AGREEMENT AND PLAN OF REORGANIZATION

                                       BY

                    AMERICAN CENTURY GOVERNMENT INCOME TRUST

                                TABLE OF CONTENTS


1.       Transfer of Assets of Short-Term Treasury.............................1
2.       Liquidating Distribution and Termination of Short-Term Treasury.......2
3.       Valuation Time........................................................3
4.       Certain Representations, Warranties and Agreements of ACGIT...........3
5.       Certain Representations, Warranties and Agreements of ACGIT...........6
6.       Shareholder Action on Behalf of Short-Term Treasury...................7
7.       Registration Statement and Proxy Solicitation Materials...............8
8.       Effective Time of the Reorganization..................................8
9.       ACGIT's Conditions....................................................9
10.      ACGIT's Conditions...................................................10
11.      Tax Documents........................................................11
12.      Further Assurances...................................................11
13.      Termination of Representations and Warranties........................12
14.      Termination of Agreement.............................................12
15.      Amendment and Waiver.................................................12
16.      Governing Law........................................................13
17.      Successors and Assigns...............................................13
18.      Beneficiaries........................................................13
19.      ACGIT Liability......................................................13
20.      ACGIT Liability......................................................13
21.      Notices..............................................................14
22.      Expenses.............................................................14
23.      Entire Agreement.....................................................14
24.      Counterparts.........................................................14






                      AGREEMENT AND PLAN OF REORGANIZATION

         AGREEMENT AND PLAN OF REORGANIZATION made as of August 8, 2001 by
American Century Government Income Trust, a Massachusetts business trust
("ACGIT").

         WHEREAS, ACGIT desires that substantially all of the assets and
liabilities of the Short-Term Treasury portfolio of ACMF ("Short-Term Treasury")
to be transferred to, and be acquired and assumed by, the Treasury portfolio of
ACGIT ("Treasury") in exchange for shares of Treasury which shall thereafter be
distributed by ACGIT to the holders of shares of Short-Term Treasury, all as
described in this Agreement (the "Reorganization");

         WHEREAS, ACGIT intends that the transfer of assets, assumption of
liabilities and distribution of shares in Short-Term Treasury be treated as a
tax-free reorganization under Section 368(a) of the Internal Revenue Code of
1986, as amended (the "Code"); and

         WHEREAS, ACGIT intends that in connection with the Reorganization,
Short-Term Treasury shall be terminated and de-registered as described in this
Agreement.

         NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth and subject to the terms and conditions hereof, and
intending to be legally bound hereby, ACGIT agrees to the following:

1.       TRANSFER OF ASSETS OF SHORT-TERM TREASURY.

         1.1.     At the Effective Time (as defined in Section 8), ACGIT shall
                  transfer and convey, on behalf of Short-Term Government, all
                  property of every description, and all interests, rights,
                  privileges and powers of Short-Term Treasury (such assets, the
                  "Short-Term Treasury Assets"). Simultaneously, ACGIT shall, on
                  behalf of Treasury, accept the Short-Term Treasury Assets and
                  assume all liabilities, whether accrued, absolute, contingent
                  or otherwise, of Short-Term Treasury reflected in the
                  calculation of Short-Term Treasury's net asset value (the
                  "Short-Term Treasury Liabilities"). As a result, at and after
                  the Effective Time: (i) all assets of Short-Term Treasury
                  shall become and be the assets of Treasury; and (ii) all known
                  liabilities of Short-Term Treasury reflected as such in the
                  calculation of Short-Term Treasury's net asset value shall
                  attach to Treasury as aforesaid and may thenceforth be
                  enforced against Treasury to the extent as if the same had
                  been incurred by it. Without limiting the generality of the
                  foregoing, the Short-Term Treasury Assets shall include all
                  property and assets of any nature whatsoever, including
                  without limitation, all cash, cash equivalents, securities,
                  other investments, claims and receivables (including dividend
                  and interest receivables) owned by Short-Term Treasury, and
                  any deferred or prepaid expenses shown as an asset on
                  Short-Term Treasury's books at the Effective Time, and all
                  good will, other intangible property and books and records
                  belonging to Short-Term Treasury. Recourse by any person for
                  the Short-Term Treasury Liabilities assumed by Treasury shall,
                  at and after the Effective Time, be limited to Treasury.

         1.2      In exchange for the transfer of the Short-Term Treasury Assets
                  and the assumption of the Short-Term Treasury Liabilities,
                  ACGIT shall simultaneously issue at the Effective Time to
                  Short-Term Treasury a number of full and fractional shares (to
                  the third decimal place) Treasury, all determined and adjusted
                  as provided in this Agreement. The number of shares of
                  Treasury so issued will have an aggregate net asset value
                  equal to the value of the Short-Term Treasury Assets, less the
                  Short-Term Treasury Liabilities, that are represented by
                  shares of Short-Term Treasury, the holders of which shall
                  receive shares of Treasury, all determined and adjusted as
                  provided in this Agreement.

         1.3.     The net asset values of shares of Treasury and of Short-Term
                  Treasury shall be determined as of the Valuation Time, as
                  defined in Section 3.

         1.4.     The net asset value of shares of Treasury shall be computed in
                  the manner set forth in Treasury's then-current prospectus
                  under the Securities Act of 1933, as amended (the "1933 Act").
                  The net asset value of the Short-Term Treasury Assets to be
                  transferred by ACGIT shall be computed by ACGIT and shall be
                  subject to adjustment by the amount, if any, agreed to by
                  ACGIT. In determining the value of the securities transferred
                  by Short-Term Treasury to Treasury, each security shall be
                  priced in accordance with the policies and procedures of ACGIT
                  as described in its then-current prospectus and statement of
                  additional information and adopted by ACGIT's Board of
                  Trustees. Price quotations and the security characteristics
                  relating to establishing such quotations shall be determined
                  by ACGIT.

2.       LIQUIDATING DISTRIBUTION AND TERMINATION OF SHORT-TERM TREASURY.

         Immediately after the Effective Time, Short-Term Treasury shall
         distribute in the complete liquidation pro rata to the record holders
         of its shares at the Effective Time the shares of Treasury to be
         received by the record holders of Short-Term Treasury. ACGIT shall
         record on its books the ownership of shares of Treasury by the record
         holders of shares of Short-Term Treasury. All of the issued and
         outstanding shares of Short-Term Treasury shall be redeemed and
         canceled on the books of ACGIT at the Effective Time and shall
         thereafter represent only the right to receive the shares of Treasury,
         and Short-Term Treasury's transfer books shall be closed permanently.
         As soon as practicable after the Effective Time, ACGIT shall take all
         steps as shall be necessary and proper to effect the dissolution of
         Short-Term Treasury under federal and state law. After the Effective
         Time, ACGIT shall not conduct any business with respect to Short-Term
         Treasury except in connection with Short-Term Treasury's liquidation
         and dissolution.

3.       VALUATION TIME.

         Subject to Section 1.4 hereof, the Valuation Time for the
         Reorganization shall be on such date as may be agreed by the duly
         authorized officers of ACGIT.

4.       CERTAIN REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF ACGIT.

         ACGIT, on behalf of itself and Short-Term Treasury, represents and
         warrants to, and agrees with, the following:

         4.1.     ACGIT is a Massachusetts business trust duly created pursuant
                  to its Agreement and Declaration of Trust for the purpose of
                  acting as a management investment company under the 1940 Act
                  and is validly existing under the laws of, and duly authorized
                  to transact business in, the Commonwealth of Massachusetts.
                  Short-Term Treasury is registered with the Securities and
                  Exchange Commission (the "SEC") as an open-end management
                  investment company under the Investment Company Act of 1940,
                  as amended (the "1940 Act"), and such registration is in full
                  force and effect.

         4.2.     ACGIT has power to own all of its properties and assets and,
                  subject to the approval of shareholders referred to herein, to
                  carry out and consummate the transactions contemplated hereby,
                  and has all necessary federal, state and local authorizations
                  to carry on its business as now being conducted and to
                  consummate the transactions contemplated by this Agreement.

         4.3.     This Agreement has been duly authorized, executed and
                  delivered by ACGIT, and represents ACGIT's valid and binding
                  contract, enforceable in accordance with its terms, subject as
                  to enforcement to bankruptcy, insolvency, reorganization,
                  arrangement, moratorium, and other similar laws of general
                  applicability relating to or affecting creditors' rights and
                  to general principles of equity. The execution and delivery of
                  this Agreement does not and will not, and the consummation of
                  the transactions contemplated by this Agreement will not,
                  violate ACGIT's Agreement and Declaration of Trust, By-laws,
                  or any agreement or arrangement to which it is a party or by
                  which it is bound.

         4.4.     Short-Term Treasury has elected to qualify and has qualified
                  as a "regulated investment company" under Subtitle A, Chapter
                  1, Subchapter M, Part I of the Code, as of and since its first
                  taxable year; has been a regulated investment company at all
                  times since the end of its first taxable year when it so
                  qualified; and qualifies and shall continue to qualify as a
                  regulated investment company until the Effective Time.

         4.5.     All federal, state, local and foreign income, profits,
                  franchise, sales, withholding, customs, transfer and other
                  taxes, including interest, additions to tax and penalties
                  (collectively, "Taxes") relating to the Short-Term Treasury
                  Assets or properly shown to be due on any return filed by
                  Short-Term Treasury with respect to taxable periods ending on
                  or prior to, and the portion of any interim period up to, the
                  date hereof have been fully and timely paid or provided for;
                  and there are no levies, liens, or other encumbrances relating
                  to Taxes existing, threatened or pending with respect to the
                  Short-Term Treasury Assets.

         4.6.     The financial statements of Short-Term Treasury for the fiscal
                  year ended March 31, 2001, audited by PricewaterhouseCoopers
                  LLP, independent auditors, copies of which have been
                  previously furnished to ACGIT, present fairly the financial
                  position of Short-Term Treasury as of March 31, 2001 and the
                  results of its operations for the year then ending, in
                  conformity with generally accepted accounting principles.

         4.7.     Prior to the Valuation Time, Short-Term Treasury shall have
                  declared a dividend or dividends, with a record date and
                  ex-dividend date prior to such Valuation Time, which, together
                  with all previous dividends, shall have the effect of
                  distributing to its shareholders all of its investment company
                  taxable income, if any, for the taxable periods or years ended
                  on or before Short-Term Treasury's most recent fiscal year
                  end, and for the period from said date to and including the
                  Effective Time (computed without regard to any deduction for
                  dividends paid), and all of its net capital gain, if any,
                  realized in taxable periods or years ended on or before
                  Short-Term Treasury's fiscal year end and for the period from
                  said date to and including the Effective Time. Such dividends
                  will be paid to shareholders of Short-Term Treasury prior to
                  the Effective Date.

         4.8.     At both the Valuation Time and the Effective Time, there shall
                  be no known liabilities of Short-Term Treasury, whether
                  accrued, absolute, contingent or otherwise, not reflected in
                  the net asset value per share of its outstanding shares.

         4.9.     There are no legal, administrative or other proceedings
                  pending or, to ACGIT's knowledge threatened, against ACGIT or
                  Short-Term Treasury which could result in liability on the
                  part of Short-Term Treasury.

         4.10.    Subject to the approval of shareholders, at both the Valuation
                  Time and the Effective Time, ACGIT shall have full right,
                  power and authority to assign, transfer and deliver the
                  Short-Term Treasury Assets and, upon delivery and payment for
                  the Short-Term Treasury Assets as contemplated herein,
                  Treasury shall acquire good and marketable title thereto, free
                  and clear of all liens and encumbrances, and subject to no
                  restrictions on the ownership or transfer thereof (except as
                  imposed by federal or state securities laws).

         4.11.    No consent, approval, authorization or order of any court or
                  governmental authority is required for the consummation by
                  ACGIT of the transactions contemplated by this Agreement,
                  except such as may be required under the 1933 Act, the
                  Securities Exchange Act of 1934, as amended (the "1934 Act"),
                  the 1940 Act, the rules and regulations under those Acts, and
                  state securities laws.

         4.12.    Insofar as the following relate to ACGIT, the registration
                  statement filed by ACGIT on Form N-14 relating to the shares
                  of Treasury that will be registered with the SEC pursuant to
                  this Agreement, which, without limitation, shall include a
                  proxy statement of ACGIT and the prospectus of ACGIT with
                  respect to the transactions contemplated by this Agreement,
                  and any supplement or amendment thereto or to the documents
                  contained or incorporated therein by reference (the "N-14
                  Registration Statement"), on the effective date of the N-14
                  Registration Statement, at the time of any shareholders'
                  meeting referred to herein and at the Effective Time: (i)
                  shall comply in all material respects with the provisions of
                  the 1933 Act, the 1934 Act and the 1940 Act, the rules and
                  regulations thereunder, and state securities laws, and (ii)
                  shall not contain any untrue statement of a material fact or
                  omit to state a material fact required to be stated therein or
                  necessary to make the statements therein not misleading;
                  provided, however, that the representations and warranties in
                  this subsection shall apply only to statements in or omissions
                  from the N-14 Registration Statement made in reliance upon and
                  in conformity with information furnished by ACGIT for use in
                  the N-14 Registration Statement.

         4.13.    All of the issued and outstanding shares of Short-Term
                  Treasury have been duly and validly issued, are fully paid and
                  non-assessable, and were offered for sale and sold in
                  conformity with all applicable federal and state securities
                  laws, and no shareholder of Short-Term Treasury has any
                  preemptive right of subscription or purchase in respect of
                  such shares.

5.       CERTAIN REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF ACGIT.

         ACGIT, on behalf of itself and Treasury, represents and warrants to,
         and agrees with, the following:

         5.1.     ACGIT is a Massachusetts business trust duly created pursuant
                  to a Declaration of Trust for the purpose of acting as a
                  management investment company under the 1940 Act and is
                  validly existing under the laws of, and duly authorized to
                  transact business in, the Commonwealth of Massachusetts,
                  Treasury is registered with the SEC as an open-end management
                  investment company under the 1940 Act and such registration is
                  in full force and effect.

         5.2.     ACGIT has the power to own all of its properties and assets
                  and to carry out and consummate the transactions contemplated
                  herein, and has all necessary federal, state and local
                  authorizations to carry on its business as now being conducted
                  and to consummate the transactions contemplated by this
                  Agreement.

         5.3.     This Agreement has been duly authorized, executed and
                  delivered by ACGIT, and represents ACGIT's valid and binding
                  contract, enforceable in accordance with its terms, subject as
                  to enforcement to bankruptcy, insolvency, reorganization,
                  arrangement, moratorium, and other similar laws of general
                  applicability relating to or affecting creditors' rights and
                  to general principles of equity. The execution and delivery of
                  this Agreement did not, and the consummation of the
                  transactions contemplated by this Agreement will not, violate
                  ACGIT's Agreement and Declaration of Trust or By-laws or any
                  agreement or arrangement to which it is a party or by which it
                  is bound.

         5.4.     Treasury has elected to qualify, and has qualified, as a
                  "regulated investment company" under Subtitle A, Chapter 1,
                  Subchapter M, Part I of the Code, as of and since its first
                  taxable year; and has been a regulated investment company at
                  all times since the end of its first taxable year when it so
                  qualified and intends to continue to qualify as a regulated
                  investment company.

         5.5.     The financial statements of Treasury for its fiscal year ended
                  March 31, 2001, audited by PricewaterhouseCoopers LLP,
                  independent auditors, copies of which have been previously
                  furnished to ACGIT, present fairly the financial position of
                  Treasury as of March 31, 2001 and the results of its
                  operations for the year then ending, in conformity with
                  generally accepted accounting principles.

         5.6.     At both the Valuation Time and the Effective Time, there shall
                  be no known liabilities of Treasury whether accrued, absolute,
                  contingent or otherwise, not reflected in the net asset value
                  per share of its shares to be issued pursuant to this
                  Agreement.

         5.7.     There are no legal, administrative or other proceedings
                  pending or, to its knowledge, threatened against ACGIT or
                  Treasury that could result in liability on the part of ACGIT
                  or Treasury.

         5.8.     No consent, approval, authorization or order of any court or
                  governmental authority is required for the consummation by
                  ACGIT of the transactions contemplated by this Agreement,
                  except such as may be required under the 1933 Act, the 1934
                  Act, the 1940 Act, the rules and regulations under those Acts,
                  and state securities laws.

         5.9.     Insofar as the following relate to ACGIT, the N-14
                  Registration Statement on its effective date, at the time of
                  any shareholders' meetings referred to herein and at the
                  Effective Time: (i) shall comply in all material respects with
                  the provisions of the 1933 Act, the 1934 Act and the 1940 Act,
                  the rules and regulations thereunder, and state securities
                  laws, and (ii) shall not contain any untrue statement of a
                  material fact or omit to state a material fact required to be
                  stated therein or necessary to make the statements therein not
                  misleading; provided, however, that the representations and
                  warranties in this subsection shall apply only to statements
                  in or omissions from the N-14 Registration Statement made in
                  reliance upon and in conformity with information furnished by
                  ACGIT for use in the N-14 Registration Statement.

         5.10.    The shares of Treasury to be issued and delivered to
                  Short-Term Treasury for the account of record holders of
                  shares of Short-Term Treasury pursuant to the terms hereof
                  shall have been duly authorized as of the Effective Time and,
                  when so issued and delivered, shall be registered under the
                  1933 Act, duly and validly issued, fully paid and
                  non-assessable, and no shareholder of ACGIT shall have any
                  preemptive right of subscription or purchase in respect
                  thereto.

6.       SHAREHOLDER ACTION ON BEHALF OF SHORT-TERM TREASURY.

         6.1.     As soon as practicable after the effective date of the N-14
                  Registration Statement, but in any event prior to the
                  Effective Time and as a condition to the Reorganization, the
                  Board of Trustees of ACGIT shall call, and ACGIT shall hold, a
                  meeting of the shareholders of Short-Term Treasury for the
                  purpose of considering and voting upon:

                  6.1.1.   Approval of this Agreement and the transactions
                           contemplated hereby, including, without limitation:

                           6.1.1.1. The transfer of the Short-Term Treasury
                                    Assets to Treasury and the assumption by
                                    Treasury of the Short-Term Treasury
                                    Liabilities, in exchange for shares of
                                    Treasury, as described in this Agreement;
                                    and

                           6.1.1.2. The liquidation of Short-Term Treasury
                                    through the distribution to its record
                                    holders of shares of the shares of Treasury
                                    as described in this Agreement; and

                  6.1.2.   Such other matters as may be determined by the Board
                           of Trustees or authorized officers of the parties.

         6.2.     Approval of this Reorganization Agreement by the shareholders
                  of Short-Term Treasury shall constitute the waiver of the
                  application of any fundamental policy of Short-Term Treasury
                  that might be deemed to prevent them from taking the actions
                  necessary to effectuate the Reorganization as described, and
                  such policies, if any, shall be deemed to have been amended
                  accordingly.

7.       REGISTRATION STATEMENT AND PROXY SOLICITATION MATERIALS.

         The N-14 Registration Statement under the 1933 Act, including the
         combined prospectus/proxy statement contained therein under the 1934
         Act and 1940 Act proxy rules, shall be filed with the SEC as promptly
         as practicable, ACGIT shall have furnished and shall continue to
         furnish the information that is required by the 1933 Act, the 1934 Act,
         the 1940 Act, the rules and regulations under each of those Acts and
         state securities laws, to be included in the N-14 Registration
         Statement.

8.       EFFECTIVE TIME OF THE REORGANIZATION.

         Delivery of the Short-Term Treasury Assets and the shares of Treasury
         to be issued pursuant to Section 1 and the liquidation of Short-Term
         Treasury pursuant to Section 2 shall occur at the opening of business
         on the next business day following the Valuation Time, or on such other
         date, and at such place and time, as may be determined by the President
         or any Vice President of each party hereto. The date and time at which
         such actions are taken are referred to herein as the "Effective Time."
         To the extent any of the Short-Term Treasury Assets are, for any
         reason, not transferred at the Effective Time, ACGIT shall cause such
         Short-Term Treasury Assets to be transferred in accordance with this
         Agreement at the earliest practicable date thereafter.

9.       ACGIT CONDITIONS.

         The obligations of ACGIT hereunder with respect to Treasury shall be
         subject to the following conditions precedent:

         9.1.     This Agreement and the transactions contemplated by this
                  Agreement shall have been approved by the shareholders of
                  Short-Term Treasury, in the manner required by law.

         9.2.     ACGIT shall have duly executed and delivered such bills of
                  sale, assignments, certificates and other instruments of
                  transfer ("Transfer Documents") as may be necessary or
                  desirable to transfer all right, title and interest of ACGIT
                  and Short-Term Treasury in and to the Short-Term Treasury
                  Assets. The Short-Term Treasury Assets shall be accompanied by
                  all necessary state stock transfer stamps or cash for the
                  appropriate purchase price therefor.

         9.3.     All representations and warranties made in this Agreement
                  shall be true and correct in all material respects as if made
                  at and as of the Valuation Time and the Effective Time. As of
                  the Valuation Time and the Effective Time, there shall have
                  been no material adverse change in the financial position of
                  Short-Term Treasury since March 31, 2001, other than those
                  changes incurred in the ordinary course of business as an
                  investment company. 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.

         9.4.     ACGIT shall have received a tax opinion dated the Effective
                  Time, substantially to the effect that for federal income tax
                  purposes: (i) the transfer of the Short-Term Treasury Assets
                  hereunder, and the assumption by Treasury of the Short-Term
                  Treasury Liabilities, in exchange for shares of Treasury, and
                  the distribution of said shares to the shareholders of
                  Short-Term Treasury, as provided in this Agreement, will
                  constitute a reorganization within the meaning of Section 368
                  of the Code, and Short-Term Treasury and Treasury will each be
                  considered "a party to a reorganization" within the meaning of
                  Section 368(b) of the Code; (ii) no gain or loss will be
                  recognized by Short-Term Treasury as a result of such
                  transaction; (iii) no gain or loss will be recognized by
                  Treasury as a result of such transaction; (iv) no gain or loss
                  will be recognized by the shareholders of Short-Term Treasury
                  on the distribution to them by Short-Term Treasury of shares
                  of Treasury in exchange for their shares of Short-Term
                  Treasury; (v) the aggregate basis of Treasury shares received
                  by each shareholder of Short-Term Treasury will be the same as
                  the aggregate basis of the shareholder's Short-Term Treasury
                  shares immediately prior to the transaction; (vi) the basis of
                  the Short-Term Treasury Assets to Treasury will be the same as
                  the basis of the Short-Term Treasury Assets in the hands of
                  Short-Term Treasury immediately prior to the exchange; (vii) a
                  shareholder's holding period for Treasury shares will be
                  determined by including the period for which the shareholder
                  held the shares of Short-Term Treasury exchanged therefor,
                  provided that the shareholder held such shares of Short-Term
                  Treasury as a capital asset; and (viii) the holding period of
                  Treasury with respect to the Short-Term Treasury Assets will
                  include the period for which the Short-Term Treasury Assets
                  were held by Short-Term Treasury.

         9.5.     The SEC shall not have issued any unfavorable advisory report
                  under Section 25(b) of the 1940 Act nor instituted any
                  proceeding seeking to enjoin consummation of the transactions
                  contemplated by this Agreement under Section 25(c) of the 1940
                  Act.

         9.6.     The N-14 Registration Statement shall have become effective
                  under the 1933 Act and no stop order suspending such
                  effectiveness shall have been instituted or, to the knowledge
                  of ACGIT, contemplated by the SEC, and the parties shall have
                  received all permits and other authorizations necessary under
                  state securities laws to consummate the transactions
                  contemplated by this Agreement.

         9.7.     The President or a Vice President of ACGIT shall have
                  certified that ACGIT has performed and complied in all
                  material respects with each of its agreements and covenants
                  required by this Agreement to be performed or complied with by
                  it prior to or at the Valuation Time and the Effective Time.

10.      ACGIT'S CONDITIONS.

         The obligations of ACGIT hereunder with respect to Short-Term Treasury
         shall be subject to the following conditions precedent:

         10.1.    This Agreement and the transactions contemplated by this
                  Agreement shall have been approved by the shareholders of
                  Short-Term Treasury in the manner required by law.

         10.2.    All representations and warranties of ACGIT made in this
                  Agreement shall be true and correct in all material respects
                  as if made at and as of the Valuation Time and the Effective
                  Time. As of the Valuation Time and the Effective Time, there
                  shall have been no material adverse change in the financial
                  condition of Treasury since March 31, 2001 other than those
                  changes incurred in the ordinary course of business as an
                  investment company. 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.

         10.3.    ACGIT shall have received a tax opinion dated the Effective
                  Time, with respect to the matters specified in Section 9.4.

         10.4.    The N-14 Registration Statement shall have become effective
                  under the 1933 Act and no stop order suspending such
                  effectiveness shall have been instituted, or to the knowledge
                  of ACGIT, contemplated by the SEC, and the parties shall have
                  received all permits and other authorizations necessary under
                  state securities laws to consummate the transactions
                  contemplated by this Agreement.

         10.5.    ACGIT shall not sell or otherwise dispose of any shares of
                  Treasury to be received in the transactions contemplated
                  herein, except in distribution to its shareholders as
                  contemplated herein.

         10.6.    The SEC shall not have issued any unfavorable advisory report
                  under Section 25(b) of the 1940 Act nor instituted any
                  proceeding seeking to enjoin consummation of the transactions
                  contemplated by this Agreement under Section 25(c) of the 1940
                  Act.

         10.7.    The President or a Vice President of ACGIT shall have
                  certified that ACGIT has performed and complied in all
                  material respects with each of its agreements and covenants
                  required by this Agreement to be performed or complied with by
                  it prior to or at the Valuation Time and the Effective Time.

11.      TAX DOCUMENTS.

         ACGIT shall obtain at the Effective Time confirmations or other
         adequate evidence as to the adjusted tax basis of the Short-Term
         Treasury Assets then delivered to Treasury in accordance with the terms
         of this Agreement.

12.      FURTHER ASSURANCES.

         Subject to the terms and conditions herein provided, each of the
         parties hereto shall use its best efforts to take, or cause to be
         taken, such action, to execute and deliver, or cause to be executed and
         delivered, such additional documents and instruments, and to do, or
         cause to be done, all things necessary, proper or advisable under the
         provisions of this Agreement and under applicable law to consummate and
         make effective the transactions contemplated by this Agreement.

13.      TERMINATION OF REPRESENTATIONS AND WARRANTIES.

         The representations and warranties of the parties set forth in this
         Agreement shall terminate at the Effective Time.

14.      TERMINATION OF AGREEMENT.

         14.1.    This Agreement may be terminated prior to the Effective Time
                  by the Board of Trustees of ACGIT, as provided below:

                  14.1.1.  By ACGIT if the conditions set forth in Section 9 are
                           not satisfied in said Section;

                  14.1.2.  By ACGIT if the conditions set forth in Section 10
                           are not satisfied as specified in said Section;

         14.2.    If ACGIT terminates this Agreement because one or more of its
                  conditions precedent have not been fulfilled, this Agreement
                  will become null and void without any liability of ACGIT or
                  any of its investment portfolios.

15.      AMENDMENT AND WAIVER.

         At any time prior to or (to the fullest extent permitted by law) after
         approval of this Agreement by the shareholders of ACGIT, (a) ACGIT may,
         by written agreement authorized by its Board of Trustees, or its
         President or any Vice President, and with or without the approval of
         its shareholders, amend any of the provisions of this Agreement, and
         (b) ACGIT may waive any breach or the failure to satisfy any of the
         conditions to its obligations (such waiver to be in writing and
         executed by the President or Vice President of ACGIT with or without
         the approval of ACGIT's shareholders).

16.      GOVERNING LAW.

         This Agreement and the transactions contemplated hereby shall be
         governed, construed and enforced in accordance with the laws of
         Massachusetts without giving effect to the conflicts of law principles
         otherwise applicable therein.

17.      SUCCESSORS AND ASSIGNS.

         This Agreement shall be binding upon the respective successors and
         permitted assigns of the parties hereto.

18.      BENEFICIARIES.

         Nothing contained in this Agreement shall be deemed to create rights in
         persons not parties hereto, other than the successors and permitted
         assigns of the parties.

19.      ACGIT LIABILITY.

         19.1.    The name "American Century Government Income Trust" and
                  "Trustees of American Century Government Income Trust" refer
                  respectively to the trust created and the trustees, as
                  trustees but not individually or personally, acting from time
                  to time under an Amended and Restated Agreement and
                  Declaration of Trust dated as of March 9, 1998, as amended,
                  which is hereby referred to and copies of which are on file at
                  the office of the State Secretary of the Commonwealth of
                  Massachusetts and at the principal office of ACGIT. The
                  obligations of ACGIT entered into in the name or on behalf
                  thereof by any of its trustees, representatives or agents are
                  made not individually, but in such capacities, and are not
                  binding upon any of the trustees, shareholders or
                  representatives of ACGIT personally, but bind only the trust
                  property, and all persons dealing with any portfolio of ACGIT
                  must look solely to the trust property belonging to such
                  portfolio for the enforcement of any claims against ACGIT.

         19.2.    ACGIT specifically acknowledges and agrees that any liability
                  of ACGIT under this Agreement with respect to Treasury, or in
                  connection with the transactions contemplated herein with
                  respect to Treasury, shall be discharged only out of the
                  assets of Treasury and that no other portfolio of ACGIT, if
                  any, shall be liable with respect thereto.

20.      ACGIT LIABILITY.

         ACGIT specifically acknowledges and agrees that any liability of ACGIT
         under this Agreement with respect to Short-Term Treasury or in
         connection with the transactions contemplated herein with respect to
         Short-Term Treasury, shall be discharged only out of the Short-Term
         Treasury Assets and that no other portfolio of ACGIT shall be liable
         with respect thereto.

21.      NOTICES.

         All notices required or permitted herein shall be in writing and shall
         be deemed to be properly given when delivered personally or by
         telecopier to the party entitled to receive the notice or when sent by
         certified or registered mail, postage prepaid, or delivered to a
         nationally recognized overnight courier service, in each case properly
         addressed to the party entitled to receive such notice at the address
         or telecopier number stated below or to such other address or
         telecopier number as may hereafter be furnished in writing by notice
         similarly given by one party to the other party hereto:

         If to American Century Government Income Trust:

                                            Charles A. Etherington
                                            4500 Main Street
                                            Kansas City, MO  64111

22.      EXPENSES.

         Expenses incurred in connection with the Reorganization are the sole
         responsibility of and will be borne by American Century Investment
         Management, Inc. or one or more of its affiliates.

23.      ENTIRE AGREEMENT.

         This Agreement embodies the entire agreement and understanding of ACGIT
         and supersedes any and all prior agreements, arrangements and
         understandings relating to matters provided for herein.

24.      COUNTERPARTS.

         This Agreement may be executed in any number of counterparts, each of
         which, when executed and delivered shall be deemed to be an original,
         but all of which together shall constitute one and the same instrument.







         IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their duly authorized officers designated below as of the date
first written.


AMERICAN CENTURY GOVERNMENT
    INCOME TRUST


By:/s/Charles A. Etherington
   Charles A. Etherington
   Vice President


ATTEST:/s/Anastasia H. Enneking
       Anastasia H. Enneking