail below.

COMPATIBLE INVESTMENT OBJECTIVES AND POLICIES

     As  discussed in the section  entitled  "SUMMARY-Comparison  of  Investment
Objectives and Policies," there are material  differences between the investment
objectives  of Arizona  Municipal  Bond and Florida  Municipal  Bond and that of
Tax-Free Bond.  However,  the Municipal Trust Board considered that all three of
the  investment  objectives  seek to provide high current  income that is exempt
from federal income tax.

VIABILITY OF THE FUNDS

     The Municipal  Trust Board  considered the decline of net assets and of net
sales of the Acquired  Funds over the past several  calendar years and concluded
that these Funds were not likely to reach a viable  asset size.  In addition the
Board considered the negative impact that the repeal of the Florida  intangibles
tax would likely have on future sales of Florida Municipal Bond.

FEDERAL INCOME TAX TREATMENT OF REORGANIZATIONS

     The  Municipal  Trust Board also  considered  that the Acquired  Funds will
receive a tax opinion to the effect that the Reorganizations  will be treated as
"tax-free" for federal income tax purposes.  Prior to the Reorganizations,  if a
Arizona  Municipal Bond or Florida Municipal Bond shareholder were to redeem its
investment in Arizona  Municipal  Bond or Florida  Municipal Bond and invest the
proceeds in another fund or other investment product, such shareholder generally
would recognize gain or loss for federal income tax purposes upon the redemption
of  the  shares.  By  contrast,  it  is  intended  that,  as  a  result  of  the
Reorganizations:  (i)  shareholders  of the Acquired  Funds will not recognize a
taxable gain or loss on the exchange of their Arizona  Municipal Bond or Florida
Municipal  Bond shares for shares of Tax-Free  Bond;  (ii)  shareholders  of the
Acquired  Funds will have the same  aggregate  tax cost basis in  Tax-Free  Bond
shares  received in  connection  with the  Reorganizations  as in their  Arizona
Municipal Bond or Florida Municipal Bond shares; and (iii) assuming that Arizona
Municipal Bond and Florida  Municipal Bond shares are held as a capital asset on
the Closing Date,  the holding period for Tax-Free Bond Fund shares will include
the period for which such shareholder held its Arizona Municipal Bond or Florida
Municipal Bond shares.

EXPENSES OF THE REORGANIZATIONS

     American Century,  or one or more of its affiliates,  will bear the cost of
the  Reorganizations,  including proxy  solicitation  and tabulation  costs. See
"Costs of the Reorganizations" under "Information About the Reorganizations" for
further information.

RECOMMENDATION IN FAVOR OF APPROVAL OF THE REORGANIZATIONS

     Based  on the  foregoing,  together  with  other  factors  and  information
considered to be relevant,  and recognizing  that there can be no assurance that
any benefits will in fact be realized,  the Municipal Trust Board concluded that
the Reorganizations are in the best interests of all affected shareholders.

     In approving the Reorganizations,  the Municipal Trust Board, including all
of the Trustees who are not  "interested  persons" within the meaning of Section
2(a)(19)  of  the  1940  Act  ("Independent  Trustees"),  determined  that  each
Reorganization  is in the best  interests of Arizona  Municipal Bond and Florida
Municipal Bond, respectively,  and their respective  shareholders.  In addition,
the Municipal  Trust Board,  including  all of the  Independent  Trustees,  also
determined that the interests of the shareholders of Arizona  Municipal Bond and
Florida  Municipal  Bond  would not be  diluted  as a result of  effecting  each
respective   Reorganization   because   each  such   shareholder   will  receive
corresponding  shares of Tax-Free Bond having an aggregate net asset value equal
to the aggregate net asset value of his or her shares in Arizona  Municipal Bond
and Florida  Municipal  Bond,  respectively,  outstanding  as  determined at the
Closing.  Consequently,  the Municipal Trust Board approved the  Reorganizations
and  directed  that they be  submitted  to the  shareholders  of each of Arizona
Municipal Bond and Florida Municipal Bond, respectively for approval.

     THE MUNICIPAL TRUST BOARD  UNANIMOUSLY  RECOMMENDS THAT THE SHAREHOLDERS OF
ARIZONA  MUNICIPAL  BOND AND FLORIDA  MUNICIPAL  BOND APPROVE THE  CORRESPONDING
PLANS OF REORGANIZATION. CONSUMMATION OF THE REORGANIZATIONS WITH RESPECT TO ONE
FUND IS NOT  CONTINGENT  UPON  THE  APPROVAL  OF THE PLAN OF  REORGANIZATION  BY
SHAREHOLDERS OF THE OTHER FUND.

FEDERAL INCOME TAX CONSEQUENCES OF THE REORGANIZATIONS

     As a condition to the  Reorganizations,  Arizona  Municipal  Bond,  Florida
Municipal Bond and Tax-Free Bond will receive  opinions of counsel to the effect
that,  on  the  basis  of  the  existing   provisions   of  the  Code,   current
administrative rules and court decisions, for federal income tax purposes:

     o    the  Reorganizations  as set forth in the Plans will each constitute a
          tax-free  reorganization  under  section  368(a) of the Code,  and the
          parties to the Plans each will be a "party to a reorganization" within
          the meaning of section 368(b) of the Code;

     o    no gain or loss will be  recognized  by Tax-Free Bond upon its receipt
          of the assets of Arizona  Municipal Bond or Florida  Municipal Bond in
          exchange for Investor Class shares of Tax-Free Bond;

     o    no gain or loss will be  recognized  by  Arizona  Municipal  Bond upon
          transfer of its assets to Tax-Free Bond in exchange for Investor Class
          shares of Tax-Free  Bond or upon the  distribution  of Investor  Class
          shares of Tax-Free Bond Fund to Arizona Municipal Bond's  shareholders
          in exchange for their shares of Arizona Municipal Bond;

     o    no gain or loss will be  recognized  by  Florida  Municipal  Bond upon
          transfer of its assets to Tax-Free Bond in exchange for Investor Class
          shares of Tax-Free  Bond or upon the  distribution  of Investor  Class
          shares of Tax-Free Bond to Florida  Municipal  Bond's  shareholders in
          exchange for their shares of the Florida Municipal Bond;

     o    no  gain or  loss  will  be  recognized  by  shareholders  of  Arizona
          Municipal Bond or Florida Municipal Bond upon exchange of their shares
          for Investor Class shares of Tax-Free Bond;

     o    the  aggregate  tax basis of Investor  Class  shares of Tax-Free  Bond
          received by each  shareholder  of Arizona  Municipal  Bond and Florida
          Municipal Bond, respectively,  pursuant to the Reorganizations will be
          the same as the aggregate tax basis of the shares of Arizona Municipal
          Bond  and  Florida   Municipal  Bond,   respectively,   held  by  such
          shareholder immediately prior to the Reorganizations;

     o    the holding  period of the  Investor  Class  shares of  Tax-Free  Bond
          received by each  shareholder  of Arizona  Municipal  Bond and Florida
          Municipal  Bond  pursuant to the Plans will include the period  during
          which  shares of Arizona  Municipal  Bond and Florida  Municipal  Bond
          exchanged therefore were held by such shareholder, provided the shares
          of Arizona  Municipal  Bond and  Florida  Municipal  Bond were held as
          capital assets on the date of the Reorganizations;

     o    the tax basis of the  assets of  Arizona  Municipal  Bond and  Florida
          Municipal  Bond  acquired by Tax-Free Bond will be the same as the tax
          basis of such assets to Arizona  Municipal Bond and Florida  Municipal
          Bond immediately prior to the Reorganizations; and

     o    the holding  period of Arizona  Municipal  Bond and Florida  Municipal
          Bond's  assets in the hands of the Tax-  Free  Bond will  include  the
          period during which those assets were held by Arizona  Municipal  Bond
          and Florida Municipal Bond.

     The  foregoing  opinion  may state that no opinion is  expressed  as to the
effect of the  Reorganizations on Arizona Municipal Bond, Florida Municipal Bond
or Tax-Free Bond's shareholders with respect to any asset as to which unrealized
gain or loss is required to be recognized for federal income tax purposes at the
end of a  taxable  year (or on the  termination  or  transfer  thereof)  under a
mark-to-market system of accounting.

     The  parties   have  agreed  to  cooperate   to   facilitate   the  orderly
reorganization  of  Arizona  Municipal  Bond and  Florida  Municipal  Bond  into
Tax-Free Bond. It is anticipated  that this  transition will include the sale of
certain  portfolio  securities of Arizona  Municipal Bond and Florida  Municipal
Bond  prior to the  Reorganizations.  The sale of  securities  may result in the
realization  of capital gains to Arizona  Municipal  Bond and Florida  Municipal
Bond that, to the extent not offset by capital  losses,  would be distributed to
shareholders prior to the Closing Date.

Arizona  Municipal  Bond,  Florida  Municipal  Bond  and  Tax-Free  Bond had the
following tax basis appreciation or (depreciation) as of May 31, 2006.


FUND                                        NET TAX BASIS
                                          APPRECIATION OR
                                           (DEPRECIATION)


Arizona Municipal                               1,457,939
Bond Fund

Florida Municipal Bond                          1,269,966
Fund

Tax-Free Bond Fund                             10,923,265

Shareholders are urged to consult their tax advisors regarding the effect of the
Reorganizations  in light of their  individual  circumstances.  As the foregoing
relates  only to  federal  income tax  consequences,  shareholders  also  should
consult their tax advisors as to the non-United  States,  state, local and other
tax consequences of the Reorganizations.

FUND CAPITALIZATION

The following table sets forth the  capitalization of Arizona Municipal Bond and
Florida  Municipal  Bond as of  January  31,  2007,  and the  capitalization  of
Tax-Free Bond on a pro forma basis,  as if the  Reorganizations  had occurred on
that date.

-------------------------- -------------------------------------------------- -------------- ------------
                                        ARIZONA MUNICIPAL BOND                TAX-FREE BOND   PRO FORMA
                                                                                              COMBINING
-------------------------- ------------- ------------- ---------- ----------- -------------- ------------
ARIZONA                      INVESTOR      A CLASS      B CLASS    C CLASS      INVESTOR       INVESTOR
MUNICIPAL/TAX-FREE BOND
-------------------------- ------------- ------------- ---------- ----------- -------------- ------------
TOTAL NET ASSETS            $52,298,280    $1,755,833    $42,273    $504,123   $645,085,129  $699,685,638
-------------------------- ------------- ------------- ---------- ----------- -------------- ------------
SHARES OUTSTANDING            4,875,057       163,672      3,940      46,993     60,103,323    65,191,907
-------------------------- ------------- ------------- ---------- ----------- -------------- ------------
NET ASSET VALUE PER SHARE        $10.73        $10.73     $10.73      $10.73         $10.73        $10.73
-------------------------- ------------- ------------- ---------- ----------- -------------- ------------



-------------------------- ------------- ------------- ---------- ----------- -------------- ------------
                                        FLORIDA MUNICIPAL BOND                TAX-FREE BOND   PRO FORMA
                                                                                              COMBINING
-------------------------- ------------- ------------- ---------- ----------- -------------- ------------
FLORIDA                      INVESTOR    INSTITUTIONAL  ADVISOR    C CLASS      INVESTOR       INVESTOR
MUNICIPAL/TAX-FREE BOND
-------------------------- ------------- ------------- ---------- ----------- -------------- ------------
TOTAL NET ASSETS            $35,836,522    $1,054,194    $16,082  $1,083,054  $645,085,129   $683,074,980
-------------------------- ------------- ------------- ---------- ----------- -------------- ------------
SHARES OUTSTANDING            3,384,334        99,556      1,519     102,281     60,103,323    63,643,850
-------------------------- ------------- ------------- ---------- ----------- -------------- ------------
NET ASSET VALUE PER SHARE        $10.59        $10.59     $10.59      $10.59         $10.73        $10.73
-------------------------- ------------- ------------- ---------- ----------- -------------- ------------


----------------------------- --------------------------------------------------
                                          ARIZONA MUNICIPAL BOND
----------------------------- ------------- ------------ ---------- ------------
                                INVESTOR         A           B          C
----------------------------- ------------- ------------ ---------- ------------
TOTAL NET ASSETS               $52,298,280   $1,755,833    $42,273   $504,123
----------------------------- ------------- ------------ ---------- ------------
SHARES OUTSTANDING               4,875,057      163,672      3,940     46,993
----------------------------- ------------- ------------ ---------- ------------
NET ASSET VALUE PER SHARE           $10.73       $10.73     $10.73     $10.73
----------------------------- ------------- ------------ ---------- ------------

----------------------------- ------------- ------------ ---------- ------------
Shares Issued                    4,874,024      163,638      3,940     46,983
----------------------------- ------------- ------------ ---------- ------------

----------------------------- --------------------------------------------------
                                          FLORIDA MUNICIPAL BOND
----------------------------- ------------- ------------ ----------- -----------
                                INVESTOR         A           B            C
----------------------------- ------------- ------------ ----------- -----------
TOTAL NET ASSETS               $35,836,522   $1,054,194     $16,082  $1,083,054
----------------------------- ------------- ------------ ----------- -----------
SHARES OUTSTANDING               3,384,334       99,556       1,519     102,281
----------------------------- ------------- ------------ ----------- -----------
NET ASSET VALUE PER SHARE           $10.59       $10.59      $10.59      $10.59
----------------------------- ------------- ------------ ----------- -----------


----------------------------- -------------- --------------
                              TAX-FREE BOND    PRO FORMA
                                               COMBINING
----------------------------- -------------- --------------
ARIZONA MUNICIPAL/FLORIDA       INVESTOR       INVESTOR
MUNICIPAL/TAX-FREE BOND
----------------------------- -------------- --------------
TOTAL NET ASSETS               $645,085,129   $737,675,490
----------------------------- -------------- --------------
SHARES OUTSTANDING               60,103,323     68,733,512
----------------------------- -------------- --------------
NET ASSET VALUE PER SHARE            $10.73         $10.73
----------------------------- -------------- --------------

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

MATERIAL DIFFERENCES BETWEEN RIGHTS OF SHAREHOLDERS

Arizona Municipal Bond,  Florida Municipal Bond and Tax-Free Bond are all series
of American Century Municipal Trust, a Massachusetts business trust organized on
May 1,  1984.  Therefore,  since all the Funds are  series of the same  business
trust there are no material differences  regarding the rights of shareholders of
the Funds under applicable  state law or the Amended and Restated  Agreement and
Declaration of Trust and Bylaws of American Century Municipal Trust.

INFORMATION ABOUT THE RECLASSIFICATIONS

TERMS OF THE RECLASSIFICATIONS

If shareholders of Diversified Bond, High-Yield,  and Prime Money Market approve
the  proposed  Reclassification  (the "A  Class  Reclassification"),  all of the
Advisor Class shares of each Fund will be  reclassified  as A shares of the same
Fund.  If  shareholders  of Tax-Free  Bond and  Utilities  approve the  proposed
Reclassification  (the "Investor  Class  Reclassification"),  all of the Advisor
Class shares of each Fund will be  reclassified  as Investor Class shares of the
same Funds.

If the A Class  Reclassification is approved by shareholders,  it is anticipated
that  it  will  be  effective  on  the  Closing  Date.  If  the  Investor  Class
Reclassification is approved by shareholders,  it is anticipated that it will be
effective  on the  Closing  Date.  A  form  of  amendment  to  the  Articles  of
Incorporation of American Century  Quantitative  Equity Funds,  Inc. is attached
hereto as Exhibit B.

COSTS OF THE RECLASSIFICATIONS

The  expenses  of the  Reclassifications  will  be  paid  by  American  Century.
Reclassification  expenses include: (a) expenses associated with the preparation
and filing of this Proxy  Statement/Prospectus;  (b) postage; (c) printing;  (d)
accounting  fees;  (e)  legal  fees  incurred  in the  preparation  of the Proxy
Statement/Prospectus;   (f)   solicitation   costs;   and  (g)   other   related
administrative  or operational  costs. Any registration or licensing fee will be
borne by the American Century Fund incurring such fee.

REASONS FOR THE RECLASSIFICATIONS

AMERICAN CENTURY INVESTMENT TRUST

At its meeting on December  8, 2006,  the Board of Trustees of American  Century
Investment  Trust  authorized,  approved  and declared it advisable to amend the
Trust's  Amended and Restated  Agreement and  Declaration  of Trust to reflect a
reclassification  of all Advisor Class shares of Diversified  Bond,  High-Yield,
and Prime Money Market as A Class shares of the same Funds. In recommending  the
Reclassifications, the Board considered the similarity in the total fees charged
to the Advisor  Class and the A Class and concluded  that the  Reclassifications
would simplify and standardize the share class structure of the Funds. The Board
proposes to  reclassify  the Advisor  Class shares as A Class shares to simplify
and  standardize  the share class  structure of  Diversified  Bond,  Prime Money
Market, and High-Yield.  Currently, Advisor Class shares and A Class shares have
identical total expense ratios. As a result of the Reclassifications,  the Funds
ultimately  will have six (or,  in the case of Prime Money  Market,  four) share
classes marketed to investors.

AMERICAN CENTURY MUNICIPAL TRUST

At its meeting on December  8, 2006,  the Board of Trustees of American  Century
Municipal  Trust  authorized,  approved  and  declared it advisable to amend the
Trust's  Amended and Restated  Agreement and  Declaration  of Trust to reflect a
reclassification  of all Advisor Class shares of Tax-Free Bond as Investor Class
shares of the same Fund in an effort to eliminate  share classes that are not in
demand. The Board proposes to reclassify all Advisor Class shares of the Fund as
Investor  Class  shares in an effort to  simplify  and  standardize  share class
structure the  distribution of the Fund. The Board considered the low balance in
the Advisor Class, and concluded that the  Reclassification of the Advisor Class
shares of Tax-Free Bond as Investor Class shares of the same Fund will result in
a beneficial decrease in the total expense ratio for affected shareholders.

AMERICAN CENTURY QUANTITATIVE EQUITY FUNDS, INC.

At its meeting on December 8, 2006,  the Board of Directors of American  Century
Quantitative Equity Funds, Inc.  authorized,  approved and declared it advisable
to amend the  Articles of  Incorporation  to reflect a  reclassification  of all
Advisor  Class shares of Utilities as Investor  Class shares of the same Fund in
an effort to eliminate share classes that are not in demand.  The Board proposes
to reclassify  all Advisor Class shares of the Fund as Investor  Class shares in
an effort to simplify and standardize the share class structure of the Fund. The
Board  considered  the low balance of the Advisor Class and  concluded  that the
Reclassification  of all Advisor  Class  shares as Investor  Class shares of the
same Fund will result in a beneficial  decrease in the total  expense  ratio for
affected shareholders.

FEDERAL INCOME TAX CONSEQUENCES

Based on the  existing  provisions  of the  Internal  Revenue  Code of 1986,  as
amended,  current  administrative rules and court decisions,  for federal income
tax purposes,  it is expected that the Reclassifications of the American Century
Funds will not result in any tax  consequences  to  shareholders of the affected
Funds.

DESCRIPTION OF THE FUND SHARES: ADVISOR CLASS TO A CLASS

DIVERSIFIED BOND, PRIME MONEY MARKET AND HIGH-YIELD

Shares in both the A Class and Advisor  Class are intended for  participants  in
employer-sponsored  retirement  plans and  those  investors  purchasing  through
financial intermediaries that provide administrative and distribution services.

A Class shares are subject to a maximum 4.50% sales  charge,  except for A Class
shares in Prime Money Market, which are not subject to a sales charge. The sales
charge on the purchase of A Class shares  varies  depending on the amount of the
investment.  Investments of $1 million or more are not subject to sales charges,
but may be  subject  to a deferred  sales  charge of 1.00% if they are  redeemed
within one year of purchase. For a discussion of the decreasing sales charges in
relation to the amount invested, see "Description of Fund Shares--Calculation of
Sales Charges," immediately below.

Load-waived  A Class Shares are not subject to the sales  charge.  Other A Class
shares  are  subject to a maximum  4.50%  sales  charge  unless  another  waiver
applies. For a more detailed discussion of the Funds' policies regarding waivers
of the sales charge, see "Description of Fund  Shares--Reductions and Waivers of
Sales Charges for A Class Shares."

CALCULATION OF SALES CHARGES

The  following  discussion  is not  applicable  to Prime Money  Market's A Class
shares because it does not charge a front-end sales charge.

Although shares in the Advisor Class and A Class each represent an interest in a
Fund,  each has a different  cost  structure.  A Class  shares are sold at their
offering  price,  which is net asset value plus an initial sales charge,  unless
they are  offered in a plan or program  that is subject to a waiver of the sales
charge,  as discussed  below.  This sales charge varies  depending on the amount
invested,  and is deducted from your purchase  before it is invested.  The sales
charges and amounts  paid to your  financial  professional  are  detailed in the
table below:

------------------------ -------------- --------------- ------------------------
Purchase Amount          Sales Charge   Sales Charge    Amount paid to Financial
                         as a % of      as a % of Net   Professional as a % of
                         Offering Price Amount Invested Offering Price
------------------------ -------------- --------------- ------------------------
Less than $100,000       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  EMPLOYER-SPONSORED  RETIREMENT  PLANS, NO
     UPFRONT AMOUNT WILL BE PAID TO FINANCIAL PROFESSIONALS.

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 below in the section  entitled
Reductions and Waivers of Sales Charges for A Class Shares.

REDUCTIONS AND WAIVERS OF SALES CHARGES FOR A CLASS SHARES

You may qualify for a reduction or waiver of certain sales  charges,  but you or
your financial  professional  must provide  certain  information,  including the
account  numbers of any accounts to be  aggregated,  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  at each  account's  current  market  value  if  made  for  your  own
account(s) and/or certain other accounts, such as:

o    Certain trust accounts

o    Solely controlled business accounts

o    Single-participant retirement plans

o    Endowments or foundations established and controlled by you or an immediate
     family member

For purposes of  aggregation,  only  investments  made through  individual-level
accounts,  rather than accounts  aggregated at the  intermediary  level,  may be
included.

CONCURRENT PURCHASES.  You may combine simultaneous purchases in A, B or C Class
shares of any two or more American  Century Advisor Funds (funds that offer A, B
and C Class shares) 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.

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,  existing
holdings may be combined  with new  purchases  and sales  charge  amounts may be
adjusted for purchases made within 90 days prior to our receipt of the Letter of
Intent.  Capital  appreciation,  capital gains and reinvested  dividends  earned
during the Letter of Intent period do not apply toward its completion. 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:

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

o    Broker-dealer  sponsored wrap program  accounts and/or  fee-based  accounts
     maintained for clients of certain financial intermediaries who have entered
     into selling agreements with American Century

o    Present or former officers, directors and employees (and their families) of
     American Century

o    Employer-sponsored retirement plan purchases. For plans under $1 million in
     assets, purchases with sales charges are allowed, but may be subject to the
     retirement plan recordkeeper's  policies.  Refer to BUYING AND SELLING FUND
     SHARES in the statement of additional information of the appropriate Fund

o    IRA  Rollovers  from  any  American   Century   Advisor  Fund  held  in  an
     employer-sponsored retirement plan

o    Certain other investors as deemed appropriate by American Century

CALCULATION OF CONTINGENT DEFERRED SALES CHARGE APPLICABLE TO A SHARES

To minimize  the amount of the CDSC you may pay when you redeem  shares,  a 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

Any applicable CDSC may be waived in the following cases:

o    redemptions through systematic  withdrawal plans not exceeding annually 12%
     of the lesser of the original  purchase cost or current  market value for A
     Class shares

o    distributions from IRAs due to attainment of age 59 1/2 for A Class shares

o    required minimum  distributions from retirement  accounts upon reaching age
     70 1/2

o    tax-free returns of excess contributions to IRAs

o    redemptions due to death or post-purchase disability

o    exchanges,  unless the shares  acquired by exchange are redeemed within the
     original CDSC period

o    IRA  Rollovers  from  any  American   Century   Advisor  Fund  held  in  an
     employer-sponsored retirement plan, for A Class shares only

o    if no broker was compensated for the sale

REINSTATEMENT PRIVILEGE

Within 90 days of a redemption  of any A 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.  At
your  request,  any  CDSC  you  paid  on an A  Class  redemption  that  you  are
reinvesting will be credited to your account. You or your financial professional
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 per account.
This privilege  applies only if the new account is owned by the original account
owner.

Load-waived A Class Shares are not subject to the sales charge.

RIGHTS OF SHAREHOLDERS OF DIVERSIFIED BOND, PRIME MONEY MARKET AND HIGH-YIELD

Diversified  Bond,  Prime Money Market and High-Yield are each a separate series
of American  Century  Investment  Trust, a Massachusetts  business trust.  Since
Advisor  Class shares and A Class  shares of each Fund  represent an interest in
the same  series of American  Century  Investment  Trust,  there are no material
differences  in the rights of  shareholders  of an Advisor Class compared to the
rights of shareholders of an A Class under  applicable  state law or the Amended
and Restated  Agreement and Declaration of Trust and Bylaws of American  Century
Investment Trust.  Nevertheless,  the following is a brief discussion  providing
information  with  respect to the rights of  shareholders  under the Amended and
Restated Agreement and Declaration of Trust of American Century Investment Trust
(the  "Charter").  The  description is qualified in its entirety by reference to
the Amended and  Restated  Agreement  and  Declaration  of Trust dated March 26,
2004,  the  form  of  Amendment  to  the  Amended  and  Restated  Agreement  and
Declaration of Trust, and Amended and the Restated Bylaws dated August 26, 2004.

VOTING RIGHTS OF SHAREHOLDERS

The Charter  provides that a shareholder of each Fund or class shall be entitled
to one vote for each  dollar of net asset value per share of such Fund or class,
on any matter on which such  shareholder  is entitled to vote.  Each  fractional
dollar amount shall be entitled to a proportionate  fractional vote. The Charter
provides  that  shareholders  are entitled to vote only:  1) for the election of
Trustees; 2) to the same extent as the stockholders of a Massachusetts  business
corporation  as to whether or not a court action,  proceeding or claim should or
should not be brought or maintained  derivatively or as a class action on behalf
of the Trust or the  Shareholders;  3) with  respect to the  termination  of the
Trust or any Fund of the Trust;  and 4) with respect to such additional  matters
relating  to the Trust as may be  required  by the  Charter,  the  Bylaws of the
Trust,  or as  deemed  necessary  or  desirable  by the  Trustees.  There  is no
cumulative voting with respect to the election of Trustees.

MEETINGS OF SHAREHOLDERS

The Charter  does not require  the Funds to hold  annual  shareholder  meetings,
unless  required to do so in order to elect  trustees and such other purposes as
may be prescribed  by law or the Charter.  The Charter  stipulates  that special
meetings of the  shareholders  may be called by the  Trustees for the purpose of
taking  action upon any other  matter  deemed by the Trustees to be necessary or
desirable.  A meeting of the shareholders may be held at any place designated by
the  Trustees.  Written  notice of any  meeting is  required  to be given by the
Trustees.  Except when a larger quorum is required by applicable law,  one-third
of the shares  entitled  to vote shall  constitute  a quorum at a  shareholder's
meeting.  When any one or more Fund or class of the trust is to vote as a single
Fund or class  separate  from any  other  shares  which  are to vote on the same
matters as a separate  Fund or class,  one-third of the shares of each such Fund
or class entitled to vote shall  constitute a quorum at a shareholders'  meeting
of that Fund or class. Any meeting of shareholders may be adjourned from time to
time by a majority of the votes properly cast upon the question,  whether or not
a  quorum  is  present,  and  the  meeting  may be held as  adjourned  within  a
reasonable  time after the date set for the  original  meeting  without  further
notice.

DESCRIPTION OF THE FUND SHARES: ADVISOR CLASS TO INVESTOR CLASS

TAX-FREE BOND AND UTILITIES SHARES

Advisor  Class  shares are  intended  for persons  investing  through  financial
intermediaries  that provide various  administrative and distribution  services.
Financial intermediaries include banks, broker-dealers,  insurance companies and
financial professionals.  Shares of Tax-Free Bond are not available to investors
in  employer-sponsored  retirement  plans.  Investor  Class shares are available
through financial  intermediaries that provide various administrative  services,
but also may be purchased directly from American Century. Neither Investor Class
nor Advisor Class shares impose a front-end or contingent deferred sales charge.

Tax-Free Bond and Utilities do not charge sales loads,  fees or other charges if
you buy shares directly from American Century,  reinvest dividends in additional
shares,  exchange  shares  into the same  class of  shares of  another  American
Century  Fund,  or redeem  shares.  There is a $10 service  charge for redeeming
shares by wire.

Investors  holding shares in the Investor Class in an American  Century  account
(i.e.,  not a financial  intermediary or retirement plan account) may be subject
to a $25  account  maintenance  fee if their  total  eligible  investments  with
American  Century are less than  $10,000.  American  Century will  determine the
amount of the total  eligible  investments  twice per year,  generally  the last
Friday in October and April. If the value of those eligible  investments is less
than $10,000 at that time, American Century will automatically  redeem shares in
one of the accounts in order to collect the $12.50  semiannual  fee. Please note
that  tax  liability  may  be  incurred  as a  result  of  this  redemption.  In
determining the total eligible investment amount,  American Century will include
investments  in all personal  accounts  (including  American  Century  Brokerage
accounts)  registered under the investor's Social Security number.  The fee will
not be charged to  investors  who choose to manage  their  accounts  exclusively
online.

RIGHTS OF SHAREHOLDERS OF TAX-FREE BOND AND UTILITIES

Tax-Free Bond is a series of American  Century  Municipal Trust, a Massachusetts
business trust. Since Advisor Class shares and Investor Class shares of Tax-Free
Bond both represent an interest in American Century  Municipal Trust,  there are
no material  differences  in the rights of  shareholders  of the  Advisor  Class
compared to the rights of  shareholders  of the Investor Class under  applicable
state law or the Amended and Restated  Agreement  and  Declaration  of Trust and
Bylaws of American  Century  Municipal Trust.  Nevertheless,  the following is a
brief   discussion   providing   information  with  respect  to  the  rights  of
shareholders  under the Amended and Restated  Agreement and Declaration of Trust
of American Century Municipal Trust (the "Municipal  Charter").  The description
is qualified in its entirety by reference to the Amended and Restated  Agreement
and  Declaration  of Trust dated March 26,  2004,  the form of  Amendment to the
Amended and Restated  Declaration of Trust,  and the Amended and Restated Bylaws
dated August 26, 2004.

Utilities is a series of American  Century  Quantitative  Equity Funds,  Inc., a
Maryland  corporation.  Since Advisor Class shares and Investor  Class shares of
Utilities both  represent an interest in American  Century  Quantitative  Equity
Funds, Inc., there are no material  differences in the rights of shareholders of
the Advisor Class compared to the rights of  shareholders  of the Investor Class
under  applicable  state law or the  Articles  of  Incorporation  and  Bylaws of
American Century Quantitative Equity Funds, Inc. Nevertheless,  the following is
a  brief  discussion  providing  information  with  respect  to  the  rights  of
shareholders  under Maryland law and the Articles of  Incorporation  of American
Century Quantitative Equity Funds, Inc. (the "Equity Charter").  The description
is qualified in its  entirety by reference to the Articles of  Incorporation  as
last amended  November 10, 2006 and the Amended and Restated Bylaws dated August
26, 2004.

VOTING RIGHTS OF SHAREHOLDERS

The Municipal Charter provides that a shareholder of each Fund or class shall be
entitled  to one vote for each  dollar of net asset value per share of such Fund
or class,  on any matter on which such  shareholder  is entitled  to vote.  Each
fractional  dollar amount shall be entitled to a proportionate  fractional vote.
The Municipal  Charter  provides that  shareholders are entitled to vote only 1)
for the election of  Trustees;  2) to the same extent as the  stockholders  of a
Massachusetts  business  corporation  as  to  whether  or  not a  court  action,
proceeding or claim should or should not be brought or  maintained  derivatively
or as a class action on behalf of the Trust or the Shareholders; 3) with respect
to the  termination of the Trust or any Fund or class of the Trust;  and 4) with
respect to such additional  matters  relating to the Trust as may be required by
the  Municipal  Charter,  the Bylaws of the  Trust,  or as deemed  necessary  or
desirable  by the  Trustees.  There is no  cumulative  voting in the election of
Trustees.

The Equity Charter provides that a shareholder shall be entitled to one vote for
each  dollar of net asset  value per share for each  share of stock  held on the
applicable  record date,  regardless  of the class or series.  However,  matters
affecting  only one class or Fund or class shall be voted upon only by that Fund
or class.  Where required by the 1940 Act or the regulations  adopted thereunder
or any other  applicable  law,  certain  matters shall be voted on separately by
each class or series of shares affected and not by all classes unless  otherwise
required by law.

MEETINGS OF SHAREHOLDERS

The Municipal Charter and Equity Charter do not require the Funds to hold annual
shareholder  meetings,  unless  required to do so in order to elect trustees and
such other  purposes  as may be  prescribed  by law or the  Municipal  or Equity
Charters.  The Municipal and Equity Charters  stipulate that special meetings of
the  shareholders  may be called by the  Trustees/Directors  for the  purpose of
taking  action  upon any other  matter  deemed by the  Trustees/Directors  to be
necessary or desirable.  A meeting of the  shareholders may be held at any place
designated by the Trustees/Directors.  Written notice of any meeting is required
to be given by the  Trustees/Directors.  Except when a larger quorum is required
by applicable law,  one-third of the shares entitled to vote shall  constitute a
quorum at a shareholder's  meeting. When any one or more Funds or classes of the
trust or  corporation  is to vote as a single  Fund or class  separate  from any
other shares which are to vote on the same matters as a separate  Fund or class,
one-third  of the  shares  of each  such Fund or class  entitled  to vote  shall
constitute  a quorum at a  shareholders'  meeting  of that  Fund or  class.  Any
meeting of shareholders  may be adjourned from time to time by a majority of the
votes properly cast upon the question,  whether or not a quorum is present,  and
the  Municipal  Charter  provides the meeting may be held as adjourned  within a
reasonable  time after the date set for the  original  meeting  without  further
notice.

FUND CAPITALIZATION

The following table sets forth the  capitalization  of the Advisor and A Classes
of Diversified Bond, High-Yield,  and Prime Money Market as of January 31, 2007,
and  the  capitalization  of  the  A  Class  on a pro  forma  basis,  as if  the
Reclassifications  had  occurred  on that  date.  The table  also sets forth the
capitalization  of the  Advisor  and  Investor  Classes  of  Tax-Free  Bond  and
Utilities as of January 31, 2007, and the  capitalization  of the Investor Class
on a pro forma basis, as if the Reclassifications had occurred on that date.


-------------------------- ---------------- --------------- --------------------
DIVERSIFIED BOND FUND      ADVISOR CLASS       A CLASS      PRO FORMA COMBINING
                                                                  A CLASS
-------------------------- ---------------- --------------- --------------------
TOTAL NET ASSETS                $3,896,082      $7,511,734           $11,407,816
-------------------------- ---------------- --------------- --------------------
SHARES OUTSTANDING                 392,389         756,535             1,148,924
-------------------------- ---------------- --------------- --------------------
NET ASSET VALUE PER SHARE            $9.93           $9.93                 $9.93
-------------------------- ---------------- --------------- --------------------


-------------------------- ---------------- --------------- --------------------
PRIME MONEY MARKET FUND    ADVISOR CLASS       A CLASS      PRO FORMA COMBINING
                                                                  A CLASS
-------------------------- ---------------- --------------- --------------------
TOTAL NET ASSETS                $4,165,363    $106,199,855          $110,365,218
-------------------------- ---------------- --------------- --------------------
SHARES OUTSTANDING               4,164,673     106,202,895           110,368,258
-------------------------- ---------------- --------------- --------------------
NET ASSET VALUE PER SHARE            $1.00           $1.00                 $1.00
-------------------------- ---------------- --------------- --------------------


-------------------------- ---------------- --------------- --------------------
HIGH-YIELD FUND            ADVISOR CLASS       A CLASS      PRO FORMA COMBINING
                                                                  A CLASS
-------------------------- ---------------- --------------- --------------------
TOTAL NET ASSETS                  $825,654     $11,360,220           $12,185,874
-------------------------- ---------------- --------------- --------------------
SHARES OUTSTANDING                 128,293       1,765,182             1,893,475
-------------------------- ---------------- --------------- --------------------
NET ASSET VALUE PER SHARE            $6.44           $6.44                 $6.44
-------------------------- ---------------- --------------- --------------------


-------------------------- --------------- ---------------- --------------------
TAX-FREE BOND              ADVISOR CLASS    INVESTOR CLASS  PRO FORMA COMBINING
                                                              INVESTOR CLASS
-------------------------- --------------- ---------------- --------------------
TOTAL NET ASSETS                 $335,015     $645,085,129          $645,420,144
-------------------------- --------------- ---------------- --------------------
SHARES OUTSTANDING                 31,214       60,103,323            60,143,537
-------------------------- --------------- ---------------- --------------------
NET ASSET VALUE PER SHARE          $10.73           $10.73                $10.73
-------------------------- --------------- ---------------- --------------------


-------------------------- ---------------- --------------- --------------------
UTILITIES FUND             ADVISOR CLASS    INVESTOR CLASS  PRO FORMA COMBINING
                                                               INVESTOR CLASS
-------------------------- ---------------- --------------- --------------------
TOTAL NET ASSETS                $5,538,925    $342,943,328          $348,482,253
-------------------------- ---------------- --------------- --------------------
SHARES OUTSTANDING                 336,147      20,786,233            21,121,925
-------------------------- ---------------- --------------- --------------------
NET ASSET VALUE PER SHARE           $16.48          $16.50                $16.50
-------------------------- ---------------- --------------- --------------------


INFORMATION ABOUT THE AMERICAN CENTURY FUNDS

GENERAL INFORMATION

This  Proxy  Statement/Prospectus  is being  furnished  in  connection  with the
solicitation  of proxies by the Boards.  Proxies may be solicited by officers or
employees of American Century Funds, American Century, their affiliates, as well
as  any  proxy  solicitation  firm  hired  by  American  Century.  Additionally,
financial  intermediaries  may solicit the votes of the beneficial owners of the
Funds. It is anticipated  that the  solicitation of proxies will be primarily by
mail,  internet,  telephone,  facsimile or personal interview.  Shareholders who
communicate  proxies by  telephone  or by other  electronic  means have the same
power  and  authority  to  issue,   revoke  or  otherwise  change  their  voting
instructions  as  shareholders  submitting  proxies in written form.  Telephonic
solicitations  will follow  procedures  designed to ensure  accuracy and prevent
fraud. American Century or an affiliate thereof may reimburse banks, brokers and
others for their reasonable expenses in forwarding proxy solicitation  materials
to beneficial  owners of American  Century  shares,  and may  reimburse  certain
officers  or  employees  that it may employ  for their  reasonable  expenses  in
assisting in the  solicitation  of proxies  from such  beneficial  owners.  Such
expenses are currently estimated to be approximately ______ in the aggregate.

DATE, TIME AND PLACE OF MEETING

The Meeting will be held on June 27, 2007 at the principal  executive offices of
American  Century,  4500 Main Street,  Kansas City,  Missouri  64111 at 11:30 am
Central Time.

USE AND REVOCATION OF PROXIES

A shareholder  executing and returning a proxy has the power to revoke it at any
time prior to its exercise by executing a superseding proxy (i.e., a later-dated
and signed  proxy),  by  submitting a notice of  revocation  to the Secretary of
Arizona Municipal Bond,  Florida Municipal Bond,  Diversified Bond,  High-Yield,
Prime Money Market, Tax-Free Bond, and Utilities or by subsequently  registering
his or her vote by telephone or over the  Internet.  In addition,  although mere
attendance  at the  Meeting  will not revoke a proxy,  a  shareholder  of record
present at the Meeting  may  withdraw  his or her proxy and vote in person.  All
shares  represented  by properly  executed  proxies  received at or prior to the
Meeting,  unless such proxies previously have been revoked, will be voted at the
Meeting in accordance  with the  directions  on the proxies;  if no direction is
indicated  on a properly  executed  proxy,  such  shares will be voted "FOR" the
Reorganizations  and  the  Reclassifications.  It is not  anticipated  that  any
matters other than the approval of the Reorganizations and the Reclassifications
will be brought before the Meeting.  If, however, any other business properly is
brought  before  the  Meeting,  proxies  will be  voted in  accordance  with the
judgment of the persons designated on such proxies.

VOTING RIGHTS AND REQUIRED VOTES

A quorum of  shareholders  is  necessary to hold a valid  meeting.  Shareholders
entitled to vote one-third of the issued and outstanding shares of each American
Century  Fund or class must be present in person or by proxy,  to  constitute  a
quorum for purposes of voting on proposals  relating to that Fund or class. Each
shareholder  is  entitled  to one vote per  dollar of NAV  represented  by their
shares,  with  fractional  dollars voting  proportionally.  Shareholders of each
affected Fund or class vote separately on whether to approve the  Reorganization
and  Reclassification,  and  the  consummation  of any  one  Reorganizations  or
Reclassifications  is not a condition for approving any other  Reorganization or
Reclassification.   Approval  of  the  Reorganizations   and   Reclassifications
affecting  Diversified Bond, Prime Money Market, High-Yield and Tax-Free Bond by
the  affected  classes or Funds  requires the approval of the lesser of (i) more
than 50% of the  outstanding  shares of the applicable Fund or class or (ii) 67%
or more of the shares of that Fund or Class present or  represented  by proxy at
the Meeting if more than 50% of such shares are present or represented by proxy.
Approval  of the  Reclassification  affecting  the  Advisor  Class of  Utilities
requires the approval of the majority of the aggregate  number of votes entitled
to be cast  thereon.  Broker-dealer  firms  or  other  financial  intermediaries
holding  shares of any of the Funds in  "street  name" for the  benefit of their
customers  and clients  will  request the  instructions  of such  customers  and
clients on how to vote their shares  before the Meeting.  Each Fund will include
shares  held of record by  broker-dealers  as to which such  authority  has been
granted in its  tabulation of the total number of shares present for purposes of
determining  whether  the  necessary  quorum  of  shareholder  exists.  Properly
executed proxies that are returned but that are marked "abstain" or with respect
to  which  a  broker-dealer  has  declined  to  vote  on any  proposal  ("broker
non-votes") will be counted as present for the purposes of determining a quorum.
Abstention and broker  non-votes (if applicable)  will have the same effect as a
vote against a proposal.  If, by the time scheduled for the Meeting,  sufficient
votes  in favor of  approval  of a  proposal  have  not been  received  from the
shareholders of the applicable  Fund or class,  the persons named as proxies may
propose one or more  adjournments of such Meeting,  without  further notice,  to
permit  further  solicitation  of proxies  from  shareholders.  According to the
Bylaws  of the  Funds,  any  meeting  at which a quorum  is not  present  can be
adjourned  by a majority of the voting stock  represented  in person or by proxy
without additional notice other than announcement at the meeting, until a quorum
shall be present or represented.

RECORD DATE AND OUTSTANDING SHARES

Only  holders of record of shares of the Funds at the close of business on April
13,  2007  (the  "Record  Date")  are  entitled  to vote at the  Meeting  or any
adjournment thereof. The following chart sets forth the number of shares of each
class of the Funds issued and outstanding at the close of business on _____.


------------------------------ ------------------------- -----------------------
FUND NAME                      SHARE CLASS               OUTSTANDING SHARES
------------------------------ ------------------------- -----------------------
Arizona Municipal Bond         Investor Class
------------------------------ ------------------------- -----------------------
                               A Class
------------------------------ ------------------------- -----------------------
                               B Class
------------------------------ ------------------------- -----------------------
                               C Class
------------------------------ ------------------------- -----------------------
Florida Municipal Bond         Investor Class
------------------------------ ------------------------- -----------------------
                               A Class
------------------------------ ------------------------- -----------------------
                               B Class
------------------------------ ------------------------- -----------------------
                               C Class
------------------------------ ------------------------- -----------------------
Diversified Bond               Advisor Class
------------------------------ ------------------------- -----------------------
High-Yield                     Advisor Class
------------------------------ ------------------------- -----------------------
Prime Money Market             Advisor Class
------------------------------ ------------------------- -----------------------
Tax-Free Bond                  Advisor Class
------------------------------ ------------------------- -----------------------
Utilities                      Advisor Class
------------------------------ ------------------------- -----------------------



SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT OF THE FUNDS

At the close of business on _______________, the following persons owned, to the
knowledge of management, 5% or more of the outstanding shares of the funds.


                                                                PERCENTAGE OF
                                                 PERCENTAGE OF  OUTSTANDING SHARES
                                                 OUTSTANDING    OWNED POST
                                                 SHARES OWNED   REORGANIZATION ON
   SHAREHOLDER                                   OF RECORD      A PRO FORMA BASIS
--------------------------------------------------------------------------------
Arizona Municipal Bond
--------------------------------------------------------------------------------
   Investor Class

          Charles Schwab & Co., Inc.                    x%              x%
          San Francisco, California

          Pershing LLC                                  x%              x%
          Jersey City, New Jersey
--------------------------------------------------------------------------------
   A Class

          Charles Schwab & Co., Inc.                    x%              x%(1)
          San Francisco, California

          American Enterprise Investment Svcs           x%              x%(1)
          Minneapolis, Minnesota

          NFS LLC FEBO                                  x%              x%(1)
          Albert & Dorothy Felsen Trust, Albert
          Felsen
          Sierra Vista, Arizona

          NFS LLC FEBO                                  x%              x%(1)
          Jeris D. Slayback TTEE
          Jeris D. Slayback Revocable Trust
          Tucson, Arizona
--------------------------------------------------------------------------------
          MLPF&S, Inc.                                  x%              x%(1)
          Jacksonville, Florida

          American Enterprise Investment Svcs           x%              x%(1)
          Minneapolis, Minnesota
--------------------------------------------------------------------------------
   B

          First Clearing LLC                            x%              x%(1)
          Phyllis Bruner Turell Trust
          Phyllis Bruner Turell TTEE
          Glen Allen, Virginia

          American Century Investment Management,       x%              x%(1)
          Inc.
          Kansas City, Missouri
--------------------------------------------------------------------------------
   C

          MLPF&S, Inc.                                  x%              x%(1)
          Jacksonville, Florida

          Raymond James & Assoc. Inc.                   x%              x%(1)
          FBO FOGDE, F TR
          St. Petersburg, Florida

          American Enterprise Investment Svcs           x%              x%(1)
          Minneapolis, Minnesota
--------------------------------------------------------------------------------
Florida Municipal Bond
--------------------------------------------------------------------------------
   Investor Class

          Charles Schwab & Co., Inc.                    x%              x%
          San Francisco, California

          Phyllis S. Gunton and WE Gunton TR            x%              x%
          PS Gunton Trust
          Naples, Florida
--------------------------------------------------------------------------------




                                                                PERCENTAGE OF
                                                 PERCENTAGE OF  OUTSTANDING SHARES
                                                 OUTSTANDING    OWNED POST
                                                 SHARES OWNED   REORGANIZATION ON
   SHAREHOLDER                                   OF RECORD      A PRO FORMA BASIS
--------------------------------------------------------------------------------
Florida Municipal Bond
--------------------------------------------------------------------------------
   A Class

      Charles Schwab & Co., Inc.                        x%              x%(1)
      San Francisco, California

      MLPF&S, Inc.                                      x%              x%(1)
      Jacksonville, Florida

      American Enterprise Investment Svcs               x%              x%(1)
      Minneapolis, Minnesota
--------------------------------------------------------------------------------
   B

      American Enterprise Investment Svcs               x%              x%(1)
      Minneapolis, Minnesota

      American Enterprise Investment Svcs               x%              x%(1)
      Minneapolis, Minnesota

      American Century Investment                       x%              x%(1)
      Management, Inc.
      Kansas City, Missouri

      Wells Fargo Investments LLC                       x%              x%(1)
      Minneapolis, Minnesota
--------------------------------------------------------------------------------
   C Class

      MLPF&S, Inc.                                      x%              x%(1)
      Jacksonville, Florida
--------------------------------------------------------------------------------
Tax-Free Bond
--------------------------------------------------------------------------------
   Investor

      Charles Schwab & Co., Inc.                        x%              0%
      San Francisco, California

      MLPF&S, Inc.                                      x%              0%
      Jacksonville, Florida
--------------------------------------------------------------------------------
   Advisor

      American Century Investment                       x%              x%(1)
      Management, Inc.
      Kansas City, Missouri
--------------------------------------------------------------------------------
Diversified Bond
--------------------------------------------------------------------------------
   A Class

      Charles Schwab & Co. Inc.                         x%              x%
      San Francisco, California
--------------------------------------------------------------------------------





                                                                PERCENTAGE OF
                                                 PERCENTAGE OF  OUTSTANDING SHARES
                                                 OUTSTANDING    OWNED POST
                                                 SHARES OWNED   REORGANIZATION ON
   SHAREHOLDER                                   OF RECORD      A PRO FORMA BASIS
--------------------------------------------------------------------------------
Diversified Bond
--------------------------------------------------------------------------------
   Advisor Class

        Saxon & Co.                                     x%              x%(2)
        Philadelphia, Pennsylvania

        Pershing LLC                                    x%              x%(2)
        Jersey City, New Jersey

        Reliance Trust Co.                              x%              x%(2)
        FBO Klauber Brothers
        Atlanta, Georgia

        Charles Schwab & Co. Inc.                       x%              x%(2)
        San Francisco, California

        Trust Lynx & Co.                                x%              x%(2)
        Denver, Colorado

        Reliance Trust Co Cust                          x%              x%(2)
        FBO Avail Medical Products
        Atlanta, Georgia
--------------------------------------------------------------------------------
High-Yield
--------------------------------------------------------------------------------
   A Class

        Charles Schwab & Co., Inc.                      x%              0%
        San Francisco, California
--------------------------------------------------------------------------------
   Advisor Class

        Riverside National Bank & Trust                 x%              x%(2)
        Stuart, Florida

        Pershing LLC                                    x%              x%(2)
        Jersey City, New Jersey

        BISYS Retirement Svcs                           x%              x%(2)
        Lakewood Construction Co PSP & DEF
        Denver, Colorado

        LPL Financial Services                          x%              x%(2)
        San Diego, California

        Ruane & Co. -- TR Paul                          x%              x%(2)
        c/o Tompkins Investment Svcs
        Ithaca, New York
--------------------------------------------------------------------------------
Utilities
--------------------------------------------------------------------------------
   Advisor Class

        Charles Schwab & Co. Inc.                       x%              x%(1)
        San Francisco, California
--------------------------------------------------------------------------------
   Investor Class

        Charles Schwab & Co. Inc.                       x%              x%
        San Francisco, California

        National Financial Services Corp                x%              x%
        New York, New York
--------------------------------------------------------------------------------

(1)  PERCENTAGE BASED ON REORGANIZATION INTO INVESTOR CLASS

(2)  PERCENTAGE BASED ON REORGANIZATION INTO A CLASS

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.  The Funds are
unaware of any other  shareholders,  beneficial or of record,  who own more than
25% of the voting securities of a Corporation. A shareholder owning of record or
beneficially  more  than  25% of the  Corporation's  outstanding  shares  may be
considered a controlling  person.  The vote of any such person could have a more
significant effect on matters presented at a shareholder's meeting than votes of
other  shareholders.  As of [ ], the officers and  directors of the Funds,  as a
group, own less than 1% of any Fund's outstanding shares.

OTHER SERVICE PROVIDERS

American Century Services,  LLC, 4500 Main Street,  Kansas City, Missouri 64111,
an  affiliate  of American  Century,  serves as transfer  agent of the  American
Century Funds.  American Century  Investment  Services,  Inc., 4500 Main Street,
Kansas  City,  Missouri  64111,  an  affiliate  of American  Century,  serves as
distributor to the American Century Funds.

WHERE TO FIND ADDITIONAL INFORMATION

Additional  information  about the  American  Century  Funds is  included in the
documents listed in the beginning of this Proxy Statement/Prospectus.

The Corporations are subject to the informational requirements of the Securities
Act, the  Securities  Exchange Act of 1934,  and the 1940 Act, and in accordance
therewith file reports and other  information with the SEC.  Reports,  proxy and
information  statements,  and other information  filed by the  Corporations,  on
behalf of the Funds,  can be  obtained  by calling or writing  the Funds and can
also be inspected  and copied by the public at the public  reference  facilities
maintained  by the SEC in  Washington,  DC located  at Room 1580,  100 F Street,
N.E.,  Washington DC 20549 and located at room 1204,  Everett  McKinley  Dirksen
Bldg., 219 South Dearborn  Street,  Chicago,  IL 60604 and 233 Broadway,  NY, NY
10007.  Copies of such  material  can be obtained at  prescribed  rates from the
Public Reference  Branch,  Office of Consumer Affairs and Information  Services,
SEC, Washington DC 20549, or obtained  electronically from the EDGAR database on
the SEC's website (www.sec.gov).

OTHER MATTERS AND DISCRETION OF ATTORNEYS NAMED IN THE PROXY

The American Century Funds are not required,  and do not intend, to hold regular
annual meetings of  shareholders.  Shareholders  wishing to submit proposals for
consideration for inclusion in a Proxy Statement/Prospectus for the next meeting
of  shareholders  should send their  written  proposals to Corporate  Secretary,
American Century Funds,  P.O. Box 410141,  Kansas City,  Missouri,  64141, or by
e-mail  to  corporatesecretary@americancentury.com  so that  they  are  received
within a reasonable time before any such meeting.

No business  other than the matters  described  above is expected to come before
the Meeting, but should any other matter requiring a vote of shareholders arise,
including any question as to an adjournment or postponement of the Meeting,  the
persons named on the enclosed proxy card(s) will vote on such matters  according
to their best judgment in the interests of the American Century Funds.



--------------------------------------------------------------------------------
SHAREHOLDERS ARE REQUESTED TO COMPLETE, DATE AND SIGN THE ENCLOSED PROXY CARD(S)
AND RETURN IT IN THE ENCLOSED ENVELOPE,  WHICH NEEDS NO POSTAGE IF MAILED IN THE
UNITED STATES.

SHAREHOLDERS  RECEIVING  THIS  PROXY   STATEMENT/PROSPECTUS  MAY  SIMULTANEOUSLY
RECEIVE A SEPARATE PROXY STATEMENT REGARDING THE ELECTION OF  DIRECTORS/TRUSTEES
AND CERTAIN OTHER MATTERS. PLEASE COMPLETE ALL PROXY CARD(S).
--------------------------------------------------------------------------------











                                                                       EXHIBIT A

                  FORM OF AGREEMENT AND PLAN OF REORGANIZATION

     THIS AGREEMENT AND PLAN OF  REORGANIZATION  (the "Agreement") is made as of
this [__] day of  [_____________],  by and between  [AMERICAN  CENTURY MUNICIPAL
TRUST], a Massachusetts  business trust, with its principal place of business at
4500 Main Street,  Kansas City, Missouri 64111-0141 (the "Trust"),  with respect
to its Tax-Free Bond Fund (the "Acquiring  Fund"), and the Trust with respect to
its [______]  Fund (the  "Acquired  Fund" and,  collectively  with the Acquiring
Fund, the "Funds").

                                    RECITALS

     This   Agreement  is  intended  to  be,  and  is  adopted  as,  a  plan  of
reorganization  within the meaning of Section 368 of the United States  Internal
Revenue Code of 1986,  as amended  (the  "Code"),  and the Treasury  Regulations
promulgated thereunder.  The reorganization will consist of: (i) the transfer of
all of the assets of the Acquired Fund in exchange for Investor  Class Shares of
the Acquiring Fund Shares  ("Acquiring Fund Shares");  and (ii) the distribution
of the  Acquiring  Fund shares to the holders of A Class,  B Class,  C Class and
Investor  Class shares of the Acquired Fund and the  liquidation of the Acquired
Fund as provided  herein,  all upon the terms and  conditions  set forth in this
Agreement (the "Reorganization").

     WHEREAS,  the Acquired Fund and Acquiring Fund are both separate  series of
the Trust, the Trust is an open-end,  registered  management  investment company
and the Acquired Fund owns securities that generally are assets of the character
in which the Acquiring Fund is permitted to invest;

     WHEREAS,  each of the Acquiring Fund and the Acquired Fund is authorized to
issue its respective shares;

     WHEREAS, the Trustees of the Trust have determined that the Reorganization,
with respect to the Acquiring  Fund,  is in the best  interests of the Acquiring
Fund and that the interests of the existing  shareholders  of the Acquiring Fund
will not be diluted as a result of the Reorganization; and

     WHEREAS, the Trustees of the Trust have determined that the Reorganization,
with respect to the Acquired Fund, is in the best interests of the Acquired Fund
and that the  interests of the existing  shareholders  of the Acquired Fund will
not be diluted as a result of the Reorganization.

                                    AGREEMENT

     NOW,  THEREFORE,  in consideration of the premises and of the covenants and
agreements  hereinafter  set forth,  the parties  hereto  covenant  and agree as
follows:

                                   ARTICLE I

     TRANSFER OF ASSETS OF THE ACQUIRED FUND IN EXCHANGE FOR ACQUIRING FUND
                  SHARES AND LIQUIDATION OF THE ACQUIRED FUND

     1.1 THE EXCHANGE.  Subject to the terms and conditions contained herein and
on the  basis  of the  representations  and  warranties  contained  herein,  the
Acquired  Fund agrees to transfer  all of its assets,  as set forth in paragraph
1.2, to the Acquiring Fund. In exchange, the Acquiring Fund agrees to deliver to
the  Acquired  Fund the number of full and  fractional  Acquiring  Fund  Shares,
determined by dividing the assets of the Acquired  Fund,  computed in the manner
and as of the time and date set forth in  paragraph  2.1, by the net asset value
per share of the  Acquiring  Fund  Shares,  computed in the manner and as of the
time and date set forth in paragraph  2.2.  Holders of A Class, B Class, C Class
and  Investor  Class shares of the Acquired  Fund will  receive  Investor  Class
shares of the Acquiring Fund. Such  transaction  shall take place at the closing
on the Closing Date provided for in paragraph 3.1.

     1.2 ASSETS TO BE ACQUIRED.  The assets of the Acquired  Fund to be acquired
by the  Acquiring  Fund shall  consist of  property  having a value equal to the
total net assets of the Acquired  Fund,  including,  without  limitation,  cash,
securities,   commodities,  interests  in  futures  and  dividends  or  interest
receivable,  owned by the  Acquired  Fund and any  deferred or prepaid  expenses
shown as an asset on the books of the Acquired Fund on the Closing Date.

     The  Acquired  Fund has provided  the  Acquiring  Fund with its most recent
audited financial statements, which contain a list of all of the Acquired Fund's
assets as of the date of such  statements.  The Acquired Fund hereby  represents
that as of the date of the  execution  of this  Agreement,  there  have  been no
changes in its  financial  position as  reflected in such  financial  statements
other  than as the  result of changes  in the  market  values of  securities  or
otherwise  occurring in the ordinary  course of business in connection  with the
purchase and sale of  securities,  the issuance and  redemption of Acquired Fund
shares and the payment of normal operating expenses, dividends and capital gains
distributions.

     1.3  LIABILITIES TO BE DISCHARGED.  The Acquired Fund will discharge all of
its  liabilities  and  obligations  prior to the  Closing  Date  other  than the
ordinary  course  liabilities  reflected in the Acquired  Fund's net asset value
incurred by the Acquired Fund prior to the Closing Date in  connection  with its
on-going business  operations  (including accrued fees and expenses and payables
for securities purchased or for shares redeemed) ("Acquired Fund Ordinary Course
Liabilities").  Subject to receiving the requisite  approval of the shareholders
of the Acquired  Fund,  and subject to other terms and  conditions  contained in
this Agreement and on the basis of the representations and warranties  contained
in this  Agreement,  on the Closing Date,  the  Acquiring  Fund shall assume and
thereafter  in due  course  pay and fully  satisfy,  discharge  or  perform  the
Acquired Fund Ordinary Course Liabilities. For avoidance of doubt, the Acquiring
Fund  shall not  assume  or agree to pay,  satisfy,  discharge  or  perform  any
contingent liabilities, or any liabilities arising under any plan adopted by the
Acquired  Fund under Rule 12b-1 with respect to the sale of the Acquired  Fund's
shares prior to the Closing Date.

     1.4 LIQUIDATION AND  DISTRIBUTION.  On or as soon after the Closing Date as
is conveniently  practicable:  (a) the Acquired Fund will distribute in complete
liquidation  of the  Acquired  Fund,  pro rata to its  shareholders  of  record,
determined as of the close of business on the Closing Date (the  "Acquired  Fund
Shareholders"),  all of the Acquiring Fund Shares  received by the Acquired Fund
pursuant to paragraph 1.1; and (b) the Acquired Fund will  thereupon  proceed to
dissolve and  terminate as set forth in paragraph 1.8 below.  Such  distribution
will be  accomplished  by the transfer of Acquiring Fund Shares  credited to the
account of the Acquired Fund on the books of the Acquiring Fund to open accounts
on the share  records of the  Acquiring  Fund in the name of the  Acquired  Fund
Shareholders,  and representing the respective pro rata number of Acquiring Fund
Shares due such shareholders.  All issued and outstanding shares of the Acquired
Fund (the "Acquired Fund Shares") will  simultaneously  be canceled on the books
of  the  Acquired  Fund.  The  Acquiring  Fund  shall  not  issue   certificates
representing  Acquiring Fund Shares in connection with such transfer.  After the
Closing  Date,  the  Acquired  Fund shall not  conduct  any  business  except in
connection with its termination.

     1.5 OWNERSHIP OF SHARES.  Ownership of Acquiring  Fund Shares will be shown
on the books of the Acquiring Fund's transfer agent.  Acquiring Fund Shares will
be issued  simultaneously  to the Acquired  Fund, in an amount equal in value to
the aggregate net asset value of the Acquired Fund Shares,  to be distributed to
Acquired Fund Shareholders.

     1.6  TRANSFER  TAXES.  Any  transfer  taxes  payable  upon the  issuance of
Acquiring Fund Shares in a name other than the registered holder of the Acquired
Fund  Shares  on the books of the  Acquired  Fund as of that  time  shall,  as a
condition  of such  issuance  and  transfer,  be paid by the person to whom such
Acquiring Fund Shares are to be issued and transferred.

     1.7 REPORTING RESPONSIBILITY.  Any reporting responsibility of the Acquired
Fund is and shall remain the responsibility of the Acquired Fund.

     1.8 TERMINATION.  The Acquired Fund shall be terminated  promptly following
the Closing Date and the making of all distributions pursuant to paragraph 1.4.

     1.9  BOOKS  AND  RECORDS.  All  books and  records  of the  Acquired  Fund,
including all books and records  required to be maintained  under the Investment
Company Act of 1940, as amended (the "1940 Act"),  and the rules and regulations
thereunder,  shall be available to the Acquiring Fund from and after the Closing
Date and  shall be  turned  over to the  Acquiring  Fund as soon as  practicable
following the Closing Date.

                                   ARTICLE II

                                    VALUATION

     2.1  VALUATION  OF ASSETS.  The value of the Acquired  Fund's  assets to be
acquired by the Acquiring  Fund  hereunder  shall be the value of such assets at
the closing on the Closing Date, using the valuation procedures set forth in the
Acquiring Fund's Articles of Incorporation, Bylaws and the Acquiring Fund's then
current prospectus and statement of additional information.

     2.2  VALUATION OF SHARES.  The net asset value per share of Acquiring  Fund
Shares  shall be the net asset  value per share  computed  at the closing on the
Closing Date,  using the valuation  procedures set forth in the Acquiring Fund's
Articles  of  Incorporation,  Bylaws  and  the  Acquiring  Fund's  then  current
prospectus and statement of additional information.

     2.3 SHARES TO BE ISSUED.  The number of the  Acquiring  Fund's shares to be
issued (including fractional shares, if any) in exchange for the Acquired Fund's
assets, shall be determined as set forth in paragraph 1.1.

     2.4  DETERMINATION  OF VALUE.  All  computations  of value shall be made by
American Century  Investment  Management,  Inc., on behalf of the Acquiring Fund
and the Acquired Fund.

                                  ARTICLE III

                            CLOSING AND CLOSING DATE

     3.1 CLOSING  DATE.  The closing shall occur on or about August 31, 2007, or
such other date(s) as the parties may agree to in writing (the "Closing  Date").
All acts taking place at the closing shall be deemed to take place at 4:00 p.m.,
Eastern Time, on the Closing Date unless otherwise  provided herein. The closing
shall be held at the offices of American Century Investments,  4500 Main Street,
Kansas  City,  Missouri  64111-0141,  or at such other time and/or  place as the
parties may agree.

     3.2 CUSTODIAN'S  CERTIFICATE.  The Acquired Fund shall cause JPMorgan Chase
Bank, N.A., as custodian for the Acquired Fund (the "Custodian"),  to deliver at
the  Closing a  certificate  of an  authorized  officer  stating  that:  (a) the
Acquired  Fund's  portfolio  securities,  cash,  and any other  assets have been
delivered in proper form to the Acquiring  Fund on the Closing Date; and (b) all
necessary  taxes  including  all  applicable  federal and state  stock  transfer
stamps,  if any,  shall have been paid, or provision for payment shall have been
made, in conjunction  with the delivery of portfolio  securities by the Acquired
Fund.

     3.3 EFFECT OF  SUSPENSION  IN TRADING.  In the event that on the  scheduled
Closing  Date,  either:  (a) the New York  Stock  Exchange  ("NYSE")  or another
primary exchange on which the portfolio  securities of the Acquiring Fund or the
Acquired  Fund are  purchased or sold,  shall be closed to trading or trading on
such exchange shall be restricted; or (b) trading or the reporting of trading on
the NYSE or elsewhere shall be disrupted so that accurate appraisal of the value
of the net assets of the Acquiring  Fund or the Acquired Fund is  impracticable,
the Closing Date shall be postponed  until the first  business day after the day
when trading is fully resumed and reporting is restored.

     3.4 TRANSFER  AGENT'S  CERTIFICATE.  The Acquired Fund shall cause American
Century Services, LLC, as transfer agent for the Acquired Fund as of the Closing
Date, to deliver at the Closing a certificate of an authorized  officer  stating
that its records contain the names and addresses of Acquired Fund  Shareholders,
and the number and percentage ownership of outstanding shares owned by each such
shareholder immediately prior to the Closing. The Acquiring Fund shall issue and
deliver or cause American  Century  Services,  LLC, its transfer agent, to issue
and deliver a  confirmation  evidencing  Acquiring Fund Shares to be credited on
the Closing Date to the Secretary of the Trust or provide evidence  satisfactory
to the Acquired  Fund that the  Acquiring  Fund Shares have been credited to the
Acquired Fund's account on the books of the Acquiring Fund. At the Closing, each
party shall deliver to the other such bills of sale, checks, assignments,  share
certificates,  receipts,  officer's  certificates,  transfer agent certificates,
custodian certificates,  opinions, and other certificates and documents, if any,
as such other party or its counsel may reasonably request.

                                   ARTICLE IV

                         REPRESENTATIONS AND WARRANTIES

     4.1  REPRESENTATIONS  OF THE  ACQUIRED  FUND.  The Trust,  on behalf of the
Acquired  Fund,  represents and warrants to the Trust on behalf of the Acquiring
Fund as follows:

     a)   The  Acquired  Fund is a  legally  designated,  separate  series  of a
          business trust duly organized,  validly  existing and in good standing
          under the laws of Massachusetts.

     b)   The Trust is registered as an open-end  management  investment company
          under the 1940 Act,  and the  Acquired  Fund's  registration  with the
          Securities and Exchange Commission (the "Commission") as an investment
          company under the 1940 Act is in full force and effect.

     c)   The current prospectus and statement of additional  information of the
          Acquired  Fund  conform in all  material  respects  to the  applicable
          requirements  of the  Securities  Act of 1933,  as amended  (the "1933
          Act"), and the 1940 Act, and the rules and regulations thereunder, and
          do not  include  any untrue  statement  of a material  fact or omit to
          state any material fact required to be stated or necessary to make the
          statements  therein,  in light of the  circumstances  under which they
          were made, not misleading.

     d)   The Acquired Fund is not in violation of, and the execution, delivery,
          and  performance of this Agreement  (subject to shareholder  approval)
          will not result in the  violation  of, any  provision  of the  Trust's
          Declaration  of  Trust  or  By-Laws  or  of  any  material  agreement,
          indenture,  instrument, contract, lease, or other undertaking to which
          the Acquired Fund is a party or by which it is bound.

     e)   The  Acquired  Fund has no  material  contracts  or other  commitments
          (other than this  Agreement) that will be terminated with liability to
          it before the  Closing  Date,  except for  liabilities,  if any, to be
          discharged as provided in paragraph 1.3 hereof.

     f)   No  litigation,  administrative  proceeding,  or  investigation  of or
          before any court or governmental  body is presently  pending or to its
          knowledge   threatened  against  the  Acquired  Fund  or  any  of  its
          properties or assets, which, if adversely determined, would materially
          and  adversely  affect its  financial  condition,  the  conduct of its
          business,  or the  ability  of the  Acquired  Fund  to  carry  out the
          transactions  contemplated by this Agreement.  The Acquired Fund knows
          of no facts  that  might  form the basis for the  institution  of such
          proceedings  and is not a party to or subject to the provisions of any
          order,  decree,  or  judgment of any court or  governmental  body that
          materially  and  adversely  affects  its  business  or its  ability to
          consummate the transactions contemplated herein.

     g)   The  financial  statements  of the Acquired Fund as of[ ], and for the
          fiscal  year  then  ended,  have  been  prepared  in  accordance  with
          generally   accepted   accounting    principles,    and   audited   by
          [PricewaterhouseCoopers],  independent  registered public accountants,
          and such  statements  (copies  of which  have  been  furnished  to the
          Acquiring Fund) fairly and accurately reflect the financial  condition
          of the  Acquired  Fund  as of  such  date,  and  there  are  no  known
          contingent  liabilities  of the Acquired Fund as of such date that are
          not disclosed in such statements.

     h)   The unaudited financial statements of the Acquired Fund as of [ ], and
          for the six months then ended,  have been prepared in accordance  with
          generally accepted accounting principles,  and such statements (copies
          of which  have  been  furnished  to the  Acquiring  Fund)  fairly  and
          accurately reflect the financial  condition of the Acquired Fund as of
          such  date,  and  there  are no known  contingent  liabilities  of the
          Acquired  Fund  as of  such  date  that  are  not  disclosed  in  such
          statements.

     i)   Since the date of the financial statements referred to in subparagraph
          (h) above, there have been no material adverse changes in the Acquired
          Fund's  financial  condition,  assets,  liabilities or business (other
          than changes  occurring in the ordinary  course of  business),  or any
          incurrence by the Acquired Fund of indebtedness maturing more than one
          year  from  the  date  such  indebtedness  was  incurred,   except  as
          identified  and disclosed by the Acquired Fund on SCHEDULE 4.1 to this
          Agreement. For the purposes of this subparagraph (i), a decline in the
          net  asset  value of the  Acquired  Fund in and of  itself  shall  not
          constitute a material adverse change.

     j)   All federal and other tax  returns  and reports of the  Acquired  Fund
          required by law to be filed,  have been timely and  accurately  filed,
          and all federal and other taxes shown due on such  returns and reports
          have been paid,  or  provision  shall  have been made for the  payment
          thereof. To the best of the Acquired Fund's knowledge,  no such return
          is currently  under audit,  and no  assessment  has been asserted with
          respect to such returns.

     k)   All issued and  outstanding  Acquired Fund Shares are duly and validly
          issued and outstanding,  fully paid and non-assessable by the Acquired
          Fund. All of the issued and outstanding  Acquired Fund Shares will, at
          the  time of the  Closing  Date,  be held  by the  persons  and in the
          amounts set forth in the records of the Acquired Fund's transfer agent
          as provided in paragraph  3.4. The  Acquired  Fund has no  outstanding
          options, warrants, or other rights to subscribe for or purchase any of
          the  Acquired  Fund  Shares,   and  has  no   outstanding   securities
          convertible into any of the Acquired Fund Shares.

     l)   At the Closing Date,  the Acquired Fund will have good and  marketable
          title to the Acquired Fund's assets to be transferred to the Acquiring
          Fund pursuant to paragraph 1.2, and full right,  power,  and authority
          to sell, assign, transfer, and deliver such assets hereunder,  free of
          any lien or other  encumbrance,  except those liens or encumbrances of
          which the Acquiring Fund has received  notice,  and, upon delivery and
          payment for such assets, and the filing of any articles,  certificates
          or other documents under the laws of Massachusetts, the Acquiring Fund
          will acquire good and marketable title,  subject to no restrictions on
          the full  transfer of such  assets,  other than such  restrictions  as
          might  arise  under  the 1933 Act or the 1940 Act,  and other  than as
          disclosed to and accepted by the Acquiring Fund.

     m)   The  execution,  delivery and  performance of this Agreement have been
          duly  authorized by all  necessary  action on the part of the Acquired
          Fund and its Board of  Trustees.  Subject to approval by the  Acquired
          Fund  Shareholders,  this  Agreement  constitutes  a valid and binding
          obligation of the Acquired Fund,  enforceable  in accordance  with its
          terms,   subject  as  to  enforcement,   to  bankruptcy,   insolvency,
          reorganization,  moratorium,  and other laws  relating to or affecting
          creditors' rights and to general equity principles.

     n)   The  information  to be  furnished  by the  Acquired  Fund  for use in
          no-action letters,  applications for orders,  registration statements,
          proxy  materials,  and  other  documents  that  may  be  necessary  in
          connection with the transactions  contemplated  herein shall comply in
          all  material  respects  with  federal  securities  and other laws and
          regulations  and will not contain any untrue  statement  of a material
          fact  or omit to  state a  material  fact  required  to be  stated  or
          necessary to make the statements,  in light of the circumstances under
          which such statements were made, not misleading.

     o)   The  Acquired  Fund has  elected to  qualify  and has  qualified  as a
          "regulated  investment  company"  under the Code (a "RIC"),  as of and
          since its  first  taxable  year;  has been a RIC under the Code at all
          times since the end of its first  taxable  year when it so  qualified;
          and qualifies and will continue to qualify as a RIC under the Code for
          its taxable year ending upon its liquidation.

     p)   No governmental  consents,  approvals,  authorizations  or filings are
          required under the 1933 Act, the  Securities  Exchange Act of 1934, as
          amended (the "1934 Act"),  the 1940 Act or  Massachusetts  law for the
          execution of this Agreement by the Trust,  for itself and on behalf of
          the Acquired Fund,  except for the  effectiveness  of the Registration
          Statement  (as  defined  in  paragraph  5.7),  and the  filing  of any
          articles,  certificates  or other documents that may be required under
          Massachusetts  law,  and except for such  other  consents,  approvals,
          authorizations  and filings as have been made or received,  and except
          for such  consents,  approvals,  authorizations  and filings as may be
          required subsequent to the Closing Date, it being understood, however,
          that this Agreement and the transactions  contemplated  herein must be
          approved by the  shareholders  of the  Acquired  Fund as  described in
          paragraph 5.2.

     4.2  REPRESENTATIONS  OF THE  ACQUIRING  FUND.  The  Trust on behalf of the
Acquiring  Fund  represents  and warrants to the Trust on behalf of the Acquired
Fund as follows:

     a)   The  Acquiring  Fund is a  legally  designated,  separate  series of a
          business trust duly organized,  validly  existing and in good standing
          under the laws of Massachusetts.

     b)   The Trust is registered as an open-end  management  investment company
          under the 1940 Act, and the  Acquiring  Fund's  registration  with the
          Commission  as an  investment  company  under  the 1940 Act is in full
          force and effect.

     c)   The current prospectus and statement of additional  information of the
          Acquiring  Fund  conform in all  material  respects to the  applicable
          requirements  of the 1933  Act and the 1940  Act,  and the  rules  and
          regulations  thereunder,  and do not include any untrue statement of a
          material fact or omit to state any material fact required to be stated
          or  necessary  to  make  such  statements  therein,  in  light  of the
          circumstances under which they were made, not misleading.

     d)   The Acquiring Fund is not in violation of, and the execution, delivery
          and  performance  of this  Agreement will not result in a violation of
          any provision of the Trust's Declaration of Trust or By-Laws or of any
          material agreement, indenture,  instrument,  contract, lease, or other
          undertaking  to which the Acquiring  Fund is a party or by which it is
          bound.

     e)   No  litigation,  administrative  proceeding,  or  investigation  of or
          before any court or governmental  body is presently  pending or to its
          knowledge  threatened  against  the  Acquiring  Fund  or  any  of  its
          properties or assets, which, if adversely determined, would materially
          and  adversely  affect its  financial  condition,  the  conduct of its
          business,  or the  ability  of the  Acquiring  Fund to  carry  out the
          transactions  contemplated by this Agreement. The Acquiring Fund knows
          of no facts  that  might  form the basis for the  institution  of such
          proceedings  and it is not a party to or subject to the  provisions of
          any order,  decree, or judgment of any court or governmental body that
          materially  and  adversely  affects  its  business  or its  ability to
          consummate the transaction contemplated herein.

     f)   The financial  statements of the Acquiring Fund as of [ ], and for the
          fiscal  year  then  ended,  have  been  prepared  in  accordance  with
          generally   accepted   accounting    principles,    and   audited   by
          PricewaterhouseCoopers, independent registered public accountants, and
          such  statements  (copies of which have been furnished to the Acquired
          Fund) fairly and  accurately  reflect the  financial  condition of the
          Acquiring  Fund as of such  date,  and there  are no known  contingent
          liabilities  of the  Acquiring  Fund  as of  such  date  that  are not
          disclosed in such statements.

     g)   The unaudited  financial  statements of the Acquiring  Fund as of [ ],
          and for the six months then ended,  have been  prepared in  accordance
          with generally  accepted  accounting  principles,  and such statements
          (copies of which have been  furnished to the Acquired Fund) fairly and
          accurately reflect the financial condition of the Acquiring Fund as of
          such  date,  and  there  are no known  contingent  liabilities  of the
          Acquiring  Fund  as of  such  date  that  are  not  disclosed  in such
          statements.

     h)   Since the date of the financial statements referred to in subparagraph
          (g)  above,  there  have  been  no  material  adverse  changes  in the
          Acquiring Fund's financial condition,  assets, liabilities or business
          (other than changes occurring in the ordinary course of business),  or
          any  incurrence by the Acquiring  Fund of  indebtedness  maturing more
          than one year from the date such indebtedness was incurred,  except as
          identified and disclosed by the Acquiring Fund on SCHEDULE 4.2 to this
          Agreement. For the purposes of this subparagraph (h), a decline in the
          net  asset  value of the  Acquiring  Fund in and of  itself  shall not
          constitute a material adverse change.

     i)   All federal and other tax  returns and reports of the  Acquiring  Fund
          required by law to be filed, have been timely and accurately filed and
          all federal and other taxes shown due on such returns and reports have
          been paid, or provision shall have been made for their payment. To the
          best of the Acquiring  Fund's  knowledge,  no such return is currently
          under audit,  and no assessment has been asserted with respect to such
          returns.

     j)   All issued and outstanding  Acquiring Fund Shares are duly and validly
          issued and outstanding, fully paid and non-assessable by the Acquiring
          Fund.  The Acquiring  Fund has no outstanding  options,  warrants,  or
          other rights to subscribe for or purchase any  Acquiring  Fund Shares,
          and has no outstanding  securities convertible into any Acquiring Fund
          Shares.

     k)   The  execution,  delivery and  performance of this Agreement have been
          duly  authorized by all necessary  action on the part of the Acquiring
          Fund and its Board of  Directors,  and this  Agreement  constitutes  a
          valid and binding  obligation of the Acquiring  Fund,  enforceable  in
          accordance with its terms,  subject as to enforcement,  to bankruptcy,
          insolvency, reorganization,  moratorium, and other laws relating to or
          affecting creditors' rights and to general equity principles.

     l)   Acquiring  Fund Shares to be issued and delivered to the Acquired Fund
          for the  account of the  Acquired  Fund  Shareholders  pursuant to the
          terms of this  Agreement  will,  at the Closing  Date,  have been duly
          authorized. When so issued and delivered, such shares will be duly and
          validly  issued  Acquiring  Fund  Shares,  and will be fully  paid and
          non-assessable.

     m)   The  information  to be  furnished  by the  Acquiring  Fund for use in
          no-action letters,  applications for orders,  registration statements,
          proxy  materials,  and  other  documents  that  may  be  necessary  in
          connection with the transactions  contemplated  herein shall comply in
          all  material  respects  with  federal  securities  and other laws and
          regulations  and will not contain any untrue  statement  of a material
          fact  or omit to  state a  material  fact  required  to be  stated  or
          necessary to make the statements,  in light of the circumstances under
          which such statements were made, not misleading.

     n)   The  Acquiring  Fund has elected to qualify and has qualified as a RIC
          under the Code, as of and since its first taxable year; has been a RIC
          under the Code at all times  since the end of its first  taxable  year
          when it so qualified; and qualifies and shall continue to qualify as a
          RIC under the Code for its current taxable year.

     o)   No governmental  consents,  approvals,  authorizations  or filings are
          required   under  the  1933  Act,  the  1934  Act,  the  1940  Act  or
          Massachusetts  law for the  execution of this  Agreement by the Trust,
          for  itself,  and on  behalf of the  Acquiring  Fund,  except  for the
          effectiveness of the  Registration  Statement (as defined in paragraph
          5.7), and the filing of any articles,  certificates or other documents
          that may be  required  under  Massachusetts  law,  and except for such
          other  consents,  approvals,  authorizations  and filings as have been
          made  or   received,   and  except  for  such   consents,   approvals,
          authorizations  and  filings  as may  be  required  subsequent  to the
          Closing Date.

     p)   The Acquiring Fund agrees to use all reasonable  efforts to obtain the
          approvals and  authorizations  required by the 1933 Act, the 1940 Act,
          and any state blue sky or securities  laws as it may deem  appropriate
          in order to continue its operations after the Closing Date.

                                   ARTICLE V

              COVENANTS OF THE ACQUIRING FUND AND THE ACQUIRED FUND

     5.1 OPERATION IN ORDINARY COURSE.  The Acquiring Fund and the Acquired Fund
will each operate its  respective  business in the ordinary  course  between the
date of this  Agreement  and the Closing  Date,  it being  understood  that such
ordinary  course of business will include  customary  dividends and  shareholder
purchases and redemptions.

     5.2 APPROVAL OF SHAREHOLDERS.  The Trust will call a special meeting of the
Acquired Fund  Shareholders  to consider and act upon this Agreement and to take
all other  appropriate  action  necessary to obtain approval of the transactions
contemplated herein.

     5.3  INVESTMENT  REPRESENTATION.  The  Acquired  Fund  covenants  that  the
Acquiring  Fund  Shares to be issued  pursuant to this  Agreement  are not being
acquired for the purpose of making any  distribution,  other than in  connection
with the Reorganization and in accordance with the terms of this Agreement.

     5.4  ADDITIONAL  INFORMATION.  The Acquired  Fund will assist the Acquiring
Fund in obtaining such  information as the Acquiring  Fund  reasonably  requests
concerning the beneficial ownership of the Acquired Fund's shares.

     5.5  FURTHER  ACTION.  Subject to the  provisions  of this  Agreement,  the
Acquiring  Fund and the Acquired  Fund will each take or cause to be taken,  all
action, and do or cause to be done, all things reasonably  necessary,  proper or
advisable to consummate and make effective the transactions contemplated by this
Agreement, including any actions required to be taken after the Closing Date.

     5.6 STATEMENT OF EARNINGS AND PROFITS.  As promptly as practicable,  but in
any case  within  sixty days after the Closing  Date,  the  Acquired  Fund shall
furnish the Acquiring  Fund, in such form as is reasonably  satisfactory  to the
Acquiring Fund, a statement of the earnings and profits of the Acquired Fund for
federal income tax purposes that will be carried over by the Acquiring Fund as a
result of Section 381 of the Code,  and which will be  certified  by the Trust's
Treasurer.

     5.7 PREPARATION OF REGISTRATION STATEMENT AND SCHEDULE 14A PROXY STATEMENT.
The Trust will review and file with the Commission a  registration  statement on
Form N-14 relating to the Acquiring Fund Shares to be issued to  shareholders of
the Acquired Fund (the  "Registration  Statement").  The Registration  Statement
shall include a proxy  statement and a prospectus of the Acquiring Fund relating
to the transaction  contemplated by this Agreement.  The Registration  Statement
shall be in  compliance  with the 1933 Act,  the 1934 Act and the 1940  Act,  as
applicable.  Each party will  provide  the other  party with the  materials  and
information  necessary  to  prepare  the  Registration   Statement  (the  "Proxy
Materials"),  for  inclusion  therein,  in  connection  with the  meeting of the
Acquired Fund  Shareholders  to consider the approval of this  Agreement and the
transactions contemplated herein.

     5.8  DISTRIBUTIONS.  On or before the Closing Date, the Acquired Fund shall
have declared and paid a dividend or dividends which, together with all previous
such  dividends,  shall have the effect of  distributing  to the  Acquired  Fund
Shareholders  all of the  Acquired  Fund's  investment  company  taxable  income
(computed  without regard to any deduction for dividends paid), if any, plus the
excess,  if any, of its  interest  income  excludible  from gross  income  under
Section 103(a) of the Code over its deductions disallowed under Sections 265 and
171(a)(2)  of the Code for all taxable  periods or years ending on or before the
Closing Date, and all of its net capital gains realized (after reduction for any
capital loss carry  forward),  if any, in all taxable periods or years ending on
or before the Closing Date.

     5.9 TAX  RETURNS.  The  Acquiring  Fund  and the  Acquired  Fund  agree  to
cooperate  with each other after the  Closing in filing any tax return,  amended
return or claim for refund,  determining  a liability  for taxes or a right to a
refund of taxes or  participating in or conducting any audit or other proceeding
in respect of taxes.

     5.10  CONFIRMATION  OF TAX BASIS.  The Acquired  Fund shall  deliver to the
Acquiring Fund on the Closing Date  confirmations or other adequate  evidence as
to the tax  basis and  holding  period of each of the  Assets  delivered  to the
Acquiring Fund hereunder.

                                   ARTICLE VI

            CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRED FUND

     The  obligations  of the  Acquired  Fund  to  consummate  the  transactions
provided for herein shall be subject, at its election, to the performance by the
Acquiring  Fund of all the  obligations  to be performed by the  Acquiring  Fund
pursuant  to this  Agreement,  on or before the Closing  Date and, in  addition,
subject to the following conditions:

     6.1 All  representations,  covenants,  and warranties of the Acquiring Fund
contained in this Agreement  shall be true and correct in all material  respects
as of the date hereof and as of the Closing Date, with the same force and effect
as if  made  on and as of the  Closing  Date.  The  Acquiring  Fund  shall  have
delivered to the Acquired  Fund on such Closing Date a  certificate  executed in
the  Acquiring  Fund's name by the Trust's  President or Vice  President and its
Treasurer or Assistant  Treasurer,  in form and  substance  satisfactory  to the
Acquired  Fund and dated as of the Closing  Date,  to such effect and as to such
other matters as the Acquired Fund shall reasonably request.

                                  ARTICLE VII

            CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND

     The  obligations  of the  Acquiring  Fund to  consummate  the  transactions
provided for herein shall be subject, at its election, to the performance by the
Acquired  Fund of all the  obligations  to be  performed  by the  Acquired  Fund
pursuant  to this  Agreement,  on or before the Closing  Date and, in  addition,
shall be subject to the following conditions:

     7.1 All  representations,  covenants,  and  warranties of the Acquired Fund
contained in this Agreement  shall be true and correct in all material  respects
as of the date hereof and as of the Closing Date, with the same force and effect
as if made  on and as of  such  Closing  Date.  The  Acquired  Fund  shall  have
delivered to the Acquiring  Fund on such Closing Date a certificate  executed in
the  Acquired  Fund's name by the Trust's  President or Vice  President  and its
Treasurer or Assistant  Treasurer,  in form and  substance  satisfactory  to the
Acquiring  Fund and dated as of such Closing Date, to such effect and as to such
other matters as the Acquiring Fund shall reasonably request.

     7.2  The  Acquired  Fund  shall  have  delivered  to the  Acquiring  Fund a
statement of the Acquired Fund's assets and liabilities, together with a list of
the  Acquired  Fund's  portfolio  securities  showing  the  tax  costs  of  such
securities by lot and the holding periods of such securities,  as of the Closing
Date, certified by the Treasurer of the Trust.

                                  ARTICLE VIII

               FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE
                        ACQUIRING FUND AND ACQUIRED FUND

     If any of the  conditions  set forth  below do not  exist on or before  the
Closing Date with respect to the Acquired Fund or the Acquiring  Fund, the other
party to this Agreement shall, at its option,  not be required to consummate the
transactions contemplated by this Agreement:

     8.1 This Agreement and the transactions  contemplated  herein, with respect
to the Acquired  Fund,  shall have been  approved by the  requisite  vote of the
Board  of  Trustees  and the  Acquired  Fund  Shareholders  in  accordance  with
applicable  law and the  provisions  of the  Trust's  Declaration  of Trust  and
By-Laws. Certified copies of the resolutions evidencing such approval shall have
been delivered to the Acquiring  Fund.  Notwithstanding  anything  herein to the
contrary,  neither  the  Acquiring  Fund nor the  Acquired  Fund may  waive  the
conditions set forth in this paragraph 8.1.

     8.2  On  the  Closing  Date,  the  Commission  shall  not  have  issued  an
unfavorable  report  under  Section  25(b) of the 1940 Act,  or  instituted  any
proceeding  seeking to enjoin the consummation of the transactions  contemplated
by this Agreement under Section 25(c) of the 1940 Act.  Furthermore,  no action,
suit or other  proceeding  shall be  threatened  or pending  before any court or
governmental  agency in which it is sought to  restrain or  prohibit,  or obtain
damages or other relief in connection  with this  Agreement or the  transactions
contemplated herein.

     8.3 All required consents of other parties and all other consents,  orders,
and permits of federal,  state and local regulatory authorities (including those
of the Commission and of state securities  authorities,  including any necessary
"no-action"   positions  and  exemptive  orders  from  such  federal  and  state
authorities) to permit  consummation  of the  transactions  contemplated  herein
shall have been  obtained,  except  where  failure  to obtain any such  consent,
order,  or permit would not involve a risk of a material  adverse  effect on the
assets or properties of the Acquiring Fund or the Acquired  Fund,  provided that
either party hereto may waive any such conditions for itself.

     8.4 The  Registration  Statement shall have become effective under the 1933
Act, and no stop orders  suspending  the  effectiveness  thereof shall have been
issued. To the best knowledge of the parties to this Agreement, no investigation
or  proceeding  for that  purpose  shall  have been  instituted  or be  pending,
threatened or contemplated under the 1933 Act.

     8.5  The  parties  shall  have  received  an  opinion  of  Reed  Smith  LLP
substantially to the effect that for federal income tax purposes:

     a)   The transfer of all of the  Acquired  Fund's  assets to the  Acquiring
          Fund solely in exchange  for  Acquiring  Fund Shares  (followed by the
          distribution   of  Acquiring   Fund  Shares  to  the   Acquired   Fund
          Shareholders in dissolution and liquidation of the Acquired Fund) will
          constitute a "reorganization"  within the meaning of Section 368(a) of
          the Code,  and the Acquiring Fund and the Acquired Fund will each be a
          "party to a  reorganization"  within the meaning of Section  368(b) of
          the Code.

     b)   No gain or loss  will be  recognized  by the  Acquiring  Fund upon the
          receipt of the assets of the  Acquired  Fund  solely in  exchange  for
          Acquiring Fund Shares.

     c)   No gain or loss  will be  recognized  by the  Acquired  Fund  upon the
          transfer of the Acquired Fund's assets to the Acquiring Fund solely in
          exchange for Acquiring Fund Shares or upon the  distribution  (whether
          actual or  constructive)  of  Acquiring  Fund Shares to Acquired  Fund
          Shareholders in exchange for their Acquired Fund Shares.

     d)   No gain or loss will be recognized  by any Acquired  Fund  Shareholder
          upon the  exchange  of its  Acquired  Fund Shares for  Acquiring  Fund
          Shares.

     e)   The aggregate tax basis of the Acquiring Fund Shares  received by each
          Acquired Fund Shareholder  pursuant to the Reorganization  will be the
          same as the aggregate tax basis of the Acquired Fund Shares held by it
          immediately  prior to the  Reorganization.  The holding  period of the
          Acquiring Fund Shares received by each Acquired Fund  Shareholder will
          include the period  during  which the Acquired  Fund Shares  exchanged
          therefor  were held by such  shareholder,  provided the Acquired  Fund
          Shares are held as capital assets at the time of the Reorganization.

     f)   The tax basis of the Acquired  Fund's assets acquired by the Acquiring
          Fund will be the same as the tax basis of such assets to the  Acquired
          Fund immediately  prior to the  Reorganization.  The holding period of
          the assets of the  Acquired  Fund in the hands of the  Acquiring  Fund
          will  include the period  during  which those  assets were held by the
          Acquired Fund.

Such opinion shall be based on customary  assumptions  and such  representations
Reed Smith LLP may reasonably request,  and the Acquired Fund and Acquiring Fund
will  cooperate  to make and certify the accuracy of such  representations.  The
foregoing opinion may state that no opinion is expressed as to the effect of the
Reorganization  on the  Acquiring  Fund,  the Acquired Fund or any Acquired Fund
Shareholder  with  respect to any asset as to which  unrealized  gain or loss is
required  to be  recognized  for  federal  income tax  purposes  at the end of a
taxable year (or on the termination or transfer  thereof) under a mark-to-market
system of accounting.  Notwithstanding anything herein to the contrary,  neither
the Acquiring  Fund nor the Acquired Fund may waive the  conditions set forth in
this paragraph 8.5.

                                   ARTICLE IX

                                    EXPENSES

     As soon  as  practical  after  the  Closing,  American  Century  Investment
Management,  Inc.,  as Advisor  to the  Acquiring  Fund shall bear the  expenses
associated  with the  Reorganization.  The  Acquiring  Fund shall bear  expenses
associated  with the  qualification  of  Acquiring  Fund  Shares for sale in the
various  states.   Reorganization  expenses  include,  without  limitation:  (a)
expenses associated with the preparation and filing of the Proxy Materials;  (b)
postage;  (c) printing;  (d)  accounting  fees;  (e) legal fees incurred by each
Fund;  (f)  solicitation  costs  of  the  transaction;  and  (g)  other  related
administrative or operational costs.

                                    ARTICLE X

                    ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES

     10.1 The Trust,  on behalf of the Acquiring  Fund, and the Trust, on behalf
of the Acquired  Fund,  agree that neither party has made to the other party any
representation,  warranty  and/or  covenant not set forth herein,  and that this
Agreement constitutes the entire agreement between the parties.

     10.2 Except as specified in the next  sentence set forth in this  paragraph
10.2, the representations, warranties, and covenants contained in this Agreement
or in any document  delivered  pursuant to or in connection with this Agreement,
shall not survive the consummation of the transactions  contemplated  hereunder.
The  covenants to be performed  after the Closing Date shall  continue in effect
beyond the consummation of the transactions contemplated hereunder.

                                   ARTICLE XI

                                   TERMINATION

     This  Agreement may be terminated by the mutual  agreement of the Trust and
the Trust. In addition,  the Trust may at its option terminate this Agreement at
or before the Closing Date due to:

     a)   a breach by the other of any  representation,  warranty,  or agreement
          contained herein to be performed at or before the Closing Date, if not
          cured within 30 days;

     b)   a condition herein expressed to be precedent to the obligations of the
          terminating party that has not been met and it reasonably appears that
          it will not or cannot be met; or

     c)   a   determination   by  the  Trust's  Board  of  Trustees,   that  the
          consummation  of the  transactions  contemplated  herein is not in the
          best  interest of the Acquired Fund or Acquiring  Fund,  respectively,
          and notice given to the other party hereto.

In the event of any such termination,  in the absence of willful default,  there
shall be no  liability  for  damages  on the  part of the  Acquiring  Fund,  the
Acquired Fund, or the Trust, or their respective  directors or officers,  to the
other party or its directors or officers.

                                  ARTICLE XII

                                   AMENDMENTS

     This Agreement may be amended,  modified, or supplemented in such manner as
may be  mutually  agreed  upon  in  writing  by the  officers  of the  Trust  as
specifically  authorized  by the  Board of  Trustees;  provided,  however,  that
following the meeting of the Acquired Fund  Shareholders  called by the Acquired
Fund pursuant to paragraph 5.2 of this Agreement, no such amendment may have the
effect of changing the provisions for  determining  the number of Acquiring Fund
Shares to be issued to the Acquired Fund  Shareholders  under this  Agreement to
the detriment of such shareholders without their further approval.

                                  ARTICLE XIII

               HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT;
                             LIMITATION OF LIABILITY

     13.1 The Article and paragraph headings contained in this Agreement are for
reference  purposes  only  and  shall  not  affect  in any  way the  meaning  or
interpretation of this Agreement.

     13.2 This Agreement may be executed in any number of counterparts,  each of
which shall be deemed an original.

     13.3 This Agreement  shall be governed by and construed in accordance  with
the laws of the State of Missouri,  without regard to the conflict of laws rules
of that or any other jurisdiction.

     13.4 This  Agreement  shall bind and inure to the  benefit  of the  parties
hereto and their respective  successors and assigns,  but, except as provided in
this paragraph, no assignment or transfer hereof or of any rights or obligations
hereunder  shall be made by any party  without the written  consent of the other
party.  Nothing herein expressed or implied is intended or shall be construed to
confer upon or give any person,  firm,  or  corporation,  other than the parties
hereto and their respective successors and assigns, any rights or remedies under
or by reason of this Agreement.

     IN WITNESS WHEREOF,  the parties have duly executed this Agreement,  all as
of the date first written above.

                               AMERICAN CENTURY MUNICIPAL TRUST
                               on behalf of its series,
                               AMERICAN CENTURY TAX-FREE BOND FUND


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





                               AMERICAN CENTURY MUNICIPAL TRUST
                               on behalf of its series,
                               AMERICAN CENTURY [_______] FUND


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











                                                                       EXHIBIT B


                        FORM OF AMENDMENT TO THE CHARTER

                                       OF

                         _________________________, INC.
                               (the "Corporation")


The shares of each class of shares of the  Corporation's  stock identified below
as a predecessor class of a series (each such class, a "Predecessor  Class") are
hereby  reclassified as additional  shares of the class  identified below as the
successor  class of such  series  (each such class,  a  "Successor  Class"),  as
follows  (the terms  "series"  and "class"  having the meanings set forth in the
charter of the Corporation):

     1.   All issued and outstanding shares of each Predecessor Class are hereby
          reclassified into that number of shares of the corresponding Successor
          Class  having a total  net  asset  value  equal to the total net asset
          value  at the  effective  time of  this  amendment  of the  respective
          Predecessor Class shares;

     2.   All  authorized  but  unissued  shares of each  Predecessor  Class are
          hereby  reclassified as shares of the  corresponding  Successor Class;
          and

     3.   The assets and liabilities  previously  allocated to each  Predecessor
          Class are hereby reallocated to the corresponding Successor Class.

For  purposes of this  amendment,  the  Predecessor  Classes  and  corresponding
Successor Classes are as follows:



SERIES                         PREDECESSOR CLASS                 SUCCESSOR CLASS











                                                                       EXHIBIT C

                  MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE



ARIZONA MUNICIPAL BOND FUND
FLORIDA MUNICIPAL BOND FUND


Market Perspective


BY DAVID MACEWEN, CHIEF INVESTMENT OFFICER, FIXED INCOME

ECONOMIC GROWTH PUSHED COMMODITY PRICES & INTEREST RATES HIGHER

Strong economic growth abroad and resilient growth in the U.S. (despite a
devastating 2005 hurricane season and record-high energy prices) helped push
U.S. interest rates and Treasury yields to their highest levels since 2001-2002
during the 12 months ended May 31, 2006. The U.S. economy grew at a moderate
rate of approximately 3.5% for the period, despite dipping below 2% in the
fourth quarter of 2005. Robust overseas growth, particularly in emerging Asian
markets such as China and India, helped push the Commodity Research Bureau index
to a record high, fanning inflation fears and forcing global central banks to
raise interest rates.

TREASURY YIELDS INVERTED, INDICATING POSSIBLE ECONOMIC WEAKNESS AHEAD

In the U.S., the Federal Reserve increased its overnight interest rate target
eight times during the 12 months, raising it from 3% to 5%. That display of
inflation-fighting discipline helped prevent long-term Treasury yields from
rising as much as short-term yields, reducing or "flattening" the difference
between these yields. On May 31, 2005, two- and 10-year Treasury yields were
3.58% and 3.98%, respectively, 0.40 percentage point apart. On May 31, 2006, the
respective yields for two- and 10-year notes were 5.04% and 5.12%, just 0.08
percentage point apart. These yields also "inverted" temporarily during the
first quarter of 2006 when the two-year yield rose higher than the 10-year. This
phenomenon often precedes economic downturns.

MUNICIPAL MARKET GENERALLY OUTPERFORMED TAXABLE MARKET

Rising interest rates created challenging conditions for bonds, which, in
general, had to rely on their interest income to help offset price declines.
Under these conditions, the best performers were money market and high-yield
securities. In addition, the municipal market generally outperformed the
taxable--municipal yields didn't rise or flatten as much as Treasury yields.
Reasons for municipal outperformance included strong demand from investors
(including those who recognized that municipals typically outperform in bond
bear markets), declining municipal supply growth (less issuance and refinancing
as interest rates rose), and favorable economic growth (providing improved tax
revenues and credit conditions for municipal debt).

U.S. FIXED-INCOME TOTAL RETURNS
For the 12 months ended May 31, 2006
--------------------------------------------------------------------------------
LEHMAN BROTHERS MUNICIPAL MARKET INDICES
--------------------------------------------------------------------------------
Municipal Bond                                                1.89%
--------------------------------------------------------------------------------
3-Year Municipal Bond                                         1.59%
--------------------------------------------------------------------------------
5-Year General Obligation (GO)                                1.24%
--------------------------------------------------------------------------------
Long-Term Municipal Bond (22+ years)                          3.20%
--------------------------------------------------------------------------------
Non-Investment-Grade (High-Yield)                             7.20%
--------------------------------------------------------------------------------
TAXABLE MARKET RETURNS
--------------------------------------------------------------------------------
Lehman Brothers U.S. Aggregate Index                         -0.48%
--------------------------------------------------------------------------------
Lehman Brothers U.S. Treasury Index                          -1.39%
--------------------------------------------------------------------------------
3-Month Treasury Bill                                         3.85%
--------------------------------------------------------------------------------
10-Year Treasury Note                                        -5.25%
--------------------------------------------------------------------------------
Source: Lehman Brothers Inc.




Arizona Municipal Bond - Performance

TOTAL RETURNS AS OF MAY 31, 2006
                                   --------------------------------
                                        AVERAGE ANNUAL RETURNS
--------------------------------------------------------------------------------
                                                            SINCE      INCEPTION
                         1 YEAR    5 YEARS    10 YEARS    INCEPTION       DATE
--------------------------------------------------------------------------------
INVESTOR CLASS            1.59%     4.30%       4.94%      5.24%        4/11/94
--------------------------------------------------------------------------------
LEHMAN BROTHERS
MUNICIPAL
5-YEAR GO INDEX           1.24%     4.06%       4.88%      5.10%(1)        --
--------------------------------------------------------------------------------
LIPPER OTHER STATES
INTERMEDIATE
MUNICIPAL DEBT FUNDS
AVERAGE RETURNS(2)        0.67%     3.69%       4.34%      4.56%(3)        --
--------------------------------------------------------------------------------
Investor Class's
Lipper Ranking
as of 5/31/06(2)        5 of 119   11 of 95    8 of 66    5 of 45(3)       --
--------------------------------------------------------------------------------
Investor Class's
Lipper Ranking
as of 6/30/06(2)        7 of 119   12 of 95    8 of 67    5 of 45(3)       --
--------------------------------------------------------------------------------
A Class                                                                 2/27/04
  No sales charge*        1.34%       --          --       1.45%
  With sales charge*     -3.25%       --          --      -0.60%
--------------------------------------------------------------------------------
B Class                                                                 2/27/04
  No sales charge*        0.61%       --          --       0.71%
  With sales charge*     -3.39%       --          --      -0.62%
--------------------------------------------------------------------------------
C Class                   0.58%       --          --       0.69%        2/27/04
--------------------------------------------------------------------------------
*Sales charges include initial sales charges and contingent deferred sales
 charges (CDSCs), as applicable. A Class shares have a 4.50% maximum initial
 sales charge for fixed income funds and may be subject to a maximum CDSC of
 1.00%. B Class shares redeemed within six years of purchase are subject to a
 CDSC that declines from 5.00% during the first year after purchase to 0.00% the
 sixth year after purchase. C Class shares redeemed within 12 months of purchase
 are subject to a maximum CDSC of 1.00%. Please see the Share Class Information
 pages for more about the applicable sales charges for each share class. The SEC
 requires that mutual funds provide performance information net of maximum sales
 charges in all cases where charges could be applied.

(1) Since 3/31/94, the date nearest the Investor Class's inception for which
    data are available.

(2) Data provided by Lipper Inc. -- A Reuters Company. (c)2006 Reuters. All
    rights reserved. Any copying, republication or redistribution of Lipper
    content, including by caching, framing or similar means, is expressly
    prohibited without the prior written consent of Lipper. Lipper shall not be
    liable for any errors or delays in the content, or for any actions taken in
    reliance thereon.
    Lipper Fund Performance -- Performance data is total return, and is
    preliminary and subject to revision.
    Lipper Rankings -- Rankings are based only on the universe shown and are
    based on average annual total returns. This listing might not represent the
    complete universe of funds tracked by Lipper.
    The data contained herein has been obtained from company reports, financial
    reporting services, periodicals and other resources believed to be reliable.
    Although carefully verified, data on compilations is not guaranteed by
    Lipper and may be incomplete. No offer or solicitations to buy or sell any
    of the securities herein is being made by Lipper.

(3) Since 4/14/94, the date nearest the Investor Class's inception for which
    data are available.

Data presented reflect past performance. Past performance is no guarantee of
future results. Current performance may be higher or lower than the performance
shown. Investment return and principal value will fluctuate, and redemption
value may be more or less than original cost. To obtain performance data current
to the most recent month end, please call 1-800-345-2021 or visit
americancentury.com. As interest rates rise, bond values will decline.
Investment income may be subject to certain state and local taxes and, depending
on your tax status, the federal alternative minimum tax (AMT). Capital gains are
not exempt from state and federal income tax.

Unless otherwise indicated, performance reflects Investor Class shares;
performance for other share classes will vary due to differences in fee
structure. For information about other share classes available, please consult
the prospectus. Data assumes reinvestment of dividends and capital gains, and
none of the charts reflect the deduction of taxes that a shareholder would pay
on fund distributions or the redemption of fund shares. Returns for the index
are provided for comparison. The fund's total returns include operating expenses
(such as transaction costs and management fees) that reduce returns, while the
total returns of the index do not.

                                                                    (continued)




Arizona Municipal Bond - Performance

GROWTH OF $10,000 OVER 10 YEARS


$10,000 investment made May 31, 1996

ONE-YEAR RETURNS OVER 10 YEARS

Periods ended May 31
----------------------------------------------------------------------------------------------------
                     1997    1998    1999    2000     2001    2002    2003     2004    2005    2006
----------------------------------------------------------------------------------------------------
Investor Class       5.77%   7.19%   4.51%   0.20%   10.57%   6.74%   9.36%   -1.06%   5.21%   1.59%
----------------------------------------------------------------------------------------------------
Lehman Brothers
Municipal 5-Year
GO Index             6.08%   6.95%   4.90%   0.65%   10.17%   6.33%   8.72%   -0.22%   4.47%   1.24%
----------------------------------------------------------------------------------------------------

Data presented reflect past performance. Past performance is no guarantee of
future results. Current performance may be higher or lower than the performance
shown. Investment return and principal value will fluctuate, and redemption
value may be more or less than original cost. To obtain performance data current
to the most recent month end, please call 1-800-345-2021 or visit
americancentury.com. As interest rates rise, bond values will decline.
Investment income may be subject to certain state and local taxes and, depending
on your tax status, the federal alternative minimum tax (AMT). Capital gains are
not exempt from state and federal income tax.

Unless otherwise indicated, performance reflects Investor Class shares;
performance for other share classes will vary due to differences in fee
structure. For information about other share classes available, please consult
the prospectus. Data assumes reinvestment of dividends and capital gains, and
none of the charts reflect the deduction of taxes that a shareholder would pay
on fund distributions or the redemption of fund shares. Returns for the index
are provided for comparison. The fund's total returns include operating expenses
(such as transaction costs and management fees) that reduce returns, while the
total returns of the index do not.




Arizona Municipal Bond - Portfolio Commentary

PORTFOLIO TEAM LEADER: ALAN KRUSS

MR. KRUSS, VICE PRESIDENT AND PORTFOLIO MANAGER, JOINED AMERICAN CENTURY
INVESTMENTS IN 1997 AND BECAME A PORTFOLIO MANAGER IN 2001. IN APRIL 2006, HE
TOOK OVER ARIZONA MUNICIPAL BOND'S TEAM-LEADER ROLE FROM KENNETH SALINGER, WHO
LEFT THE COMPANY TO PURSUE OTHER INTERESTS.

PERFORMANCE SUMMARY

Arizona Municipal Bond returned 1.59%* for the 12 months ended May 31, 2006,
more than double the 0.67% average total return of Lipper's Other States
Intermediate Municipal Debt Funds. In addition, Arizona Municipal Bond
outperformed the Lehman Brothers Municipal 5-Year GO Index, which returned
1.24%.

The fund's longer-term performance was also noteworthy: Arizona Municipal Bond
ranked among the top 15% of its Lipper peer group for the trailing five and 10
years while returning more than Lehman's Municipal 5-Year GO Index.

Although favorable by comparison, the fund's absolute 12-month return was
modest, reflecting myriad obstacles faced by municipal bonds and the broader
bond market that are detailed in the Market Perspective on page 2. The
commentary below discusses the strategies that we employed for Arizona Municipal
Bond in that environment.

YIELD SUMMARY

One of Arizona Municipal Bond's investment objectives is to seek high current
income exempt from federal and Arizona income taxes. Along those lines, the
fund's 30-day SEC yield was 3.65% as of May 31, 2006, which translated into the
attractive tax-equivalent yields shown in the table at top right. By comparison,
Arizona Municipal Bond's Lipper group average 30-day SEC yield was only 3.11%.

All else being equal, a higher yield can boost returns and pave the way for
better performance. It's also worth noting that Arizona Municipal Bond achieved
that yield advantage while generally steering clear of bonds subject to the
Alternative Minimum Tax.

PORTFOLIO STRATEGY & OUTLOOK

Within the framework of our repeatable, multi-layered investment approach, one
of our main emphasized strategies involved actively managing Arizona Municipal
Bond's bond-maturity

PORTFOLIO AT A GLANCE
--------------------------------------------------------------------------------
                                            AS OF                 AS OF
                                           5/31/06              11/30/05
--------------------------------------------------------------------------------
Weighted Average
Maturity                                   8.3 yrs               7.9 yrs
--------------------------------------------------------------------------------
Average Duration
(Modified)                                 4.4 yrs               4.1 yrs
--------------------------------------------------------------------------------

YIELDS AS OF MAY 31, 2006
--------------------------------------------------------------------------------
30-DAY SEC YIELD
--------------------------------------------------------------------------------
Investor Class                                         3.65%
--------------------------------------------------------------------------------
A Class                                                3.25%
--------------------------------------------------------------------------------
B Class                                                2.65%
--------------------------------------------------------------------------------
C Class                                                2.65%
--------------------------------------------------------------------------------
INVESTOR CLASS 30-DAY TAX-EQUIVALENT YIELDS(1)
--------------------------------------------------------------------------------
28.54% Tax Bracket                                     5.11%
--------------------------------------------------------------------------------
31.40% Tax Bracket                                     5.32%
--------------------------------------------------------------------------------
36.38% Tax Bracket                                     5.73%
--------------------------------------------------------------------------------
38.28% Tax Bracket                                     5.91%
--------------------------------------------------------------------------------
(1) The tax brackets indicated are combined federal and state tax brackets.
    Actual tax-equivalent yields may be lower, if alternative minimum tax is
    applicable.

*All fund returns and yields referenced in this commentary are for Investor
 Class shares.

                                                                    (continued)




Arizona Municipal Bond - Portfolio Commentary

structure. In particular, we positioned the portfolio to benefit from a
diminishing gap between the yields of short- and long-term municipal bonds.

In order to appropriately position the portfolio to take advantage of this
forecast scenario, we employed a "barbell" bond-maturity structure. We achieved
this structure by overweighting short- and long-term municipal bonds, while
comparatively underweighting intermediate-term bonds. That paid off as the yield
gap between two- and 30-year triple-A-rated municipal bonds dropped from
approximately 161 basis points (1.61%) to only 83 basis points over the 12
months.

However, the municipal yield curve's flattening lost momentum toward the end of
the period. And when factored in with how much yield spreads had already
contracted, as well as with the latest economic, market, and interest rate
forecasts at that time, we decided that the time for a strategy shift was at
hand.

So we pared short- and long-term bond holdings and generally invested the
proceeds in intermediate-term securities, establishing a "curve-neutral"
bond-maturity structure.

Lastly, while conservatively managing the portfolio's interest rate sensitivity,
we increased triple-B municipal bond holdings. These securities generally
afforded higher yields than their like-maturity, higher-rated equivalents,
boosting the portfolio's income stream and providing a cushion against the
backdrop of falling bond prices and rising yields.

ARIZONA MUNICIPAL BOND'S PLACE IN YOUR PORTFOLIO

Arizona Municipal Bond is designed to be a core bond holding and seeks safety of
principal and high current income by investing in debt securities--issued by
cities, counties and municipalities, and U.S. territories--with interest
payments exempt from regular federal and Arizona income taxes.

Because municipal bonds typically don't move in lock-step with equities, Arizona
Municipal Bond also provides diversification benefits. But it's important to
keep in mind that diversification does not insure against losses.

PORTFOLIO COMPOSITION BY CREDIT RATING
--------------------------------------------------------------------------------
                                          % OF FUND             % OF FUND
                                         INVESTMENTS           INVESTMENTS
                                            AS OF                 AS OF
                                           5/31/06              11/30/05
--------------------------------------------------------------------------------
AAA                                         70%                   74%
--------------------------------------------------------------------------------
AA                                           8%                    8%
--------------------------------------------------------------------------------
A                                            9%                   11%
--------------------------------------------------------------------------------
BBB                                         13%                    7%
--------------------------------------------------------------------------------
Ratings provided by independent research companies. These ratings are listed in
Standard & Poor's format even if they were provided by other sources.

TOP FIVE SECTORS AS OF MAY 31, 2006
--------------------------------------------------------------------------------
                                                                % OF FUND
                                                               INVESTMENTS
--------------------------------------------------------------------------------
General Obligation (GO)                                           28%
--------------------------------------------------------------------------------
Certificates of Participation
(COPs)/Leases                                                     16%
--------------------------------------------------------------------------------
Prerefunded                                                       15%
--------------------------------------------------------------------------------
Water and Sewer Revenue                                           14%
--------------------------------------------------------------------------------
Industrial Development Revenue                                    10%
--------------------------------------------------------------------------------






Florida Municipal Bond - Performance

TOTAL RETURNS AS OF MAY 31, 2006
                                   --------------------------------
                                        AVERAGE ANNUAL RETURNS
--------------------------------------------------------------------------------
                                                            SINCE      INCEPTION
                         1 YEAR    5 YEARS    10 YEARS    INCEPTION       DATE
--------------------------------------------------------------------------------
INVESTOR CLASS            1.48%     4.12%       5.10%      5.31%        4/11/94
--------------------------------------------------------------------------------
LEHMAN BROTHERS
MUNICIPAL
5-YEAR GO INDEX           1.24%     4.06%       4.88%      5.10%(1)        --
--------------------------------------------------------------------------------
LIPPER FLORIDA
INTERMEDIATE
MUNICIPAL DEBT FUNDS
AVERAGE RETURNS(2)        0.87%     3.45%       4.14%      4.37%(3)        --
--------------------------------------------------------------------------------
Investor Class's
Lipper Ranking
as of 5/31/06(2)         5 of 18   2 of 15     1 of 11    1 of 10(3)       --
--------------------------------------------------------------------------------
Investor Class's
Lipper Ranking
as of 6/30/06(2)         5 of 18   2 of 15     1 of 12    1 of 10(3)       --
--------------------------------------------------------------------------------
A Class                                                                 2/27/04
  No sales charge*        1.23%      --          --         1.15%
  With sales charge*     -3.33%      --          --        -0.87%
--------------------------------------------------------------------------------
B Class                                                                 2/27/04
  No sales charge*        0.47%      --          --         0.39%
  With sales charge*     -3.53%      --          --        -0.94%
--------------------------------------------------------------------------------
C Class                   0.47%      --          --         0.40%       2/27/04
--------------------------------------------------------------------------------
*Sales charges include initial sales charges and contingent deferred sales
 charges (CDSCs), as applicable. A Class shares have a 4.50% maximum initial
 sales charge for fixed income funds and may be subject to a maximum CDSC of
 1.00%. B Class shares redeemed within six years of purchase are subject to a
 CDSC that declines from 5.00% during the first year after purchase to 0.00% the
 sixth year after purchase. C Class shares redeemed within 12 months of purchase
 are subject to a maximum CDSC of 1.00%. Please see the Share Class Information
 pages for more about the applicable sales charges for each share class. The SEC
 requires that mutual funds provide performance information net of maximum sales
 charges in all cases where charges could be applied.

(1) Since 3/31/94, the date nearest the Investor Class's inception for which
    data are available.

(2) Data provided by Lipper Inc. -- A Reuters Company. (c)2006 Reuters. All
    rights reserved. Any copying, republication or redistribution of Lipper
    content, including by caching, framing or similar means, is expressly
    prohibited without the prior written consent of Lipper. Lipper shall not be
    liable for any errors or delays in the content, or for any actions taken in
    reliance thereon.
    Lipper Fund Performance -- Performance data is total return, and is
    preliminary and subject to revision.
    Lipper Rankings -- Rankings are based only on the universe shown and are
    based on average annual total returns. This listing might not represent the
    complete universe of funds tracked by Lipper.
    The data contained herein has been obtained from company reports, financial
    reporting services, periodicals and other resources believed to be reliable.
    Although carefully verified, data on compilations is not guaranteed by
    Lipper and may be incomplete. No offer or solicitations to buy or sell any
    of the securities herein is being made by Lipper.

(3) Since 4/14/94, the date nearest the Investor Class's inception for which
    data are available.

Data presented reflect past performance. Past performance is no guarantee of
future results. Current performance may be higher or lower than the performance
shown. Investment return and principal value will fluctuate, and redemption
value may be more or less than original cost. To obtain performance data current
to the most recent month end, please call 1-800-345-2021 or visit
americancentury.com. As interest rates rise, bond values will decline.
Investment income may be subject to certain state and local taxes and, depending
on your tax status, the federal alternative minimum tax (AMT). Capital gains are
not exempt from state and federal income tax.

Unless otherwise indicated, performance reflects Investor Class shares;
performance for other share classes will vary due to differences in fee
structure. For information about other share classes available, please consult
the prospectus. Data assumes reinvestment of dividends and capital gains, and
none of the charts reflect the deduction of taxes that a shareholder would pay
on fund distributions or the redemption of fund shares. Returns for the index
are provided for comparison. The fund's total returns include operating expenses
(such as transaction costs and management fees) that reduce returns, while the
total returns of the index do not.

                                                                    (continued)




Florida Municipal Bond - Performance

GROWTH OF $10,000 OVER 10 YEARS


$10,000 investment made May 31, 1996

ONE-YEAR RETURNS OVER 10 YEARS
Periods ended May 31
----------------------------------------------------------------------------------------------------
                     1997    1998    1999    2000     2001    2002    2003     2004    2005    2006
----------------------------------------------------------------------------------------------------
Investor Class       6.63%   8.20%   4.71%   0.49%   10.71%   5.98%   9.90%   -1.30%   4.88%   1.48%
----------------------------------------------------------------------------------------------------
Lehman Brothers
Municipal 5-Year
GO Index             6.08%   6.95%   4.90%   0.65%   10.17%   6.33%   8.72%   -0.22%   4.47%   1.24%
----------------------------------------------------------------------------------------------------

Data presented reflect past performance. Past performance is no guarantee of
future results. Current performance may be higher or lower than the performance
shown. Investment return and principal value will fluctuate, and redemption
value may be more or less than original cost. To obtain performance data current
to the most recent month end, please call 1-800-345-2021 or visit
americancentury.com. As interest rates rise, bond values will decline.
Investment income may be subject to certain state and local taxes and, depending
on your tax status, the federal alternative minimum tax (AMT). Capital gains are
not exempt from state and federal income tax.

Unless otherwise indicated, performance reflects Investor Class shares;
performance for other share classes will vary due to differences in fee
structure. For information about other share classes available, please consult
the prospectus. Data assumes reinvestment of dividends and capital gains, and
none of the charts reflect the deduction of taxes that a shareholder would pay
on fund distributions or the redemption of fund shares. Returns for the index
are provided for comparison. The fund's total returns include operating expenses
(such as transaction costs and management fees) that reduce returns, while the
total returns of the index do not.





Florida Municipal Bond - Portfolio Commentary

PORTFOLIO TEAM LEADER: ALAN KRUSS

MR. KRUSS, VICE PRESIDENT AND PORTFOLIO MANAGER, JOINED AMERICAN CENTURY
INVESTMENTS IN 1997 AND BECAME A PORTFOLIO MANAGER IN 2001. IN APRIL 2006, HE
TOOK OVER FLORIDA MUNICIPAL BOND'S TEAM-LEADER ROLE FROM KENNETH SALINGER, WHO
LEFT THE COMPANY TO PURSUE OTHER INTERESTS.

PERFORMANCE SUMMARY

Florida Municipal Bond returned 1.48%* for the 12 months ended May 31, 2006,
solidly outpacing the 0.87% average total return of Lipper's Florida
Intermediate Municipal Debt Funds. In addition, Florida Municipal Bond
outperformed the Lehman Brothers Municipal 5-Year GO Index, which returned
1.24%. And it's worth keeping in mind that fees do not reduce the return of the
Lehman index.

The fund's longer-term performance was also noteworthy: Florida Municipal Bond
ranked among the top 15% of its Lipper peer group for the trailing five and 10
years while returning more than Lehman's Municipal 5-Year GO Index.

Although favorable by comparison, the fund's absolute 12-month return was
modest, reflecting myriad obstacles faced by municipal bonds and the broader
bond market that are detailed in the Market Perspective on page 2. The
commentary below discusses the strategies that we employed for Florida Municipal
Bond in that environment.

YIELD SUMMARY

Seeking high current income exempt from federal income tax as well as the
Florida intangible personal property tax is one of Florida Municipal Bond's
primary investment objectives. Along those lines, the fund's 30-day SEC yield
was 3.63% as of May 31, 2006. By comparison, Florida Municipal Bond's Lipper
group average 30-day SEC yield was only 3.17% at the end of the 12 months.

A higher yield can boost returns and pave the way for better performance, all
else being equal.

PORTFOLIO STRATEGY & OUTLOOK

One of the main strategies that we emphasized within the framework of our
repeatable, multi-layered investment approach involved actively managing Florida
Municipal Bond's bond-maturity structure. In particular, we positioned the
portfolio to benefit from a declining gap between the yields of short- and
long-term municipal bonds.

PORTFOLIO AT A GLANCE
--------------------------------------------------------------------------------
                                            AS OF                 AS OF
                                           5/31/06              11/30/05
--------------------------------------------------------------------------------
Weighted Average
Maturity                                   7.7 yrs               8.3 yrs
--------------------------------------------------------------------------------
Average Duration
(Modified)                                 4.5 yrs               4.3 yrs
--------------------------------------------------------------------------------

YIELDS AS OF MAY 31, 2006
--------------------------------------------------------------------------------
30-DAY SEC YIELD
--------------------------------------------------------------------------------
Investor Class                                         3.63%
--------------------------------------------------------------------------------
A Class                                                3.22%
--------------------------------------------------------------------------------
B Class                                                2.64%
--------------------------------------------------------------------------------
C Class                                                2.62%
--------------------------------------------------------------------------------
INVESTOR CLASS 30-DAY TAX-EQUIVALENT YIELDS(1)
--------------------------------------------------------------------------------
25.00% Tax Bracket                                     4.84%
--------------------------------------------------------------------------------
28.00% Tax Bracket                                     5.04%
--------------------------------------------------------------------------------
33.00% Tax Bracket                                     5.42%
--------------------------------------------------------------------------------
35.00% Tax Bracket                                     5.58%
--------------------------------------------------------------------------------
(1) The tax brackets indicated are for federal taxes only. Actual tax-equivalent
    yields may be lower, if alternative minimum tax is applicable.

*All fund returns and yields referenced in this commentary are for Investor
 Class shares.

                                                                    (continued)




Florida Municipal Bond - Portfolio Commentary

That meant employing a "barbell" structure, which tends to outperform in such a
scenario. We achieved this structure by overweighting short- and long-term
municipal bonds, while comparatively underweighting intermediate-term bonds.
That paid off as the yield gap between two- and 30-year triple-A-rated municipal
bonds dropped almost in half over the 12 months.

Toward the end of the period, however, the municipal yield curve's flattening
appeared to be winding down. That notion was supported by economic, market, and
interest rate forecasts at that time as well as by how much yield spreads had
already contracted. So we pared short- and long-term bond holdings and generally
invested the proceeds in intermediate-term securities.

We also increased Florida Municipal Bond's triple-B municipal bond holdings. The
triple-B bonds generally afforded higher yields than their like-maturity,
higher-rated counterparts, boosting the portfolio's income stream and providing
a cushion against the backdrop of rising bond yields.

By the end of the period, we felt that the yield advantage of triple-B bonds
over triple-A equivalents had contracted enough to merit holding onto our
triple-B positions, but not actively expanding upon them.

FLORIDA MUNICIPAL BOND'S PLACE IN YOUR PORTFOLIO

Florida Municipal Bond is designed to be a core bond holding and seeks safety of
principal and high current income by investing in debt securities--issued by
cities, counties and municipalities, and U.S. territories--with interest
payments exempt from federal income tax as well as the Florida intangible
personal property tax.

Because municipal bonds typically don't move in lock-step with equities, Florida
Municipal Bond also provides diversification benefits. But it's important to
keep in mind that diversification does not insure against losses.

PORTFOLIO COMPOSITION BY CREDIT RATING
--------------------------------------------------------------------------------
                                          % OF FUND             % OF FUND
                                         INVESTMENTS           INVESTMENTS
                                            AS OF                 AS OF
                                           5/31/06              11/30/05
--------------------------------------------------------------------------------
AAA                                         78%                   84%
--------------------------------------------------------------------------------
AA                                           1%                    1%
--------------------------------------------------------------------------------
A                                            2%                    1%
--------------------------------------------------------------------------------
BBB                                         19%                   14%
--------------------------------------------------------------------------------
Ratings provided by independent research companies. These ratings are listed in
Standard & Poor's format even if they were provided by other sources.

TOP FIVE SECTORS AS OF MAY 31, 2006
--------------------------------------------------------------------------------
                                                                % OF FUND
                                                               INVESTMENTS
--------------------------------------------------------------------------------
Water and Sewer Revenue                                           16%
--------------------------------------------------------------------------------
Prerefunded                                                       16%
--------------------------------------------------------------------------------
Certificates of Participation
(COPs)/Leases                                                      9%
--------------------------------------------------------------------------------
Transportation Revenue                                             9%
--------------------------------------------------------------------------------
General Obligation (GO)                                            8%
--------------------------------------------------------------------------------






Tax-Free Bond - Performance

TOTAL RETURNS AS OF MAY 31, 2006
                                  ----------------------------------
                                        AVERAGE ANNUAL RETURNS
--------------------------------------------------------------------------------
                                                           SINCE      INCEPTION
                        1 YEAR     5 YEARS    10 YEARS   INCEPTION       DATE
--------------------------------------------------------------------------------
INVESTOR CLASS          1.87%       4.34%       5.05%      5.42%        3/2/87
--------------------------------------------------------------------------------
LEHMAN BROTHERS
MUNICIPAL
5-YEAR GO INDEX         1.24%       4.06%       4.88%      5.56%(1)       --
--------------------------------------------------------------------------------
AVERAGE RETURN
OF LIPPER'S
INTERMEDIATE
MUNICIPAL
DEBT FUNDS(2)           1.03%       3.94%       4.71%      5.55%(3)       --
--------------------------------------------------------------------------------
Investor Class's
Lipper Ranking
as of 5/31/06(2)      17 of 150   30 of 104   14 of 70    8 of 13(3)      --
--------------------------------------------------------------------------------
Investor Class's
Lipper Ranking
as of 6/30/06(2)      18 of 149   31 of 106   15 of 70    9 of 13(3)      --
--------------------------------------------------------------------------------
Institutional Class     2.07%         --          --       3.17%        4/15/03
--------------------------------------------------------------------------------
Advisor Class             --          --          --       1.51%(4)     7/29/05
--------------------------------------------------------------------------------

(1) Since 2/28/87, the date nearest the Investor Class's inception for which
    data are available.

(2) Data provided by Lipper Inc. - A Reuters Company. (c) 2006 Reuters. All
    rights reserved. Any copying, republication or redistribution of Lipper
    content, including by caching, framing or similar means, is expressly
    prohibited without the prior written consent of Lipper. Lipper shall not be
    liable for any errors or delays in the content, or for any actions taken in
    reliance thereon.

    Lipper Fund Performance -- Performance data is total return, and is
    preliminary and subject to revision.

    Lipper Rankings -- Rankings are based only on the universe shown and are
    based on average annual total returns. This listing might not represent the
    complete universe of funds tracked by Lipper.

    The data contained herein has been obtained from company reports, financial
    reporting services, periodicals and other resources believed to be
    reliable. Although carefully verified, data on compilations is not
    guaranteed by Lipper and may be incomplete. No offer or solicitations to
    buy or sell any of the securities herein is being made by Lipper.

(3) Since 3/31/87, the date nearest the Investor Class's inception for which
    data are available.

(4) Total returns for periods less than one year are not annualized.

Data presented reflect past performance. Past performance is no guarantee of
future results. Current performance may be higher or lower than the performance
shown. Investment return and principal value will fluctuate, and redemption
value may be more or less than original cost. To obtain performance data current
to the most recent month end, please call 1-800-345-2021 or visit
americancentury.com. As interest rates rise, bond values will decline.
Investment income may be subject to certain state and local taxes and, depending
on your tax status, the federal alternative minimum tax (AMT). Capital gains are
not exempt from state and federal income tax.

Unless otherwise indicated, performance reflects Investor Class shares;
performance for other share classes will vary due to differences in fee
structure. For information about other share classes available, please consult
the prospectus. Data assumes reinvestment of dividends and capital gains, and
none of the charts reflect the deduction of taxes that a shareholder would pay
on fund distributions or the redemption of fund shares. Returns for the index
are provided for comparison. The fund's total returns include operating expenses
(such as transaction costs and management fees) that reduce returns, while the
total returns of the index do not.

                                                                    (continued)




Tax-Free Bond - Performance

GROWTH OF $10,000 OVER 10 YEARS

$10,000 investment made May 31, 1996

ONE-YEAR RETURNS OVER 10 YEARS

Periods ended May 31
--------------------------------------------------------------------------------------------------
                    1997    1998    1999    2000    2001    2002    2003     2004    2005    2006
--------------------------------------------------------------------------------------------------
Investor Class     6.29%   7.60%   4.07%   0.44%   10.77%   6.45%   9.31%   -0.79%   5.16%   1.87%
--------------------------------------------------------------------------------------------------
Lehman Brothers
Municipal 5-Year
GO Index           6.08%   6.95%   4.90%   0.65%   10.17%   6.33%   8.72%   -0.22%   4.47%   1.24%
--------------------------------------------------------------------------------------------------

Data presented reflect past performance. Past performance is no guarantee of
future results. Current performance may be higher or lower than the performance
shown. Investment return and principal value will fluctuate, and redemption
value may be more or less than original cost. To obtain performance data current
to the most recent month end, please call 1-800-345-2021 or visit
americancentury.com. As interest rates rise, bond values will decline.
Investment income may be subject to certain state and local taxes and, depending
on your tax status, the federal alternative minimum tax (AMT). Capital gains are
not exempt from state and federal income tax.

Unless otherwise indicated, performance reflects Investor Class shares;
performance for other share classes will vary due to differences in fee
structure. For information about other share classes available, please consult
the prospectus. Data assumes reinvestment of dividends and capital gains, and
none of the charts reflect the deduction of taxes that a shareholder would pay
on fund distributions or the redemption of fund shares. Returns for the index
are provided for comparison. The fund's total returns include operating expenses
(such as transaction costs and management fees) that reduce returns, while the
total returns of the index do not.




Tax-Free Bond - Portfolio Commentary

PORTFOLIO TEAM LEADER: ROBERT J. MILLER

MR. MILLER, VICE PRESIDENT AND PORTFOLIO MANAGER, JOINED AMERICAN CENTURY
INVESTMENTS IN JUNE 1998 AND BECAME A PORTFOLIO MANAGER IN FEBRUARY 2001. IN
APRIL 2006 HE TOOK OVER THE TEAM-LEADER ROLE FOR TAX-FREE BOND FROM KENNETH
SALINGER, WHO LEFT THE COMPANY TO PURSUE OTHER INTERESTS.

PERFORMANCE SUMMARY

Tax-Free Bond returned 1.87%* for the 12 months ended May 31, 2006, solidly
outpacing the 1.03% average return of Lipper's Intermediate Municipal Debt
Funds. The fund also outperformed the Lehman Brothers Municipal 5-Year GO Index,
which returned 1.24%. Tax-Free Bond's long-term performance was also noteworthy:
the fund ranked among the top 30% of its Lipper peer group for the trailing five
and 10 years while returning more than Lehman's Municipal 5-Year GO Index.

Although favorable by comparison, Tax-Free Bond's 12-month absolute return was
modest, reflecting a myriad of obstacles faced by municipal bonds and the
broader bond market that are detailed in the Market Perspective on page 2. The
commentary below discusses the strategies that we employed for Tax-Free Bond in
that environment.

YIELD SUMMARY

One of Tax-Free Bond's key investment objectives is to seek high current income
exempt from federal income tax. Along those lines, the fund's 30-day SEC yield
was 3.62% as of May 31, 2006, which translated into the attractive
tax-equivalent yields shown in the table at bottom right on this page. By
comparison, Tax-Free Bond's Lipper group average 30-day SEC yield was 3.38%.

All else being equal, a higher yield can boost returns and performance. And it's
worth noting that Tax-Free Bond achieved that yield advantage while steering
clear of bonds subject to the Alternative Minimum Tax.

PORTFOLIO STRATEGY & OUTLOOK

The fundamentals of our repeatable, multi-layered investment approach remained
central to our efforts, and one of our key strategies involved actively managing
Tax-Free Bond's bond-maturity structure. In particular, we positioned the
portfolio to benefit from a diminishing gap between the yields of short- and
long-term municipal bonds.

That meant employing a "barbell" bond maturity structure which tends to
outperform in such a scenario. We achieved the barbell by overweighting short-
and long-term municipal bonds, while comparatively underweighting
intermediate-term securities. That structure paid off as the yield gap between
two- and 30-year triple-A rated municipal bonds dropped from approximately 161
basis points (1.61%) to only 83 basis points over the 12 months.

YIELDS AS OF MAY 31, 2006
--------------------------------------------------------------------------------
30-DAY SEC YIELD
--------------------------------------------------------------------------------
Investor Class                                    3.62%
--------------------------------------------------------------------------------
Institutional Class                               3.82%
--------------------------------------------------------------------------------
Advisor Class                                     3.38%
--------------------------------------------------------------------------------
INVESTOR CLASS 30-DAY TAX-EQUIVALENT YIELDS(1)
--------------------------------------------------------------------------------
25.0% Tax Bracket                                 4.83%
--------------------------------------------------------------------------------
28.0% Tax Bracket                                 5.03%
--------------------------------------------------------------------------------
33.0% Tax Bracket                                 5.40%
--------------------------------------------------------------------------------
35.0% Tax Bracket                                 5.57%
--------------------------------------------------------------------------------

(1) The tax brackets indicated are for federal taxes only. Actual
    tax-equivalent yields may be lower, if alternative minimum tax is
    applicable.

*All fund returns and yields referenced in this commentary are for Investor
 Class shares.

                                                                     (continued)



Tax-Free Bond - Portfolio Commentary

Toward the end of the period, however, the municipal yield curve's flattening
appeared to be largely over, a notion supported by how much yield spreads had
already contracted, as well as by economic, market, and interest rate forecasts
at that time.

So we pared back short- and long-term bond holdings and generally invested the
proceeds in intermediate-term securities, establishing a "curve-neutral"
emphasis.

Lastly, we conservatively managed the portfolio's interest rate sensitivity and
closely monitored supply and demand developments within and between the various
states. We also increased the portfolio's triple-B municipal bond holdings.
These securities, which reside on the lowest credit rung of the investment-grade
ladder, generally afforded higher yields than their like-maturity, higher-rated
equivalents. In addition to boosting the portfolio's income stream, that meant a
greater cushion against the backdrop of falling bond prices and rising yields.

TAX-FREE BOND'S PLACE IN YOUR PORTFOLIO

Tax-Free Bond is designed to be a core bond holding and seeks safety of
principal and high current income by investing in debt securities issued by
cities, counties and municipalities, and U.S. territories.

Because municipal bonds typically don't move in lock-step with equities under
various economic and market scenarios, Tax-Free Bond also potentially offers
diversification benefits for investors. But it's important to keep in mind that
even diversification does not insure against losses.

PORTFOLIO COMPOSITION BY CREDIT RATING
--------------------------------------------------------------------------------
                                          % OF FUND             % OF FUND
                                         INVESTMENTS           INVESTMENTS
                                            AS OF                 AS OF
                                           5/31/06              11/30/05
--------------------------------------------------------------------------------
AAA                                          73%                   73%
--------------------------------------------------------------------------------
AA                                            3%                    5%
--------------------------------------------------------------------------------
A                                             5%                    8%
--------------------------------------------------------------------------------
BBB                                          19%                   14%
--------------------------------------------------------------------------------

Ratings provided by independent research companies. These ratings are listed in
Standard & Poor's format even if they were provided by other sources.

TOP FIVE STATES
AS OF MAY 31, 2006
--------------------------------------------------------------------------------
                                          % OF NET              % OF NET
                                           ASSETS                ASSETS
                                            AS OF                 AS OF
                                           5/31/06              11/30/05
--------------------------------------------------------------------------------
Texas                                       10.8%                 13.8%
--------------------------------------------------------------------------------
New Jersey                                  10.6%                  4.8%
--------------------------------------------------------------------------------
Arizona                                      8.8%                  7.7%
--------------------------------------------------------------------------------
Puerto Rico                                  7.9%                  7.9%
--------------------------------------------------------------------------------
Washington                                   7.0%                  6.7%
--------------------------------------------------------------------------------






DIVERSIFIED BOND FUND
HIGH-YIELD FUND


Market Perspective


BY DAVID MACEWEN, CHIEF INVESTMENT OFFICER, FIXED INCOME

RATE HIKES, ENERGY PRICES, & HURRICANE DAMAGE TEMPERED ECONOMIC GROWTH

The resilient U.S. economy grew at a moderate rate during the 12 months ended
March 31, 2006, but showed signs of slowing in the months ahead. Real annualized
GDP growth averaged approximately 3.5% for the 12 months, despite faltering to a
1.7% rate in the fourth quarter of 2005 after one of the worst hurricane seasons
in history.

Besides severe damage to the Gulf Coast from Hurricanes Katrina and Rita, the
economy withstood eight additional interest rate hikes by the Federal Reserve
(on top of seven hikes in the prior 10 months), a flattened Treasury yield
curve, and soaring energy prices.

Relatively stable "core" inflation (without energy and food prices), an
improving labor market, and the fact that long-term interest rates stayed
relatively low for much of the period aided economic growth. But record-high
energy prices, a belated upturn in long-term interest rates, and indications
that the housing boom might finally be over raised concerns about consumer
spending and economic growth in the second half of 2006.

GOOD TIMES FOR HIGH-YIELD & MONEY MARKET SECURITIES

High-yield and money market securities were fixed-income market leaders during
this period of moderate economic growth and rising interest rates. The Lehman
Brothers Corporate High-Yield Index significantly outperformed the other bond
market indices in the table below. The table also shows that a key money market
benchmark, the three-month Treasury bill, outpaced most other market indices as
the Federal Reserve raised rates.

In general, shorter-maturity securities suffered less price depreciation than
their more rate change-sensitive, longer-maturity counterparts. Relatively
higher-yielding securities -- including mortgage-backed and agency securities
-- outperformed because their yields cushioned against price declines. The
investment-grade corporate sector was a notable exception. Poor auto industry
performance in 2005, before General Motors and Ford were downgraded to
high-yield, hurt returns in this sector.

U.S. FIXED-INCOME TOTAL RETURNS

For the 12 months ended March 31, 2006
--------------------------------------------------------------------------------
TREASURY SECURITIES
--------------------------------------------------------------------------------
3-month bill                                                  3.55%
--------------------------------------------------------------------------------
2-year note                                                   2.07%
--------------------------------------------------------------------------------
5-year note                                                   0.45%
--------------------------------------------------------------------------------
10-year note                                                  0.40%
--------------------------------------------------------------------------------
30-year bond                                                  0.37%
--------------------------------------------------------------------------------
LEHMAN BROTHERS U.S. BOND MARKET INDICES
--------------------------------------------------------------------------------
Corporate High-Yield                                          7.43%
--------------------------------------------------------------------------------
Fixed-Rate Mortgage-Backed                                    2.67%
--------------------------------------------------------------------------------
Agency                                                        2.58%
--------------------------------------------------------------------------------
Aggregate (multi-sector)                                      2.26%
--------------------------------------------------------------------------------
Treasury                                                      1.95%
--------------------------------------------------------------------------------
Corporate Investment-Grade                                    1.63%
--------------------------------------------------------------------------------
Source: Lehman Brothers Inc.





Diversified Bond - Performance

TOTAL RETURNS AS OF MARCH 31, 2006
                                --------------------------------
                                     AVERAGE ANNUAL RETURNS
--------------------------------------------------------------------------------
                                                        SINCE      INCEPTION
                        1 YEAR   5 YEARS   10 YEARS   INCEPTION      DATE
--------------------------------------------------------------------------------
INVESTOR CLASS           1.97%     --         --        3.73%      12/3/01
--------------------------------------------------------------------------------
LEHMAN BROTHERS U.S.
AGGREGATE INDEX(1)       2.26%    5.11%      6.29%      4.52%(2)      --
--------------------------------------------------------------------------------
Institutional Class      2.17%    4.56%      5.72%      5.68%      4/1/93
--------------------------------------------------------------------------------
Advisor Class            1.72%     --         --        3.47%      12/3/01
--------------------------------------------------------------------------------
A Class                                                            1/31/03
  No sales charge*       1.72%     --         --        2.52%
  With sales charge*    -2.90%     --         --        1.04%
--------------------------------------------------------------------------------
B Class                                                            1/31/03
  No sales charge*       0.96%     --         --        1.78%(3)
  With sales charge*    -3.04%     --         --        0.85%(3)
--------------------------------------------------------------------------------
C Class                  0.96%     --         --        1.84%(3)   1/31/03
--------------------------------------------------------------------------------
R Class                   --       --         --       -0.33%(4)   7/29/05
--------------------------------------------------------------------------------

*Sales charges include initial sales charges and contingent deferred sales
 charges (CDSCs), as applicable. A Class shares have a 4.50% maximum initial
 sales charge for fixed income funds and may be subject to a maximum CDSC of
 1.00%. B Class shares redeemed within six years of purchase are subject to a
 CDSC that declines from 5.00% during the first year after purchase to 0.00% the
 sixth year after purchase. C Class shares redeemed within 12 months of purchase
 are subject to a maximum CDSC of 1.00%. Please see the Share Class Information
 pages for more about the applicable sales charges for each share class. The SEC
 requires that mutual funds provide performance information net of maximum sales
 charges in all cases where charges could be applied.

Diversified Bond acquired all of the net assets of the American Century
Intermediate-Term Bond Fund, the American Century Bond Fund, and the American
Century Premium Bond Fund on December 3, 2001, pursuant to a plan of
reorganization approved by the acquired funds' shareholders on November 16,
2001. Financial information prior to December 3, 2001 is that of American
Century Premium Bond Fund and is used in calculating the performance of
Diversified Bond.

(1) Data provided by Lipper Inc. -- A Reuters Company. (c) 2006 Reuters. All
    rights reserved. Any copying, republication or redistribution of Lipper
    content, including by caching, framing or similar means, is expressly
    prohibited without the prior written consent of Lipper. Lipper shall not be
    liable for any errors or delays in the content, or for any actions taken in
    reliance thereon.

    The data contained herein has been obtained from company reports, financial
    reporting services, periodicals and other resources believed to be reliable.
    Although carefully verified, data on compilations is not guaranteed by Lipper
    and may be incomplete. No offer or solicitations to buy or sell any of the
    securities herein is being made by Lipper.

(2) Since 11/30/01, the date nearest the Investor Class's inception for which
    data are available.

(3) Class returns would have been lower if American Century had not voluntarily
    waived a portion of its service and distribution fees.

(4) Total returns for periods less than one year are not annualized.

Data presented reflect past performance. Past performance is no guarantee of
future results. Current performance may be higher or lower than the performance
shown. Investment return and principal value will fluctuate, and redemption
value may be more or less than original cost. To obtain performance data current
to the most recent month end, please call 1-800-345-2021 or visit
americancentury.com. As interest rates rise, bond values will decline.

Unless otherwise indicated, performance reflects Investor Class shares;
performance for other share classes will vary due to differences in fee
structure. For information about other share classes available, please consult
the prospectus. Data assumes reinvestment of dividends and capital gains, and
none of the charts reflect the deduction of taxes that a shareholder would pay
on fund distributions or the redemption of fund shares. Returns for the index
are provided for comparison. The fund's total returns include operating expenses
(such as transaction costs and management fees) that reduce returns, while the
total returns of the index do not.

(continued)




Diversified Bond - Performance

GROWTH OF $10,000 OVER LIFE OF CLASS

$10,000 investment made December 3, 2001

ONE-YEAR RETURNS OVER LIFE OF CLASS
Periods ended March 31
--------------------------------------------------------------------------------
                           2002*     2003       2004       2005       2006
--------------------------------------------------------------------------------
Investor Class            -0.99%     9.93%      4.92%      0.63%      1.97%
--------------------------------------------------------------------------------
Lehman Brothers
U.S. Aggregate Index      -0.54%    11.69%      5.40%      1.15%      2.26%
--------------------------------------------------------------------------------

* From 12/3/01, the Investor Class's inception date. Index data from 11/30/01,
  the date nearest the Investor Class's inception for which data are available.
  Not annualized.

Data presented reflect past performance. Past performance is no guarantee of
future results. Current performance may be higher or lower than the performance
shown. Investment return and principal value will fluctuate, and redemption
value may be more or less than original cost. To obtain performance data current
to the most recent month end, please call 1-800-345-2021 or visit
americancentury.com. As interest rates rise, bond values will decline.

Unless otherwise indicated, performance reflects Investor Class shares;
performance for other share classes will vary due to differences in fee
structure. For information about other share classes available, please consult
the prospectus. Data assumes reinvestment of dividends and capital gains, and
none of the charts reflect the deduction of taxes that a shareholder would pay
on fund distributions or the redemption of fund shares. Returns for the index
are provided for comparison. The fund's total returns include operating expenses
(such as transaction costs and management fees) that reduce returns, while the
total returns of the index do not.




Diversified Bond - Portfolio Commentary

PORTFOLIO MANAGERS: DAVID MACEWEN, ROBERT GAHAGAN, JAMES KEEGAN, JEFFREY
HOUSTON, ALEJANDRO AGUILAR, BRIAN HOWELL, JOHN WALSH AND DAN SHIFFMAN

PERFORMANCE SUMMARY

Diversified Bond returned 1.97%* for the 12 months ended March 31, 2006. A
comparative broad bond market index, the Lehman Brothers U.S. Aggregate Index
(Lehman Aggregate) returned 2.26%.

The performance of the taxable, investment-grade U.S. bond market's largest
sectors -- including mortgage-backed, Treasury, corporate, and agency securities
-- primarily determined the fund's and the index's returns (see the returns
table on page 2). As discussed on page 2, conditions were challenging for these
sectors-- price depreciation was prevalent as interest rates and yields rose,
but the losses were generally small enough to be offset by the yield component,
resulting in modest positive total returns.

A TALE OF ALTERNATING MARKETS

The modest returns don't tell the whole story, however. The 12-month period
alternated between up and down movements in bond prices each quarter. It started
with a strong bond rally in the second quarter of 2005, followed by a reversal
in the third quarter, a modest recovery in the fourth quarter of 2005, and
another selloff in the first quarter of 2006.

Changing investor perceptions of the economy, inflation, and Federal Reserve
(Fed) policy helped cause this up-and-down pattern. Soaring energy prices and
rising short-term interest rates fostered doubts about financial health and
economic growth, triggering the bond rally at the start of the 12-month period.
But inflation fears surfaced in the wake of Hurricanes Katrina and Rita, causing
a bond market reversal in the third quarter of 2005.

Fourth quarter events calmed the inflation worries but brought instead an
inverted Treasury yield curve (the two-year Treasury yield rose above its
10-year counterpart for the first time since 2000), which has often been a
harbinger of economic downturns. This generated speculation that the Fed might
end its latest series of rate hikes in early 2006. Instead, the U.S. economy
rebounded in the first quarter of 2006, forcing the Fed to continue raising
rates.

WHAT DIFFERENTIATED FUND & INDEX PERFORMANCE

We positioned Diversified Bond defensively in anticipation of higher interest
rates and bond price depreciation. As a result, the fund performed relatively
better compared with the Lehman

PORTFOLIO AT A GLANCE
--------------------------------------------------------------------------------
                                               AS OF               AS OF
                                               3/31/06            3/31/05
--------------------------------------------------------------------------------
Weighted Average Maturity                     6.6 years          5.9 years
--------------------------------------------------------------------------------
Average Duration (effective)                  4.7 years          4.4 years
--------------------------------------------------------------------------------
*All fund returns referenced in this commentary are for Investor Class shares.

YIELDS AS OF MARCH 31, 2006
--------------------------------------------------------------------------------
30-DAY SEC YIELD
--------------------------------------------------------------------------------
Investor Class                                                4.64%
--------------------------------------------------------------------------------
Institutional Class                                           4.84%
--------------------------------------------------------------------------------
Advisor Class                                                 4.38%
--------------------------------------------------------------------------------
A Class                                                       4.19%
--------------------------------------------------------------------------------
B Class                                                       3.63%
--------------------------------------------------------------------------------
C Class                                                       3.62%
--------------------------------------------------------------------------------
R Class                                                       4.14%
--------------------------------------------------------------------------------

(continued)




Diversified Bond - Portfolio Commentary

Aggregate when the bond market weakened than it did when the market rallied. The
periods when defensive positioning enhanced performance essentially offset those
when it detracted. Fund expenses ultimately made the biggest difference between
the fund's and the Lehman Aggregate's 12-month returns; index returns are not
reduced by expenses.

PORTFOLIO STRATEGY & OUTLOOK

We remained focused on our investment process, which uses a consistent,
repeatable framework that seeks to identify the best relative value among bond
sectors. We actively apply a multi-step process, which includes yield
curve/duration positioning, security selection, portfolio construction, and
attribution analysis.

Positioning the portfolio defensively compared with the Lehman Aggregate meant
keeping duration relatively short, underweighting Treasury securities, and
overweighting agency securities and higher-yielding securitized sectors,
particularly collateralized mortgage obligations, commercial mortgage-backed
securities, and asset-backed securities. It also meant favoring mortgage-backed
over corporate securities because of concerns about rising credit risk as
interest rates climb.

As you can see from the returns table on page 2, our short duration strategy and
sector allocations were favorable. The portfolio remained in a defensive
position as of March 31, 2006, given our expectations at the time that interest
rates could rise further.

HOW THE FUND FITS IN A DIVERSIFIED INVESTMENT STRATEGY

Diversified Bond is designed to serve as a core portfolio holding. Investors can
benefit from exposure to a broad spectrum of bond sectors and from the fund's
historically negative correlation with the major U.S. stock indices. In
addition, the fund has historically delivered steady monthly income. Dividend
income becomes even more important when there's potential for rising rates -- it
can help cushion the impact of price declines.

TYPES OF INVESTMENTS IN PORTFOLIO
--------------------------------------------------------------------------------
                                       % OF FUND             % OF FUND
                                      INVESTMENTS           INVESTMENTS
                                         AS OF                 AS OF
                                        3/31/06               9/30/05
--------------------------------------------------------------------------------
Mortgage-Backed
Securities                               22.7%                 26.0%
--------------------------------------------------------------------------------
U.S. Government
Agency Securities                        17.8%                 14.2%
--------------------------------------------------------------------------------
Corporate Bonds                          15.8%                 18.4%
--------------------------------------------------------------------------------
CMOs                                     14.6%                 12.2%
--------------------------------------------------------------------------------
U.S. Treasury Securities                  8.2%                 10.3%
--------------------------------------------------------------------------------
Asset-Backed Securities                   7.8%                  9.6%
--------------------------------------------------------------------------------
Sovereign Governments
& Agencies                                0.5%                  0.8%
--------------------------------------------------------------------------------
Municipal Securities                      0.2%                  1.1%
--------------------------------------------------------------------------------
Temporary Cash
Investments                               3.6%                  2.1%
--------------------------------------------------------------------------------
Collateral Received
for Securities Lending                    8.8%                  5.3%
--------------------------------------------------------------------------------

PORTFOLIO COMPOSITION BY CREDIT RATING
--------------------------------------------------------------------------------
                                       % OF FUND             % OF FUND
                                      INVESTMENTS           INVESTMENTS
                                         AS OF                 AS OF
                                        3/31/06               9/30/05
--------------------------------------------------------------------------------
AAA                                        80%                   76%
--------------------------------------------------------------------------------
AA                                          3%                    4%
--------------------------------------------------------------------------------
A                                           9%                   10%
--------------------------------------------------------------------------------
BBB                                         7%                    8%
--------------------------------------------------------------------------------
BB                                          1%                    2%
--------------------------------------------------------------------------------






High-Yield - Performance

TOTAL RETURNS AS OF MARCH 31, 2006
                                                  ------------------------
                                                   AVERAGE ANNUAL RETURNS
-------------------------------------------------------------------------------------------
                                                                  SINCE       INCEPTION
                                       1 YEAR       5 YEARS     INCEPTION        DATE
-------------------------------------------------------------------------------------------
INVESTOR CLASS                         6.29%(1)     6.39%(1)     3.28%(1)      9/30/97
-------------------------------------------------------------------------------------------
CSFB HIGH YIELD INDEX II               6.61%        9.45%        6.08%          --
-------------------------------------------------------------------------------------------
LIPPER HIGH CURRENT YIELD
FUNDS AVERAGE RETURN(2)                6.77%        6.92%        3.85%          --
-------------------------------------------------------------------------------------------
Investor Class's Lipper Ranking(2)   260 of 435   195 of 310   118 of 164        --
-------------------------------------------------------------------------------------------
Institutional Class                    6.50%(1)       --         6.68%(1)       8/2/04
-------------------------------------------------------------------------------------------
Advisor Class                          6.02%(1)       --         8.02%(1)       3/8/02
-------------------------------------------------------------------------------------------
A Class                                                                        1/31/03
  No sales charge*                     6.02%(1)       --         9.42%(1)
  With sales charge*                   1.29%(1)       --         7.85%(1)
-------------------------------------------------------------------------------------------
B Class                                                                         1/31/03
  No sales charge*                     5.23%(1)       --         8.62%(1)
  With sales charge*                   1.23%(1)       --         7.82%(1)
-------------------------------------------------------------------------------------------
C Class                                5.23%(1)       --         6.99%(1)      12/10/01
-------------------------------------------------------------------------------------------
R Class                                  --           --         2.23%(1)(3)    7/29/05
-------------------------------------------------------------------------------------------

*Sales charges include initial sales charges and contingent deferred sales
 charges (CDSCs), as applicable. A Class shares have a 4.50% maximum initial
 sales charge for fixed income funds and may be subject to a maximum CDSC of
 1.00%. B Class shares redeemed within six years of purchase are subject to a
 CDSC that declines from 5.00% during the first year after purchase to 0.00% the
 sixth year after purchase. C Class shares redeemed within 12 months of purchase
 are subject to a maximum CDSC of 1.00%. Please see the Share Class Information
 pages for more about the applicable sales charges for each share class. The SEC
 requires that mutual funds provide performance information net of maximum sales
 charges in all cases where charges could be applied.

(1) Class returns would have been lower if American Century had not voluntarily
    waived a portion of its management fees and reimbursed a portion of its
    service and distribution fees, as applicable.

(2) Data provided by Lipper Inc. -- A Reuters Company. (c) 2006 Reuters. All
    rights reserved. Any copying, republication or redistribution of Lipper
    content, including by caching, framing or similar means, is expressly
    prohibited without the prior written consent of Lipper. Lipper shall not be
    liable for any errors or delays in the content, or for any actions taken in
    reliance thereon.

    Lipper Fund Performance -- Performance data is total return, and is
    preliminary and subject to revision.

    Lipper Rankings -- Rankings are based only on the universe shown and are
    based on average annual total returns. This listing might not represent the
    complete universe of funds tracked by Lipper.

    The data contained herein has been obtained from company reports, financial
    reporting services, periodicals and other resources believed to be reliable.
    Although carefully verified, data on compilations is not guaranteed by Lipper
    and may be incomplete. No offer or solicitations to buy or sell any of the
    securities herein is being made by Lipper.

(3) Total returns for periods less than one year are not annualized.

Data presented reflect past performance. Past performance is no guarantee of
future results. Current performance may be higher or lower than the performance
shown. Investment return and principal value will fluctuate, and redemption
value may be more or less than original cost. To obtain performance data current
to the most recent month end, please call 1-800-345-2021 or visit
americancentury.com. As interest rates rise, bond values will decline. In
addition, the lower-rated securities in which the fund invests are subject to
greater credit risk, default risk and liquidity risk.

Unless otherwise indicated, performance reflects Investor Class shares;
performance for other share classes will vary due to differences in fee
structure. For information about other share classes available, please consult
the prospectus. Data assumes reinvestment of dividends and capital gains, and
none of the charts reflect the deduction of taxes that a shareholder would pay
on fund distributions or the redemption of fund shares. Returns for the index
are provided for comparison. The fund's total returns include operating expenses
(such as transaction costs and management fees) that reduce returns, while the
total returns of the index do not.

(continued)




High-Yield - Performance

GROWTH OF $10,000 OVER LIFE OF CLASS

$10,000 investment made September 30, 1997

ONE-YEAR RETURNS OVER LIFE OF CLASS
Periods ended March 31
--------------------------------------------------------------------------------------------------------
                           1998*    1999     2000     2001     2002    2003     2004    2005     2006
--------------------------------------------------------------------------------------------------------
 Investor Class            6.76%   -2.41%    0.90%   -8.15%   -0.33%   5.90%   15.53%   5.17%   6.29%**
--------------------------------------------------------------------------------------------------------
 CSFB High Yield Index II  5.29%   -0.73%   -0.10%    0.75%    3.41%   7.52%   22.86%   7.84%   6.61%
--------------------------------------------------------------------------------------------------------

* From 9/30/97, the Investor Class's inception date. Not annualized.

**Returns would have been lower, along with the ending value, if a portion of
 the class's management fees had not been waived during the period.

Data presented reflect past performance. Past performance is no guarantee of
future results. Current performance may be higher or lower than the performance
shown. Investment return and principal value will fluctuate, and redemption
value may be more or less than original cost. To obtain performance data current
to the most recent month end, please call 1-800-345-2021 or visit
americancentury.com. As interest rates rise, bond values will decline. In
addition, the lower-rated securities in which the fund invests are subject to
greater credit risk, default risk and liquidity risk.

Unless otherwise indicated, performance reflects Investor Class shares;
performance for other share classes will vary due to differences in fee
structure. For information about other share classes available, please consult
the prospectus. Data assumes reinvestment of dividends and capital gains, and
none of the charts reflect the deduction of taxes that a shareholder would pay
on fund distributions or the redemption of fund shares. Returns for the index
are provided for comparison. The fund's total returns include operating expenses
(such as transaction costs and management fees) that reduce returns, while the
total returns of the index do not.




High-Yield - Portfolio Commentary

PORTFOLIO MANAGERS: MICHAEL DIFLEY AND JAMES KEEGAN

RETURN SUMMARY & PERSPECTIVE

High-Yield generated a 6.29%* total return for the 12 months ended March 31,
2006. By comparison, the CSFB High Yield Index II returned 6.61%. The index's
returns are not reduced by expenses. The average return of the 435 funds in
Lipper's High Current Yield Funds category was 6.77%.

Corporate high-yield bonds outperformed most fixed-income market sectors for the
reporting period, benefiting from: (1) a search for yield by investors, (2) an
upbeat performance by stocks, (3) historically low defaults, and (4) reduced new
bond supply compared with recent years. We talk about the strategies that we
employed for High-Yield in the Portfolio Strategy & Outlook section on the next
page.

HIGH-YIELD BONDS OUTPERFORMED

Corporate high-yield bonds--which tend to act like a mix of stocks and
bonds--outperformed most other types of fixed-income securities for the 12
months (please see the Market Perspective on page 2). Investors' appetite for
risk and their search for yield helped to make that performance possible, as did
a solid performance by equities.

Within the corporate high-yield bond market, securities rated single-B returned
approximately 8.0%. By comparison, securities rated double-B--one credit notch
below investment-grade--returned roughly 6.7%. The riskiest class of bonds,
those rated triple-C or lower, finished behind the top two high-yield credit
tiers but still generated a respectable return of approximately 6.4%, the bulk
of that gain occurring during the first three months of 2006.

A historically low default rate provided a positive backdrop. Moody's global
speculative-grade issuer default rate finished at a historically low 1.65% for
the 12 months ended March 31, 2006. That was down moderately from 2.30% at the
end of March 2005 and considerably below the recent-cycle peak of 10.89% reached
in January 2002.

Limited new bond supply, due to slower refinancing activity, supported prices as
well. New corporate high-yield bond issuance in 2005 was approximately 75% of
that issued during 2004 and roughly 82% of 2003 levels, a trend that continued
in early 2006.

PORTFOLIO AT A GLANCE
--------------------------------------------------------------------------------
                                           AS OF                  AS OF
                                           3/31/06               3/31/05
--------------------------------------------------------------------------------
Weighted Average Maturity                 6.6 years             6.6 years
--------------------------------------------------------------------------------
Average Duration
(effective)                               3.9 years             4.1 years
--------------------------------------------------------------------------------

YIELDS AS OF MARCH 31, 2006*
--------------------------------------------------------------------------------
30-DAY SEC YIELD
--------------------------------------------------------------------------------
Investor Class                                                6.62%
--------------------------------------------------------------------------------
Institutional Class                                           6.84%
--------------------------------------------------------------------------------
Advisor Class                                                 6.41%
--------------------------------------------------------------------------------
A Class                                                       6.08%
--------------------------------------------------------------------------------
B Class                                                       5.61%
--------------------------------------------------------------------------------
C Class                                                       5.63%
--------------------------------------------------------------------------------
R Class                                                       6.11%
--------------------------------------------------------------------------------

*The yields presented reflect the waiver of a portion of the fund's management
 fees. Without such waiver, the 30-day yields would have been lower.

*All fund returns referenced in this commentary are for Investor Class shares.

(continued)




High-Yield - Portfolio Commentary

PORTFOLIO STRATEGY & OUTLOOK

On the portfolio front, we remained focused on our structured-value approach,
which is designed to boost performance through a repeatable framework that helps
us to identify the best relative values within the corporate high-yield bond
universe.

With that approach in mind, we concentrated the bulk of the portfolio in
securities rated single-B, an emphasis that we expect to maintain for now. A
compressed gap between the yields of top- and bottom-tier bonds convinced us
that the potential rewards for adding triple-C or lower-rated securities
generally weren't worth the risks, while the outlook for double-B bonds was
limited by the backdrop of rising interest rates. That strategy paid off as
bonds rated single-B returned more than bonds rated either double-B or triple-C
or lower.

On an industry front, we kept the portfolio diversified across a fairly broad
range of industry sectors, while focusing on security selection. In addition, we
limited our exposure to the automotive industry and avoided air transportation.
Both of these industries generally offered what we considered to be unfavorable
outlooks and were some of the market's bottom performers in 2005 before
rebounding in early 2006.

Lastly, it's worth noting that the Ford Motor Credit Co. and General Motors
Acceptance Corp. bonds in the portfolio represent exposure to the captive
finance subsidiaries of Ford and General Motors and are listed under diversified
financial services holdings (rather than as direct exposure to their automotive
parent companies). These bonds generally performed better than the
parent-company bonds for the 12 months.

HIGH-YIELD'S PLACE IN A DIVERSIFIED PORTFOLIO

High-Yield represents an opportunity to invest in a higher-risk portfolio of
below-investment-grade bonds with the potential for higher returns. The
potential for high monthly income and low correlations with stocks and
high-credit-quality bonds are additional key benefits.

TOP FIVE INDUSTRIES AS OF MARCH 31, 2006
--------------------------------------------------------------------------------
                                         % OF                  % OF
                                      NET ASSETS            NET ASSETS
                                         AS OF                 AS OF
                                        3/31/06               9/30/05
--------------------------------------------------------------------------------
Media                                     9.4%                 10.7%
--------------------------------------------------------------------------------
Hotels, Restaurants
& Leisure                                 8.7%                  9.9%
--------------------------------------------------------------------------------
Oil, Gas &
Consumable Fuels                          8.1%                  8.8%
--------------------------------------------------------------------------------
Commercial Services
& Supplies                                6.0%                  4.3%
--------------------------------------------------------------------------------
Wireless  Telecommunication
Services                                  5.6%                  5.3%
--------------------------------------------------------------------------------

PORTFOLIO COMPOSITION BY CREDIT RATING
--------------------------------------------------------------------------------
                                       % OF FUND             % OF FUND
                                      INVESTMENTS           INVESTMENTS
                                         AS OF                 AS OF
                                        3/31/06               9/30/05
--------------------------------------------------------------------------------
AAA                                         6%                    1%
--------------------------------------------------------------------------------
A                                           1%                    --
--------------------------------------------------------------------------------
BBB                                         2%                    1%
--------------------------------------------------------------------------------
BB                                         34%                   39%
--------------------------------------------------------------------------------
B                                          51%                   54%
--------------------------------------------------------------------------------
CCC or lower                                6%                    5%
--------------------------------------------------------------------------------






Prime Money Market - Performance

TOTAL RETURNS AS OF MARCH 31, 2006
                                  -----------------------------------
                                         AVERAGE ANNUAL RETURNS
------------------------------------------------------------------------------
                                                              SINCE    INCEPTION
                         1 YEAR      5 YEARS  10 YEARS      INCEPTION     DATE
--------------------------------------------------------------------------------
INVESTOR CLASS(1)         3.28%       1.81%     3.53%         3.81%     11/17/93
--------------------------------------------------------------------------------
90-DAY U.S.
TREASURY
BILL INDEX                3.53%       2.08%     3.61%      3.86%(2)           --
--------------------------------------------------------------------------------
LIPPER MONEY
MARKET INSTRUMENT
FUNDS AVERAGE
RETURN(3)                 2.86%       1.51%     3.29%      3.57%(2)           --
--------------------------------------------------------------------------------
Fund's Lipper
Ranking(3)            59 of 355   61 of 299   44 of 189   25 of 134(2)        --
--------------------------------------------------------------------------------
Advisor Class          3.02%(1)    1.56%(1)        --         2.75%      8/28/98
--------------------------------------------------------------------------------
A Class(1)                3.05%          --        --         1.42%      1/31/03
--------------------------------------------------------------------------------
B Class(1)                                                               1/31/03
   No sales charge*       2.26%          --        --         0.92%
   With sales charge*    -1.74%          --        --        -0.02%
--------------------------------------------------------------------------------
C Class(1)                2.51%          --        --         0.91%       5/7/02
--------------------------------------------------------------------------------

*Sales charges include initial sales charges and contingent deferred sales
charges (CDSCs), as applicable. (Please see the Share Class Information page for
more about the applicable sales charges for each share class.) The SEC requires
that mutual funds provide performance information net of maximum sales charges
in all cases where charges could be applied.

(1)  Class returns would have been lower if American Century had not voluntarily
     waived a portion of its management fees or its service and distribution
     fees, as applicable.

(2)  Since 11/30/93, the date nearest the Investor Class's inception for which
     data are available.

(3)  Data provided by Lipper Inc. -- A Reuters Company. (c) 2006 Reuters. All
     rights reserved. Any copying, republication or redistribution of Lipper
     content, including by caching, framing or similar means, is expressly
     prohibited without the prior written consent of Lipper. Lipper shall not be
     liable for any errors or delays in the content, or for any actions taken in
     reliance thereon.

     Lipper Fund Performance -- Performance data is total return, and is
     preliminary and subject to revision.

     Lipper Rankings -- Rankings are based only on the universe shown and are
     based on average annual returns. This listing might not represent the
     complete universe of funds tracked by Lipper Inc.

     The data contained herein has been obtained from company reports, financial
     reporting services, periodicals and other resources believed to be
     reliable. Although carefully verified, data on compilations is not
     guaranteed by Lipper and may be incomplete. No offer or solicitations to
     buy or sell any of the securities herein is being made by Lipper.

Data presented reflect past performance. Past performance is no guarantee of
future results. Current performance may be higher or lower than the performance
shown. To obtain performance data current to the most recent month end, please
call 1-800-345-2021 or visit americancentury.com.

An investment in the fund is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency. Although the fund seeks to
preserve the value of your investment at $1.00 per share, it is possible to lose
money by investing in the fund.

The 7-day current yield more closely reflects the current earnings of the fund
than the total return.

                                                                    (continued)




Prime Money Market - Performance


PORTFOLIO COMPOSITION BY CREDIT RATING

--------------------------------------------------------------------------------
                                          % OF FUND             % OF FUND
                                         INVESTMENTS           INVESTMENTS
                                            AS OF                 AS OF
                                           3/31/06               9/30/05
--------------------------------------------------------------------------------
A-1+                                         63%                    66%
--------------------------------------------------------------------------------
A-1                                          37%                    34%
--------------------------------------------------------------------------------
Ratings provided by independent research companies. These ratings are listed in
Standard & Poor's format even if they were provided by other sources.

YIELDS AND WEIGHTED AVERAGE MATURITY
--------------------------------------------------------------------------------
7-DAY CURRENT YIELD AS OF MARCH 31, 2006*
--------------------------------------------------------------------------------
Investor Class                                         4.22%
--------------------------------------------------------------------------------
Advisor Class                                          3.97%
--------------------------------------------------------------------------------
A Class                                                3.95%
--------------------------------------------------------------------------------
B Class                                                3.22%
--------------------------------------------------------------------------------
C Class                                                3.47%
--------------------------------------------------------------------------------
7-DAY EFFECTIVE YIELD AS OF MARCH 31, 2006*
--------------------------------------------------------------------------------
Investor Class                                         4.31%
--------------------------------------------------------------------------------
Advisor Class                                          4.05%
--------------------------------------------------------------------------------
A Class                                                4.03%
--------------------------------------------------------------------------------
B Class                                                3.27%
--------------------------------------------------------------------------------
C Class                                                3.53%
--------------------------------------------------------------------------------
                                           3/31/06               9/30/05
--------------------------------------------------------------------------------
Weighted Average
Maturity                                   41 days               32 days
--------------------------------------------------------------------------------
*The yields presented reflect the waiver of a portion of the fund's management
 fees. Without such waiver, the 30-day yields would have been lower.

PORTFOLIO COMPOSITION BY MATURITY
--------------------------------------------------------------------------------
                                          % OF FUND             % OF FUND
                                         INVESTMENTS           INVESTMENTS
                                            AS OF                 AS OF
                                           3/31/06               9/30/05
--------------------------------------------------------------------------------
1--30 days                                   56%                   60%
--------------------------------------------------------------------------------
31--90 days                                  34%                   35%
--------------------------------------------------------------------------------
91--180 days                                  7%                    5%
--------------------------------------------------------------------------------
More than 180 days                            3%                    --
--------------------------------------------------------------------------------

Data presented reflect past performance. Past performance is no guarantee of
future results. Current performance may be higher or lower than the performance
shown. To obtain performance data current to the most recent month end, please
call 1-800-345-2021 or visit americancentury.com.

An investment in the fund is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency. Although the fund seeks to
preserve the value of your investment at $1.00 per share, it is possible to lose
money by investing in the fund.

The 7-day current yield more closely reflects the current earnings of the fund
than the total return.




Prime Money Market - Portfolio Commentary

PORTFOLIO MANAGER: DENISE LATCHFORD

PERFORMANCE SUMMARY

For the fiscal year ended March 31, 2006, Prime Money Market returned 3.28%*,
ahead of the 2.86% average return of the 355 funds in Lipper Inc.'s money market
funds category. The fund's fiscal-year return ranked in the top 20% of the
Lipper category, which is consistent with its longer-term performance--the
fund's five- and 10-year returns ranked in the top 25% of the Lipper group. (See
page 3 for additional performance information.)

ECONOMIC AND MARKET REVIEW

Money market rates increased during the one-year period, reaching their highest
levels in five years. As the economy maintained its momentum and inflation
increased modestly over the past year, the Federal Reserve (Fed) continued to
raise short-term interest rates. The Fed enacted eight quarter-point rate hikes
during the fiscal year, boosting its federal funds rate target from 2.75% to
4.75%--its highest level since April 2001. The Fed has now raised rates 15 times
since mid-2004, the longest uninterrupted stretch of rate hikes since the
runaway-inflation days of the late-1970s.

The Fed's actions provided a similar lift to money market rates; the three-month
Treasury bill yield rose from 2.79% to 4.63% during the one-year period.

PORTFOLIO STRATEGY

Prime Money Market's seven-day current yield increased from 2.13% to 4.22%
during the fiscal year, tracking the broad rise in money market yields. We
maintained a relatively short average maturity for the portfolio in order to
reflect higher money market rates more quickly. For the most part, the fund's
average maturity ranged from 30-45 days, compared with an average maturity of
65-75 days for the fund in 2003, when the Fed was finishing its extended series
of interest rate CUTS.

We increased the portfolio's commercial paper holdings from 44% to 54% of the
portfolio during the fiscal year. After declining from 2001 to 2003, commercial
paper issuance rebounded in 2004 and 2005, and issuance rose by more than $80
billion in the first quarter of 2006. The increased supply has made commercial
paper yields more attractive, and we took advantage of the opportunity to expand
our commercial paper position to more than half of the portfolio. We reduced our
exposure to floating-rate notes and certificates of deposit to make room for the
additional commercial paper holdings.

LOOKING AHEAD

Based on federal funds rate futures, the Fed is expected to raise short-term
interest rates again in May 2006, but the timing of any further increases--if
there are any--is much less clear. Consequently, after enjoying nearly two years
of steadily rising yields, money market investors may see more stable rates in
the second half of 2006. But regardless of the near-term outlook for rates, a
money market fund like Prime Money Market can help preserve capital and add
stability to a diversified portfolio.

*All fund returns, rankings and yields referenced in this commentary are for
Investor Class shares.




UTILITIES


Market
Perspective


BY ENRIQUE CHANG, CHIEF INVESTMENT OFFICER, AMERICAN CENTURY INVESTMENTS

ECONOMIC GROWTH SURGED, THEN MODERATED

Economic growth--along with commodity prices, short-term interest rates, and
inflation--surged early in the 12-month period ended December 31, 2006. But
growth and inflation moderated in the second half of the year, when the Federal
Reserve (the Fed) halted its two-year string of interest rate hikes.

After a hurricane-related slowdown in the fourth quarter of 2005, U.S. gross
domestic product grew in the first quarter of 2006 at a 5.6% annualized pace,
the highest level in more than two years. The Fed steadily raised short-term
interest rates through June 2006 to keep inflation--including pressures from
soaring commodity prices--in check. The Fed finally snapped its string of rate
hikes in August 2006, leaving its target at 5.25%, a five-year high. By then,
economic growth had slowed, dragged down in part by a cooling housing market.

DOUBLE-DIGIT STOCK INDEX RETURNS

The Fed's pause and expectations for lower interest rates and mild inflation in
2007 helped produce double-digit stock index returns for 2006. Market rallies at
the start and end of the year offset a late-spring/early-summer selloff. Growth
stocks flourished in the latter rally, but value stocks outperformed growth for
the full year. Likewise, though large-cap stocks gained ground late in the
period, small-caps posted higher returns for the full year.

SENTIMENT REVERSED IN MAY AND JULY

Early in 2006, investors celebrated a dip in crude oil prices and strong
economic growth by pushing stock prices higher. The small-cap Russell 2000 Index
led the way, surging 13.92% by April 30. Sentiment changed in early May,
however, when the Fed made it clear that more interest rate hikes might be
necessary to control inflation. Between April 30 and July 15, the S&P 500 fell
5.28%, and the Russell 2000 more than doubled that loss as investors desired
larger, more stable companies.

The selloff ended in late July after Fed chairman Ben Bernanke predicted
inflation would moderate. The Fed's subsequent rate pause in August and plunging
energy prices triggered a substantial stock rebound during the last five months
of the year.

U.S. STOCK INDEX RETURNS
For the 12 months ended December 31, 2006
--------------------------------------------------------------------------------
RUSSELL 1000 INDEX (LARGE-CAP)                               15.46%
--------------------------------------------------------------------------------
Russell 1000 Growth Index                                     9.07%
--------------------------------------------------------------------------------
Russell 1000 Value Index                                     22.25%
--------------------------------------------------------------------------------
RUSSELL MIDCAP INDEX                                         15.26%
--------------------------------------------------------------------------------
Russell Midcap Growth Index                                  10.66%
--------------------------------------------------------------------------------
Russell Midcap Value Index                                   20.22%
--------------------------------------------------------------------------------
RUSSELL 2000 INDEX (SMALL-CAP)                               18.37%
--------------------------------------------------------------------------------
Russell 2000 Growth Index                                    13.35%
--------------------------------------------------------------------------------
Russell 2000 Value Index                                     23.48%
--------------------------------------------------------------------------------


Utilities - Performance

TOTAL RETURNS AS OF DECEMBER 31, 2006
                                   --------------------------------
                                        AVERAGE ANNUAL RETURNS
--------------------------------------------------------------------------------
                                                            SINCE      INCEPTION
                         1 YEAR    5 YEARS    10 YEARS    INCEPTION       DATE
--------------------------------------------------------------------------------
INVESTOR CLASS           24.99%     9.73%      9.69%       9.34%         3/1/93
--------------------------------------------------------------------------------
FUND BENCHMARK(1)        27.20%     8.34%      9.82%       9.64%(2)        --
--------------------------------------------------------------------------------
S&P 500 INDEX(3)         15.79%     6.19%      8.42%      10.82%(2)        --
--------------------------------------------------------------------------------
Advisor Class            24.62%     9.44%        --        6.35%         6/25/98
--------------------------------------------------------------------------------

(1) See Index Definitions pages.

(2) Since 2/28/93, the date nearest the Investor Class's inception for which
    data are available.

(3) Data provided by Lipper Inc. - A Reuters Company. (c)2007 Reuters. All
    rights reserved. Any copying, republication or redistribution of Lipper
    content, including by caching, framing or similar means, is expressly
    prohibited without the prior written consent of Lipper. Lipper shall not be
    liable for any errors or delays in the content, or for any actions taken in
    reliance thereon.
    The data contained herein has been obtained from company reports, financial
    reporting services, periodicals and other resources believed to be reliable.
    Although carefully verified, data on compilations is not guaranteed by
    Lipper and may be incomplete. No offer or solicitations to buy or sell any
    of the securities herein is being made by Lipper.

Data presented reflect past performance. Past performance is no guarantee of
future results. Current performance may be higher or lower than the performance
shown. Investment return and principal value will fluctuate, and redemption
value may be more or less than original cost. To obtain performance data current
to the most recent month end, please call 1-800-345-2021 or visit
americancentury.com. The fund concentrates its investments in a narrow segment
of the total market and is therefore subject to greater risks and market
fluctuations than a portfolio representing a broader range of industries.

Unless otherwise indicated, performance reflects Investor Class shares;
performance for other share classes will vary due to differences in fee
structure. For information about other share classes available, please consult
the prospectus. Data assumes reinvestment of dividends and capital gains, and
none of the charts reflect the deduction of taxes that a shareholder would pay
on fund distributions or the redemption of fund shares. Returns for the index
are provided for comparison. The fund's total returns include operating expenses
(such as transaction costs and management fees) that reduce returns, while the
total returns of the index do not.

                                                                    (continued)


Utilities - Performance

GROWTH OF $10,000 OVER 10 YEARS

$10,000 investment made December 31, 1996

ONE-YEAR RETURNS OVER 10 YEARS

Periods ended December 31
---------------------------------------------------------------------------------------------------------
                   1997     1998     1999     2000     2001     2002     2003     2004     2005     2006
---------------------------------------------------------------------------------------------------------
Investor Class    35.82%   27.43%   11.46%    3.97%  -20.97%  -27.44%   23.96%   23.81%   14.30%   24.99%
---------------------------------------------------------------------------------------------------------
Fund benchmark    34.50%   33.29%   12.36%    2.17%  -16.90%  -32.28%   25.38%   24.34%   11.14%   27.20%
---------------------------------------------------------------------------------------------------------
S&P 500 Index     33.36%   28.58%   21.04%   -9.10%  -11.89%  -22.10%   28.68%   10.88%    4.91%   15.79%
---------------------------------------------------------------------------------------------------------

Data presented reflect past performance. Past performance is no guarantee of
future results. Current performance may be higher or lower than the performance
shown. Investment return and principal value will fluctuate, and redemption
value may be more or less than original cost. To obtain performance data current
to the most recent month end, please call 1-800-345-2021 or visit
americancentury.com. The fund concentrates its investments in a narrow segment
of the total market and is therefore subject to greater risks and market
fluctuations than a portfolio representing a broader range of industries.

Unless otherwise indicated, performance reflects Investor Class shares;
performance for other share classes will vary due to differences in fee
structure. For information about other share classes available, please consult
the prospectus. Data assumes reinvestment of dividends and capital gains, and
none of the charts reflect the deduction of taxes that a shareholder would pay
on fund distributions or the redemption of fund shares. Returns for the index
are provided for comparison. The fund's total returns include operating expenses
(such as transaction costs and management fees) that reduce returns, while the
total returns of the index do not.




Utilities - Portfolio Commentary

PORTFOLIO MANAGERS: JOHN SCHNIEDWIND AND JOE STERLING

PERFORMANCE SUMMARY

Utilities gained 24.99%* for the 12 months ended December 31, 2006, compared
with the 27.20% return of its custom benchmark (defined on page 27), and the
30.57%** return of the Russell 1000 Utilities Index. The S&P 500, a broad market
measure, returned 15.79%. 2006 marked the third straight year in which the fund
and its benchmark outperformed the S&P 500.

We received positive absolute contributions from all but one of the industries
in which we were invested. However, several of our portfolio positions, most
notably diversified telecommunication services, lagged those of our custom
benchmark.

TOUGH CALLS IN TELECOM

Our investments in diversified telecom contributed most to total return during
the period but also hindered relative performance more than any other industry.
A combination of underweight positions and unfavorable security selection was to
blame.

Our largest underweights included the major diversified telecom services
providers, most of which posted double- or even triple-digit gains. Our
underweights in AT&T and BellSouth--the two largest positions in the custom
benchmark--hurt relative performance as both stocks rallied in advance of their
year-end merger. Though we're gradually increasing our exposure in the
diversified telecom industry, the change has been neither fast nor ample enough
to capture as much of that group's powerful performance as we would have liked.

Other telecom companies provided strong absolute performance, including
Beijing-based China Mobile, which finished the reporting period as our
top-contributing stock. The world's largest cell-phone operator by users, China
Mobile reported that it added a record number of new subscribers in November.

UTILITIES MARKET RETURNS
For the 12 months ended December 31, 2006
--------------------------------------------------------------------------------
BROAD UTILITIES MARKET
--------------------------------------------------------------------------------
Lipper Utility Fund Index                              26.89%
--------------------------------------------------------------------------------
Russell 1000 Utilities Index                           30.57%
--------------------------------------------------------------------------------
PRIMARY UTILITIES INDUSTRIES IN FUND BENCHMARK
--------------------------------------------------------------------------------
Diversified Telecommunication Services                 48.01%
--------------------------------------------------------------------------------
Gas Utilities                                          30.07%
--------------------------------------------------------------------------------
Independent Power Producers                            25.38%
--------------------------------------------------------------------------------
Electric Utilities                                     24.44%
--------------------------------------------------------------------------------
Wireless Telecommunication Services                    21.26%
--------------------------------------------------------------------------------
Multi-Utilities                                        19.56%
--------------------------------------------------------------------------------

TOP TEN HOLDINGS
AS OF DECEMBER 31, 2006
--------------------------------------------------------------------------------
                                            % OF                  % OF
                                         NET ASSETS            NET ASSETS
                                            AS OF                 AS OF
                                          12/31/06               6/30/06
--------------------------------------------------------------------------------
Sempra Energy                               4.6%                  4.1%
--------------------------------------------------------------------------------
AT&T Inc.                                   4.5%                  3.8%
--------------------------------------------------------------------------------
PG&E Corp.                                  4.3%                  3.9%
--------------------------------------------------------------------------------
Verizon
Communications Inc.                         4.1%                  3.2%
--------------------------------------------------------------------------------
TXU Corp.                                   3.2%                  4.6%
--------------------------------------------------------------------------------
Constellation
Energy Group Inc.                           2.7%                  2.4%
--------------------------------------------------------------------------------
FirstEnergy Corp.                           2.6%                  2.6%
--------------------------------------------------------------------------------
Telefonica SA ADR                           2.4%                  1.6%
--------------------------------------------------------------------------------
FPL Group, Inc.                             2.3%                  1.7%
--------------------------------------------------------------------------------
AES Corp. (The)                             2.2%                  1.9%
--------------------------------------------------------------------------------

 *All fund returns referenced in this commentary are for Investor Class shares.

**The Russell 1000 Utilities Index returned 5.93% and 6.84% for the 5- and
  10-year periods ended December 31, 2006, respectively.

                                                                    (continued)



Utilities - Portfolio Commentary

POWER COMPANIES ENERGIZED RELATIVE PERFORMANCE

Our positions in the multi-utilities and electric utilities industries
contributed most to performance against the benchmark, an outcome attributable
to effective security selection. One top stock was U.K.-based Scottish Power
plc, a non-benchmark holding that operates wind farms and supplies electricity
to more than five million homes and businesses.

Another U.K. success was National Grid plc, also a non-benchmark holding. One of
the world's largest utility companies, its profits increased 12% for the six
months ended September 30, 2006, driven in part by the performance of its U.S.
electricity and gas distribution business.

Favorable stock selection also yielded a top contributor in Oklahoma-based
natural gas utility ONEOK, which reported increased quarterly profits. The firm
also raised its 2007 earnings forecast, stating that a settlement in a Kansas
case will allow for rate increases in the months ahead.

STARTING POINT FOR THE NEXT REPORT PERIOD

After three straight years of outperforming the broad market, we are moderating
our expectations. We believe the valuations on electric utilities have become
increasingly stretched and that telecoms--which outperformed the broader market
by a significant margin in 2006--could continue to provide market leadership.

As of December 31, 2006, we had a moderately overweight position in the gas
utilities industry compared to that of our benchmark because our quantitative
process identified numerous opportunities in this area. Also, because our
quantitative system has ranked telecom stocks higher in recent months, we will
continue to bolster our position in the telecommunications sector, where we
remain significantly underweight.

INDUSTRY BREAKDOWN
AS OF DECEMBER 31, 2006
--------------------------------------------------------------------------------
                                            % OF                  % OF
                                         NET ASSETS            NET ASSETS
                                            AS OF                 AS OF
                                          12/31/06               6/30/06
--------------------------------------------------------------------------------
Multi-Utilities                             26.6%                 26.3%
--------------------------------------------------------------------------------
Integrated Telecom.
Services                                    22.2%                 19.8%
--------------------------------------------------------------------------------
Electric Utilities                          20.3%                 21.4%
--------------------------------------------------------------------------------
Independent Power
Producers &
Energy Traders                              11.6%                  9.0%
--------------------------------------------------------------------------------
Gas Utilities                                8.8%                  8.3%
--------------------------------------------------------------------------------
Wireless Telecom.
Services                                     7.4%                  8.6%
--------------------------------------------------------------------------------
Other Industries                             2.4%                  5.2%
--------------------------------------------------------------------------------
Other Assets
and Liabilities(1)                           0.7%                  1.4%
--------------------------------------------------------------------------------

(1) Includes temporary cash investments, collateral received for securities
    lending and other assets and liabilities.

TYPES OF INVESTMENTS IN PORTFOLIO
--------------------------------------------------------------------------------
                                            % OF                  % OF
                                         NET ASSETS            NET ASSETS
                                            AS OF                 AS OF
                                          12/31/06               6/30/06
--------------------------------------------------------------------------------
Domestic
Common Stocks                               82.3%                 82.0%
--------------------------------------------------------------------------------
Foreign
Common Stocks(2)                            17.0%                 16.6%
--------------------------------------------------------------------------------
TOTAL COMMON STOCKS                         99.3%                 98.6%
--------------------------------------------------------------------------------
Temporary Cash
Investments                                  1.5%                  1.3%
--------------------------------------------------------------------------------
Other Assets
and Liabilities(3)                          (0.8)%                 0.1%
--------------------------------------------------------------------------------

(2) Includes depositary shares, dual listed securities and foreign ordinary
    shares.

(3) Includes collateral received for securities lending and other assets and
    liabilities.






                                                                       EXHIBIT D


FINANCIAL HIGHLIGHTS

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

The  Financial  Highlights  have been  audited  by  PricewaterhouseCoopers  LLP,
independent  registered  public  accounting  firm.  Their Report of  Independent
Registered Public  Accounting Firm and the financial  statements are included in
the funds' annual reports, which are available upon request.



ARIZONA MUNICIPAL BOND FUND
FLORIDA MUNICIPAL BOND FUND


Arizona Municipal Bond - Financial Highlights

FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED MAY 31 (EXCEPT AS NOTED)
-----------------------------------------------------------------------------------------------
                                                       INVESTOR CLASS
-----------------------------------------------------------------------------------------------
                                2006(1)     2006       2005       2004       2003       2002
-----------------------------------------------------------------------------------------------
PER-SHARE DATA
-----------------------------------------------------------------------------------------------
Net Asset Value,
Beginning of Period             $10.68     $10.96     $10.83     $11.40     $10.89     $10.69
-----------------------------------------------------------------------------------------------
Income From
Investment Operations
--------------------------
  Net Investment
  Income (Loss)                   0.22      0.42(2)     0.42       0.41       0.41       0.44
--------------------------
  Net Realized and
  Unrealized Gain (Loss)          0.18     (0.25)       0.13      (0.53)      0.59       0.27
-----------------------------------------------------------------------------------------------
  Total From
  Investment Operations           0.40       0.17       0.55      (0.12)      1.00       0.71
-----------------------------------------------------------------------------------------------
Distributions
--------------------------
  From Net
  Investment Income              (0.22)     (0.43)     (0.42)     (0.41)     (0.41)     (0.44)
--------------------------
  From Net
  Realized Gains                    --      (0.02)      --(3)     (0.04)     (0.08)     (0.07)
-----------------------------------------------------------------------------------------------
  Total Distributions            (0.22)     (0.45)     (0.42)     (0.45)     (0.49)     (0.51)
-----------------------------------------------------------------------------------------------
Net Asset Value,
End of Period                   $10.86     $10.68     $10.96     $10.83     $11.40     $10.89
===============================================================================================
  TOTAL RETURN(4)                 3.77%      1.59%      5.21%     (1.06)%     9.36%      6.74%

RATIOS/SUPPLEMENTAL DATA
-----------------------------------------------------------------------------------------------
Ratio of Operating
Expenses to Average
Net Assets                     0.49%(5)      0.49%      0.50%      0.51%      0.51%      0.51%
--------------------------
Ratio of Net Investment
Income (Loss)
to Average Net Assets          4.06%(5)      3.89%      3.86%      3.70%      3.70%      4.04%
--------------------------
Portfolio Turnover Rate              9%        44%        48%        26%        50%        77%
--------------------------
Net Assets, End of Period
(in thousands)                  $53,609    $52,404    $53,203    $60,203    $75,787    $66,327
-----------------------------------------------------------------------------------------------

(1) Six months ended November 30, 2006 (unaudited).

(2) Computed using average shares outstanding throughout the period.

(3) Per-share amount is less than $0.005.

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

(5) Annualized.




Arizona Municipal Bond - Financial Highlights

FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED MAY 31 (EXCEPT AS NOTED)
--------------------------------------------------------------------------------
                                                       A CLASS
--------------------------------------------------------------------------------
                                       2006(1)     2006       2005      2004(2)
--------------------------------------------------------------------------------
PER-SHARE DATA
--------------------------------------------------------------------------------
Net Asset Value,
Beginning of Period                    $10.68     $10.96     $10.83     $11.25
--------------------------------------------------------------------------------
Income From Investment Operations
---------------------------------
  Net Investment Income (Loss)           0.20       0.39(3)    0.40       0.10
---------------------------------
  Net Realized and
  Unrealized Gain (Loss)                 0.18      (0.25)      0.13      (0.42)
--------------------------------------------------------------------------------
  Total From
  Investment Operations                  0.38       0.14       0.53      (0.32)
--------------------------------------------------------------------------------
Distributions
---------------------------------
  From Net Investment Income            (0.20)     (0.40)     (0.40)     (0.10)
---------------------------------
  From Net Realized Gains                  --      (0.02)      --(4)        --
--------------------------------------------------------------------------------
  Total Distributions                   (0.20)     (0.42)     (0.40)     (0.10)
--------------------------------------------------------------------------------
Net Asset Value, End of Period         $10.86     $10.68     $10.96     $10.83
================================================================================
  TOTAL RETURN(5)                        3.64%      1.34%      4.94%     (2.87)%

RATIOS/SUPPLEMENTAL DATA
--------------------------------------------------------------------------------
Ratio of Operating Expenses
to Average Net Assets                 0.74%(6)      0.74%      0.75%   0.76%(6)
---------------------------------
Ratio of Net Investment Income
(Loss) to Average Net Assets          3.81%(6)      3.64%      3.61%   3.63%(6)
---------------------------------
Portfolio Turnover Rate                     9%        44%        48%     26%(7)
---------------------------------
Net Assets, End of Period
(in thousands)                          $1,769     $3,741     $4,271    $1,523
--------------------------------------------------------------------------------

(1) Six months ended November 30, 2006 (unaudited).

(2) February 27, 2004 (commencement of sale) through May 31, 2004.

(3) Computed using average shares outstanding throughout the period.

(4) Per-share amount is less than $0.005.

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

(6) Annualized.

(7) Portfolio turnover is calculated at the fund level. Percentage indicated
    was calculated for the year ended May 31, 2004.





Arizona Municipal Bond - Financial Highlights

FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED MAY 31 (EXCEPT AS NOTED)
--------------------------------------------------------------------------------
                                                       B CLASS
--------------------------------------------------------------------------------
                                       2006(1)     2006       2005      2004(2)
--------------------------------------------------------------------------------
PER-SHARE DATA
--------------------------------------------------------------------------------
Net Asset Value,
Beginning of Period                    $10.68     $10.96     $10.83     $11.25
--------------------------------------------------------------------------------
Income From Investment Operations
---------------------------------
  Net Investment Income (Loss)           0.16       0.36(3)    0.32       0.08
---------------------------------
  Net Realized and
  Unrealized Gain (Loss)                 0.18      (0.30)      0.13      (0.42)
--------------------------------------------------------------------------------
  Total From
  Investment Operations                  0.34       0.06       0.45      (0.34)
--------------------------------------------------------------------------------
Distributions
---------------------------------
  From Net Investment Income            (0.16)     (0.32)     (0.32)     (0.08)
---------------------------------
  From Net Realized Gains                  --      (0.02)      --(4)        --
--------------------------------------------------------------------------------
  Total Distributions                   (0.16)     (0.34)     (0.32)     (0.08)
--------------------------------------------------------------------------------
Net Asset Value, End of Period         $10.86     $10.68     $10.96     $10.83
================================================================================
  TOTAL RETURN(5)                        3.25%      0.61%      4.19%     (3.06)%

RATIOS/SUPPLEMENTAL DATA
--------------------------------------------------------------------------------
Ratio of Operating Expenses
to Average Net Assets                 1.49%(6)      1.49%      1.50%   1.51%(6)
---------------------------------
Ratio of Net Investment Income
(Loss) to Average Net Assets          3.06%(6)      2.89%      2.86%   2.88%(6)
---------------------------------
Portfolio Turnover Rate                     9%        44%        48%     26%(7)
---------------------------------
Net Assets, End of Period
(in thousands)                             $43        $42         $3         $2
--------------------------------------------------------------------------------

(1) Six months ended November 30, 2006 (unaudited).

(2) February 27, 2004 (commencement of sale) through May 31, 2004.

(3) Computed using average shares outstanding throughout the period.

(4) Per-share amount is less than $0.005.

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

(6) Annualized.

(7) Portfolio turnover is calculated at the fund level. Percentage indicated was
    calculated for the year ended May 31, 2004.




Arizona Municipal Bond - Financial Highlights

FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED MAY 31 (EXCEPT AS NOTED)
--------------------------------------------------------------------------------
                                                       C CLASS
--------------------------------------------------------------------------------
                                       2006(1)     2006       2005      2004(2)
--------------------------------------------------------------------------------
PER-SHARE DATA
--------------------------------------------------------------------------------
Net Asset Value,
Beginning of Period                    $10.68     $10.96     $10.83     $11.25
--------------------------------------------------------------------------------
Income From Investment Operations
---------------------------------
  Net Investment Income (Loss)           0.16      0.30(3)     0.31       0.08
---------------------------------
  Net Realized and
  Unrealized Gain (Loss)                 0.18      (0.24)      0.13      (0.42)
--------------------------------------------------------------------------------
  Total From
  Investment Operations                  0.34       0.06       0.44      (0.34)
--------------------------------------------------------------------------------
Distributions
---------------------------------
  From Net Investment Income            (0.16)     (0.32)     (0.31)     (0.08)
---------------------------------
  From Net Realized Gains                  --      (0.02)      --(4)        --
--------------------------------------------------------------------------------
  Total Distributions                   (0.16)     (0.34)     (0.31)     (0.08)
--------------------------------------------------------------------------------
Net Asset Value, End of Period         $10.86     $10.68     $10.96     $10.83
================================================================================
  TOTAL RETURN(5)                        3.25%      0.58%      4.15%     (3.06)%

RATIOS/SUPPLEMENTAL DATA
--------------------------------------------------------------------------------
Ratio of Operating Expenses
to Average Net Assets                 1.49%(6)      1.49%      1.50%   1.51%(6)
---------------------------------
Ratio of Net Investment Income
(Loss) to Average Net Assets          3.06%(6)      2.89%      2.86%   2.88%(6)
---------------------------------
Portfolio Turnover Rate                     9%        44%        48%     26%(7)
---------------------------------
Net Assets, End of Period
(in thousands)                            $534       $382       $719        $12
--------------------------------------------------------------------------------

(1) Six months ended November 30, 2006 (unaudited).

(2) February 27, 2004 (commencement of sale) through May 31, 2004.

(3) Computed using average shares outstanding throughout the period.

(4) Per-share amount is less than $0.005.

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

(6) Annualized.

(7) Portfolio turnover is calculated at the fund level. Percentage indicated was
    calculated for the year ended May 31, 2004.




Florida Municipal Bond - Financial Highlights

FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED MAY 31 (EXCEPT AS NOTED)
-----------------------------------------------------------------------------------------------
                                                       INVESTOR CLASS
-----------------------------------------------------------------------------------------------
                                2006(1)     2006       2005       2004       2003       2002
-----------------------------------------------------------------------------------------------
PER-SHARE DATA
-----------------------------------------------------------------------------------------------
Net Asset Value,
Beginning of Period             $10.55     $10.81     $10.68     $11.29     $10.73     $10.67
-----------------------------------------------------------------------------------------------
Income From
Investment Operations
--------------------------
  Net Investment
  Income (Loss)                   0.22       0.42       0.39       0.42       0.42       0.44
--------------------------
  Net Realized and
  Unrealized Gain (Loss)          0.16      (0.26)      0.13      (0.56)      0.62       0.19
-----------------------------------------------------------------------------------------------
  Total From
  Investment Operations           0.38       0.16       0.52      (0.14)      1.04       0.63
-----------------------------------------------------------------------------------------------
Distributions
--------------------------
  From Net
  Investment Income              (0.22)     (0.42)     (0.39)     (0.42)     (0.42)     (0.44)
--------------------------
  From Net
  Realized Gains                   --         --         --      (0.05)      (0.06)     (0.13)
-----------------------------------------------------------------------------------------------
  Total Distributions            (0.22)     (0.42)     (0.39)     (0.47)     (0.48)     (0.57)
-----------------------------------------------------------------------------------------------
Net Asset Value,
End of Period                   $10.71     $10.55     $10.81     $10.68     $11.29     $10.73
===============================================================================================
  TOTAL RETURN(2)                 3.62%      1.48%      4.88%     (1.30)%     9.90%      5.98%

RATIOS/SUPPLEMENTAL DATA
-----------------------------------------------------------------------------------------------
Ratio of Operating
Expenses to Average
Net Assets                     0.49%(3)      0.49%      0.50%      0.51%      0.51%      0.51%
--------------------------
Ratio of Net Investment
Income (Loss)
to Average Net Assets          4.11%(3)      3.90%      3.56%      3.82%      3.78%      4.03%
--------------------------
Portfolio Turnover Rate             34%        28%        44%        59%        45%        75%
--------------------------
Net Assets, End of Period
(in thousands)                  $38,211    $40,604    $49,451    $63,142    $70,078    $54,565
-----------------------------------------------------------------------------------------------

(1) Six months ended November 30, 2006 (unaudited).

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

(3) Annualized.




Florida Municipal Bond - Financial Highlights

FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED MAY 31 (EXCEPT AS NOTED)
--------------------------------------------------------------------------------
                                                       A CLASS
--------------------------------------------------------------------------------
                                       2006(1)     2006       2005      2004(2)
--------------------------------------------------------------------------------
PER-SHARE DATA
--------------------------------------------------------------------------------
Net Asset Value,
Beginning of Period                    $10.55     $10.81     $10.68     $11.11
--------------------------------------------------------------------------------
Income From Investment Operations
---------------------------------
  Net Investment Income (Loss)           0.21       0.39       0.36       0.09
---------------------------------
  Net Realized and
  Unrealized Gain (Loss)                 0.16      (0.26)      0.13      (0.43)
--------------------------------------------------------------------------------
  Total From
  Investment Operations                  0.37       0.13       0.49      (0.34)
--------------------------------------------------------------------------------
Distributions
---------------------------------
  From Net Investment Income            (0.21)     (0.39)     (0.36)     (0.09)
--------------------------------------------------------------------------------
Net Asset Value, End of Period         $10.71     $10.55     $10.81     $10.68
================================================================================
  TOTAL RETURN(3)                        3.49%      1.23%      4.62%     (3.10)%

RATIOS/SUPPLEMENTAL DATA
--------------------------------------------------------------------------------
Ratio of Operating Expenses
to Average Net Assets                 0.74%(4)      0.74%      0.75%   0.76%(4)
---------------------------------
Ratio of Net Investment Income
(Loss) to Average Net Assets          3.86%(4)      3.65%      3.31%   3.34%(4)
---------------------------------
Portfolio Turnover Rate                    34%        28%        44%     59%(5)
---------------------------------
Net Assets, End of Period
(in thousands)                          $1,066     $1,380     $2,105       $761
--------------------------------------------------------------------------------

(1) Six months ended November 30, 2006 (unaudited).

(2) February 27, 2004 (commencement of sale) through May 31, 2004.

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

(4) Annualized.

(5) Portfolio turnover is calculated at the fund level. Percentage indicated was
    calculated for the year ended May 31, 2004.




Florida Municipal Bond - Financial Highlights

FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED MAY 31 (EXCEPT AS NOTED)
--------------------------------------------------------------------------------
                                                       B CLASS
--------------------------------------------------------------------------------
                                       2006(1)     2006       2005      2004(2)
--------------------------------------------------------------------------------
PER-SHARE DATA
--------------------------------------------------------------------------------
Net Asset Value,
Beginning of Period                    $10.55     $10.81     $10.68     $11.11
--------------------------------------------------------------------------------
Income From Investment Operations
---------------------------------
  Net Investment Income (Loss)           0.17       0.31       0.28       0.07
---------------------------------
  Net Realized and
  Unrealized Gain (Loss)                 0.16      (0.26)      0.13      (0.43)
--------------------------------------------------------------------------------
  Total From
  Investment Operations                  0.33       0.05       0.41      (0.36)
--------------------------------------------------------------------------------
Distributions
---------------------------------
  From Net Investment Income            (0.17)     (0.31)     (0.28)     (0.07)
--------------------------------------------------------------------------------
Net Asset Value, End of Period         $10.71     $10.55     $10.81     $10.68
================================================================================
  TOTAL RETURN(3)                        3.11%      0.47%      3.83%     (3.28)%

RATIOS/SUPPLEMENTAL DATA
--------------------------------------------------------------------------------
Ratio of Operating Expenses
to Average Net Assets                 1.49%(4)      1.49%      1.50%   1.51%(4)
---------------------------------
Ratio of Net Investment Income
(Loss) to Average Net Assets          3.11%(4)      2.90%      2.56%   2.59%(4)
---------------------------------
Portfolio Turnover Rate                    34%        28%        44%     59%(5)
---------------------------------
Net Assets, End of Period
(in thousands)                             $16        $15        $19        $17
--------------------------------------------------------------------------------

(1) Six months ended November 30, 2006 (unaudited).

(2) February 27, 2004 (commencement of sale) through May 31, 2004.

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

(4) Annualized.

(5) Portfolio turnover is calculated at the fund level. Percentage indicated was
    calculated for the year ended May 31, 2004.




Florida Municipal Bond - Financial Highlights

FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED MAY 31 (EXCEPT AS NOTED)
--------------------------------------------------------------------------------
                                                       C CLASS
--------------------------------------------------------------------------------
                                       2006(1)     2006       2005      2004(2)
--------------------------------------------------------------------------------
PER-SHARE DATA
--------------------------------------------------------------------------------
Net Asset Value,
Beginning of Period                    $10.55     $10.81     $10.68     $11.11
--------------------------------------------------------------------------------
Income From Investment Operations
---------------------------------
  Net Investment Income (Loss)           0.17       0.31       0.28       0.07
---------------------------------
  Net Realized and
  Unrealized Gain (Loss)                 0.16      (0.26)      0.13      (0.43)
--------------------------------------------------------------------------------
  Total From
  Investment Operations                  0.33       0.05       0.41      (0.36)
--------------------------------------------------------------------------------
Distributions
---------------------------------
  From Net Investment Income            (0.17)     (0.31)     (0.28)     (0.07)
--------------------------------------------------------------------------------
Net Asset Value, End of Period         $10.71     $10.55     $10.81     $10.68
================================================================================
  TOTAL RETURN(3)                        3.11%      0.47%      3.84%     (3.28)%

RATIOS/SUPPLEMENTAL DATA
--------------------------------------------------------------------------------
Ratio of Operating Expenses
to Average Net Assets                 1.49%(4)      1.49%      1.50%   1.51%(4)
---------------------------------
Ratio of Net Investment Income
(Loss) to Average Net Assets          3.11%(4)      2.90%      2.56%   2.59%(4)
---------------------------------
Portfolio Turnover Rate                    34%        28%        44%     59%(5)
---------------------------------
Net Assets, End of Period
(in thousands)                          $1,182     $1,570     $1,827     $1,032
--------------------------------------------------------------------------------

(1) Six months ended November 30, 2006 (unaudited).

(2) February 27, 2004 (commencement of sale) through May 31, 2004.

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

(4) Annualized.

(5) Portfolio turnover is calculated at the fund level. Percentage indicated was
    calculated for the year ended May 31, 2004.




TAX-FREE BOND FUND


Tax-Free Bond - Financial Highlights

For a Share Outstanding Throughout the Years Ended May 31 (except as noted)
---------------------------------------------------------------------------------------------------------
                                                                INVESTOR CLASS
---------------------------------------------------------------------------------------------------------
                                          2006(1)     2006       2005      2004        2003        2002
---------------------------------------------------------------------------------------------------------
PER-SHARE DATA
---------------------------------------------------------------------------------------------------------
Net Asset Value,
Beginning of Period                       $10.67     $10.88     $10.71    $11.19      $10.63      $10.50
---------------------------------------------------------------------------------------------------------
Income From Investment Operations
---------------------------------
  Net Investment Income (Loss)              0.21       0.40       0.38      0.37        0.39        0.44
---------------------------------
  Net Realized and Unrealized
  Gain (Loss)                               0.20      (0.20)      0.17     (0.45)       0.58        0.22
---------------------------------------------------------------------------------------------------------
  Total From
  Investment Operations                     0.41       0.20       0.55     (0.08)       0.97        0.66
---------------------------------------------------------------------------------------------------------
Distributions
---------------------------------
  From Net Investment Income               (0.21)     (0.40)     (0.38)    (0.37)      (0.39)      (0.44)
---------------------------------
  From Net Realized Gains                     --      (0.01)        --     (0.03)      (0.02)      (0.09)
---------------------------------------------------------------------------------------------------------
  Total Distributions                      (0.21)     (0.41)     (0.38)    (0.40)      (0.41)      (0.53)
---------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period            $10.87     $10.67     $10.88    $10.71      $11.19      $10.63
=========================================================================================================
  TOTAL RETURN(2)                           3.88%      1.87%      5.16%    (0.79)%      9.31%      6.45%
---------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
---------------------------------------------------------------------------------------------------------
Ratio of Operating Expenses
to Average Net Assets                    0.49%(3)      0.49%      0.50%      0.51%      0.51%      0.51%
---------------------------------
Ratio of Net Investment
Income (Loss)
to Average Net Assets                    3.89%(3)      3.73%      3.46%      3.34%      3.62%      4.14%
---------------------------------
Portfolio Turnover Rate                       27%        79%        77%        60%        57%        86%
---------------------------------
Net Assets, End of Period
(in thousands)                           $631,398   $665,458   $610,420   $583,689   $620,000   $382,447
---------------------------------------------------------------------------------------------------------

(1) Six months ended November 30, 2006 (unaudited).

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

(3) Annualized.







                       STATEMENT OF ADDITIONAL INFORMATION

                                 April __, 2007

                                REORGANIZATION OF

                AMERICAN CENTURY ARIZONA MUNICIPAL BOND FUND AND
                  AMERICAN CENTURY FLORIDA MUNICIPAL BOND FUND
               EACH, A SERIES OF AMERICAN CENTURY MUNICIPAL TRUST


                    IN EXCHANGE FOR INVESTOR CLASS SHARES OF


                       AMERICAN CENTURY TAX-FREE BOND FUND
                  A SERIES OF AMERICAN CENTURY MUNICIPAL TRUST


                                     AND THE

            RECLASSIFICATION OF SHARE CLASSES OF THE FOLLOWING FUNDS:


ADVISOR  CLASS SHARES OF THE  FOLLOWING  FUNDS WILL BE  RECLASSIFIED  AS A CLASS
SHARES OF THE SAME FUNDS:


                     AMERICAN CENTURY DIVERSIFIED BOND FUND
                        AMERICAN CENTURY HIGH-YIELD FUND
                    AMERICAN CENTURY PRIME MONEY MARKET FUND
               EACH, A SERIES OF AMERICAN CENTURY INVESTMENT TRUST


ADVISOR CLASS SHARES OF THE  FOLLOWING  FUNDS WILL BE  RECLASSIFIED  AS INVESTOR
CLASS SHARES OF THE SAME FUNDS:


                       AMERICAN CENTURY TAX-FREE BOND FUND
                  A SERIES OF AMERICAN CENTURY MUNICIPAL TRUST

                                       AND

                         AMERICAN CENTURY UTILITIES FUND
          A SERIES OF AMERICAN CENTURY QUANTITATIVE EQUITY FUNDS, INC.


                      Each fund has the following address:

                                4500 Main Street
                           Kansas City, Missouri 64111
                          Telephone No.: 1-877-345-8836

This  Statement  of  Additional  Information  dated  April  __,  2007,  is not a
prospectus.  A Proxy Statement and Prospectus  dated April __, 2007,  related to
the  above-referenced  matters may be obtained from American  Century Funds,  on
behalf of the funds listed above, by writing or calling  American  Century Funds
at the address and telephone  number shown above.  This  Statement of Additional
Information  should  be  read in  conjunction  with  such  Proxy  Statement  and
Prospectus.



                                TABLE OF CONTENTS

1.   The statement of additional  information for Diversified  Bond,  High-Yield
     and Prime Money Market, each a series of American Century Investment Trust,
     dated November 30, 2006.

2.   The  statement  of  additional   information  for  Tax-Free  Bond,  Arizona
     Municipal  Bond and  Florida  Municipal  Bond,  each a series  of  American
     Century Municipal Trust, dated October 1, 2006.

3.   The statement of additional information for Utilities, a series of American
     Century Quantitative Equity Funds, Inc., dated November 30, 2006.

4.   Audited Financial Statements of Tax-Free Bond, a series of American Century
     Municipal Trust, dated May 31, 2006.

5.   Audited  Financial   Statements  of  Arizona  Municipal  Bond  and  Florida
     Municipal Bond, each a series of American Century  Municipal  Trust,  dated
     May 31, 2006.

6.   Audited  Financial  Statements of Diversified  Bond and High-Yield,  each a
     series of American Century Investment Trust, dated March 31, 2006.

7.   Audited  Financial  Statements of Prime Money Market,  a series of American
     Century Investment Trust, dated March 31, 2006.

8.   Audited  Financial  Statements of Utilities,  a series of American  Century
     Quantitative Equity Funds, Inc., dated December 31, 2006.

9.   Unaudited  Financial  Statements  of  Tax-Free  Bond,  a series of American
     Century Municipal Trust, dated November 30, 2006.

10.  Unaudited  Financial  Statements  of  Arizona  Municipal  Bond and  Florida
     Municipal Bond, each a series of American Century  Municipal  Trust,  dated
     November 30, 2006.

11.  Unaudited Financial  Statements of Diversified Bond and High-Yield,  each a
     series of American Century Investment Trust, dated September 30, 2006.

12.  Unaudited Financial  Statements of Prime Money Market, a series of American
     Century Investment Trust, dated September 30, 2006.

13.  Pro Forma Financial  Statements of Arizona Municipal Bond and Tax-Free Bond
     combined.

14.  Pro Forma Financial  Statements of Florida Municipal Bond and Tax-Free Bond
     combined.

15.  Pro Forma Financial Statements of Arizona Municipal Bond, Florida Municipal
     Bond and Tax-Free Bond.



                      INFORMATION INCORPORATED BY REFERENCE

The  combined   statement  of  additional   information  for  Diversified  Bond,
High-Yield and Prime Money Market,  each a series of American Century Investment
Trust, dated November 30, 2006, is incorporated by reference to American Century
Investment Trust's Post-Effective Amendment No. 37 to its Registration Statement
on Form N-1A  (File No.  811-07822)  which was  filed  with the  Securities  and
Exchange Commission on or about November 29, 2006.

The combined  statement of additional  information  for Tax-Free  Bond,  Arizona
Municipal Bond and Florida  Municipal  Bond,  each a series of American  Century
Municipal  Trust,  dated October 1, 2006, as  supplemented  January 26, 2007, is
incorporated by reference to American Century Municipal  Trust's  Post-Effective
Amendment No. 51 to its Registration Statement on Form N-1A (File No. 811-04025)
which  was  filed  with  the  Securities  and  Exchange  Commission  on or about
September 28, 2006.

A  statement  of  additional  information  for  Utilities,  a series of American
Century   Quantitative   Equity  Funds,   Inc.,  dated  November  30,  2006,  is
incorporated by reference to American Century  Quantitative Equity Funds, Inc.'s
Post-Effective Amendment No. 46 to its Registration Statement on Form N-1A (File
No. 811-05447) which was filed with the Securities and Exchange Commission on or
about November 29, 2006.

Audited  Financial  Statements  of Tax-Free  Bond, a series of American  Century
Municipal Trust, dated May 31, 2006, are incorporated by reference to the fund's
Annual Report to shareholders,  which was filed with the Securities and Exchange
Commission  pursuant to Section 30(b) of the Investment  Company Act of 1940, as
amended, on or about August 4, 2006.

Audited  Financial  Statements of Arizona  Municipal Bond and Florida  Municipal
Bond, each a series of American Century Municipal Trust, dated May 31, 2006, are
incorporated by reference to the funds' Annual Report to shareholders, which was
filed with the Securities and Exchange  Commission  pursuant to Section 30(b) of
the Investment Company Act of 1940, as amended, on or about August 4, 2006.

Audited Financial  Statements of Diversified Bond and High-Yield,  each a series
of American Century  Investment Trust, dated March 31, 2006, are incorporated by
reference to the funds' Annual Report to shareholders,  which was filed with the
Securities and Exchange  Commission  pursuant to Section 30(b) of the Investment
Company Act of 1940, as amended, on or about May 31, 2006.

Audited Financial Statements of Prime Money Market, a series of American Century
Investment  Trust,  dated March 31, 2006, are  incorporated  by reference to the
fund's Annual Report to  shareholders,  which was filed with the  Securities and
Exchange  Commission  pursuant to Section 30(b) of the Investment Company Act of
1940, as amended, on or about May 31, 2006.

Audited  Financial  Statements  of  Utilities,  a  series  of  American  Century
Quantitative  Equity Funds,  Inc.,  dated December 31, 2006, are incorporated by
reference to the fund's Annual Report to shareholders,  which was filed with the
Securities and Exchange  Commission  pursuant to Section 30(b) of the Investment
Company Act of 1940, as amended, on or about ______, 2007.

Unaudited  Financial  Statements of Tax-Free Bond, a series of American  Century
Municipal  Trust,  dated November 30, 2006, are incorporated by reference to the
fund's  Semiannual  Report to shareholders,  which was filed with the Securities
and Exchange  Commission pursuant to Section 30(b) of the Investment Company Act
of 1940, as amended, on or about February 1, 2007.

Unaudited  Financial  Statements of Arizona Municipal Bond and Florida Municipal
Bond,  each a series of American  Century  Municipal  Trust,  dated November 30,
2006,  are  incorporated  by  reference  to  the  fund's  Semiannual  Report  to
shareholders,  which was  filed  with the  Securities  and  Exchange  Commission
pursuant to Section 30(b) of the Investment Company Act of 1940, as amended,  on
or about February 1, 2007.

Unaudited Financial Statements of Diversified Bond and High-Yield, each a series
of American Century Investment Trust, dated September 30, 2006, are incorporated
by reference to the funds'  Semiannual  Report to shareholders,  which was filed
with the  Securities  and Exchange  Commission  pursuant to Section 30(b) of the
Investment Company Act of 1940, as amended, on or about December 1, 2006.

Unaudited  Financial  Statements  of Prime  Money  Market,  a series of American
Century  Investment  Trust,  dated  September  30,  2006,  are  incorporated  by
reference to the fund's Semiannual Report to shareholders,  which was filed with
the  Securities  and  Exchange  Commission  pursuant  to  Section  30(b)  of the
Investment Company Act of 1940, as amended, on or about December 1, 2006.

References  to the  above-listed  documents  include  any  supplements  to  such
documents in effect as of the date of the related Proxy Statement/Prospectus.




Arizona Municipal ("Fund 1") /  Florida Municipal ("Fund 2") / Tax-Free Bond ("Fund 3")
PROFORMA COMBINED SCHEDULE OF INVESTMENTS                                                                          November 30, 2006
(Unaudited)



  FUND 1      FUND 2      FUND 3      COMBINED                                                         FUND 1     FUND 2       FUND 3      COMBINED
  PRINCIPAL   PRINCIPAL   PRINCIPAL   PRINCIPAL                                                        MARKET     MARKET       MARKET      MARKET
  AMOUNT      AMOUNT      AMOUNT      AMOUNT     SECURITY DESCRIPTION            RATE    MAT. DATE     VALUE      VALUE        VALUE       VALUE
----------------------------------------------------------------------------------------------------------------------------------------------------
MUNICIPAL SECURITIES - 98.8%

  ALABAMA - 0.8%

      -          -       $ 865,000   $ 865,000   Alabama Water Pollution Control  5.75%   8/15/2018       -          -       $  931,891   $  931,891
                                                 Auth. GO (Ambac)(1)

      -          -         190,000     190,000   East Central Industrial          5.25%    9/1/2008       -          -          195,611      195,611
                                                 Development Auth. Rev.,
                                                 Prerefunded at 100% of Par
                                                 (Ambac)(2)

      -          -         810,000     810,000   East Central Industrial          5.25%    9/1/2013       -          -          832,874      832,874
                                                 Development Auth. Rev. (Ambac)

      -          -       1,035,000   1,035,000   Helena Utilities Board Rev.      5.75%    4/1/2020       -          -        1,148,260    1,148,260
                                                 (MBIA)

      -          -         790,000     790,000   Helena Utilities Board Rev.      5.75%    4/1/2022       -          -          873,819      873,819
                                                  (MBIA)

      -          -         840,000     840,000   Helena Utilities Board Rev.,     5.75%    4/1/2012       -          -          936,247      936,247
                                                 Prerefunded at 101% of Par
                                                 (MBIA)(2)

      -          -         645,000     645,000   Helena Utilities Board Rev.,     5.75%    4/1/2012       -          -          718,904      718,904
                                                 Prerefunded at 101% of Par
                                                 (MBIA)(2)
                                                                                                   -------------------------------------------------
                                                                                                          -          -        5,637,606    5,637,606
                                                                                                   =================================================

  ALASKA - 0.2%

      -          -       1,125,000   1,125,000   Borough of Aleutians East Rev.,  5.00%    6/1/2020       -          -        1,180,980    1,180,980
                                                 (Aleutian Pribilof Islands Inc.)                  =================================================
                                                 (ACA)
  ARIZONA - 11.5%

 $1,000,000      -        935,000    1,935,000   Arizona Board of Regents COP,    5.00%    6/1/2018  $1,095,890      -        1,024,657    2,120,547
                                                 Series 2006 A, (University of
                                                 Arizona) (Ambac)

      -          -       1,275,000   1,275,000   Arizona Health Facilities Auth.  4.00%    4/1/2012       -          -        1,279,080    1,279,080
                                                 Rev., (Blood Systems
                                                 Incorporated)

      -          -       1,175,000   1,175,000   Arizona Health Facilities Auth.  4.50%    4/1/2016       -          -        1,203,717    1,203,717
                                                 Rev., (Blood Systems
                                                 Incorporated)

  1,000,000      -           -       1,000,000   Arizona Health Facilities Auth.  5.00%    4/1/2021   1,044,230      -             -       1,044,230
                                                 Rev., (Blood Systems
                                                 Incorporated)

  1,750,000      -           -       1,750,000   Arizona School Facilities Board  5.50%    7/1/2011   1,894,358      -             -       1,894,358
                                                 Rev., (State School Improvement),
                                                 Prerefunded at 100% of Par(2)

  1,000,000     -            -       1,000,000   Arizona Student Loan Acquisition 5.65%    5/1/2014   1,067,860      -             -       1,067,860
                                                 Auth. Rev., Series 1999 A1,
                                                 (Guaranteed Student Loans)

      -         -        1,000,000   1,000,000   Arizona Tourism & Sports Auth.   5.00%    7/1/2011       -          -        1,039,150    1,039,150
                                                 Rev., (Baseball Training
                                                 Facilities)

      -         -        1,000,000   1,000,000   Arizona Tourism & Sports Auth.   5.00%    7/1/2012       -          -        1,044,240    1,044,240
                                                 Rev., (Baseball Training
                                                 Facilities)

      -         -        2,000,000   2,000,000   Arizona Tourism & Sports Auth.   5.25%    7/1/2017       -          -        2,181,500    2,181,500
                                                 Rev., Series 2003 A,
                                                 (Multipurpose Stadium Facility)
                                                 (MBIA)

  1,880,000     -            -       1,880,000   Arizona Tourism & Sports Auth.   5.00%    7/1/2013   1,970,654      -             -       1,970,654
                                                 Tax Rev., (Baseball Training
                                                 Facilities)(1)

      -         -        2,130,000    2,130,000  Energy Management Services LLC   4.50%    7/1/2012       -          -        2,236,607    2,236,607
                                                 Rev., (Arizona State University -
                                                 Main Campus) (MBIA)

  1,910,000     -            -        1,910,000  Energy Management Services LLC   4.50%    7/1/2011   1,991,462      -             -       1,991,462
                                                 Rev., (Arizona State University -
                                                 Main Campus) (MBIA)(1)

     -          -          340,000      340,000  Gilbert Water Resource Municipal  4.25%   4/1/2011       -          -          338,983      338,983
                                                 Property Corp. Rev.

  1,000,000     -        3,000,000    4,000,000  Gilbert Water Resource Municipal  4.90%   4/1/2019   1,018,340      -        3,055,020    4,073,360
                                                 Property Corp. Rev., (Development
                                                 Fee & Sub-Lien)

   540,000      -            -          540,000  Glendale Industrial Development  5.375%  5/15/2028     555,077      -             -         555,077
                                                 Auth. Rev., Series 1998 A,
                                                 (Midwestern University)

   460,000      -            -          460,000  Glendale Industrial Development  5.375%  5/15/2008     476,555      -             -         476,555
                                                 Auth. Rev., Series 1998 A,
                                                 (Midwestern University),
                                                 Prerefunded at 101% of Par(2)

   500,000      -            -          500,000  Glendale Industrial Development   5.75%  5/15/2021     540,120      -             -         540,120
                                                 Auth. Rev., Series 2001 A,
                                                 (Midwestern University)

 1,740,000      -            -        1,740,000  Greater Arizona Development Auth. 5.00%   8/1/2023   1,873,580      -             -       1,873,580
                                                 Rev., Series 2005 A (MBIA)(1)

     -          -        1,155,000    1,155,000  Maricopa County Gilbert Unified   5.75%   7/1/2011       -          -        1,264,956    1,264,956
                                                 School District No. 41 GO  (FSA)

 1,040,000      -            -        1,040,000  Maricopa County Kyrene Elementary 4.30%   7/1/2007   1,018,774      -             -       1,018,774
                                                 School District No. 28 GO, Series
                                                 2001 B (MBIA)(4)

 1,615,000      -            -        1,615,000  Maricopa County Litchfield        4.55%   7/1/2007   1,623,915      -             -       1,623,915
                                                 Elementary School District No. 79
                                                 GO, Series 2000 A, (Projects of
                                                 1998) (FSA)

 1,000,000      -            -        1,000,000  Maricopa County Peoria Unified    5.00%   7/1/2024   1,085,990      -             -       1,085,990
                                                 School District No. 11 GO,
                                                 (School Improvement) (MBIA)

 1,000,000      -            -        1,000,000  Maricopa County Phoenix           5.50%   7/1/2007   1,021,240      -             -       1,021,240
                                                 Elementary School District No. 1
                                                 GO, Prerefunded at 101% of Par
                                                 (MBIA)(2)

 1,445,000      -            -        1,445,000  Maricopa County Phoenix Union     4.75%   7/1/2011   1,521,816      -             -       1,521,816
                                                 High School District No. 210 GO
                                                 (FSA)

     -          -        2,415,000    2,415,000  Maricopa County Saddle Mountain   5.25%   7/1/2011       -          -        2,540,773    2,540,773
                                                 Unified School District No. 90
                                                 GO, Series 2003 A

     -          -        2,000,000    2,000,000  Maricopa County Saddle Mountain   5.25%   7/1/2012       -          -        2,119,360    2,119,360
                                                 Unified School District No. 90
                                                 GO, Series 2003 A

 1,955,000      -            -        1,955,000  Maricopa County Saddle Mountain   5.00%   7/1/2010   2,021,293      -             -       2,021,293
                                                 Unified School District No. 90
                                                 GO, Series 2003 A(1)

 1,000,000      -            -        1,000,000  Maricopa County Scottsdale        6.60%   7/1/2012   1,154,100      -             -       1,154,100
                                                 Elementary School District No.
                                                 48 GO

 1,000,000      -            -        1,000,000  Maricopa County Scottsdale        4.00%   7/1/2016   1,025,220      -             -       1,025,220
                                                 Unified School District No. 48
                                                 GO, Series 2006 B (FSA)

 1,265,000      -            -        1,265,000  Mohave County Community College   5.75%   3/1/2014   1,348,427      -             -       1,348,427
                                                 District COP (Ambac)

 1,150,000      -        1,000,000    2,150,000  Mohave County Community College   6.00%   3/1/2020   1,233,387      -        1,072,510    2,305,897
                                                 District Rev., (State Board of
                                                 Directors) (MBIA)

     -          -        2,155,000    2,155,000  Mohave County Industrial          5.00%   4/1/2014       -          -        2,334,878    2,334,878
                                                 Development Auth. GO, Series 2004
                                                 A, (Mohave Prison) (XLCA)

 1,815,000      -            -        1,815,000  Navajo County Unified School      5.00%   7/1/2017   2,014,177      -             -       2,014,177
                                                 District No. 20 Rev., Series 2006
                                                 A (MBIA)(1)

 1,000,000      -            -        1,000,000  Phoenix Civic Improvement Corp.   5.00%   7/1/2021   1,083,750      -             -       1,083,750
                                                 Rev., (Junior Lien) (MBIA)

 1,000,000      -            -        1,000,000  Phoenix Civic Improvement Corp.   5.50%    7/1/2019  1,092,960      -             -       1,092,960
                                                 Water System Rev., (Junior Lien)
                                                 (FGIC)

 1,000,000      -            -        1,000,000  Phoenix Civic Improvement Corp.   6.25%    7/1/2010  1,099,830      -             -       1,099,830
                                                 Water System Rev., (Junior Lien),
                                                 Prerefunded at 101% of Par
                                                 (FGIC)(2)

 1,070,000      -            -        1,070,000  Phoenix GO, Series 1995 A         6.25%    7/1/2017  1,309,787      -             -       1,309,787

   240,000      -            -          240,000  Phoenix Industrial Development    6.60%   12/1/2029    246,053      -             -         246,053
                                                 Auth. Single Family Mortgage
                                                 Rev., Series 1998 A
                                                 (GNMA/FNMA/FHLMC)

    -          -         1,200,000    1,200,000  Pima County Indian                4.60%   7/1/2013       -          -        1,263,612    1,263,612
                                                 Oasis-Baboquivari Unified School
                                                 District No. 40 GO, Series 2002
                                                 A (MBIA)

 1,710,000     -             -        1,710,000  Pima County Metropolitan Domestic 5.25%   7/1/2018   1,951,794      -             -       1,951,794
                                                 Water Improvement District Rev.
                                                 (Ambac)(1)

 1,800,000     -             -        1,800,000  Pima County Metropolitan Domestic 5.25%   7/1/2019   2,067,875      -             -       2,067,875
                                                 Water Improvement District Rev.
                                                 (Ambac)(1)

    -          -         2,600,000    2,600,000  Pima County Tucson Unified       4.625%   7/1/2013       -          -        2,745,158    2,745,158
                                                 School District No. 1 GO (FSA)

 1,125,000     -             -        1,125,000  Pima County Unified School        5.50%   7/1/2015   1,204,988      -             -       1,204,988
                                                 District No. 6 Marana GO (FGIC)

    -          -         3,970,000    3,970,000  Pinal County COP                  5.00%  12/1/2025       -          -        4,171,597    4,171,597

 1,000,000     -             -        1,000,000  Pinal County COP                  5.00%  12/1/2026   1,050,780      -             -       1,050,780

   820,000     -             -          820,000  Pinal County COP (Ambac)          4.75%   6/1/2013     864,985      -             -         864,985

 1,100,000     -             -        1,100,000  Pinal County Unified School       5.00%   7/1/2023   1,188,781      -             -       1,188,781
                                                 District No. 43 Apache Junction
                                                 GO, Series 2005 A, (School
                                                 Improvement) (MBIA)

   775,000     -             -          775,000  Pinal County Unified School       5.00%   7/1/2024     842,293      -             -         842,293
                                                 District No. 43 Apache Junction
                                                 GO, Series 2006 B, (School
                                                 Improvement) (FGIC)

    -          -         1,000,000    1,000,000  Queen Creek Improvement District  5.00%   1/1/2016       -          -        1,036,610    1,036,610
                                                 No. 1 Special Tax Rev.

 1,000,000     -             -        1,000,000  Queen Creek Improvement District  5.00%   1/1/2011   1,045,570      -             -       1,045,570
                                                 No. 1 Special Tax Rev.

 1,600,000     -             -        1,600,000  Scottsdale GO, Prerefunded at     6.25%   7/1/2009   1,707,632      -             -       1,707,632
                                                 100% of Par(2)

 1,000,000     -             -        1,000,000  Sedona COP, Prerefunded at 101%   5.75%   7/1/2009   1,063,890      -             -       1,063,890
                                                 of Par(2)

    -          -         3,085,000    3,085,000  South Tucson Municipal Property   5.50%   6/1/2024       -          -        3,235,733    3,235,733
                                                 Corp. Rev.

 1,645,000     -              -       1,645,000  University of Arizona COP,        5.50%   6/1/2017   1,794,202      -             -       1,794,202
                                                 Series 2002 A (Ambac)

   500,000     -              -         500,000  University of Arizona COP,        5.00%   6/1/2024     537,045      -             -         537,045
                                                 Series 2005 B (Ambac)

   725,000     -              -         725,000  Westpark Community Facility       5.25%  7/15/2031     739,500      -             -         739,500
                                                 District GO
                                                                                                     -----------------------------------------------
                                                                                                     49,488,180      -       35,188,141   84,676,321
                                                                                                     ===============================================
  CALIFORNIA - 4.0%

    -          -         7,500,000    7,500,000  California GO(1)                  5.00%   6/1/2026       -          -        7,999,872    7,999,872

    -          -         1,000,000    1,000,000  California Public Works Board     6.20%  10/1/2008       -          -        1,001,930    1,001,930
                                                 Lease COP, Series 1994 A,
                                                 (Various University of California
                                                 Projects)

    -          -         1,000,000    1,000,000  California Statewide Communities  4.70%   6/1/2009       -          -        1,024,540    1,024,540
                                                 Auth. Rev., Series 2002 E,
                                                 (Kaiser Permanente)

    -          -         1,075,000    1,075,000  California Statewide Communities  5.00%  10/1/2012       -          -        1,161,462    1,161,462
                                                 Development Auth. Water & Waste
                                                 Rev., Series 2004 A, (Pooled
                                                 Financing Program) (FSA)

    -          -         2,000,000    2,000,000  California Statewide Communities  5.25%  10/1/2019       -          -        2,197,120    2,197,120
                                                 Development Auth. Water & Waste
                                                 Rev., Series 2004 A, (Pooled
                                                 Financing Program) (FSA)(1)

    -          -         3,000,000    3,000,000  Imperial Irrigation District COP, 5.50%   7/1/2029       -          -        3,247,140    3,247,140
                                                 (Water Systems) (Ambac)

    -          -         2,200,000    2,200,000  Manteca Unified School District   5.25%   8/1/2014       -          -        2,463,494    2,463,494
                                                 GO, Prerefunded at 100% of Par
                                                 (FSA)(2)

    -          -         1,000,000    1,000,000  Plumas Unified School District    5.25%   8/1/2020       -          -        1,149,390    1,149,390
                                                 GO (FSA)

    -          -         2,145,000    2,145,000  San Francisco Uptown Parking      5.50%   7/1/2015       -          -        2,341,246    2,341,246
                                                 Corporation Rev., (Union Square)
                                                 (MBIA)

    -          -         1,000,000    1,000,000  San Francisco Uptown Parking      6.00%   7/1/2020       -          -        1,114,190    1,114,190
                                                 Corporation Rev., (Union Square)
                                                 (MBIA)

    -          -         2,000,000    2,000,000  San Francisco Uptown Parking      6.00%   7/1/2031       -          -        2,210,020    2,210,020
                                                 Corporation Rev., (Union Square)
                                                 (MBIA)

    -          -         1,575,000    1,575,000  San Marcos Public Facilities      5.00%   8/1/2020       -          -        1,723,334    1,723,334
                                                 Auth. Tax Allocation Rev., Series
                                                 2006 A (Project Area No. 3)
                                                 (Ambac)

    -          -         2,055,000    2,055,000  Westlands Water District COP,     5.00%   9/1/2024      -           -        2,197,370    2,197,370
                                                 Series 2005 A (MBIA)
                                                                                                     -----------------------------------------------
                                                                                                         -           -       29,831,108   29,831,108
                                                                                                     ===============================================
  COLORADO - 2.4%

    -          -         1,100,000    1,100,000  Arapahoe County Water &           5.75%  12/1/2017      -           -        1,225,081    1,225,081
                                                 Wastewater Public Improvement
                                                 District GO, Series 2002 B (MBIA)

    -          -           530,000      530,000  Colorado Educational & Cultural   4.50%  11/1/2009      -           -          531,489      531,489
                                                 Facilities Auth. Rev.,
                                                 (University Facilities-Northwest
                                                 Nazarene)

    -          -           900,000      900,000  Colorado Educational & Cultural   4.75%  11/1/2010      -           -          912,330      912,330
                                                 Facilities Auth. Rev.,
                                                 (University Facilities-Northwest
                                                 Nazarene)

    -          -           800,000      800,000  Colorado Educational & Cultural   4.60%  11/1/2016      -           -          799,656      799,656
                                                 Facilities Auth. Rev.,
                                                 (University Facilities-Northwest
                                                 Nazarene)

    -          -         1,000,000    1,000,000  Colorado Health Facilities Auth.  5.25%   6/1/2020      -           -        1,075,890    1,075,890
                                                 Rev., (The Evangelical Lutheran
                                                 Good Samaritan Society)

    -          -         1,300,000    1,300,000  Colorado Health Facilities Auth.  5.25%   6/1/2021      -           -        1,396,564    1,396,564
                                                 Rev., (The Evangelical Lutheran
                                                 Good Samaritan Society)

    -          -           500,000      500,000  Colorado Health Facilities Auth.  4.00%  1/15/2007      -           -          500,055      500,055
                                                 Rev., (Vail Valley Medical
                                                 Center)

    -          -           335,000      335,000  Colorado Health Facilities Auth.  4.50%  1/15/2009      -           -          338,980      338,980
                                                 Rev., (Vail Valley Medical
                                                 Center)

    -          -            50,000       50,000  Colorado Water Resources & Power  6.25%   9/1/2016      -           -           54,738       54,738
                                                 Development Auth. Rev., Series
                                                 2000 A

    -          -           450,000      450,000  Colorado Water Resources & Power  6.25%   9/1/2010      -           -          492,890      492,890
                                                 Development Auth. Rev., Series
                                                 2000 A, Prerefunded at 100% of
                                                 Par(2)

    -          -         1,430,000    1,430,000  Denver West Metropolitan          5.25%  12/1/2024      -           -        1,485,026    1,485,026
                                                 District GO


    -          -         1,000,000    1,000,000  Douglas & Elbert Counties School  5.75% 12/15/2012      -           -        1,118,960    1,118,960
                                                 District No. Re-1 GO,  Series
                                                 2002 B, Prerefunded at 100% of
                                                 Par (FSA/State Aid
                                                 Withholding)(2)

    -          -         1,100,000    1,100,000  Eagle Bend Metropolitan District  5.25%  12/1/2023      -           -        1,176,670    1,176,670
                                                 No. 2 GO (RADIAN)

    -          -         1,020,000    1,020,000  El Paso County School District    4.25% 12/15/2013      -           -        1,051,069    1,051,069
                                                 No 8 & Fountain-Fort Carson
                                                 School District Finance Corp.
                                                 COP (Ambac)

    -          -         5,000,000    5,000,000  University of Colorado Regents    6.00%  12/1/2022      -           -        5,453,500    5,453,500
                                                 COP (MBIA-IBC)(1)                                   -----------------------------------------------
                                                                                                         -           -       17,612,898   17,612,898
                                                                                                     ===============================================

  CONNECTICUT - 1.7%

    -          -         2,150,000    2,150,000  City of Bridgeport GO, Series     5.25%  8/15/2014      -           -        2,396,003    2,396,003
                                                 2004 A, Prerefunded at 100% of
                                                 Par (MBIA)(1)(2)

    -          -         5,000,000    5,000,000  Connecticut GO, Series 2006 C     5.00%   6/1/2014      -           -        5,469,400    5,469,400

    -          -         2,595,000    2,595,000  Connecticut GO, Series 2006 D     5.00%   1/1/2015      -           -        2,867,501    2,867,501

    -          -         2,000,000    2,000,000  Connecticut GO, Series 2006 D     5.00%  11/1/2026      -           -        2,183,780    2,183,780
                                                                                                     -----------------------------------------------
                                                                                                         -           -       12,916,684   12,916,684
                                                                                                     ===============================================
  DISTRICT OF COLUMBIA - 0.4%

    -          -         1,385,000    1,385,000  District of Columbia GO, Series   5.50%   6/1/2009      -           -        1,449,638    1,449,638
                                                 1999 B (FSA)

    -          -         1,155,000    1,155,000  District of Columbia Rev.,        5.20%   7/1/2012      -           -        1,210,151    1,210,151
                                                 (Gonzaga College High School)                       -----------------------------------------------
                                                 (FSA)                                                   -           -        2,659,789    2,659,789
                                                                                                     ===============================================

  FLORIDA - 5.2%

    -      $1,110,000         -       1,110,000  Broward County Airport Systems    5.25%  10/1/2012      -      $1,146,386         -       1,146,386
                                                 Rev., (Passenger Facility),
                                                 (Conventional Lien H-1) (Ambac)

    -         400,000         -         400,000  Broward County Educational        5.00%   4/1/2014      -         422,848         -         422,848
                                                 Facilities Auth. Rev., Series
                                                 2004 B, (Nova Southeastern)

    -         500,000         -         500,000  Broward County Educational        5.50%   4/1/2015      -         542,285         -         542,285
                                                 Facilities Auth. Rev., Series
                                                 2004 B, (Nova Southeastern)

    -         525,000         -         525,000  Broward County Educational        5.50%   4/1/2016      -         568,192         -         568,192
                                                 Facilities Auth. Rev., Series
                                                 2004 B, (Nova Southeastern)

    -         500,000         -         500,000  Broward County School Board COP, 5.375%   7/1/2011      -         538,620         -         538,620
                                                 Series 2002 B, Prerefunded at
                                                 100% of Par (FSA)(2)

    -       1,000,000         -       1,000,000  Callaway/Bay County Wastewater    5.00%   9/1/2023      -       1,069,820         -       1,069,820
                                                 System Rev. (MBIA)

    -       1,475,000         -       1,475,000  Collier County School Board COP   5.50%  2/15/2012      -       1,605,833         -       1,605,833
                                                 (FSA)(1)

    -       1,150,000         -       1,150,000  Duval County School Board COP     5.75%   7/1/2016      -       1,209,478         -       1,209,478
                                                 (FSA)

    -         100,000         -         100,000  Escambia County Housing Finance   4.85%   4/1/2007      -         100,301         -         100,301
                                                 Auth. Single Family Mortgage
                                                 Rev., Series 1998 A,
                                                 (Multi-County Program) (GNMA/FNMA)

    -         195,000         -         195,000  Florida Housing Finance Corp.     4.60%   1/1/2021      -         195,930         -         195,930
                                                 Rev., Series 1999-2, (Homeowner
                                                 Mortgage) (FSA)

    -       1,000,000         -       1,000,000  Florida Municipal Loan Council    5.25%  11/1/2021      -       1,085,850         -       1,085,850
                                                 GO, Series 2002 C (MBIA)

    -         350,000         -         350,000  Gainesville Utilities System      5.75%  10/1/2009      -         370,923         -         370,923
                                                 Rev., Series 1996 A

    -         675,000         -         675,000  Greater Orlando Aviation Auth.    5.25%  10/1/2009      -         704,369         -         704,369
                                                 Rev., Series 1999 A (FGIC)

    -          -         1,000,000    1,000,000  Halifax Hospital Medical Center   5.25%   6/1/2016      -           -        1,087,050    1,087,050
                                                 Rev., Series 2006 A

    -          -         3,495,000    3,495,000  Halifax Hospital Medical Center   5.25%   6/1/2017      -           -        3,783,827    3,783,827
                                                 Rev., Series 2006 A

    -       1,000,000         -       1,000,000  Halifax Hospital Medical Center   5.25%   6/1/2015      -       1,081,630         -       1,081,630
                                                 Rev., Series 2006 A

    -       1,000,000         -       1,000,000  Halifax Hospital Medical Center   5.25%   6/1/2018      -       1,081,660         -       1,081,660
                                                 Rev., Series 2006 A

    -          -           500,000      500,000  Highlands County Health           5.00% 11/15/2009      -           -          516,845      516,845
                                                 Facilities Auth. Rev., Series
                                                 2005 B, (Adventist Health)

    -          -           500,000      500,000  Highlands County Health           5.00% 11/15/2010      -           -          522,130      522,130
                                                 Facilities Auth. Rev., Series
                                                 2005 B, (Adventist Health)

    -       1,235,000         -       1,235,000  Indian River County Rev.,         5.25%   4/1/2015      -       1,325,624         -       1,325,624
                                                 (Spring Training Facility)
                                                 (FGIC)(1)

    -         850,000         -         850,000  Lee County Industrial Development 5.50% 11/15/2009      -         878,152         -         878,152
                                                 Health Care Facilities Auth.
                                                 Rev., Series 1999 A, (Shell Point
                                                 Village)

    -       1,000,000         -       1,000,000  Miami Beach Stormwater Rev.       5.75%   9/1/2017      -       1,084,080         -       1,084,080
                                                 (FGIC)

    -       1,910,000         -       1,910,000  Miami Beach Water & Sewer Rev.   5.625%   9/1/2016      -       2,060,527         -       2,060,527
                                                 (Ambac)(1)

    -         650,000         -         650,000  Miami Parking Facilities Rev.     5.25%  10/1/2015      -         724,276         -         724,276
                                                 (MBIA)

    -       1,000,000         -       1,000,000  Miami-Dade County School Board    5.50%  10/1/2011      -       1,086,600         -       1,086,600
                                                 COP, Series 2001 C, Prerefunded
                                                 at 100% of Par (FSA)(2)

    -       1,000,000         -       1,000,000  Miami-Dade County School Board    5.50%  10/1/2011      -       1,086,600         -       1,086,600
                                                 COP, Series 2001 C, Prerefunded
                                                 at 100% of Par (FSA)(2)

    -       1,875,000         -       1,875,000  Orange County School Board COP,   5.50%   8/1/2012      -       2,061,675         -       2,061,675
                                                 Series 2002 A, Prerefunded at
                                                 100% of Par (MBIA)(1)(2)

    -         450,000         -         450,000  Orlando and Orange County         6.50%   7/1/2011      -         505,409         -         505,409
                                                 Expressway Auth. Rev. (FGIC)

    -          -         1,000,000    1,000,000  Orlando Utilities Commission      6.75%  10/1/2017      -          -         1,207,860    1,207,860
                                                 Water & Electric Rev., Series
                                                 1989 D(2)

    -         240,000         -         240,000  Palm Beach County Airport         5.75%  10/1/2014      -         275,388         -         275,388
                                                 Systems Rev. (MBIA)

    -         760,000         -         760,000  Palm Beach County Airport         5.75%  10/1/2014      -         866,210         -         866,210
                                                 Systems Rev. (MBIA)

    -       1,000,000         -       1,000,000  Palm Beach County School Board   5.375%   8/1/2012      -       1,091,050         -       1,091,050
                                                 COP, Series 2002 A, Prerefunded
                                                 at 100% of Par (FSA)(2)

    -       2,000,000         -       2,000,000  Pasco County Solid Waste Disposal 6.00%   4/1/2010      -       2,118,198         -       2,118,198
                                                 & Resource Recovery System Rev.
                                                 (Ambac)(1)

    -         155,000         -         155,000  Pensacola Airport Rev., Series    5.40%  10/1/2007      -         157,193         -         157,193
                                                 1997 B (MBIA)

    -         300,000         -         300,000  Plantation Health Facilities      4.70%  12/1/2007      -         301,626         -         301,626
                                                 Auth. Rev., (Covenant Village
                                                 of Florida Inc.)

    -       1,000,000         -       1,000,000  Sumter County School Board COP    5.50%   1/1/2021      -       1,092,960         -       1,092,960
                                                 (MBIA)

    -       1,000,000         -       1,000,000  Sunrise Utility System Rev.       5.20%  10/1/2022      -       1,134,550         -       1,134,550
                                                 (Ambac)

    -         400,000         -         400,000  Tampa Guaranteed Entitlement      6.00%  10/1/2018      -         459,688         -         459,688
                                                 Rev. (Ambac)

    -       1,000,000         -       1,000,000  Tampa Water & Sewer Rev. (FSA)    6.00%  10/1/2017      -       1,201,750         -       1,201,750

                                                                                                     -----------------------------------------------
                                                                                                         -      31,235,681    7,117,712   38,353,393
                                                                                                     ===============================================
  GEORGIA - 0.3%

    -          -         1,250,000    1,250,000  Fulton County Development Auth.   5.50%   9/1/2018      -          -         1,371,325    1,371,325
                                                 Rev., Series 2001 A,
                                                 (TUFF/Atlanta Housing, LLC
                                                 Project at Georgia State
                                                 University) (Ambac)

    -          -            20,000       20,000  Georgia Municipal Electric Power  6.50%   1/1/2011      -          -            21,640       21,640
                                                 Auth. Rev., Series 1991 V
                                                 (MBIA-IBC)

    -          -           615,000      615,000  Georgia Municipal Electric Power  6.50%   1/1/2012      -          -           670,565      670,565
                                                 Auth. Rev., Series 1991 V
                                                 (MBIA-IBC)

    -          -           110,000      110,000  Georgia Municipal Electric Power  6.50%   1/1/2012      -          -           122,383      122,383
                                                 Auth. Rev., Series 1991 V,
                                                 Prerefunded at 100% of Par
                                                 (MBIA-IBC)(2)

    -          -           255,000      255,000  Georgia Municipal Electric Power  6.50%   1/1/2009      -          -           266,182      266,182
                                                 Auth. Rev., Series 1991 V,                          -----------------------------------------------
                                                 Prerefunded at 100% of Par                              -          -         2,452,095    2,452,095
                                                 (MBIA-IBC)(2)                                       ===============================================

  HAWAII - 0.1%

    -          -           500,000      500,000  Maui County GO, Series 2000 A,    6.50%   3/1/2010      -          -           549,605      549,605
                                                 Prerefunded at 101% of Par                         ================================================
                                                 (FGIC)(2)


  IDAHO - 0.1%

    -          -         1,000,000    1,000,000  Blaine County Hailey School       5.00%  7/30/2010      -          -         1,052,730    1,052,730
                                                 District No. 61 GO (Ambac)                         ================================================

  ILLINOIS - 6.7%

    -          -         2,000,000    2,000,000  Bedford Park GO, Series           5.25% 12/15/2020      -          -         2,200,740    2,200,740
                                                 2004 A (FSA)(1)

    -          -         4,000,000    4,000,000  Chicago O'Hare International      5.00%   1/1/2012      -          -         4,251,320    4,251,320
                                                 Airport Rev., Series 1993 A,
                                                 (Senior Lien) (MBIA-IBC)(1)

    -          -         1,015,000    1,015,000  City of Chicago Rev., Series      5.00%  11/1/2013      -          -         1,101,194    1,101,194
                                                 2006 A (Ambac)

    -          -         3,310,000    3,310,000  City of Chicago Rev., Series      5.00%  11/1/2014      -          -         3,619,121    3,619,121
                                                 2006 A (Ambac)(1)

    -          -         2,000,000    2,000,000  Illinois Dedicated Tax Rev.,      6.25% 12/15/2020      -          -         2,431,320    2,431,320
                                                 (Civic Center) (Ambac)

    -          -           595,000      595,000  Illinois Development Finance      5.00%  5/15/2008      -          -           603,842      603,842
                                                 Auth. Rev., Series 2001 B,
                                                 (Midwestern University)

    -          -           655,000      655,000  Illinois Development Finance      5.125% 5/15/2010      -          -           678,462      678,462
                                                 Auth. Rev., Series 2001 B,
                                                 (Midwestern University)

    -          -           400,000      400,000  Illinois Development Finance      5.75%  5/15/2016      -          -           427,528      427,528
                                                 Auth. Rev., Series 2001 B,
                                                 (Midwestern University)

    -          -         1,775,000    1,775,000  Illinois Finance Auth. Student    5.00%   5/1/2009      -          -         1,811,991    1,811,991
                                                 Housing Rev., Series 2006 B,
                                                 (Educational Advancement Fund,
                                                 Inc.)

    -          -         1,000,000    1,000,000  Illinois Finance Auth. Student    5.00%   5/1/2010      -          -         1,029,540    1,029,540
                                                 Housing Rev., Series 2006 B,
                                                 (Educational Advancement Fund,
                                                 Inc.)

    -          -         2,785,000    2,785,000  Illinois Finance Auth. Student    5.00%   5/1/2011      -          -         2,893,838    2,893,838
                                                 Housing Rev., Series 2006 B,
                                                 (Educational Advancement Fund,
                                                 Inc.)

    -          -         3,535,000    3,535,000  Illinois Finance Auth. Student    5.00%   5/1/2013      -          -         3,724,087    3,724,087
                                                 Housing Rev., Series 2006 B,
                                                 (Educational Advancement Fund,
                                                 Inc.)

    -          -         3,895,000    3,895,000  Illinois Finance Auth. Student    5.00%   5/1/2014      -          -         4,115,885    4,115,885
                                                 Housing Rev., Series 2006 B,
                                                 (Educational Advancement Fund,
                                                 Inc.)

    -          -         4,095,000    4,095,000  Illinois Finance Auth. Student    5.00%   5/1/2015      -          -         4,335,581    4,335,581
                                                 Housing Rev., Series 2006 B,
                                                 (Educational Advancement Fund,
                                                 Inc.)

    -       1,000,000    1,000,000    2,000,000  Illinois Finance Auth. Student    5.25%   5/1/2019      -       1,070,600    1,070,600    2,141,200
                                                 Housing Rev., Series 2006 B,
                                                 (Education Advancement Fund,
                                                 Inc.)

    -          -         1,140,000    1,140,000  Illinois Health Facilities Auth.  6.75%  4/15/2012      -          -         1,257,409    1,257,409
                                                 Rev., Series 1992 C, (Evangelical
                                                 Hospital)(2)

    -          -         1,000,000    1,000,000  Illinois Regional Transportation  7.20%  11/1/2020      -          -         1,262,560    1,262,560
                                                 Auth. Rev., Series 1990 A
                                                 (Ambac)

    -          -           930,000      930,000  Kane County Community Unit        6.20%   1/1/2024      -          -         1,091,522    1,091,522
                                                 School District No. 304 GO (FSA)

    -          -            70,000       70,000  Ogle Lee & De Kalb Counties       6.00%  12/1/2017      -          -            77,747       77,747
                                                 Township High School District
                                                 No. 212 GO (MBIA)

    -          -            75,000       75,000  Ogle Lee & De Kalb Counties       6.00%  12/1/2018      -          -            83,047       83,047
                                                 Township High School District
                                                 No. 212 GO (MBIA)

    -          -         1,035,000    1,035,000  Ogle Lee & De Kalb Counties       6.00%  12/1/2011      -          -         1,151,044    1,151,044
                                                 Township High School District
                                                 No. 212 GO, Prerefunded at 100%
                                                 of Par (MBIA)(2)

    -          -         1,145,000    1,145,000  Ogle Lee & De Kalb Counties       6.00%  12/1/2011      -          -         1,273,377    1,273,377
                                                 Township High School District No.
                                                 212 GO, Prerefunded at 100% of
                                                 Par (MBIA)(2)

    -          -         2,165,000    2,165,000  Southwestern Illinois Develop-   5.125%  8/15/2016      -          -         2,313,021    2,313,021
                                                 ment Auth. Rev., (Anderson
                                                 Hospital)(3)

    -          -         1,000,000    1,000,000  Southwestern Illinois Develop-    5.00%  10/1/2018      -          -         1,098,360    1,098,360
                                                 ment Auth. Rev., (Triad School
                                                 District No. 2) (MBIA/GO of
                                                 District)

    -          -         1,250,000    1,250,000  Town of Cicero GO, Series 2005    5.25%   1/1/2020      -          -         1,370,113    1,370,113
                                                 A (XLCA)

    -          -         1,000,000    1,000,000  Town of Cicero GO, Series 2005    5.25%   1/1/2021      -          -         1,094,640    1,094,640
                                                 A (XLCA)

    -          -         1,000,000    1,000,000  University of Illinois COP,       5.75%  8/15/2008      -          -         1,035,340    1,035,340
                                                 (Utility Infrastructure) (MBIA)

    -          -         1,000,000    1,000,000  University of Illinois COP,       5.00%  3/15/2016      -          -         1,095,690    1,095,690
                                                 Series 2006 A, (Academic                           ------------------------------------------------
                                                 Facilities) (Ambac)                                     -       1,070,600   48,498,919   49,569,519
                                                                                                    ================================================

  INDIANA - 2.3%

    -          -         1,405,000    1,405,000  Hammond Multi-School Building     5.00%  7/15/2014      -          -         1,530,593    1,530,593
                                                 Corp. Rev., (First Mortgage)
                                                 (FGIC/State Aid Withholding)

    -          -         1,520,000    1,520,000  Indiana Bond Bank Rev., Series    5.00%   8/1/2017      -          -         1,675,815    1,675,815
                                                 2006 A (FSA)

    -          -         1,600,000    1,600,000  Indiana Bond Bank Rev., Series    5.00%   8/1/2018      -          -         1,759,376    1,759,376
                                                 2006 A (FSA)

    -          -         1,680,000    1,680,000  Indiana Bond Bank Rev., Series    5.00%   8/1/2019      -          -         1,840,205    1,840,205
                                                 2006 A (FSA)

    -          -         1,075,000    1,075,000  Indiana Health & Educational      5.00%  2/15/2016      -          -         1,155,604    1,155,604
                                                 Facilities Finance Auth. Rev.,
                                                 (Clarian Health Obligation
                                                 Group B)

    -          -         1,900,000    1,900,000  Indiana Health Facilities        5.375%  12/1/2012      -          -         1,962,396    1,962,396
                                                 Financing Auth. Hospital Rev.,
                                                 (Holy Cross Health System Corp.)
                                                 (MBIA)

    -          -           780,000      780,000  Indiana Transportation Finance    7.25%   6/1/2015      -          -           939,588      939,588
                                                 Auth. Rev., Series 1990 A


    -          -           220,000      220,000  Indiana Transportation Finance    7.25%   6/1/2015      -          -           246,455      246,455
                                                 Auth. Rev., Series 1990 A,
                                                 Prerefunded at 100% of Par(2)

    -          -         1,435,000    1,435,000  Indianapolis Local Public         5.00%   7/1/2012      -          -         1,539,181    1,539,181
                                                 Improvement Bond Bank Rev.,
                                                 Series 2002 A (MBIA)

    -          -         1,500,000    1,500,000  Mount Vernon of Hancock County    5.75%  7/15/2011      -          -         1,639,875    1,639,875
                                                 Multi-School Building Corp. Rev.,
                                                 Series 2001 B, (First Mortgage)
                                                 Prerefunded at 100% of Par
                                                 (Ambac)(2)

    -          -         1,650,000    1,650,000  Valparaiso Middle Schools         5.75%  7/15/2011      -          -         1,800,925    1,800,925
                                                 Building Corp. Rev., (First
                                                 Mortgage), Prerefunded at 100%
                                                 of Par (FGIC)(2)

    -          -         1,000,000    1,000,000  Zionsville Community Schools      5.75%  1/15/2012      -          -         1,101,480    1,101,480
                                                 Building Corp. GO, (First                          ------------------------------------------------
                                                 Mortgage) (FGIC/State Aid                               -          -        17,191,493   17,191,493
                                                 Withholding)                                       ================================================


  IOWA - 0.7%

    -       2,000,000         -       2,000,000  Iowa Finance Auth. Health         5.25%   7/1/2014      -       2,097,380         -       2,097,380
                                                 Facilities Development Rev.,
                                                 Series 2006 A, (Care
                                                 Initiatives)(1)

    -          -         1,485,000    1,485,000  Iowa Finance Auth. Rev., Series   5.25%   7/1/2013      -          -         1,554,706    1,554,706
                                                 2006 A, (Development Care
                                                 Initiatives)

    -          -         1,690,000    1,690,000  Iowa Finance Auth. Rev., Series   5.25%   7/1/2016      -          -         1,778,995    1,778,995
                                                 2006 A, (Development Care                          ------------------------------------------------
                                                 Initiatives)                                            -       2,097,380    3,333,701    5,431,081
                                                                                                    ================================================



  KANSAS - 0.4%

    -          -         1,280,000    1,280,000  Wichita Hospital Facilities       5.25% 11/15/2013      -          -         1,359,321    1,359,321
                                                 Rev., Series 2001 III

    -          -         1,195,000    1,195,000  Wichita Hospital Facilities       5.50% 11/15/2016      -          -         1,274,420    1,274,420
                                                 Rev., Series 2001 III                              ------------------------------------------------
                                                                                                         -          -         2,633,741    2,633,741
                                                                                                    ================================================

  LOUISIANA - 0.6%

    -          -         1,740,000    1,740,000  Louisiana Local Government        5.25%   4/1/2023      -          -         1,896,008    1,896,008
                                                 Environmental Facilities &
                                                 Community Development Auth.
                                                 Rev., (Ascension Parish Library)
                                                 (Ambac)

    -          -         1,105,000    1,105,000  Louisiana Public Facilities Auth. 4.00%   7/1/2013      -          -         1,129,708    1,129,708
                                                 Rev., Series 2006 A, (Black &
                                                 Gold Facilities) (CIFG)

    -          -         1,205,000    1,205,000  Louisiana Public Facilities Auth. 5.00%   7/1/2015      -          -         1,317,909    1,317,909
                                                 Rev., Series 2006 A, (Black &                      ------------------------------------------------
                                                 Gold Facilities) (CIFG)                                 -          -         4,343,625    4,343,625
                                                                                                    ================================================

  MASSACHUSETTS - 0.6%

    -          -         2,500,000    2,500,000  Commonwealth of Massachusetts     5.00%   8/1/2014      -          -         2,733,150    2,733,150
                                                 GO, Series 2006 D

    -          -         1,000,000    1,000,000  Massachusetts Development         5.00%   1/1/2023      -          -         1,075,840    1,075,840
                                                 Finance Agency Rev., Series
                                                 2006 A, (Emerson College)

    -          -           885,000      885,000  Massachusetts Health &            6.25%   7/1/2012      -          -           950,136      950,136
                                                 Educational Facilities Auth.                       ------------------------------------------------
                                                 Rev., Series 1992 F (Ambac)                             -          -         4,759,126    4,759,126
                                                                                                    ================================================


  MICHIGAN - 4.4%

    -          -         3,500,000    3,500,000  Detroit GO, Series 2004 A-1       5.25%   4/1/2023      -          -         3,783,675    3,783,675
                                                 (Ambac)

    -          -         1,485,000    1,485,000  Grand Valley State University     5.75%  12/1/2010      -          -         1,607,928    1,607,928
                                                 Rev., Prerefunded at 100% of
                                                 Par (FGIC)(2)

    -          -         1,265,000    1,265,000  Kalamazoo Public Schools GO       4.00%   5/1/2013      -          -         1,296,296    1,296,296
                                                 (FSA)

    -          -         1,250,000    1,250,000  Kalamazoo Public Schools GO       5.00%   5/1/2015      -          -         1,373,050    1,373,050
                                                 (FSA)

    -          -         1,545,000    1,545,000  Kalamazoo Public Schools GO       5.25%   5/1/2016      -          -         1,736,302    1,736,302
                                                 (FSA)

    -          -         5,000,000    5,000,000  Michigan Building Auth. Rev.,     5.25% 10/15/2011      -          -         5,383,000    5,383,000
                                                 Series 2003 I, (Facilities
                                                 Program) (FSA)(1)

    -          -         2,345,000    2,345,000  Michigan Higher Education         5.00%   3/1/2026      -          -         2,458,850    2,458,850
                                                 Facilities Auth. Rev., (Limited
                                                 Obligation - Hillsdale College)

    -          -         1,070,000    1,070,000  Pontiac City School District GO   5.00%   5/1/2013      -          -         1,157,376    1,157,376
                                                 (XLCA)

    -          -         1,110,000    1,110,000  Pontiac City School District GO   5.00%   5/1/2014      -          -         1,210,966    1,210,966
                                                 (XLCA)

    -          -         1,260,000    1,260,000  Pontiac City School District GO   5.00%   5/1/2015      -          -         1,384,034    1,384,034
                                                 (XLCA)

    -          -         1,425,000    1,425,000  Pontiac City School District GO   5.00%   5/1/2016      -          -         1,573,314    1,573,314
                                                 (XLCA)

    -          -         1,595,000    1,595,000  Pontiac City School District GO   5.00%   5/1/2017      -          -         1,755,664    1,755,664
                                                 (XLCA)

    -          -           575,000      575,000  Taylor GO (MBIA)                  5.00%   9/1/2011      -          -           611,783      611,783

    -          -         2,010,000    2,010,000  Wayne Charter County Airport      5.00%  12/1/2011      -          -         2,136,369    2,136,369
                                                 Rev., Series 2002 C (FGIC)

    -          -         2,215,000    2,215,000  Wayne Charter County Airport     5.375%  12/1/2013      -          -         2,422,678    2,422,678
                                                 Rev., Series 2002 C (FGIC)

    -          -         2,335,000    2,335,000  Wayne Charter County Airport     5.375%  12/1/2014      -          -         2,548,676    2,548,676
                                                 Rev., Series 2002 C (FGIC)                         ------------------------------------------------
                                                                                                         -          -        32,439,961   32,439,961
                                                                                                    ================================================

  MINNESOTA - 0.6%

    -          -         1,500,000    1,500,000  Minnesota Higher Education        5.00%  10/1/2012      -          -         1,609,995    1,609,995
                                                 Facilities Auth. Rev., Series
                                                 2005-6G, (Saint John University)

    -          -         3,000,000    3,000,000  St. Paul Housing & Redevelopment  5.25%  5/15/2036      -          -         3,195,060    3,195,060
                                                 Auth. Health Care Facilities                       ------------------------------------------------
                                                 Rev., (Healthpartners Obligated                         -          -         4,805,055    4,805,055
                                                 Group)                                             ================================================

  MISSISSIPPI - 2.3%

    -          -         1,565,000    1,565,000  Mississippi Development Bank      5.00%  11/1/2015      -          -         1,718,088    1,718,088
                                                 Special Obligation Rev., Series
                                                 2006 A, (Biloxi, Mississippi)
                                                 (Ambac)

    -          -         1,645,000    1,645,000  Mississippi Development Bank      5.00%  11/1/2016      -          -         1,813,777    1,813,777
                                                 Special Obligation Rev., Series
                                                 2006 A, (Biloxi, Mississippi)
                                                 (Ambac)

    -          -         1,000,000    1,000,000  Mississippi Development Bank      5.00%   3/1/2017      -          -         1,092,170    1,092,170
                                                 Special Obligation Rev., Series
                                                 2006 A, (Municipal Energy
                                                 Agency Power Supply) (XLCA)

    -          -         7,925,000    7,925,000  State of Mississippi GO,          5.25%  11/1/2012      -          -         8,622,955    8,622,955
                                                 (Capital Improvement),
                                                 Prerefunded at 100%
                                                 of Par (FGIC)(1)(2)

    -          -         1,195,000    1,195,000  University of Southern            5.00%   3/1/2017      -          -         1,310,999    1,310,999
                                                 Mississippi Rev., Series 2006 A
                                                 (FSA)

    -          -         1,940,000    1,940,000  University of Southern            5.00%   3/1/2018      -          -         2,122,127    2,122,127
                                                 Mississippi Rev., Series 2006 A                    ------------------------------------------------
                                                 (FSA)                                                   -          -        16,680,116   16,680,116
                                                                                                    ================================================


  MISSOURI - 2.2%

    -          -         1,145,000    1,145,000  Jackson County Public Building    6.00%  11/1/2008      -          -         1,208,479    1,208,479
                                                 Corp. COP, Series 2000 A,
                                                 Prerefunded at 101% of Par(2)

    -          -         1,425,000    1,425,000  Jackson County Public Building    5.00%  12/1/2015      -          -         1,566,545    1,566,545
                                                 Corp. Rev., Series 2006 A,
                                                 (Capital Improvements) (MBIA)

    -          -         2,775,000    2,775,000  Missouri Development Finance      5.75%   4/1/2022      -          -         2,956,318    2,956,318
                                                 Board COP, Series 2000 A,
                                                 (Midtown Redevelopment) (MBIA)

    -          -         2,650,000    2,650,000  Missouri Health & Educational     5.60%   1/1/2015      -          -         2,823,469    2,823,469
                                                 Facilities Auth. Rev., Series
                                                 1998 A, (Park Lane Medical
                                                 Center) (MBIA)

    -          -         3,145,000    3,145,000  Missouri Joint Municipal Electric 5.00%   1/1/2016      -          -         3,469,438    3,469,438
                                                 Utility Commission Rev., (Plum
                                                 Point) (MBIA)

    -          -         3,030,000    3,030,000  Missouri State Highways & Transit 5.00%   5/1/2013      -          -         3,284,672    3,284,672
                                                 Commission Rev., Series 2006 A

    -          -         1,000,000    1,000,000  St. Louis Municipal Finance Corp. 4.00%  2/15/2017      -          -         1,016,380    1,016,380
                                                 Rev., Series 2006 A, (Carnahan                     ------------------------------------------------
                                                 Courthouse) (Ambac)                                     -          -        16,325,301   16,325,301
                                                                                                    ================================================

  NORTH CAROLINA - 2.0%

    -          -         1,000,000    1,000,000  Charlotte Airport Rev., Series    5.25%   7/1/2024      -          -         1,084,810    1,084,810
                                                 2004 A (MBIA)

    -          -         2,000,000    2,000,000  City of Raleigh Combined          5.00%   3/1/2017      -          -         2,205,660    2,205,660
                                                 Enterprise System Rev., Series
                                                 2006 A


    -          -         1,000,000    1,000,000  North Carolina Medical Care       5.00%  11/1/2034      -          -         1,063,240    1,063,240
                                                 Commission Rev., (Novant Health
                                                 Obligated Group)(3)

    -          -         4,150,000    4,150,000  North Carolina Medical Care       5.50%  10/1/2024      -          -         4,491,960    4,491,960
                                                 Commission Rev., Series 2004 A,
                                                 (Health Care Housing - ARC
                                                 Projects)

    -          -         1,000,000    1,000,000  North Carolina Municipal Power    6.00%   1/1/2010      -          -         1,071,440    1,071,440
                                                 Agency No. 1 Catawba Electric
                                                 Rev. (MBIA)

    -          -         2,000,000    2,000,000  North Carolina Municipal Power    5.50%   1/1/2013      -          -         2,176,900    2,176,900
                                                 Agency No. 1 Catawba Electric
                                                 Rev., Series 2003 A

    -          -         1,560,000    1,560,000  University of North Carolina      5.00%  10/1/2016      -          -         1,729,931    1,729,931
                                                 Rev., Series 2006 A (MBIA)

    -          -         1,000,000    1,000,000  University of North Carolina      5.00%  10/1/2033      -          -         1,081,880    1,081,880
                                                 Rev., Series 2006 A (MBIA)
                                                                                                    ------------------------------------------------
                                                                                                         -          -        14,905,821   14,905,821
                                                                                                    ================================================

  NORTH DAKOTA - 0.2%

    -          -         1,500,000    1,500,000  Grand Forks Health Care System   7.125%  8/15/2024      -          -         1,668,225    1,668,225
                                                 Rev., (Altru Health System                         ================================================
                                                 Obligation Group)

  NEVADA - 1.0%

    -          -         3,295,000    3,295,000  Las Vegas Redevelopment Agency    4.50%  6/15/2010      -          -         3,336,912    3,336,912
                                                 Tax Increment Rev., Series 2003
                                                 A, (Fremont Street)

    -          -         1,550,000    1,550,000  Reno Sales and Room Tax Rev.,     5.50%   6/1/2012      -          -         1,697,048    1,697,048
                                                 (ReTrac-Reno Transportation Rail
                                                 Access Corridor), (Senior Lien),
                                                 Prerefunded at 100% of Par
                                                 (Ambac)(2)

    -          -         1,865,000    1,865,000  Reno Sales and Room Tax Rev.,     5.50%   6/1/2012      -          -         2,041,933    2,041,933
                                                 (ReTrac-Reno Transportation Rail                   ------------------------------------------------
                                                 Access Corridor), (Senior Lien),                        -          -         7,075,893    7,075,893
                                                 Prerefunded at 100% of Par                         ================================================
                                                 (Ambac)(2)

  NEW HAMPSHIRE - 0.9%

    -          -         1,660,000    1,660,000  New Hampshire Health & Education  5.00%  10/1/2011      -          -         1,726,699    1,726,699
                                                 Facilities Auth. Rev., Series
                                                 2004 A, (Kendal at Hanover)

    -          -           680,000      680,000  New Hampshire Health & Education  5.00%  10/1/2012      -          -           711,334      711,334
                                                 Facilities Auth. Rev., Series
                                                 2004 A, (Kendal at Hanover)

    -          -         1,030,000    1,030,000  New Hampshire Health & Education  5.00%  10/1/2013      -          -         1,080,151    1,080,151
                                                 Facilities Auth. Rev., Series
                                                 2004 A, (Kendal at Hanover)

    -          -         3,000,000    3,000,000  New Hampshire Health & Education  5.00%  10/1/2018      -          -         3,115,410    3,115,410
                                                 Facilities Auth. Rev., Series                      ------------------------------------------------
                                                 2004 A, (Kendal at Hanover)                             -          -         6,633,594    6,633,594
                                                                                                    ================================================

  NEW JERSEY - 4.9%

    -          -         5,595,000    5,595,000  New Jersey Transit Corporation    5.00%  10/1/2013      -          -         6,041,033    6,041,033
                                                 COP (FSA)(1)

    -          -         4,235,000    4,235,000  New Jersey Transit Corporation    5.00%  10/1/2012      -          -         4,531,747    4,531,747
                                                 COP (FSA)

    -          -         7,400,000    7,400,000  New Jersey Transportation Trust   5.25% 12/15/2012      -          -         8,068,072    8,068,072
                                                 Fund Auth. Rev., Series 2004 B
                                                 (FGIC)(1)

    -          -        15,000,000   15,000,000  New Jersey Transportation Trust   5.25% 12/15/2020      -          -        17,147,100   17,147,100
                                                 Fund Auth. Rev., Series 2006                       ------------------------------------------------
                                                 A(1)                                                    -          -        35,787,952   35,787,952
                                                                                                    ================================================

  NEW MEXICO - 1.5%

    -          -         2,340,000    2,340,000  City of Clayton Rev., (Jail       5.00%  11/1/2010      -          -         2,448,670    2,448,670
                                                 Project) (CIFG)(1)

    -          -         6,675,000    6,675,000  Los Alamos County Inc. Rev.,      5.00%   7/1/2011      -          -         7,082,575    7,082,575
                                                 Series 2004 A (FSA)(1)

    -          -         1,415,000    1,415,000  San Juan County Gross Receipts    5.75%  9/15/2021      -          -         1,556,684    1,556,684
                                                 Tax Rev., Series 2001 A (Ambac)
                                                                                                    ------------------------------------------------
                                                                                                         -          -        11,087,929   11,087,929
                                                                                                    ================================================

  NEW YORK - 4.4%

    -          -         2,975,000    2,975,000  City of New York GO, Series 2002  5.25%   8/1/2009      -          -         3,105,275    3,105,275
                                                 B (CIFG)

    -          -         2,885,000    2,885,000  City of New York GO, Series 2002  5.25%   8/1/2009      -          -         3,011,334    3,011,334
                                                 C (CIFG)

    -          -         5,000,000    5,000,000  City of New York GO, Series 2003  5.75%   3/1/2013      -          -         5,619,100    5,619,100
                                                 I, Prerefunded at 100% of
                                                 Par(1)(2)

    -          -         5,195,000    5,195,000  City of New York GO, Series 2004  5.00%  11/1/2017      -          -         5,654,810    5,654,810
                                                 D (FSA)(1)

    -          -         4,000,000    4,000,000  City of New York GO, Series 2006  5.00%   6/1/2018      -          -         4,354,880    4,354,880
                                                 J-1(1)

    -          -           710,000      710,000  Monroe County Industrial          4.00%   8/1/2010      -          -           711,051      711,051
                                                 Development Agency Rev.,
                                                 (Highland Hospital Rochester)

    -          -           855,000      855,000  Monroe County Industrial          4.00%   8/1/2009      -          -           855,932      855,932
                                                 Development Agency Rev.,
                                                 (Highland Hospital Rochester)

    -          -           890,000      890,000  Monroe County Industrial          4.00%   8/1/2010      -          -           891,317      891,317
                                                 Development Agency Rev.,
                                                 (Highland Hospital Rochester)

    -          -           920,000      920,000  Monroe County Industrial          5.00%   8/1/2011      -          -           958,980      958,980
                                                 Development Agency Rev.,
                                                 (Highland Hospital Rochester)

    -          -         2,000,000    2,000,000  New York City Transitional        5.00%  11/1/2010      -          -         2,111,040    2,111,040
                                                 Finance Auth. Rev., Series 2005 A1

    -          -         1,440,000    1,440,000  New York Dormitory Auth. Rev.,    7.50%  5/15/2013      -          -         1,757,319    1,757,319
                                                 Series 1990 A, (UNIC Educational
                                                 Facilities) (MBIA-IBC)

    -          -         1,000,000    1,000,000  New York Dormitory Auth. Rev.,    5.00%  3/15/2012      -          -         1,071,580    1,071,580
                                                 Series 2005 F (FSA)

    -          -         1,125,000    1,125,000  New York Dormitory Auth. Rev.,    5.00%   7/1/2015      -          -         1,229,546    1,229,546
                                                 Series 2006 A, (Department of
                                                 Education)

    -          -         1,000,000    1,000,000  Niagara Falls Bridge Commission   5.25%  10/1/2015      -          -         1,084,470    1,084,470
                                                 Toll Rev., Series 1993 B (FGIC)
                                                                                                    ------------------------------------------------
                                                                                                         -          -        32,416,634   32,416,634
                                                                                                    ================================================
  OHIO - 1.6%

    -          -         1,000,000    1,000,000  Cincinnati City School District   4.25% 12/15/2019      -          -         1,020,080    1,020,080
                                                 COP (FSA)

    -          -           500,000      500,000  Erie County Hospital Facilities   4.50%  8/15/2007      -          -           502,170      502,170
                                                 Rev., Series 2002 A, (Firelands
                                                 Regional Medical Center)

    -          -         1,150,000    1,150,000  Mad River Local School District   5.75%  12/1/2012      -          -         1,286,034    1,286,034
                                                 GO, (Classroom Facilities),
                                                 Prerefunded at 100% of Par
                                                 (FGIC)(2)

    -          -         1,700,000    1,700,000  Milford Exempt Village School     6.00%  12/1/2011      -          -         1,890,604    1,890,604
                                                 District GO, (School Improvement)
                                                 (FSA)

    -          -         1,005,000    1,005,000  Ohio GO, Series 2005 A,           5.00%   9/1/2011      -          -         1,070,204    1,070,204
                                                 (Infrastructure Improvement)

    -          -         1,365,000    1,365,000  Ohio GO, Series 2005 A,           5.00%   9/1/2012      -          -         1,468,931    1,468,931
                                                 (Infrastructure Improvement)

    -          -           750,000      750,000  Ohio Higher Educational Facility  6.50%  10/1/2020      -          -           933,435      933,435
                                                 Commission Rev., Series 1990 B,
                                                 (Case Western Reserve University)

    -          -         1,505,000    1,505,000  Summit County GO, Prerefunded at  5.75%  12/1/2012      -          -         1,691,740    1,691,740
                                                 101% of Par (FGIC)(2)

    -          -         1,550,000    1,550,000  Tri Valley Local School District  5.75%  12/1/2021      -          -         1,711,355    1,711,355
                                                 GO (FGIC)                                          ------------------------------------------------
                                                                                                         -          -        11,574,553   11,574,553
                                                                                                    ================================================

  OKLAHOMA - 3.0%

    -          -         1,000,000    1,000,000  Comanche County Hospital Auth.    5.00%   7/1/2011      -          -         1,051,970    1,051,970
                                                 Rev. (RADIAN)

    -          -         1,525,000    1,525,000  Comanche County Hospital Auth.    5.00%   7/1/2012      -          -         1,618,254    1,618,254
                                                 Rev. (RADIAN)

    -          -         1,730,000    1,730,000  Durant Community Facilities       5.75%  11/1/2024      -          -         1,964,484    1,964,484
                                                 Auth. GO (XLCA)

    -          -         1,135,000    1,135,000  McClain County Economic           5.00%   9/1/2010      -          -         1,174,521    1,174,521
                                                 Development Auth. Rev,
                                                 (Newcastle Public Schools)

    -          -           750,000      750,000  McClain County Economic           5.00%   9/1/2011      -          -           782,453      782,453
                                                 Development Auth. Rev,
                                                 (Newcastle Public Schools)

    -          -           500,000      500,000  McClain County Economic           5.00%   9/1/2012      -          -           525,515      525,515
                                                 Development Auth. Rev,
                                                 (Newcastle Public Schools)

    -          -         1,640,000    1,640,000  McClain County Economic           5.00%   9/1/2013      -            -       1,731,446    1,731,446
                                                 Development Auth. Rev,
                                                 (Newcastle Public Schools)

    -          -         1,300,000    1,300,000  Oklahoma County Finance Auth.     4.00%   9/1/2010      -            -       1,320,098    1,320,098
                                                 Rev., (Western Heights Public
                                                 Schools) (Assured Guaranty)

    -          -         1,730,000    1,730,000  Pottawatomie County Facilities    5.00%   9/1/2014      -            -       1,818,195    1,818,195
                                                 Auth. Rev., (Shawnee Public
                                                 Schools)

    -          -         1,710,000    1,710,000  Pottawatomie County Facilities    5.00%   9/1/2015      -            -       1,793,585    1,793,585
                                                 Auth. Rev., (Shawnee Public
                                                 Schools)

    -       1,000,000    1,130,000    2,130,000  Pottawatomie County Facilities    5.00%   9/1/2016      -       1,047,470    1,183,641    2,231,111
                                                 Auth. Rev., (Shawnee Public
                                                 Schools)

    -          -         1,000,000    1,000,000  Tulsa County Industrial Auth.     4.00%   9/1/2009      -            -       1,010,560    1,010,560
                                                 Rev., (Owasso Public Schools)
                                                 (Assured Guaranty)

    -          -         5,225,000    5,225,000  Tulsa County Industrial Auth.     5.00%  5/15/2010      -            -       5,474,285    5,474,285
                                                 Rev., Series 2005 C (FSA)(1)                       ------------------------------------------------
                                                                                                         -       1,047,470   21,449,007   22,496,477
                                                                                                    ================================================

  OREGON - 1.5%

    -          -         1,000,000    1,000,000  City of Eugene GO, (Public        4.00%   6/1/2014      -            -       1,029,210    1,029,210
                                                 Safety Park & Open Space) (Ambac)

    -          -         2,015,000    2,015,000  Clackamas County School Distrist  5.50%  6/15/2010      -            -       2,147,143    2,147,143
                                                 No. 62 GO (School Bond
                                                 Guarantee)(1)

    -          -         2,000,000    2,000,000  Cow Creek Band of Umpqua Tribe   5.625%  10/1/2026      -            -       2,055,040    2,055,040
                                                 of Indians Rev., Series 2006 C

    -          -           400,000      400,000  Oregon State Facilities Auth.     5.00%  10/1/2013      -            -         424,436      424,436
                                                 Rev., Series 2005 A, (Linfield
                                                 College)

    -          -           925,000      925,000  Oregon State Facilities Auth.     5.00%  10/1/2014      -            -         983,451      983,451
                                                 Rev., Series 2005 A, (Linfield
                                                 College)

    -          -         4,750,000    4,750,000  Tri-County Metropolitan           4.00%   5/1/2014      -            -       4,788,950    4,788,950
                                                 Transportation District Rev.,                      ------------------------------------------------
                                                 (Payroll Tax & Grant Receipt)                           -            -      11,428,230   11,428,230
                                                 (MBIA)(1)                                          ================================================

  PENNSYLVANIA - 4.6%


    -          -         2,250,000    2,250,000  Allegheny County Industrial       4.75%   9/1/2014      -            -       2,304,540    2,304,540
                                                 Development Auth. Rev.,
                                                 (Residential Resource Inc.)

    -          -         1,150,000    1,150,000  Central Dauphin School District   7.00%   2/1/2027      -            -       1,443,250    1,443,250
                                                 GO (MBIA)

    -          -        15,805,000   15,805,000  City of Pittsburgh GO, Series     5.25%   9/1/2016      -            -      17,769,561   17,769,561
                                                 2006 B (FSA)(1)

    -          -         2,580,000    2,580,000  East Stroudsburg Area School      7.75%   9/1/2028      -            -       3,402,607    3,402,607
                                                 District GO (FSA/State Aid
                                                 Withholding)(3)

    -          -         1,000,000    1,000,000  Oxford Area School District GO,   5.50%  2/15/2012      -            -       1,093,170    1,093,170
                                                 Series 2001 A, Prerefunded at
                                                 100% of Par (FGIC/State Aid
                                                 Withholding)(2)

    -          -         2,975,000    2,975,000  Philadelphia School District GO,  5.25%   2/1/2011      -            -       3,167,483    3,167,483
                                                 Series 2002 A (FSA/State Aid
                                                 Withholding)

    -          -         4,380,000    4,380,000  Philadelphia School District GO,  5.50%   2/1/2012      -            -       4,785,325    4,785,325
                                                 Series 2002 A, Prerefunded at                      ------------------------------------------------
                                                 100% of Par (FSA/State Aid                              -            -      33,965,936   33,965,936
                                                 Withholding)(1)(2)                                 ================================================

  PUERTO RICO - 2.7%

 1,000,000     -              -       1,000,000  Government Development Bank of    4.00%  1/24/2007     999,750       -            -         999,750
                                                 Puerto Rico Rev.

 1,000,000  1,000,000         -       2,000,000  Government Development Bank of    5.00%  12/1/2016   1,090,130  1,090,130         -       2,180,260
                                                 Puerto Rico Rev., Series 2006 B

    -          -         3,000,000    3,000,000  Puerto Rico GO, Series 2006 A     5.25%   7/1/2026      -            -       3,279,810    3,279,810


 1,000,000  1,000,000    3,000,000    5,000,000  Puerto Rico GO, Series 2006 B     5.25%   7/1/2017   1,104,130  1,104,130    3,312,390    5,520,650


 1,500,000     -              -       1,500,000  Puerto Rico GO, Series 2006 B     5.25%   7/1/2022   1,646,145       -            -       1,646,145


    -          -         2,000,000    2,000,000  Puerto Rico Infrastructure        5.00%   7/1/2013      -            -       2,138,020    2,138,020
                                                 Financing Auth. Special Tax
                                                 Rev., Series 2006 B

    -          -         3,700,000    3,700,000  Puerto Rico Municipal Finance     5.00%   8/1/2011      -            -       3,891,882    3,891,882
                                                 Agency GO, Series 2005 A                           ------------------------------------------------
                                                                                                      4,840,155  2,194,260   12,622,102   19,656,517
                                                                                                    ================================================
  RHODE ISLAND - 0.5%

    -          -         1,000,000    1,000,000  Cranston GO, Prerefunded at      6.375% 11/15/2009      -            -       1,088,840    1,088,840
                                                 101% of Par (FGIC)(2)

    -          -         2,000,000    2,000,000  Rhode Island Depositors Economic  6.25%   8/1/2016      -            -       2,414,000    2,414,000
                                                 Protection Corp. Special
                                                 Obligation Rev., Series 1993 A                     ------------------------------------------------
                                                 (MBIA)(2)                                               -            -       3,502,840    3,502,840
                                                                                                    ================================================

  SOUTH CAROLINA - 4.2%

    -          -         5,455,000    5,455,000  Charleston Educational Excellence 5.00%  12/1/2019      -            -       5,903,892    5,903,892
                                                 Finance Corp. Rev., (Charleston
                                                 County School District)(1)

    -          -         1,700,000    1,700,000  Florence Water & Sewer Rev.       7.50%   3/1/2018      -            -       1,919,878    1,919,878
                                                 (Ambac)

    -          -         1,060,000    1,060,000  Kershaw County Rev., (School      5.00%  12/1/2017      -            -       1,159,216    1,159,216
                                                 Improvements) (CIFG)

    -          -         2,260,000    2,260,000  Kershaw County Rev., (School      5.00%  12/1/2018      -            -       2,465,457    2,465,457
                                                 Improvements) (CIFG)

    -          -         2,000,000    2,000,000  Kershaw County Rev., (School      5.00%  12/1/2019      -            -       2,173,180    2,173,180
                                                 Improvements) (CIFG)

    -          -         3,000,000    3,000,000  Kershaw County Rev., (School      5.00%  12/1/2020      -            -       3,254,340    3,254,340
                                                 Improvements) (CIFG)

    -          -         2,300,000    2,300,000  Lancaster Educational Assistance  5.00%  12/1/2026      -            -       2,398,555    2,398,555
                                                 Program Inc. Rev., (School
                                                 District Lancaster County)

    -          -         3,500,000    3,500,000  Laurens County School District    5.25%  12/1/2030      -            -       3,731,245    3,731,245
                                                 No. 55 Rev.

    -          -           875,000      875,000  Piedmont Municipal Power Agency   6.75%   1/1/2019      -            -       1,107,164    1,107,164
                                                 Rev. (FGIC)

    -          -           625,000      625,000  Piedmont Municipal Power Agency   6.75%   1/1/2019      -            -         802,675      802,675
                                                 Rev. (FGIC)(2)

    -          -           375,000      375,000  Piedmont Municipal Power Agency   6.50%   1/1/2016      -            -         454,256      454,256
                                                 Rev., Series 1991 A (FGIC)

    -          -           140,000      140,000  Piedmont Municipal Power Agency   6.50%   1/1/2016      -            -         170,674      170,674
                                                 Rev., Series 1991 A (FGIC)(2)

    -          -           485,000      485,000  Piedmont Municipal Power Agency   6.50%   1/1/2016      -            -         591,263      591,263
                                                 Rev., Series 1991 A (FGIC)(2)

    -          -         3,195,000    3,195,000  South Carolina Jobs Economic      5.50%   8/1/2009      -            -       3,328,583    3,328,583
                                                 Development Auth. Hospital
                                                 Facilities Rev., Series 2003 C,
                                                 (Palmetto Health) (ACA)

    -          -         1,095,000    1,095,000  Spartanburg County Health         5.50%  4/15/2016      -            -       1,189,061    1,189,061
                                                 Services District Inc. Hospital                    ------------------------------------------------
                                                 Rev. (FSA)                                              -            -      30,649,439   30,649,439
                                                                                                    ================================================

  TENNESSEE - 0.6%

    -          -         4,105,000    4,105,000  Chattanooga Health Educational    5.00%  10/1/2015      -            -       4,260,621    4,260,621
                                                 & Housing Facility Board Rev.,                     ================================================
                                                 Series 2005 A, (Campus
                                                 Development Foundation, Inc.
                                                 Phase I LLC)

  TEXAS - 7.1%

    -          -         1,000,000    1,000,000  Canadian River Municipal Water    5.00%  2/15/2019      -            -       1,087,100    1,087,100
                                                 Auth. Rev., (Conjunctive Use
                                                 Groundwater) (Ambac)

    -          -         2,035,000    2,035,000  Cash Special Utility District     5.25%   9/1/2024      -            -       2,224,275    2,224,275
                                                 Rev. (MBIA)(1)

    -       1,000,000         -       1,000,000  City of Richardson GO (MBIA)      5.25%  2/15/2018      -       1,113,690         -       1,113,690

    -          -         1,815,000    1,815,000  Clint Independent School          6.00%  2/15/2017      -            -       1,984,702    1,984,702
                                                 District GO (PSF-GTD)

    -          -           500,000      500,000  Corpus Christi Independent        4.00%  8/15/2013      -            -         501,780      501,780
                                                 Schoool District GO (PSF-GTD)

    -          -           270,000      270,000  Denison Hospital Auth. Rev.,      5.90%  2/15/2007      -            -         276,637      276,637
                                                 (Texoma Medical Center),
                                                 Prerefunded at 102% of Par
                                                 (ACA)(2)

    -          -         2,000,000    2,000,000  Donna Independent School          5.00%  2/15/2015      -            -       2,185,900    2,185,900
                                                 District GO (PSF-GTD)

    -          -         1,115,000    1,115,000  Edcouch-Elsa Independent School   5.00%  2/15/2014      -            -       1,210,544    1,210,544
                                                 District GO (PSF-GTD)

    -          -           380,000      380,000  Garza County Public Facility      4.50%  10/1/2007      -            -         380,505      380,505
                                                 Corp. Rev.

    -          -           400,000      400,000  Garza County Public Facility      4.75%  10/1/2008      -            -         402,632      402,632
                                                 Corp. Rev.

    -          -           420,000      420,000  Garza County Public Facility      4.75%  10/1/2009      -            -         424,523      424,523
                                                 Corp. Rev.

    -          -           585,000      585,000  Garza County Public Facility      4.75%  10/1/2010      -            -         593,564      593,564
                                                 Corp. Rev.

    -          -           610,000      610,000  Garza County Public Facility      5.00%  10/1/2011      -            -         627,891      627,891
                                                 Corp. Rev.

    -          -         2,015,000    2,015,000  Garza County Public Facility      5.00%  10/1/2013      -            -       2,088,003    2,088,003
                                                 Corp. Rev.

    -          -         1,115,000    1,115,000  Garza County Public Facility      5.25%  10/1/2014      -            -       1,174,151    1,174,151
                                                 Corp. Rev.

    -          -         1,225,000    1,225,000  Garza County Public Facility      5.25%  10/1/2015      -            -       1,293,588    1,293,588
                                                 Corp. Rev.

    -          -         1,145,000    1,145,000  Garza County Public Facility      5.25%  10/1/2016      -            -       1,212,108    1,212,108
                                                 Corp. Rev.

    -          -         1,000,000    1,000,000  Garza County Public Facility      5.50%  10/1/2016      -            -       1,071,720    1,071,720
                                                 Corp. Rev.

    -          -         1,000,000    1,000,000  Gregg County Health Facilities    5.00%  10/1/2016      -            -       1,063,860    1,063,860
                                                 Development Corp. Rev., Series
                                                 2006 A, (Good Shepherd Medical
                                                 Center)

    -          -           815,000      815,000  Harris County Housing Finance     4.90%   3/1/2011      -            -         829,140      829,140
                                                 Corporation Rev., (Las Americas
                                                 Apartments) (FNMA)

    -          -         2,300,000    2,300,000  Hays Consolidated Independent     5.20%  8/15/2011      -            -       1,929,999    1,929,999
                                                 School District GO (PSF-GTD)(4)

    -          -           700,000      700,000  Hays Consolidated Independent     5.20%  8/15/2011      -            -         589,022      589,022
                                                 School District GO (PSF-GTD)
                                                 (2)(4)

    -          -         1,295,000    1,295,000  Hidalgo County GO (FGIC)          5.50%  8/15/2019      -            -       1,424,720    1,424,720

    -          -         1,750,000    1,750,000  Hidalgo County GO (FGIC)          5.50%  8/15/2021      -            -       1,925,297    1,925,297

    -          -         1,500,000    1,500,000  Houston Water & Sewer System     5.375%  12/1/2007      -            -       1,541,745    1,541,745
                                                 Rev., Series 1997 C, (Junior
                                                 Lien), Prerefunded at 101% of
                                                 Par (FGIC)(2)

    -          -         1,375,000    1,375,000  Kerrville Health Facilities       5.00%  8/15/2011      -            -       1,424,734    1,424,734
                                                 Development Corp. Rev., (Sid
                                                 Peterson Memorial Hospital)

    -          -         1,630,000    1,630,000  Live Oak GO (MBIA)                5.25%   8/1/2022      -            -       1,780,205    1,780,205

    -          -         1,000,000    1,000,000  Lubbock Health Facilities         6.00%  3/20/2029      -            -       1,096,510    1,096,510
                                                 Development Corp. Rev.,
                                                 (Lutheran Retirement) (GNMA)

    -          -         1,740,000    1,740,000  Montgomery County GO (Ambac)      5.50%   3/1/2024      -            -       1,922,387    1,922,387


    -          -           550,000      550,000  Pasadena Independent School       6.05%  2/15/2016      -            -         645,310      645,310
                                                 District GO, Series 2001 A
                                                 (PSF-GTD)

    -          -         1,500,000    1,500,000  Pearland Independent School       6.00%  2/15/2009      -            -       1,578,765    1,578,765
                                                 District GO, Prerefunded at 100%
                                                 of Par (PSF-GTD)(2)

    -          -         2,000,000    2,000,000  San Antonio Electric and Gas      7.10%   2/1/2009      -            -       1,850,240    1,850,240
                                                 Rev. (FGIC)(2)(4)

    -          -         1,505,000    1,505,000  Seguin Independent School         5.25%   4/1/2023      -            -       1,646,651    1,646,651
                                                 District GO (PSF-GTD)

    -          -         2,120,000    2,120,000  Southside Independent School      5.25%  8/15/2025      -            -       2,319,174    2,319,174
                                                 District GO, Series 2004 A
                                                 (PSF-GTD)

    -          -         2,345,000    2,345,000  Texas Municipal Power Agency COP, 4.00%   9/1/2009      -            -       2,352,809    2,352,809
                                                 (Sub-Lien) (FGIC)

    -          -           950,000      950,000  Texas Public Finance Auth.        6.25%   8/1/2009      -            -         990,119      990,119
                                                 Building Rev., (Technical
                                                 College) (MBIA)

    -       1,000,000       -         1,000,000  Texas Public Finance Auth.        5.25%  2/15/2014      -       1,073,210         -       1,073,210
                                                 Charter School Finance Corp.
                                                 Rev., Series 2006 A, (KIPP, Inc.)
                                                 (ACA)

    -          -         1,000,000    1,000,000  Travis County Health Facilities  5.875% 11/15/2009      -            -       1,074,180    1,074,180
                                                 Development Corp. Rev., Series
                                                 1999 A, (Ascension Health
                                                 Credit), Prerefunded at 101% of
                                                 Par (Ambac)(2)

    -          -         1,265,000    1,265,000  West Oso Independent School       5.50%  8/15/2026      -            -       1,387,288    1,387,288
                                                 District GO (PSF-GTD)

    -          -         1,705,000    1,705,000  Williamson County GO,             4.25%  2/15/2020      -            -       1,723,005    1,723,005
                                                 (Pass-Through Toll & Limited                       ------------------------------------------------
                                                 Tax) (FSA)                                              -       2,186,900   49,834,783   52,021,683
                                                                                                    ================================================

  U.S. VIRGIN ISLANDS - 0.3%

    -          -         2,000,000    2,000,000  Virgin Islands Public Finance     5.20%  10/1/2009      -            -       2,064,700    2,064,700
                                                 Auth. Rev., Series 1998 A,                         ================================================
                                                 (Senior Lien)

  UTAH - 1.4%

    -          -         1,000,000    1,000,000  Salt Lake City Hospital Rev.,    8.125%  5/15/2015      -            -       1,186,930    1,186,930
                                                 Series 1988 A, (Intermountain
                                                 Health Corporation) (2)

    -          -         1,495,000    1,495,000  Utah County Municipal Building    5.00%  11/1/2009      -            -       1,557,311    1,557,311
                                                 Auth. Lease Rev. (Ambac)(2)

    -          -         1,820,000    1,820,000  Utah County Municipal Building    5.25%  11/1/2011      -            -       1,957,210    1,957,210
                                                 Auth. Lease Rev., Prerefunded
                                                 at 100% of Par (Ambac)(2)

    -          -         1,915,000    1,915,000  Utah County Municipal Building    5.25%  11/1/2011      -            -       2,059,372    2,059,372
                                                 Auth. Lease Rev., Prerefunded
                                                 at 100% of Par (Ambac)(2)

    -          -         1,000,000    1,000,000  Utah County Municipal Building    5.50%  11/1/2011      -            -       1,086,570    1,086,570
                                                 Auth. Lease Rev., Prerefunded
                                                 at 100% of Par (Ambac)(2)

    -          -         1,130,000    1,130,000  West Valley City Municipal        5.00%   8/1/2010      -            -       1,184,466    1,184,466
                                                 Building Auth. Lease Rev.,
                                                 Series 2002 A (Ambac)

    -          -         1,305,000    1,305,000  West Valley City Utility Sales    5.50%  7/15/2016      -            -       1,414,046    1,414,046
                                                 Tax Rev., Series 2001 A (MBIA)                     ------------------------------------------------
                                                                                                         -            -      10,445,905   10,445,905
                                                                                                    ================================================

  VIRGINIA - 0.4%

    -          -         1,500,000    1,500,000  Fairfax County COP                5.30%  4/15/2023      -            -       1,620,300    1,620,300

    -          -         1,115,000    1,115,000  Pittsylvania County GO, Series    5.75%   3/1/2018      -            -       1,228,540    1,228,540
                                                 2001 B (MBIA)                                      ------------------------------------------------
                                                                                                         -            -       2,848,840    2,848,840
                                                                                                    ================================================


  WASHINGTON - 7.6%

    -          -         1,000,000    1,000,000  Benton County Public Utility     5.625%  11/1/2019      -            -       1,087,000    1,087,000
                                                 District No. 1 Rev., Series
                                                 2001 A (FSA)

    -          -         5,000,000    5,000,000  City of Tacoma Electric System   5.625%   1/1/2011      -            -       5,437,500    5,437,500
                                                 Rev., Series 2001 A, Prerefunded
                                                 at 101% of Par (FSA)(1)(2)

    -          -         1,000,000    1,000,000  Cowlitz County Kelso School       5.75%  12/1/2018      -            -       1,103,580    1,103,580
                                                 District No. 458 GO (FSA)

    -          -           500,000      500,000  Energy Northwest Rev. (MBIA)      5.00%   7/1/2010      -            -         523,595      523,595


    -          -         1,750,000    1,750,000  Energy Northwest Rev. (MBIA)      4.75%   7/1/2020      -            -       1,838,025    1,838,025


    -          -         3,500,000    3,500,000  Energy Northwest Rev., Series     5.75%   7/1/2018      -            -       3,867,360    3,867,360
                                                 2002 A, (Columbia Generating)
                                                 (MBIA)

    -          -        10,000,000   10,000,000  Energy Northwest Rev., Series     6.00%   7/1/2018      -            -      11,174,800   11,174,800
                                                 2002 B, (Columbia Generating)
                                                 (Ambac)(1)

    -          -         1,000,000    1,000,000  Grays Harbor County Public        5.00%   7/1/2023      -            -       1,082,730    1,082,730
                                                 Utility District No. 1 Rev.
                                                 (FGIC)(3)

    -          -         1,555,000    1,555,000  King County Lake Washington       5.75%  12/1/2015      -            -       1,738,941    1,738,941
                                                 School District No. 414 GO,
                                                 Prerefunded at 100% of Par(2)

    -          -         1,000,000    1,000,000  King County Public Hospital       5.00%  12/1/2014      -            -       1,090,570    1,090,570
                                                 District No. 2 GO, (Evergreen
                                                 Healthcare) (MBIA)

    -          -         1,000,000    1,000,000  Kitsap County School District     5.00%  12/1/2017      -            -       1,098,060    1,098,060
                                                 No. 303 Bainbridge Island GO
                                                 (MBIA/School Bond Guarantee)

    -          -         1,260,000    1,260,000  Mason County Shelton School      5.625%  12/1/2017      -            -       1,372,556    1,372,556
                                                 District No. 309 GO (FGIC)

    -          -         1,120,000    1,120,000  Metropolitan Park District of     6.00%  12/1/2011      -            -       1,245,574    1,245,574
                                                 Tacoma GO, Prerefunded at 100%
                                                 of Par (Ambac)(2)

    -          -         1,000,000    1,000,000  Metropolitan Park District of     6.00%  12/1/2011      -            -       1,112,120    1,112,120
                                                 Tacoma GO, Prerefunded at 100%
                                                 of Par (Ambac)(2)

    -          -         6,715,000    6,715,000  Snohomish County Edmonds School   5.00%  12/1/2017      -            -       7,373,473    7,373,473
                                                 District No. 15 GO (FGIC/School
                                                 Bond Guarantee)(1)

    -          -         1,720,000    1,720,000  University of Washington Rev.,   5.875%   6/1/2010      -            -       1,867,903    1,867,903
                                                 (Student Facilities Fee),
                                                 Prerefunded at 101% of Par
                                                 (FSA)(2)

    -          -         3,240,000    3,240,000  Washington Economic Development   5.00%   6/1/2023      -            -       3,495,377    3,495,377
                                                 Finance Auth. Rev., Series 2006
                                                 J, (Washington Biomedical
                                                 Research Properties II) (MBIA)

    -          -         1,000,000    1,000,000  Washington GO, Series 1990 A      6.75%   2/1/2015      -            -       1,163,900    1,163,900

    -          -         4,570,000    4,570,000  Washington Public Power Supply    5.00%   7/1/2012      -            -       4,752,572    4,752,572
                                                 System Rev., Series 1998 A,
                                                 (Nuclear Project No. 2) (FSA)(1)

    -          -         1,500,000    1,500,000  Whitman County Pullman School    5.625%  12/1/2016      -            -       1,648,845    1,648,845
                                                 District No. 267 GO (FSA)

    -          -         1,675,000    1,675,000  Yakima County School District No. 5.00%  12/1/2018      -            -       1,841,847    1,841,847
                                                 208 West Valley GO (MBIA/School                    ------------------------------------------------
                                                 Bond Guaranty)                                          -            -      55,916,328   55,916,328
                                                                                                    ================================================

  WISCONSIN - 0.9%

    -          -         1,990,000    1,990,000  Wisconsin Clean Water Rev.       6.875%   6/1/2011      -            -       2,202,990    2,202,990

    -          -         2,590,000    2,590,000  Wisconsin Health & Educational    6.00% 11/15/2010      -            -       2,813,180    2,813,180
                                                 Facilities Auth. Rev., (Aurora
                                                 Medical Group) (FSA)

    -          -           500,000      500,000  Wisconsin Health & Educational    5.50%   6/1/2024      -            -         539,460      539,460
                                                 Facilities Auth. Rev., (Blood
                                                 Center Southeastern)

    -          -           750,000      750,000  Wisconsin Health & Educational    5.75%   6/1/2034      -            -         825,720      825,720
                                                 Facilities Auth. Rev., (Blood                      ------------------------------------------------
                                                 Center Southeastern)                                    -            -       6,381,350    6,381,350
                                                                                                    ================================================
TOTAL MUNICIPAL SECURITIES                                                                           54,328,335 39,832,291  633,731,068  727,891,694
                                                                                                    ================================================

SHORT-TERM MUNICIPAL SECURITIES - 0.8%


  ALASKA - 0.1%

    -          -         1,000,000    1,000,000  Northern Tobacco Securitization   3.54%  12/7/2006      -            -       1,000,000    1,000,000
                                                 Corp. Rev., (MT 279), VRDN (LOC:                   ================================================
                                                 Merril Lynch Capital Services)

  ARIZONA - 0.2%

    -          -           650,000      650,000  Phoenix Industrial Development    3.46%  12/7/2006      -            -         650,000      650,000
                                                 Auth. Rev., Series 2003 A,
                                                 (Southwest Human Development),
                                                 VRDN

   700,000     -           475,000    1,175,000  Pima County Industrial            3.55%  12/6/2006     700,000       -         475,000    1,175,000
                                                 Development Auth. Rev., (Tucson                    ------------------------------------------------
                                                 Electric), VRDN (LOC: Bank of                          700,000       -       1,125,000    1,825,000
                                                 New York)                                          ================================================


  FLORIDA - 0.4%

    -          -         1,500,000    1,500,000  Alachua County Health Facilities  3.65%  12/1/2006      -            -       1,500,000    1,500,000
                                                 Auth. Rev., Series 2002 A,
                                                 (Shands Teaching Hospital and
                                                 Clinics Inc. Revolving Loan
                                                 Program), VRDN (LOC: SunTrust
                                                 Bank)

    -          -         1,200,000    1,200,000  Sunshine State Governmental       3.75%  12/1/2006      -            -       1,200,000    1,200,000
                                                 Financing Commission Rev., VRDN                    ------------------------------------------------
                                                 (Ambac)                                                 -            -       2,700,000    2,700,000
                                                                                                    ================================================

  TENNESSEE - 0.1%

    -          -           500,000      500,000  Clarksville Public Building       3.65%  12/1/2006      -            -         500,000      500,000
                                                 Authority Rev., (Tennessee                         ================================================
                                                 Municipal Bond Fund), VRDN (LOC:
                                                 Bank of America N.A.)
  TOTAL SHORT-TERM MUNICIPAL SECURITIES                                                                 700,000       -       5,325,000    6,025,000
                                                                                                    ================================================


 TEMPORARY CASH INVESTMENTS(5)
    -         195,000         -         195,000  Federated Florida Municipal                           -         195,000         -           195,000
                                                 Cash Trust                                         ================================================

 TOTAL INVESTMENT SECURITIES - 99.6%                                                               $55,028,335 $40,027,291 $639,056,068 $734,111,694
                                                                                                    ================================================

 OTHER ASSETS AND LIABILITIES - 0.4%                                                                                                       2,818,215
                                                                                                                                    ----------------
 TOTAL NET ASSETS - 100.0%                                                                                                              $736,929,909
                                                                                                                                    ================


FUTURES CONTRACTS
   CONTRACTS PURCHASED                                                     EXPIRATION      UNDERLYING FACE AMOUNT AT VALUE
       FUND 1   FUND 2    FUND 3   COMBINED                                    DATE        FUND 1         FUND 2          FUND 3          COMBINED
----------------------------------------------------------------------------------------------------------------------------------------------------
        41       31       484       556      U.S. Treasury 2-Year Notes     March 2007     $8,405,000    $6,355,000     $ 99,220,000    $113,980,000


                                                                                           UNREALIZED GAIN (LOSS)
                                                                                           ---------------------------------------------------------
                                                                                           $   17,849     $  13,495      $   210,690      $  242,034


  CONTRACTS SOLD                                                            EXPIRATION     UNDERLYING FACE AMOUNT AT VALUE
     FUND 1   FUND 2    FUND 3   COMBINED                                      DATE        FUND 1          FUND 2          FUND 3          COMBINED
----------------------------------------------------------------------------------------------------------------------------------------------------
        32       32       578       642      U.S. Treasury 10-Year Notes    March 2007     $3,494,000    $3,494,000     $ 63,110,375     $70,098,375


                                                                                          UNREALIZED GAIN (LOSS)
                                                                                          ----------------------------------------------------------
                                                                                          $  (27,321)    $ (27,322)     $  (493,504)    $  (548,147)

 NOTES TO SCHEDULE OF INVESTMENTS

    ACA =  American Capital Access
  Ambac =  Ambac Assurance Corporation
   CIFG =  CDC IXIS Financial Guaranty North America
    COP =  Certificates of Participation
   FGIC =  Financial Guaranty Insurance Co.
  FHLMC =  Federal Home Loan Mortgage Corporation
   FNMA =  Federal National Mortgage Association
    FSA =  Financial Security Assurance, Inc.
   GNMA =  Government National Mortgage Association
     GO =  General Obligation
    LOC =  Letter of Credit
   MBIA =  MBIA Insurance Corporation
MBIA-IBC=  MBIA Insured Bond Certificates
 PSF-GTD=  Permanent School Fund - Guaranteed
  RADIAN=  Radian Asset Assurance, Inc.
   VRDN =  Variable Rate Demand Note. Interest reset date is indicated.
           Rate shown is effective November 30, 2006.
   XLCA =  XL Capital Ltd.
        (1)  Security,  or a portion thereof,  has been segregated for futures
             contracts and/or when-issued securities.
        (2)  Escrowed to maturity in U.S.  government  securities or state and
             local government securities.
        (3)  When-issued security.
        (4)  Security is a zero-coupon  municipal  bond. The rate indicated is
             the yield to maturity at  purchase.  Zero-coupon  securities  are
             issued at a substantial discount from their value at maturity.
        (5)  Category is less than 0.05% of total net assets.




ARIZONA MUNICIPAL, FLORIDA MUNICIPAL AND TAX-FREE BOND
PRO FORMA COMBINED STATEMENT OF ASSETS AND LIABILITIES

NOVEMBER 30, 2006 (UNAUDITED)


                                            ARIZONA          FLORIDA       TAX-FREE                         PRO-FORMA
                                            MUNICIPAL        MUNICIPAL       BOND        ADJUSTMENTS    COMBINING (NOTE 1)
------------------------------------------------------------------------------------------------------------------------
ASSETS
------------------------------------------------------------------------------------------------------------------------
Investment securities, at value          $ 55,028,335    $ 40,027,291    $639,056,068    $          -      $ 734,111,694
(cost of $52,564,140, $38,144,310 and
$615,259,989, respectively)
Cash                                           23,858               -          63,168         (17,333)(a)         69,693
Receivable for investments sold                     -               -         844,032               -            844,032
Receivable for capital shares sold                  -             257               -               -                257
Interest receivable                           970,474         529,270       9,130,594               -         10,630,338
                                        --------------------------------------------------------------------------------
                                           56,022,667      40,556,818     649,093,862         (17,333)       745,656,014
                                        --------------------------------------------------------------------------------


------------------------------------------------------------------------------------------------------------------------
LIABILITIES
------------------------------------------------------------------------------------------------------------------------
Disbursements in excess of                          -          17,333               -         (17,333)(a)              -
  demand deposit
Payable for investments purchased                   -               -       7,815,834               -          7,815,834
Payable for variation margin on                 4,032           6,220         128,938                            139,190
   futures contracts
Accrued management fees                        22,061          16,132         249,330               -            287,523
Distribution fees payable                         354             736              69               -              1,159
Service fees (and distributions                   495             473              69               -              1,037
  fees - A Class) payable
Dividends payable                              40,212          40,591         400,559                            481,362
                                        --------------------------------------------------------------------------------
                                               67,154          81,485       8,594,799    $    (17,333)         8,726,105
                                        --------------------------------------------------------------------------------
NET ASSETS                               $ 55,955,513    $ 40,475,333   $ 640,499,063    $          -      $ 736,929,909
                                        ================================================================================


------------------------------------------------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
------------------------------------------------------------------------------------------------------------------------
Capital paid in                          $ 53,710,480    $ 38,969,147   $ 619,367,068    $          -        712,046,695
Accumulated net realized loss on             (209,690)       (362,968)     (2,382,083)                        (2,954,741)
  investment transactions
Net unrealized appreciation on              2,454,723       1,869,154      23,514,078               -         27,837,955
  investments                           --------------------------------------------------------------------------------
                                         $ 55,955,513    $ 40,475,333   $ 640,499,063    $          -      $ 736,929,909
                                        ================================================================================




                                                                                                            PRO-FORMA
                                                                                           ADJUSTMENTS      COMBINING
------------------------------------------------------------------------------------------------------------------------
Investor Class
----------------------------------------
Net Assets                               $ 53,609,441    $ 38,211,319    $631,397,920     $  4,947,134     $ 728,165,814
----------------------------------------
Shares Outstanding                          4,935,858       3,566,628      58,109,259          399,816(b)     67,011,561
----------------------------------------
Net asset value per share                $      10.86    $      10.71    $      10.87     $      10.87     $       10.87
------------------------------------------------------------------------------------------------------------------------


------------------------------------------------------------------------------------------------------------------------
INSTITUTIONAL CLASS
----------------------------------------
Net Assets                                        N/A             N/A    $  8,764,095              N/A     $   8,764,095
----------------------------------------
Shares Outstanding                                N/A             N/A         806,583              N/A           806,583
----------------------------------------
Net asset value per share                         N/A             N/A    $      10.87              N/A     $       10.87
------------------------------------------------------------------------------------------------------------------------


------------------------------------------------------------------------------------------------------------------------
ADVISOR CLASS
----------------------------------------
Net Assets                                        N/A             N/A    $    337,048     $   (337,048)              N/A
----------------------------------------
Shares Outstanding                                N/A             N/A          31,019          (31,019)(b)           N/A
----------------------------------------
Net asset value per share                         N/A             N/A    $      10.87     $      10.87               N/A
------------------------------------------------------------------------------------------------------------------------


------------------------------------------------------------------------------------------------------------------------
A CLASS
----------------------------------------
Net Assets                               $  1,769,213     $ 1,065,623             N/A              N/A               N/A
----------------------------------------
Shares Outstanding                            162,892          99,465             N/A              N/A               N/A
----------------------------------------
Net asset value per share                     $ 10.86         $ 10.71             N/A              N/A               N/A
----------------------------------------
Maximum offering price (net asset             $ 11.37         $ 11.21             N/A              N/A               N/A
value divided by 0.955)
------------------------------------------------------------------------------------------------------------------------


------------------------------------------------------------------------------------------------------------------------
B CLASS
----------------------------------------
Net Assets                               $     42,785     $    16,125             N/A              N/A               N/A
----------------------------------------
Shares Outstanding                              3,940           1,505             N/A              N/A               N/A
----------------------------------------
Net asset value per share                $      10.86     $     10.71             N/A              N/A               N/A
------------------------------------------------------------------------------------------------------------------------


------------------------------------------------------------------------------------------------------------------------
C CLASS
----------------------------------------
Net Assets                               $    534,074     $ 1,182,266             N/A              N/A               N/A
----------------------------------------
Shares Outstanding                             49,172         110,352             N/A              N/A               N/A
----------------------------------------
Net asset value per share                $      10.86         $ 10.71             N/A              N/A               N/A
------------------------------------------------------------------------------------------------------------------------


(a)  Reclass of  disbursements  in excess of demand deposit cash against cash to
     reflect combined cash position.

(b)  Adjustments  reflect the  issuance of Tax-Free  Bond shares in exchange for
     all Arizona  Municipal  shares and Florida  Municipal  shares in connection
     with the proposed reorganization.  Also reflects issuance of Investor Class
     shares of Tax-Free  Bond in exchange  for Advisor  Class shares of Tax-Free
     Bond in connection with the proposed reclassification.

SEE NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS.






ARIZONA MUNICIPAL, FLORIDA MUNICIPAL AND TAX-FREE BOND
PRO FORMA COMBINED STATEMENT OF OPERATIONS

YEAR ENDED NOVEMBER 30, 2006 (UNAUDITED)

                                            ARIZONA         FLORIDA        TAX-FREE                         PRO-FORMA
                                            MUNICIPAL       MUNICIPAL        BOND        ADJUSTMENTS    COMBINING (NOTE 1)
--------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
--------------------------------------------------------------------------------------------------------------------------
INCOME:
Interest                                 $ 2,718,229      $ 1,982,498     $28,040,214      $        -        $ 32,740,941
                                   ---------------------------------------------------------------------------------------
                                           2,718,229        1,982,498      28,040,214               -          32,740,941
                                   ---------------------------------------------------------------------------------------
EXPENSES:
Management fees                              274,008          212,603       3,130,894      $      191  (a)      3,617,696
Distribution Fees:
  Advisor Class                                    -                -             191            (191) (b)              -
  B Class                                        286              137               -            (423) (b)              -
  C Class                                      3,273           11,401               -         (14,674) (b)              -
Service Fees:
  Advisor Class                                    -                -             191            (191) (b)              -
  B Class                                         96               45               -            (141) (b)              -
  C Class                                      1,091            3,799               -          (4,890) (b)              -
Service and distribution                       8,432            3,818               -         (12,250) (b)              -
  fees - A Class
Trustees' fees and expenses                    3,047            2,486          37,931                              43,464
Other expenses                                   104               81           1,328                               1,513
                                   ---------------------------------------------------------------------------------------
                                             290,337          234,370       3,170,535         (32,569)          3,662,673
                                   ---------------------------------------------------------------------------------------

NET INVESTMENT INCOME                      2,427,892        1,748,128      24,869,679          32,569          29,078,268
                                   ---------------------------------------------------------------------------------------



--------------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
--------------------------------------------------------------------------------------------------------------------------
NET REALIZED GAIN (LOSS) ON:
Investment transactions                        5,400          (13,970)       (698,015)                           (706,585)
Futures and swaps transactions               (60,651)         (16,117)     (1,452,381)                         (1,529,149)
                                   ---------------------------------------------------------------------------------------
                                             (55,251)         (30,087)     (2,150,396)              -          (2,235,734)
                                   ---------------------------------------------------------------------------------------

CHANGE IN UNREALIZED APPRECIATION
  (DEPRECIATION) ON:
Investment                                 1,006,878          249,824       9,464,186                          10,720,888
Futures and swaps                            (10,094)          18,264        (301,253)                           (293,083)
                                   ---------------------------------------------------------------------------------------
                                             996,784          268,088       9,162,933               -          10,427,805
                                   ---------------------------------------------------------------------------------------


NET REALIZED AND UNREALIZED                  941,533          238,001       7,012,537               -           8,192,071
  GAIN (LOSS)                      ---------------------------------------------------------------------------------------

NET INCREASE (DECREASE) IN NET
  ASSETS RESULTING FROM OPERATIONS       $ 3,369,425      $ 1,986,129     $31,882,216      $   32,569         $37,270,339
                                   =======================================================================================

(a)  Adjustment  reflects  the  increase  in  total  management  fees due to the
     exchange of Tax-Free Bond's Advisor Class for Investor Class shares.

(b)  Adjustment  reflects  the  elimination  of 12b-1  fees as a result of these
     share classes being exchanged for Tax-Free Bond Investor Class shares.

SEE NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS.





NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS (UNAUDITED)
NOVEMBER 30, 2006 (UNAUDITED)

1.   BASIS  OF  COMBINATION-The   unaudited  Pro  Forma  Combining  Schedule  of
     Investments,  Pro Forma  Combining  Statement of Assets and Liabilities and
     Pro Forma  Combining  Statement of  Operations  reflect the accounts of the
     Arizona Municipal Bond Fund ("Arizona  Municipal"),  Florida Municipal Bond
     Fund  ("Florida  Municipal")  and  Tax-Free  Bond  Fund  ("Tax-Free  Bond")
     (collectively,  the  funds),  three  funds in a series  issued by  American
     Century  Municipal  Trust at and for the year ended  November 30, 2006. The
     Pro  Forma  Combining  Schedule  of  Investments  and Pro  Forma  Combining
     Statement of Assets and Liabilities  assume the combination was consummated
     after the close of business  November  30,  2006.  The Pro Forma  Combining
     Statement of Operations  assumes the  combination  was  consummated  at the
     beginning of the fiscal year ended November 30, 2006.

     The pro forma statements give effect to the proposed transfer of the assets
     and stated  liabilities of the non-surviving  funds,  Arizona Municipal and
     Florida  Municipal,  in  exchange  for shares of the  surviving  fund,  for
     purposes of maintaining the financial statements and performance,  Tax-Free
     Bond. Financial  information for Tax-Free Bond as of November 30, 2006, has
     been  adjusted  to reflect  the plan of  reorganization  anticipated  to be
     effective  at the  close of  business  on  August  31,  2007,  for  Arizona
     Municipal,  Florida Municipal and Tax-Free Bond. Tax-Free Bond will acquire
     all of the assets of Arizona  Municipal  and Florida  Municipal in exchange
     for  shares  of equal  value of  Tax-Free  Bond and the  assumption  of all
     liabilities  of Arizona  Municipal and Florida  Municipal.  Also,  Investor
     Class shares of Tax-Free  Bond will be issued in exchange for Advisor Class
     shares of Tax-Free Bond in connection with the proposed reclassification.

     In accordance with accounting  principles  generally accepted in the United
     States of America,  the historical  cost of investment  securities  will be
     carried  forward to the surviving  fund and the results of  operations  for
     pre-combination periods for the surviving fund will not be adjusted.  Under
     the terms of the  Agreement  and Plan of  Reorganization,  neither  Arizona
     Municipal,  Florida  Municipal  nor  Tax-Free  Bond  will  bear  any of the
     expenses associated with the costs of the  Reorganization,  including proxy
     solicitation  and  tabulation  costs.  Therefore,  the pro forma  financial
     statements  do not reflect these  expenses.  Under the terms of the Plan of
     Reorganization,  the combination of the funds will be treated as a tax-free
     business  combination and accordingly  will be accounted for by a method of
     accounting for tax-free mergers of investment companies.

     The Pro Forma Combining  Schedule of  Investments,  Statement of Assets and
     Liabilities and Statement of Operations  should be read in conjunction with
     the historical  financial  statements of the funds included or incorporated
     by reference in the Statement of Additional Information.

2.   SECURITY  VALUATION - Debt securities  maturing in greater than 60 days are
     valued at current market value as provided by a commercial  pricing service
     or at the mean of the most  recent bid and asked  prices.  Debt  securities
     maturing  within 60 days may be valued at cost, plus or minus any amortized
     discount or premium.  If an event  occurs after the value of a security was
     established  but before the net asset value per share was  determined  that
     was likely to materially change the net asset value, that security would be
     valued at fair value as determined in accordance with procedures adopted by
     the Board of Trustees.  If the funds  determine  that the market price of a
     portfolio security is not readily available,  or that the valuation methods
     mentioned above do not reflect the security's fair value,  such security is
     valued at its fair value as determined by, or in accordance with procedures
     adopted  by,  the Board of  Trustees  or its  designee  if such fair  value
     determination  would  materially  impact a fund's net asset value.  Certain
     other circumstances may cause the funds to fair value a security such as: a
     security  has been  declared  in  default;  trading in a security  has been
     halted during the trading day; or there is a foreign  market holiday and no
     trading will commence.

3.   MANAGEMENT FEES - The combined fund will pay a single,  unified  management
     fee per class.  This fee  provides  that all  expenses  of the fund  except
     brokerage commissions, taxes, interest, fees and expenses of those trustees
     who are not  considered  "interested  persons"  as  defined in the 1940 Act
     (including  counsel  fees) and  extraordinary  expenses will be paid by the
     Advisor.  The adjustments in the Statement of Operations reflect the impact
     of the single, unified management fee per class.

4.   USE OF  ESTIMATES  - The pro forma  financial  statements  are  prepared in
     conformity  with  accounting  principles  generally  accepted in the United
     States of America,  which may require  management to make certain estimates
     and  assumptions  at the date of the financial  statements.  Actual results
     could differ from those estimates.

5.   CAPITAL  SHARES  -The pro  forma net asset  value  per  share  assumes  the
     issuance  of shares of the  surviving  fund that would have been  issued at
     November 30, 2006,  in  connection  with the proposed  reorganization.  The
     number of shares  assumed  to be issued is equal to the net asset  value of
     shares of the non-surviving  funds, as of November 30, 2006, divided by the
     net  asset  value  per  share of the  shares  of the  surviving  fund as of
     November 30, 2006. The pro forma total number of shares outstanding for the
     combined fund consists of the following at November 30, 2006:

------------------ ------------------ ------------------- -------------------
  COMBINED FUND:    TOTAL PRO FORMA   SHARES OF SURVIVING  ADDITIONAL SHARES
  TAX-FREE BOND       OUTSTANDING          FUND PRIOR      ASSUMED ISSUED IN
                         SHARES           TO COMBINATION    REORGANIZATION
------------------ ------------------ ------------------- -------------------
 Investor                  67,011,561          58,109,259         8,902,302
------------------ ------------------ ------------------- -------------------
 Institutional                806,583             806,583                 0
------------------ ------------------ ------------------- -------------------
 Advisor(1)                         0              31,019           (31,019)
------------------ ------------------ ------------------- -------------------
 Total Fund                67,818,144          58,946,861          8,871,283
------------------ ------------------ ------------------- -------------------

(1)  Tax-Free  Bond  Advisor  Class  shares  were  exchanged  for  shares of the
     Investor Class.

6.   FEDERAL  TAX  INFORMATION  -  At  May  31,  2006,   Florida  Municipal  had
     accumulated capital losses of $295,636,  which may be used to offset future
     realized capital gains for federal income tax purposes.  To the extent that
     those  carryover  losses are used to offset capital  gains,  it is probable
     that any  gains  so  offset  will  not be  distributed.  The  capital  loss
     carryovers expire in 2013.

     For the seven-month period ended May 31, 2006,  Arizona Municipal,  Florida
     Municipal  and  Tax-Free  Bond  incurred  net capital  losses of  $154,439,
     $81,454, and $659,404,  respectively.  The funds have elected to treat such
     losses as having  been  incurred in the  following  fiscal year for federal
     income tax purposes.








AMERICAN CENTURY MUNICIPAL TRUST

PART C    OTHER INFORMATION

Item 15.  Indemnification

     As stated in Article VII,  Section 3 of the Amended and Restated  Agreement
and  Declaration of Trust,  incorporated  herein by reference as Exhibit 1, "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 of
Trustees."

     Registrant  hereby  incorporates  by  reference,  as though set forth fully
herein, Article VI of the Registrant's Amended and Restated Bylaws, appearing as
Exhibit 2 herein.

     The Registrant has purchased an insurance  policy insuring its officers and
directors  against  certain  liabilities  which such  officers and directors 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 directors by way of  indemnification  against such  liabilities,  subject in
either case to clauses respecting deductibility and participation.

Item 16.  Exhibits

     (1)  (a) Amended and Restated  Agreement and  Declaration  of Trust,  dated
March 26, 2004 (filed  electronically as Exhibit a to  Post-Effective  Amendment
No. 43 to the  Registration  Statement of the  Registrant on September 28, 2004,
File No. 2-91229, and incorporated herein by reference).

          (b)  Amendment  No.  1 to  the  Amended  and  Restated  Agreement  and
Declaration of Trust, dated June 30, 2005 (filed electronically as Exhibit a2 to
Post-Effective  Amendment No. 46 to the Registration Statement of the Registrant
on July 28, 2005, File No. 2-91229, and incorporated herein by reference).

          (c)  Amendment  No.  2 to  the  Amended  and  Restated  Agreement  and
Declaration of Trust,  dated December 12, 2005 (filed  electronically as Exhibit
1(c) to the  Registration  Statement on Form N-14 of the  Registrant on December
22, 2005, File No. 2-91229, and incorporated herein by reference).

          (d) Form of Amendment No. 3 to the Amended and Restated  Agreement and
Declaration of Trust, is included herein.

     (2)   Amended  and   Restated   Bylaws,   dated   August  26,  2004  (filed
electronically  as  Exhibit  b  to  Post-Effective   Amendment  No.  44  to  the
Registration  Statement of the Registrant on May 13, 2005, File No. 2-91229, and
incorporated herein by reference).

     (3)  Not applicable.

     (4) Form of  Agreement  and Plan of  Reorganization,  filed as Exhibit A to
this  Registration  Statement  of the  Registrant  and  incorporated  herein  by
reference.

     (5) 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 Agreement and Declaration of Trust,  appearing
as Exhibit 1a  hereto,  the Form of  Amendment  No. 3 to  Amended  and  Restated
Agreement and  Declaration of Trust of the  Registrant,  appearing as Exhibit 1d
hereto,   and  Article  II,  Article  VII,  Article  VIII,  and  Article  IX  of
Registrant's Amended and Restated Bylaws, appearing as Exhibit 2 hereto.

     (6)  (a) Management Agreement with American Century Investment  Management,
Inc., dated August 1, 2006 (filed electronically as Exhibit d1 to Post-Effective
Amendment No. 51 to the  Registration  Statement of the  Registrant on September
28, 2006, File No. 2-91229, and incorporated herein by reference).

          (b) Management Agreement with American Century Investment  Management,
Inc., dated March 30, 2006 (filed electronically as Exhibit d2 to Post-Effective
Amendment  No. 50 to the  Registration  Statement of the  Registrant on July 31,
2006, File No. 2-91229, and incorporated herein by reference).

     (7)  (a) Amended and Restated Distribution  Agreement with American Century
Investment  Services,  Inc.,  dated November 29, 2006 (filed  electronically  as
Exhibit e1 to Post-Effective  Amendment No. 46 to the Registration  Statement of
American Century  Quantitative Equity Funds, Inc. on November 29, 2006, File No.
33-19589, and incorporated herein by reference).

          (b) Form of Dealer/Agency  Agreement (filed  electronically as Exhibit
e2 to Pre-Effective  Amendment No. 1 to the  Registration  Statement of American
Century  Growth  Funds,  Inc.  on  May  30,  2006,  File  No.  333-132114,   and
incorporated herein by reference).

     (8)  Not applicable.

     (9)  (a) Master Agreement with 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, and incorporated herein by reference).

          (b) Global Custody  Agreement  with 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, and incorporated herein by reference).

          (c) Amendment to the Global Custody Agreement with 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,  and
incorporated herein by reference).

          (d) Amendment No. 2 to the Global Custody  Agreement  between American
Century  Investments and the JPMorgan Chase Bank, dated as of May 1, 2004 (filed
electronically  as  Exhibit  g4  to  Post-Effective  Amendment  No.  35  to  the
Registration  Statement of American Century  Quantitative  Equity Funds, Inc. on
April 29, 2004, File No. 33-19589, and incorporated herein by reference).

          (e) Chase Manhattan Bank Custody Fee Schedule,  dated October 19, 2000
(filed  electronically as Exhibit g5 to  Post-Effective  Amendment No. 35 to the
Registration  Statement of American Century  Quantitative  Equity Funds, Inc. on
April 29, 2004, File No. 33-19589, and incorporated herein by reference).

          (f) Amendment No. 3 to the Global Custody  Agreement  between American
Century Investments and the JPMorgan Chase Bank, dated as of May 31, 2006 (filed
electronically   as  Exhibit  g6  to  Pre-Effective   Amendment  No.  1  to  the
Registration  Statement of American Century Growth Funds,  Inc. on May 30, 2006,
File No. 333-132114, and incorporated herein by reference).

          (g)  Registered  Investment  Company  Custody  Agreement with Goldman,
Sachs & Co.,  dated  February  6, 2006  (filed  electronically  as  Exhibit 6 to
Post-Effective  Amendment No. 49 to the Registration Statement of the Registrant
on March 9, 2006, File No. 2-91229, and incorporated herein by reference).

     (10) (a) Master  Distribution and Individual  Shareholder  Services Plan (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,  and
incorporated herein by reference).

          (b)  Amendment  No.  1  to  the  Master  Distribution  and  Individual
Shareholder Services Plan (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,
and incorporated herein by reference).

          (c)  Amendment  No.  2  to  the  Master  Distribution  and  Individual
Shareholder   Services   Plan  (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, and incorporated herein by reference).

          (d)  Amendment  No.  3  to  the  Master  Distribution  and  Individual
Shareholder Services Plan (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,  and
incorporated herein by reference).

          (e)  Amendment  No.  4  to  the  Master  Distribution  and  Individual
Shareholder   Services   Plan  (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, and incorporated herein by reference).

          (f)  Amendment  No.  5  to  the  Master  Distribution  and  Individual
Shareholder   Services   Plan  (C  Class),   dated   January  2,  2004,   (filed
electronically  as  Exhibit  m6  to  Post-Effective  Amendment  No.  42  to  the
Registration Statement of the Registrant on February 26, 2004, File No. 2-91229,
and incorporated herein by reference).

          (g)  Amendment  No.  6  to  the  Master  Distribution  and  Individual
Shareholder Services Plan (C Class), dated May 1, 2004 (filed  electronically as
Exhibit m13 to Post-Effective  Amendment No. 35 to the Registration Statement of
American  Century  Quantitative  Equity Funds,  Inc. on April 29, 2004, File No.
33-19589, and incorporated herein by reference).

          (h)  Amendment  No.  7  to  the  Master  Distribution  and  Individual
Shareholder Services Plan (C Class), dated May 1, 2005 (filed  electronically as
Exhibit m15 to Post-Effective  Amendment No. 38 to the Registration Statement of
American  Century  Quantitative  Equity  Funds,  Inc. on May 13, 2005,  File No.
33-19589, and incorporated herein by reference).

          (i)  Amendment  No.  8  to  the  Master  Distribution  and  Individual
Shareholder   Services  Plan  (C  Class),   dated   September  29,  2005  (filed
electronically  as  Exhibit  m17  to  Post-Effective  Amendment  No.  41 to  the
Registration  Statement of American Century  Quantitative  Equity Funds, Inc. on
September 29, 2005, File No. 33-19589, and incorporated herein by reference).

          (j)  Amendment  No.  9  to  the  Master  Distribution  and  Individual
Shareholder Services Plan (C Class), dated March 30, 2006 (filed  electronically
as Exhibit m10 to Post-Effective  Amendment No. 50 to the Registration Statement
of the Registrant on March 31,2006, File No. 2-14213, and incorporated herein by
reference).

          (k)  Amendment  No.  10 to  the  Master  Distribution  and  Individual
Shareholder   Services   Plan  (C  Class),   dated   November  29,  2006  (filed
electronically  as  Exhibit  m19  to  Post-Effective  Amendment  No.  46 to  the
Registration  Statement of American Century  Quantitative  Equity Funds, Inc. on
November 29, 2006, File No. 33-19589, and incorporated herein by reference).

          (l) Master  Distribution and Individual  Shareholder  Services Plan (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 1, 2002,  File No.
2-82734, and incorporated herein by reference).

          (m)  Amendment  No.  1  to  the  Master  Distribution  and  Individual
Shareholder   Services   Plan  (A  Class),   dated   February  27,  2004  (filed
electronically  as  Exhibit  m18  to  Post-Effective  Amendment  No.  104 to the
Registration  Statement of American  Century Mutual Funds,  Inc. on February 26,
2004, File No. 2-14213, and incorporated herein by reference).

          (n)  Amendment  No.  2  to  the  Master  Distribution  and  Individual
Shareholder   Services  Plan  (A  Class),   dated   September  30,  2004  (filed
electronically  as  Exhibit  m22  to  Post-Effective  Amendment  No.  106 to the
Registration  Statement  of American  Century  Investment  Trust on November 29,
2004, File No. 2-14213, and incorporated herein by reference).

          (o)  Amendment  No.  3  to  the  Master  Distribution  and  Individual
Shareholder   Services   Plan  (A  Class),   dated   November  17,  2004  (filed
electronically  as  Exhibit  m23  to  Post-Effective  Amendment  No.  106 to the
Registration  Statement  of American  Century  Investment  Trust on November 29,
2004, File No. 2-14213, and incorporated herein by reference).

          (p)  Amendment  No.  4  to  the  Master  Distribution  and  Individual
Shareholder Services Plan (A Class), dated May 1, 2005 (filed  electronically as
Exhibit m13 to Post-Effective  Amendment No. 44 to the Registration Statement of
the Registrant on May 13, 2005, File No.  2-91229,  and  incorporated  herein by
reference).

          (q)  Amendment  No.  5  to  the  Master  Distribution  and  Individual
Shareholder   Services  Plan  (A  Class),   dated   September  29,  2005  (filed
electronically  as  Exhibit  m25  to  Post-Effective  Amendment  No.  38 to  the
Registration  Statement of American Century World Mutual Funds, Inc. on November
30, 2005, File No. 33-39242, and incorporated herein by reference).

          (r)  Amendment  No.  6  to  the  Master  Distribution  and  Individual
Shareholder Services Plan (A Class), dated March 30, 2006 (filed  electronically
as Exhibit m27 to Post-Effective  Amendment No. 23 to the Registration Statement
of American Century  Strategic Asset  Allocations,  Inc. on March 30, 2006, File
No. 33-79482, and incorporated herein by reference).

          (s)  Amendment  No.  7  to  the  Master  Distribution  and  Individual
Shareholder   Services   Plan  (A  Class),   dated   November  29,  2006  (filed
electronically  as  Exhibit  m34  to  Post-Effective  Amendment  No.  46 to  the
Registration  Statement of American Century  Quantitative  Equity Funds, Inc. on
November 29, 2006, File No. 33-19589, and incorporated herein by reference).

          (t) Master  Distribution and Individual  Shareholder  Services Plan (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 1, 2002,  File No.
2-82734, and incorporated herein by reference).

          (u)  Amendment  No.  1  to  the  Master  Distribution  and  Individual
Shareholder   Services   Plan  (B  Class),   dated   February  27,  2004  (filed
electronically  as  Exhibit  m20  to  Post-Effective  Amendment  No.  104 to the
Registration  Statement of American  Century Mutual Funds,  Inc. on February 26,
2004, File No. 2-14213, and incorporated herein by reference).

          (v)  Amendment  No.  2  to  the  Master  Distribution  and  Individual
Shareholder   Services  Plan  (B  Class),   dated   September  30,  2004  (filed
electronically  as Exhibit  m26 to  Post-Effective  No. 106 to the  Registration
Statement of American  Century  Investment  Trust on November 29, 2004, File No.
2-14213, and incorporated herein by reference).

          (w)  Amendment  No.  3  to  the  Master  Distribution  and  Individual
Shareholder   Services   Plan  (B  Class),   dated   November  17,  2004  (filed
electronically  as  Exhibit  m27  to  Post-Effective  Amendment  No.  106 to the
Registration  Statement  of American  Century  Investment  Trust on November 29,
2004, File No. 2-14213, and incorporated herein by reference).

          (x)  Amendment  No.  4  to  the  Master  Distribution  and  Individual
Shareholder Services Plan (B Class), dated May 1, 2005 (filed  electronically as
Exhibit m18 to Post-Effective  Amendment No. 44 to the Registration Statement of
the Registrant on May 13, 2005, File No.  2-91229,  and  incorporated  herein by
reference).

          (y)  Amendment  No.  5  to  the  Master  Distribution  and  Individual
Shareholder   Services  Plan  (B  Class),   dated   September  29,  2005  (filed
electronically  as  Exhibit  m31  to  Post-Effective  Amendment  No.  38 to  the
Registration  Statement of American Century World Mutual Funds, Inc. on November
30, 2005, File No. 33-39242, and incorporated herein by reference).

          (z)  Amendment  No.  6  to  the  Master  Distribution  and  Individual
Shareholder Services Plan (B Class), dated March 30, 2006 (filed  electronically
as Exhibit m34 to Post-Effective  Amendment No. 23 to the Registration Statement
of American Century  Strategic Asset  Allocations,  Inc. on March 30, 2006, File
No. 33-79482, and incorporated herein by reference).

          (aa)  Amendment  No.  7 to  the  Master  Distribution  and  Individual
Shareholder   Services   Plan  (B  Class),   dated   November  29,  2006  (filed
electronically  as  Exhibit  m42  to  Post-Effective  Amendment  No.  46 to  the
Registration  Statement of American Century  Quantitative  Equity Funds, Inc. on
November 29, 2006, File No. 33-19589, and incorporated herein by reference).

          (bb)  Master  Distribution  and  Shareholder  Services  Plan  (Advisor
Class),  dated  August  1,  1997,  (filed   electronically  as  Exhibit  m18  to
Post-Effective  Amendment  No.  32 to the  Registration  Statement  of  American
Century  Target  Maturities  Trust on January 31, 2000,  File No.  2-94608,  and
incorporated herein by reference).

          (cc) Amendment to Master  Distribution  and Shareholder  Services Plan
(Advisor  Class),  dated June 29,  1998 (filed  electronically  as Exhibit m2 to
Post-Effective  Amendment  No.  32 to the  Registration  Statement  of  American
Century  Target  Maturities  Trust on January 31, 2000,  File No.  2-94608,  and
incorporated herein by reference).

          (dd) Amendment No. 1 to Master  Distribution and Shareholder  Services
Plan (Advisor Class),  dated August 1, 2001 (filed  electronically as Exhibit m3
to  Post-Effective  Amendment No. 44 to the  Registration  Statement of American
Century  Government  Income  Trust  on July 31,  2001,  File  No.  2-99222,  and
incorporated herein by reference).

          (ee) Amendment No. 2 to Master  Distribution and Shareholder  Services
Plan (Advisor Class), dated December 3, 2001 (filed electronically as Exhibit m4
to Post-Effective Amendment No. 16 to the Registration Statement of the American
Century  Investment  Trust  on  November  30,  2001,  File  No.  33-65170,   and
incorporated herein by reference).

          (ff) Amendment No. 3 to Master  Distribution and Shareholder  Services
Plan (Advisor Class), dated July 1, 2002 (filed  electronically as Exhibit m5 to
Post-Effective  Amendment  No.  38 to the  Registration  Statement  of  American
Century  Target  Maturities  Trust on January 31, 2005,  File No.  2-94608,  and
incorporated herein by reference).

          (gg) Amendment No. 4 to Master  Distribution and Shareholder  Services
Plan (Advisor Class),  dated May 1, 2004 (filed  electronically as Exhibit m6 to
Post-Effective  Amendment  No.  35 to the  Registration  Statement  of  American
Century  Quantitative  Equity Funds,  Inc. on April 29, 2004, File No. 33-19589,
and incorporated herein by reference).

          (hh) Amendment No. 5 to Master  Distribution and Shareholder  Services
Plan (Advisor Class), dated July 29, 2005 (filed electronically as Exhibit m7 to
Post-Effective  Amendment  No.  51 to the  Registration  Statement  of  American
Century  Government  Income  Trust  on July 28,  2005,  File  No.  2-99222,  and
incorporated herein by reference).

          (ii)  Amendment  No.  6 to the  Master  Distribution  and  Shareholder
Services Plan (Advisor Class), dated September 29, 2005 (filed electronically as
Exhibit m8 to Post-Effective  Amendment No. 41 to the Registration  Statement of
American Century Quantitative Equity Funds, Inc. on September 29, 2005, File No.
33-19589, and incorporated herein by reference).

          (jj) Amended and Restated Multiple Class Plan, dated September 3, 2002
(filed  electronically  as Exhibit n to  Post-Effective  Amendment No. 35 to the
Registration  Statement of American  Century  California  Tax-Free and Municipal
Funds on  December  17,  2002,  File No.  2-82734,  and  incorporated  herein by
reference).

          (kk) Amendment No. 1 to the Amended and Restated  Multiple Class Plan,
dated December 31, 2002 (filed  electronically  as Exhibit n2 to  Post-Effective
Amendment No. 39 to the Registration Statement of the Registrant on December 23,
2002, File No. 2-91229, and incorporated herein by reference).

          (ll) Amendment No. 2 to the Amended and Restated  Multiple Class Plan,
dated  August 29, 2003  (filed  electronically  as Exhibit n3 to  Post-Effective
Amendment No. 17 to the  Registration  Statement of American  Century  Strategic
Asset Allocations,  Inc. on August 28, 2003, File No. 33-79482, and incorporated
herein by reference).

          (mm) Amendment No. 3 to the Amended and Restated  Multiple Class Plan,
dated February 27, 2004 (filed  electronically  as Exhibit n4 to  Post-Effective
Amendment  No. 104 to the  Registration  Statement  of American  Century  Mutual
Funds, Inc. on February 26, 2004, File No. 2-14213,  and incorporated  herein by
reference).

          (nn) Amendment No. 4 to the Amended and Restated  Multiple Class Plan,
dated  May  1,  2004  (filed  electronically  as  Exhibit  n5 to  Post-Effective
Amendment No. 35 to the Registration  Statement of American Century Quantitative
Equity Funds, Inc. on April 29, 2004, File No. 33-19589, and incorporated herein
by reference).

          (oo) Amendment No. 5 to the Amended and Restated  Multiple Class Plan,
dated  August 1, 2004  (filed  electronically  as Exhibit  n6 to  Post-Effective
Amendment No. 24 to the Registration  Statement of American  Century  Investment
Trust on  August  1,  2004,  File  No.  33-65170,  and  incorporated  herein  by
reference).

          (pp) Amendment No. 6 to the Amended and Restated  Multiple Class Plan,
dated  as  of  September  30,  2004  (filed  electronically  as  Exhibit  n7  to
Post-Effective  Amendment  No.  20 to the  Registration  Statement  of  American
Century  Strategic  Asset  Allocations,  Inc. on September  29,  2004,  File No.
33-79482, and incorporated herein by reference).

          (qq) Amendment No. 7 to the Amended and Restated  Multiple Class Plan,
dated November 17, 2004 (filed  electronically  as Exhibit n8 to  Post-Effective
Amendment  No. 106 to the  Registration  Statement  of American  Century  Mutual
Funds, Inc. on November 29, 2004, File No. 2-14213,  and incorporated  herein by
reference).

          (rr) Amendment No. 8 to the Amended and Restated  Multiple Class Plan,
dated February 24, 2005 (filed  electronically  as Exhibit n9 to  Post-Effective
Amendment No. 22 to the  Registration  Statement of American  Century  Strategic
Asset Allocations,  Inc. on March 30, 2005, File No. 33-79482,  and incorporated
herein by reference).

          (ss) Amendment No. 9 to the Amended and Restated  Multiple Class Plan,
dated July 29,  2005  (filed  electronically  as Exhibit  n10 to  Post-Effective
Amendment  No. 111 to the  Registration  Statement  of American  Century  Mutual
Funds,  Inc. on July 28, 2005,  File No.  2-14213,  and  incorporated  herein by
reference).

          (tt) Amendment No. 10 to the Amended and Restated Multiple Class Plan,
dated September 29, 2005 (filed  electronically as Exhibit n11 to Post-Effective
Amendment No. 41 to the Registration  Statement of American Century Quantitative
Equity Funds,  Inc. on September 29, 2005, File No.  33-19589,  and incorporated
herein by reference).

          (uu) Amendment No. 11 to the Amended and Restated Multiple Class Plan,
dated  March 30,  2006 (filed  electronically  as Exhibit n12 to  Post-Effective
Amendment No. 23 to the  Registration  Statement of American  Century  Strategic
Asset Allocations,  Inc. on March 30, 2006, File No. 33-79482,  and incorporated
herein by reference).

          (vv) Amendment No. 12 to the Amended and Restated Multiple Class Plan,
dated November 29, 2006 (filed  electronically  as Exhibit n13 to Post-Effective
Amendment No. 46 to the Registration  Statement of American Century Quantitative
Equity Funds,  Inc. on November 29, 2006, File No.  33-19589,  and  incorporated
herein by reference).

     (11) Opinion and Consent of Counsel,  dated  February 27, 2007, is included
herein.

     (12)   Opinions  and  Consents  of  Counsel  as  to  the  tax  matters  and
consequences to shareholders (to be filed by amendment).

     (13) (a)  Transfer  Agency   Agreement  with  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,  and
incorporated herein by reference).

          (b) Amendment No. 1 to the Transfer Agency Agreement  American Century
Services Corporation, dated June 29, 1998 (filed electronically as Exhibit 9b to
Post-Effective  Amendment  No.  23 to the  Registration  Statement  of  American
Century  Quantitative  Equity Funds on June 29,  1998,  File No.  33-19589,  and
incorporated herein by reference).

          (c) Amendment  No. 2 to the Transfer  Agency  Agreement  with 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, and incorporated herein by reference).

          (d) Amendment  No. 3 to the Transfer  Agency  Agreement  with 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, and
incorporated herein by reference).

          (e) Amendment  No. 4 to the Transfer  Agency  Agreement  with 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,  and
incorporated herein by reference).

          (f) Amendment  No. 5 to the Transfer  Agency  Agreement  with 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,  and
incorporated herein by reference).

          (g) Amendment  No. 6 to the Transfer  Agency  Agreement  with American
Century Services  Corporation,  dated September 3, 2002 (filed electronically as
Exhibit h7 to Post-Effective  Amendment No. 35 to the Registration  Statement of
the Registrant on September 30, 2002, File No. 2-91229,  and incorporated herein
by reference).

          (h) Amendment  No. 7 to the Transfer  Agency  Agreement  with American
Century Services  Corporation,  dated December 31, 2002 (filed electronically as
Exhibit h8 to  Post-Effective  Amendment No. 4 to the Registration  Statement of
American  Century  Variable  Portfolios II, Inc. on December 23, 2002,  File No.
333-46922, and incorporated herein by reference).

          (i) Amendment  No. 8 to the Transfer  Agency  Agreement  with American
Century Services Corporation, dated May 1, 2004 (filed electronically as Exhibit
h10 to Post-Effective Amendment No. 35 to the Registration Statement of American
Century  Quantitative  Equity Funds,  Inc. on April 29, 2004, File No. 33-19589,
and incorporated herein by reference).

          (j) Amendment  No. 9 to the Transfer  Agency  Agreement  with American
Century Services,  LLC, dated May 1, 2005 (filed electronically as Exhibit h9 to
Post-Effective  Amendment  No.  38 to the  Registration  Statement  of  American
Century Quantitative Equity Funds, Inc. on May 13, 2005, File No. 33-19589,  and
incorporated herein by reference).

          (k) Amendment No. 10 to the Transfer  Agency  Agreement  with American
Century Services, LLC, dated September 29, 2005 (filed electronically as Exhibit
h11 to Post-Effective Amendment No. 41 to the Registration Statement of American
Century  Quantitative  Equity  Funds,  Inc.  on  September  29,  2005,  File No.
33-19589, and incorporated herein by reference).

          (l) Amendment No. 11 to the Transfer  Agency  Agreement  with American
Century Services, LLC, dated March 30, 2006 (filed electronically as Exhibit h12
to  Post-Effective  Amendment  No.  50 to  the  Registration  Statement  of  the
Registrant  on March 31, 2006,  File No.  2-14213,  and  incorporated  herein by
reference).

          (m) Amendment No. 12 to the Transfer  Agency  Agreement  with American
Century Services, LLC, dated April 28, 2006 (filed electronically as Exhibit h13
to  Post-Effective  Amendment No. 44 to the  Registration  Statement of American
Century  Quantitative  Equity Funds,  Inc. on April 28, 2006, File No. 33-19589,
and incorporated herein by reference).

          (n) Amendment No. 13 to the Transfer  Agency  Agreement  with American
Century Services,  LLC, dated November 29, 2006 (filed electronically as Exhibit
h14 to Post-Effective Amendment No. 46 to the Registration Statement of American
Century Quantitative Equity Funds, Inc. on November 29, 2006, File No. 33-19589,
and incorporated herein by reference).

          (o) Credit  Agreement  with  JPMorgan  Chase Bank,  as  Administrative
Agent,  dated  December  17,  2003  (filed   electronically  as  Exhibit  h9  to
Post-Effective  Amendment  No.  39 to the  Registration  Statement  of  American
Century  Target  Maturities  Trust on January 30, 2004,  File No.  2-94608,  and
incorporated herein by reference).

          (p) Termination,  Replacement and Restatement  Agreement with JPMorgan
Chase Bank N.A.,  as  Administrative  Agent,  dated  December  13,  2006  (filed
electronically  as  Exhibit  h13  to  Post-Effective  Amendment  No.  41 to  the
Registration  Statement of American  Century  California  Tax-Free and Municipal
Funds on  December  28,  2006,  File No.  2-82734,  and  incorporated  herein by
reference).

          (q)  Customer   Identification   Program  Reliance   Agreement  (filed
electronically   as  Exhibit  h2  to  Pre-Effective   Amendment  No.  1  to  the
Registration  Statement of American Century Growth Funds,  Inc. on May 30, 2006,
File No. 333-132114, and incorporated herein by reference).

     (14) Consent of  PricewaterhouseCoopers  LLP, independent registered public
accounting firm, dated February 22, 2007, is included herein.

     (15)  Not applicable.

     (16) (a) Power of Attorney,  dated August 25, 2006 (filed electronically as
Exhibit j2 to Post-Effective  Amendment No. 45 to the Registration  Statement of
American Century  Quantitative Equity Funds, Inc. on September 1, 2006, File No.
33-19589, and incorporated herein by reference).

          (b)   Secretary's   Certificate,   dated   August  25,   2006   (filed
electronically  as  Exhibit  j3  to  Post-Effective  Amendment  No.  45  to  the
Registration  Statement of American Century  Quantitative  Equity Funds, Inc. on
September 1, 2006, File No. 33-19589, and incorporated herein by reference).

     (17)  Form of proxy card is included herein.

Item 17.  Undertakings

The undersigned registrant agrees to file, by post-effective amendment, opinions
of counsel  supporting  the tax  consequences  of the  proposed  reorganizations
within a reasonable time after receipt of such opinion.





                                   SIGNATURES


     As required by the  Securities Act of 1933, as amended,  this  Registration
Statement  has been  signed on behalf of the  Registrant,  in the City of Kansas
City, State of Missouri on the 27th day of February, 2007.


                            AMERICAN CENTURY MUNICIPAL TRUST
                            (Registrant)


                            By: *
                                -----------------------------------------
                                William M. Lyons
                                President and Principal Executive Officer


     As required by the Securities Act of 1933, this Registration  Statement has
been  signed  by the  following  persons  in  the  capacities  and on the  dates
indicated.


SIGNATURE                      TITLE                              DATE
---------                      -----                              ----

*                          President, Principal             February 27, 2007
------------------------   Executive Officer
William M. Lyons           and Trustee


*                          Vice President,                  February 27, 2007
------------------------   Treasurer and Chief
Robert J. Leach            Financial Officer


*                          Director                         February 27, 2007
------------------------
John Freidenrich


*                          Chairman of the                  February 27, 2007
------------------------   Board and Director
Ronald J. Gilson


*                          Director                         February 27, 2007
------------------------
Kathryn A. Hall


*                          Director                         February 27, 2007
------------------------
Myron S. Scholes


*                          Director                         February 27, 2007
------------------------
John B. Shoven


*                          Director                         February 27, 2007
------------------------
Jeanne D. Wohlers




*By:  /s/ Brian L. Brogan
      ----------------------------------------
      Brian L. Brogan
      Attorney in Fact
      (pursuant to Power of Attorney
      dated August 25, 2006)





                                  EXHIBIT INDEX


EXHIBIT             DESCRIPTION OF DOCUMENT
NUMBER

EXHIBIT (1)(d)      Form of Amendment No. 3 to the Amended and Restated
                    Agreement and Declaration of Trust.

EXHIBIT (11)        Opinion and Consent of Counsel,  dated  February 27, 2007.

EXHIBIT (14)        Consent   of    PricewaterhouseCoopers    LLP,   independent
                    registered public accounting firm, dated February 22, 2007.

EXHIBIT (17)        Form of proxy card.