AGREEMENT AND PLAN OF REORGANIZATION

                                       BY

                    AMERICAN CENTURY GOVERNMENT INCOME TRUST


                                TABLE OF CONTENTS


         Preamble...........................................................................1
1.       Transfer of Assets of Treasury.....................................................1
2.       Liquidating Distribution and Termination of 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 Treasury...........................................7
7.       Registration Statement and Proxy Solicitation Materials............................8
8.       Effective Time of the Reorganization...............................................8
9.       ACGIT Conditions..................................................................10
10.      ACGIT 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.      Notices...........................................................................13
21.      Expenses..........................................................................14
22.      Entire Agreement..................................................................14
23.      Counterparts......................................................................14






                      AGREEMENT AND PLAN OF REORGANIZATION

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

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

         WHEREAS, the parties intend that the transfer of assets, assumption of
liabilities and distribution of shares in 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, the parties intend that in connection with the Reorganization,
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 as follows:

1.       TRANSFER OF ASSETS OF TREASURY.

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

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

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

         1.4.     The net asset value of shares of Government Bond shall be
                  computed in the manner set forth in Government Bond's
                  then-current prospectus under the Securities Act of 1933, as
                  amended (the "1933 Act"). The net asset value of the Treasury
                  Assets to be transferred by ACGIT shall be computed by ACGIT.
                  In determining the value of the securities transferred by
                  Treasury to Government Bond, 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 TREASURY.

         Immediately after the Effective Time, Treasury shall distribute in the
         complete liquidation pro rata to the record holders of its shares at
         the Effective Time the shares of Government Bond to be received by the
         record holders of Treasury. ACGIT shall record on its books the
         ownership of shares of Government Bond by the record holders of shares
         of Treasury. All of the issued and outstanding shares of 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
         Government Bond, and 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 Treasury under federal and state law. After the
         Effective Time, ACGIT shall not conduct any business with respect to
         Treasury except in connection with 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 Treasury, represents and warrants to,
         and agrees with the following:

         4.1.     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.

         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 Declaration of Trust, By-laws, or any
                  agreement or arrangement to which it is a party or by which it
                  is bound.

         4.4.     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; 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 Treasury Assets or
                  properly shown to be due on any return filed by 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 Treasury
                  Assets.

         4.6.     The financial statements of 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
                  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, 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
                  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 tax-exempt income and net capital gain, if any,
                  realized in taxable periods or years ended on or before
                  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 Treasury prior to the Effective Date.

         4.8.     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 outstanding shares.

         4.9.     There are no legal, administrative or other proceedings
                  pending or, to ACGIT's knowledge threatened, against ACGIT or
                  Treasury which could result in liability on the part of
                  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
                  Treasury Assets and, upon delivery and payment for the
                  Treasury Assets as contemplated herein, Government Bond 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 Government Bond that will be registered with the SEC
                  pursuant to this Agreement, which, without limitation, shall
                  include a proxy statement and 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 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 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 Government Bond, 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,
                  Government Bond 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 does not, and the consummation of the
                  transactions contemplated by this Agreement will not, violate
                  ACGIT's 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.     Government Bond 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 Government Bond 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 Government Bond 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 Government Bond 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
                  Government Bond that could result in liability on the part of
                  ACGIT or Government Bond.

         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 Government Bond to be issued and delivered to
                  Treasury for the account of record holders of shares of
                  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 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 Directors of ACGIT shall call, and ACGIT shall hold,
                  a meeting of the shareholders of 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 Treasury Assets to
                                    Government Bond and the assumption by
                                    Government Bond of the Treasury Liabilities,
                                    in exchange for shares of Government Bond,
                                    as described in this Agreement; and

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

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

         6.2.     Approval of this Reorganization Agreement by the shareholders
                  of Treasury shall constitute the waiver of the application of
                  any fundamental policy of 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 relating to Treasury and Government Bond 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 Treasury Assets and the shares of Government Bond to be
         issued pursuant to Section 1 and the liquidation of 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 ACGIT. The date and time at which such actions are
         taken are referred to herein as the "Effective Time." To the extent any
         of the Treasury Assets are, for any reason, not transferred at the
         Effective Time, ACGIT shall cause such 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 Government Bond
         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
                  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 Treasury in and to the Treasury Assets. The 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
                  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 addressed to ACGIT in
                  a form reasonably satisfactory to it and dated the Effective
                  Time, substantially to the effect that for federal income tax
                  purposes: (i) the transfer of the Treasury Assets hereunder,
                  and the assumption by Government Bond of the Treasury
                  Liabilities, in exchange for shares of Government Bond, and
                  the distribution of said shares to the shareholders of
                  Treasury, as provided in this Agreement, will constitute a
                  reorganization within the meaning of Section 368 of the Code,
                  and Treasury and Government Bond 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
                  Treasury as a result of such transaction; (iii) no gain or
                  loss will be recognized by Government Bond as a result of such
                  transaction; (iv) no gain or loss will be recognized by the
                  shareholders of Treasury on the distribution to them by
                  Treasury of shares of Government Bond in exchange for their
                  shares of Treasury; (v) the aggregate basis of Government Bond
                  shares received by each shareholder of Treasury will be the
                  same as the aggregate basis of the shareholder's Treasury
                  shares immediately prior to the transaction; (vi) the basis of
                  the Treasury Assets to Government Bond will be the same as the
                  basis of the Treasury Assets in the hands of Treasury
                  immediately prior to the exchange; (vii) a shareholder's
                  holding period for Government Bond shares will be determined
                  by including the period for which the shareholder held the
                  shares of Treasury exchanged therefor, provided that the
                  shareholder held such shares of Treasury as a capital asset;
                  and (viii) the holding period of Government Bond with respect
                  to the Treasury Assets will include the period for which the
                  Treasury Assets were held by Treasury (except to the extent
                  that an activity or investment of Government Bond has the
                  effect of diminishing a holding period with respect to an
                  asset).

         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 CONDITIONS.

         The obligations of ACGIT hereunder with respect to 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
                  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 Government Bond 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, addressed to ACGIT in
                  a form reasonably satisfactory to it and 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
                  Government Bond 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 have at the Effective Time confirmations or other adequate
         evidence as to the adjusted tax basis of the Treasury Assets then
         delivered to Government Bond 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.  With respect to Government Bond, by ACGIT if the
                           conditions set forth in Section 9 are not satisfied
                           as specified in said Section;

                  14.1.2.  With respect to Treasury, by ACGIT if the conditions
                           set forth in Section 10 are not satisfied as
                           specified in said Section;

                  14.1.3.  By the mutual consent of the parties.

         14.2.    If a party terminates this Agreement because one or more of
                  its conditions precedent have not been fulfilled, or if this
                  Agreement is terminated by mutual consent, this Agreement will
                  become null and void without any liability of either party or
                  any of their investment portfolios to the other; provided,
                  however, that if such termination is by ACGIT with respect to
                  Government Bond pursuant to Section 14.1.1 as a result of a
                  breach by ACGIT with respect to Treasury of any of its
                  representations, warranties or covenants in this Agreement, or
                  such termination is by ACGIT with respect to Treasury pursuant
                  to Section 14.1.2 as a result of a breach by ACGIT with
                  respect to Government Bond of any of its representations,
                  warranties or covenants in this Agreement, nothing herein
                  shall affect the non-breaching party's right to damages on
                  account of such other party's breach.

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) the
         parties hereto may, by written agreement authorized by their Board of
         Trustees, or their respective Presidents or any Vice Presidents, and
         with or without the approval of their shareholders, amend any of the
         provisions of this Agreement, and (b) either party may waive any breach
         by the other party 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 the waiving party with or without the
         approval of such party'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. This Agreement and the rights,
         obligations and liabilities hereunder may not be assigned by either
         party without the consent of the other party.

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.    Both parties specifically acknowledge and agree that any
                  liability of ACGIT under this Agreement with respect to
                  Government Bond, or in connection with the transactions
                  contemplated herein with respect to Government Bond, shall be
                  discharged only out of the assets of Government Bond and that
                  no other portfolio of ACGIT, if any, shall be liable with
                  respect thereto.

         19.3.    Both parties specifically acknowledge and agree 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.      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

21.      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.

22.      ENTIRE AGREEMENT.

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

23.      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