document 2

-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LxMORSSGETlXb8Usq5Sx9Z4MGtQQopPHoUcmVJY0YfA3zN+WrLBj4cwvLqEfzJyH jH5UUgCG6Q87a4OWcXo/Nw== 0000717316-02-000010.txt : 20020415 0000717316-02-000010.hdr.sgml : 20020415 ACCESSION NUMBER: 0000717316-02-000010 CONFORMED SUBMISSION TYPE: N-14 PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 20020313 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERICAN CENTURY CALIFORNIA TAX FREE & MUNICIPAL FUNDS CENTRAL INDEX KEY: 0000717316 IRS NUMBER: 946562826 STATE OF INCORPORATION: MA FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: N-14 SEC ACT: 1933 Act SEC FILE NUMBER: 333-84240 FILM NUMBER: 02574336 BUSINESS ADDRESS: STREET 1: 1665 CHARLESTON RD CITY: MOUNTAIN VIEW STATE: CA ZIP: 94043 BUSINESS PHONE: 8003218321 MAIL ADDRESS: STREET 1: 1665 CHARLESTON RD CITY: MOUNTAIN VIEW STATE: CA ZIP: 94043 FORMER COMPANY: FORMER CONFORMED NAME: BENHAM CALIFORNIA TAX FREE TRUST DATE OF NAME CHANGE: 19910218 FORMER COMPANY: FORMER CONFORMED NAME: BENHAM CALIFORNIA TAX FREE TRUST / DATE OF NAME CHANGE: 19960815 FORMER COMPANY: FORMER CONFORMED NAME: BENHAM CALIFORNIA TAX FREE & MUNICIPAL FUNDS DATE OF NAME CHANGE: 19920703 N-14 1 doc-2.htm document 2

N-14
Initial Statement

As filed with the Securities and Exchange Commission on March 13, 2002

Registration Nos. 2-82734 and 811-3706

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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM N-14

REGISTRATION UNDER THE SECURITIES ACT OF 1933

Pre-Effective Amendment No. _____ [ ]
Post-Effective Amendment No. _____ [ ]

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AMERICAN CENTURY CALIFORNIA TAX-FREE AND MUNICIPAL FUNDS
(Exact Name of Registrant as Specified in Charter)

4500 Main Street
P.O. Box 419200
Kansas City, MO 64141-6200
(Address of Principal Executive Offices)

Registrant's Telephone Number, including Area Code: 816-531-5575

Charles A. Etherington
Vice President and Associate General Counsel
4500 Main Street, P.O. Box 419200, Kansas City, MO 64141-6200
(Name and Address of Agent for Service)

Approximate Date of Proposed Public Offering: As soon as practicable after this
Registration Statement becomes effective under the Securities Act of 1933.

Calculation of Registration Fee under the Securities Act of 1933: No filing fee
is required because an indefinite number of shares have previously been
registered on Form N-1A (Registration Nos. 2-82734 and 811-3706) pursuant to
Rule 24f-2 under the Investment Company Act of 1940. The Registrant is filing as
an exhibit to this Registration Statement an opinion related to the legality of
shares being issued in connection with this Registration Statement. Pursuant to
Rule 429, this Registration Statement relates to the aforesaid Registration
Statement on Form N-1A.

The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission acting pursuant to said section 8(a),
may determine.

Prospectus and Proxy Statement

April 15, 2002

California Municipal Money Market Fund

Important Voting Information Inside!

TABLE OF CONTENTS

Important Information You Should Consider ................................. 2
Notice of Special Meeting of Shareholders ................................. 5
Combined Prospectus/Proxy Statement ....................................... 6
Proposal One: Election of Trustees
Nominees .................................................................. X
Information Regarding Nominees ............................................ X
The Board of Trustees ..................................................... x
Selection of Independent Auditors ......................................... X
Ownership of Fund Shares .................................................. X
Voting Information ........................................................ X
Proposal Two: Reorganization
Comparison of Certain Information Regarding the Funds ..................... 7
Primary Federal Income Tax Consequences ................................... 7
Risk Factors .............................................................. 8
Transaction and Operating Expense Information ............................. 8
Additional Information About the Proposed Transaction ..................... 9
Summary of Plan of Reorganization ......................................... 9
Description of the Securities of California Tax-Free Money Market ......... 10
Reasons Supporting the Reorganization ..................................... 10
Federal Income Tax Consequences ........................................... 11
Capitalization ............................................................ 12
Information About the Funds ............................................... 12
Fundamental Investment Policies ........................................... 13
Information Relating to Voting Matters .................................... 13
General Information ....................................................... 13
Voting and Revocation of Proxies .......................................... 13
Record Date ............................................................... 14
Quorum .................................................................... 14
Shareholder Vote Required ................................................. 14
Cost of Proxy Solicitation ................................................ 15
Certain Shareholders ...................................................... 15
Appraisal Rights .......................................................... 15
Annual Meetings ........................................................... 15
Additional Information .................................................... 16
Litigation ................................................................ 16
Other Business ............................................................ 16
Shareholder Inquiries ..................................................... 16
Management's Discussion of Fund Performance ............................... 17
Report Highlights ......................................................... 17
Our Message to You ........................................................ 18
Performance & Portfolio Information ....................................... 19
Management Q&A ............................................................ 20
Appendix I ................................................................ X
Appendix II ............................................................... X

American Century Investments
P.O. Box 419200
Kansas City, Missouri 64141-6200

April 15, 2002

Dear American Century California Municipal Money Market Fund Shareholder:

I am writing to ask for your support of an important proposal affecting your
fund. The proposal will be voted on at an upcoming Special Meeting of
shareholders to be held on Friday, August 2, 2002. Please take a few minutes to
read the enclosed materials, complete and sign the proxy voting card and mail it
back to us.

At the Special Meeting, you are being asked to elect nominees to serve on the
Board of Trustees/Directors of your fund. The enclosed materials give more
detailed information about the nominees. We encourage you to vote "FOR" all the
nominees.

In addition, as a shareholder of American Century California Municipal Money
Market Fund, you are being asked to approve the combination of your fund with
the American Century California Tax-Free Money Market Fund.

The reason for the combination is twofold. First, the reorganization will
combine funds with substantially similar investment objectives and strategies.
Second, management believes it will be more efficient to have the funds'
portfolio management team focus on a single, larger portfolio of assets rather
than continue managing similar, smaller portfolios.

The Board of Trustees of your fund has unanimously voted in favor of this
reorganization and believes the combination is in your fund's and your best
interests. We encourage you to vote "FOR" the reorganization. The enclosed
materials give more detailed information about the proposed reorganization and
the reasons why we recommend you vote for it.

Please don't put these materials aside, thinking that you will return to them at
another time. If shareholders don't return their proxies, additional expenses
must be incurred to pay for follow-up mailings and phone calls. PLEASE TAKE A
FEW MINUTES TO REVIEW THE ENCLOSED MATERIALS AND VOTE YOUR SHARES TODAY. If you
have any questions or need any help in voting your shares, please call us at
1-800-331-8331.

To more efficiently handle this proxy solicitation, we have hired Alamo Direct
to act as our proxy solicitor. They might be calling you during the solicitation
process to ask if you have questions or concerns about the voting process and to
assist you with your vote.

I appreciate your consideration of these important proposals. Thank you for
investing with American Century and for your continued support.

Sincerely,

William M. Lyons
President

IMPORTANT INFORMATION YOU SHOULD CONSIDER

The following Q&A is a brief summary of some of the issues that may be important
to you. It may not contain all of the information or topics that you think are
important and, as a result, is qualified in its entirety by the more detailed
information contained elsewhere in this document, or incorporated into this
document. Please read all the enclosed proxy materials before voting. PLEASE
REMEMBER TO VOTE YOUR SHARES AS SOON AS POSSIBLE. If enough shareholders return
their proxy cards soon, additional costs for follow-up mailings and phone calls
may be avoided.

What is the purpose of the upcoming meeting?

At the Special Meeting, you are being asked to elect nominees to serve on the
Board of Trustees of American Century California Tax-Free and Municipal Funds.
In addition, your Board of Trustees has recommended combining California
Municipal Money Market into California Tax-Free Money Market. This combination
requires approval of California Municipal Money Market shareholders. The Special
Meeting to vote on these proposals will be held on Friday, August 2, 2002, at
10:00 a.m. (Central time) at American Century Tower I, 4500 Main Street, Kansas
City, Missouri. Shareholders of record as of the close of business on April 5,
2002, are eligible to vote.

Who are the nominees for Trustee? Have all of them been elected before?

The Nominating Committee of your Board of Trustees has proposed that
shareholders elect eight members to the Board of Trustees of American Century
California Tax-Free and Municipal Funds. The nominees are:

Albert Eisenstat
Ronald J. Gilson
Kathryn A. Hall
William M. Lyons
Myron S. Scholes
Kenneth E. Scott
James E. Stowers III
Jeanne D. Wohlers

Albert Eisenstat, Kathryn Hall and William M. Lyons are being considered by
shareholders for the first time. A full discussion of the proposal to elect
Trustees begins on page ___.

When will the proposal regarding the Trustees take effect if it is approved?

The proposal regarding the Trustees will be effective immediately upon approval.

Why is the reorganization being proposed?

The reorganization seeks to improve operational and investment management
efficiencies by combining funds with similar investment objectives and
investment policies, approaches, procedures and portfolio securities. Combining
these similar funds will permit the portfolio management team to focus its
resources on a single, larger fund, rather than divide its time between similar
funds.

How will the reorganization be accomplished?

Shareholders of California Municipal Money Market are being asked to approve the
combination of their fund with California Tax-Free Money Market according to the
Agreement and Plan of Reorganization described on page ____. The reorganization
will take the form of a transfer of assets by California Municipal Money Market
in exchange for shares of California Tax-Free Money Market. California Municipal
Money Market will then make a liquidating distribution to its shareholders of
the California Tax-Free Money Market shares received in the exchange.

What will shareholders get if the reorganization is approved?

As a result of the liquidating distribution, you will receive shares of
California Tax-Free Money Market in an amount equal to the value of your
California Municipal Money Market shares on the date the combination takes place
(probably September 3, 2002). The total dollar value of your account after the
reorganization will be the same as the total dollar value of your account before
the reorganization. However, because the net asset value (price per share) of
California Municipal Money Market may be different from the net asset value of
California Tax-Free Money Market, you may receive a different number of shares
than the number of shares of California Municipal Money Market that you have.
After the reorganization, you will own shares of California Tax-Free Money
Market rather than shares of California Municipal Money Market.

Why did the Board of Trustees approve the reorganization?

After reviewing many factors, your Board of Trustees unanimously determined that
the reorganization was in the best interests of California Municipal Money
Market and its shareholders. Some of the factors considered include:

* The potential for enhanced investment performance and increased
efficiency of operations.

* The expense ratio for shareholders will not change as a result of the
reorganization.

* The similarity of investment objectives, policies, restrictions, and
portfolio securities.

* The benefits that may result to the advisor and its affiliates if the
reorganization is consummated.

* The tax consequences to shareholders and the funds if the
reorganization is consummated.

Will the exchange of California Municipal Money Market shares for shares of
California Tax-Free Money Market cause shareholders to realize income or capital
gains for tax purposes?

No. The exchange of shares in the reorganization will be tax-free. We will
obtain a tax opinion confirming that the reorganization will not be a taxable
event for you for federal income tax purposes. Your tax basis and holding period
for your shares will be unchanged.

How does the total expense ratio of California Tax-Free Money Market compare to
that of California Municipal Money Market?

The total expense ratios of the funds are the same.

What are the primary differences between California Tax-Free Money Market and
California Municipal Money Market?

Both funds seek safety of principal and high current income that is exempt from
federal and California income taxes. Both funds invest in high-quality, very
short-term debt securities with interest payments exempt from federal income and
alternative minimum tax and from California income tax. However, California
Municipal Money Market can also purchase high-quality, very short-term debt
securities with interest payments subject to the federal alternative minimum
tax. As a result, California Municipal Money Market shareholders may be subject
to the alternative minimum tax.

Because the high-quality, very short-term debt securities purchased by both
funds are among the safest securities available, the interest they pay is among
the lowest for income-paying securities. Accordingly, the yield on these funds
will likely be lower than the yield on funds that invest in longer-term or
lower-quality securities. In addition, because both funds invest primarily in
California municipal securities, they will be sensitive to events that affect
California's economy. Both California Municipal Money Market and California
Tax-Free Money Market are subject to these risks.

When and how will the reorganization take place?

Subject to receiving shareholder approval, the reorganization is scheduled to
take place on September 3, 2002. After the funds have calculated the value of
their assets and liabilities on August 30, 2002, California Municipal Money
Market will transfer its assets and liabilities to California Tax-Free Money
Market in exchange for the appropriate number of California Tax-Free Money
Market shares. California Municipal Money Market will then make a liquidating
distribution of those California Tax-Free Money Market shares pro rata to its
shareholders according to the value of their accounts immediately prior to the
transfer of assets. THE VALUE OF YOUR ACCOUNT WILL NOT CHANGE AS A RESULT OF
THIS REORGANIZATION.

Will the reorganization affect the management team of California Tax-Free Money
Market?

No. American Century Investment Management, Inc. will continue to manage the
assets of California Tax-Free Money Market after the reorganization, and the
portfolio management team of California Municipal Money Market also serves as
the portfolio management team of California Tax-Free Money Market.

How will distribution, purchase and redemption procedures and exchange rights
change as a result of the reorganization?

They won't. California Tax-Free Money Market has the same distribution, purchase
and exchange policies and procedures as California Municipal Money Market.

How will the proposed changes affect your account?

If the proxy proposals are approved, California Municipal Money Market will be
combined with California Tax-Free Money Market and your services will be
transferred. American Century will ensure your services will continue and no
action is required on your part. Please review the following information to
answer questions you may have about services and transactions during the proxy
period.

Account number

Your account number will change and you will receive a transaction confirmation
with the new number in early September.

Automatic services

If you have any of the services below, they will be transferred and you will
receive a service update as a confirmation.

* automatic investments * direct deposits
* automatic exchanges * dividend options
* automatic redemptions * required minimum distributions
* automatic transfers

- - If you have any of these services, they will occur in August as
scheduled unless we contact you for instructions.

Transactions

- - Purchases may be made into your current account until August 16.

- - You may continue to make exchanges or redemptions on your current
account through August 30.

CheckWriting

- - If you have CheckWriting on your account, a checkbook will be sent for
your new fund in early September, which you may use as soon as you
receive it. Destroy the checks for your old account after you receive
your new checkbook. Please do not use old checks after September 30.

If shareholders send their proxies in now as requested, can they change their
vote later?

Yes! A proxy can be revoked at any time using any of the voting procedures
described on your proxy vote card or by attending the meeting and voting in
person. Even if you plan to attend the meeting to vote in person, we ask that
you return the enclosed proxy vote card. Doing so will help us achieve a quorum
for the meeting.

How do shareholders vote their shares?

We've made it easy for you. You can vote online, by phone, by mail or by fax. To
vote online, access the Web site listed on your proxy card (you will need the
control number that appears on the right-hand side of your proxy card). To vote
by telephone, call the toll-free number listed on your proxy card (you will need
the control number that appears on the right-hand side of your proxy card). To
vote by mail, complete, sign and send us the enclosed proxy voting card in the
enclosed postage-paid envelope. To vote by fax, send your fax to the toll-free
number listed on your proxy card.

Your shares will be voted EXACTLY as you tell us. If you simply sign the
enclosed proxy card and return it, we will follow the recommendation of your
Board of Trustees and vote it "FOR" all proposals. You also may vote in person
at the meeting on Friday, August 2, 2002.

Where can shareholders get more information about the funds?

A copy of California Tax-Free Money Market's Prospectus accompanies this proxy
statement. In addition, the Manager's Discussion and Analysis of Fund
Performance portion of California Tax-Free Money Market's most recent Annual
Report to Shareholders is included in this document on page ____ . If you would
like a copy of California Municipal Money Market's prospectus or either fund's
Statement of Additional Information or most recent annual or semiannual report,
please call us at 1-800-331-8331.

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS

AMERICAN CENTURY CALIFORNIA TAX-FREE AND MUNICIPAL FUNDS
American Century Investments
P. O. Box 419200
Kansas City, Missouri 64141-6200
1-800-331-8331

To be held on August 2, 2002

To American Century California Municipal Money Market Shareholders:

NOTICE IS HEREBY GIVEN THAT a Special Meeting of the shareholders of the
American Century California Municipal Money Market Fund, a portfolio of American
Century California Tax-Free and Municipal Funds ("California Municipal Money
Market"), will be held at American Century Tower I, 4500 Main Street, Kansas
City, Missouri on Friday, August 2, 2002, at 10:00 a.m. (Central time) for the
following purposes:

PROPOSAL 1. To elect a Board of Trustees of eight members to hold office until
their successors are duly elected and qualified;

PROPOSAL 2. To consider and act upon a proposal to approve an Agreement and Plan
of Reorganization and the transactions contemplated thereby, including:

(a) the transfer of substantially all of the assets and liabilities of
California Municipal Money Market to the American Century California Tax-Free
Money Market Fund, another investment portfolio of American Century California
Tax-Free and Municipal Funds ("California Tax-Free Money Market"), in exchange
for shares in California Tax-Free Money Market; and

(b) the distribution of California Tax-Free Money Market shares to the
shareholders of California Municipal Money Market according to their respective
interests.

PROPOSAL 3. To transact such other business as may properly come before the
Special Meeting or any adjournment(s) thereof.

The proposed reorganization, the Agreement and Plan of Reorganization and
related matters are described in the attached Combined Prospectus/Proxy
Statement.

Information regarding the nominees for the Board of Trustees begins on page
________ of this Combined Prospectus/Proxy Statement. The proposed
reorganization, the Agreement and Plan of Reorganization and related matters are
described in the attached Combined Prospectus/Proxy Statement beginning on page
_______ .

Shareholders of record as of the close of business on April 5, 2002, are
entitled to notice of, and to vote at, the Special Meeting or any adjournment(s)
thereof.

Please execute and return promptly in the enclosed envelope the accompanying
proxy card, which is being solicited by the Board of Trustees of American
Century Government Income Trust. Please return your proxy card even if you are
planning to attend the meeting. This is important to ensure a quorum at the
meeting. Proxies may be revoked at any time before they are exercised using any
of the voting procedures described on your proxy vote card or by attending the
meeting and voting in person.

David C. Tucker
Senior Vice President

April 15, 2002

COMBINED PROSPECTUS/PROXY STATEMENT
AMERICAN CENTURY CALIFORNIA TAX-FREE AND MUNICIPAL FUNDS

April 15, 2002

This Combined Prospectus/Proxy Statement is furnished in connection with the
solicitation of votes by the Board of Trustees of American Century California
Tax-Free and Municipal Funds on behalf of its California Municipal Money Market
Fund ("California Municipal Money Market"), in connection with a Special Meeting
of Shareholders to be held on Friday, August 2, 2002, at 10:00 a.m. (Central
time) at American Century Tower I, 4500 Main Street, Kansas City, Missouri.

At the Special Meeting, shareholders of California Municipal Money Market are
being asked to approve the combination of their fund with the American Century
California Tax-Free Money Market Fund, another series of American Century
California Tax-Free and Municipal Funds ("California Tax-Free Money Market").

The funds are similarly managed, diversified, open-end mutual funds that invest
in a substantially similar mix of fixed-income securities. The purpose of the
reorganization is to streamline American Century's fixed-income lineup and to
achieve management and operational efficiencies. Combining these similar funds
as described further in this Combined Prospectus/Proxy Statement will help
achieve this objective. Each fund has shares registered with the Securities and
Exchange Commission.

This Combined Prospectus/Proxy Statement constitutes the proxy statement of your
fund for the Special Meeting of Shareholders and a prospectus for the California
Tax-Free Money Market shares that are to be issued to you in connection with the
reorganization. It is intended to give you the information you need to consider
and vote on the proposed reorganization. You should retain this document for
future reference. A Statement of Additional Information about California
Tax-Free Money Market, dated January 1, 2002 , has been filed with the
Commission and is incorporated into this document by reference. A copy of the
Statement of Additional Information may be obtained without charge upon request
by calling us at 1-800-331-8331 or writing to us at American Century
Investments, 4500 Main Street, P. O. Box 419200, Kansas City, Missouri
64141-6200.

The principal executive offices of California Municipal Money Market and
California Tax-Free Money Market are located at American Century Investments,
4500 Main Street, P. O. Box 419200, Kansas City, Missouri 64141-6200. The funds'
telephone number is 1-800-345-2021.

The information contained in this Combined Prospectus/Proxy Statement is
required by rules of the Securities and Exchange Commission, and some of it is
highly technical. If you have any questions about these materials or how to vote
your shares, please call us at 1-800-331-8331.

Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities or determined if this
Combined Prospectus/Proxy Statement is accurate or complete. Any representation
to the contrary is a criminal offense.

No person has been authorized to give any information or to make any
representations other than those contained in this Combined Prospectus/Proxy
Statement and in the materials expressly incorporated herein by reference. If
given or made, such other information or representations must not be relied upon
as having been authorized by California Municipal Money Market, California
Tax-Free Money Market or anyone affiliated with American Century Investments.

PLEASE NOTE THAT THE SPECIAL MEETING OF SHAREHOLDERS WILL BE A BUSINESS MEETING
ONLY AND IS NOT A SHAREHOLDER SEMINAR.

PROPOSAL 1: ELECTION OF TRUSTEES

Nominees

The Board of Trustees of American Century California Tax-Free and Municipal
Funds (the "Trust") has nominated eight individuals (the "Nominees") for
election to the Board. At the meeting, the shareholders of California Municipal
Money Market will be asked to elect the Nominees to serve on the American
Century California Tax-Free and Municipal Funds Board of Trustees. It is
intended that the enclosed Proxy will be voted for the election of the eight
Nominees named below as Trustees, unless such authority has been withheld in the
Proxy. The term of office of each person elected as Trustee will be until his or
her successor is duly elected and shall qualify. Information regarding each
Nominee is set forth below. Each Nominee has consented to serve as a Trustee if
elected.

Shareholders are being asked to elect the Nominees to serve as Trustees of the
American Century California Tax-Free and Municipal Funds Board of Trustees in
order to ensure that at least two-thirds of the members of the Board have been
elected by the shareholders of the Trust as required by the Investment Company
Act of 1940, as amended (the "Investment Company Act"). The Investment Company
Act provides that vacancies on the Board of Trustees may not be filled by
Trustees unless thereafter at least two-thirds of the Trustees shall have been
elected by shareholders of the Trust. To ensure continued compliance with this
requirement without incurring the expense of calling additional shareholder
meetings, shareholders are being asked at this Special Meeting to elect the
eight Trustees to hold office until the next meeting of shareholders. Consistent
with the provisions of the Trust's by-laws, and as permitted by Massachussetts
law, the Trust does not anticipate holding annual shareholder meetings. Thus,
the Trustees will be elected for indefinite terms, subject to termination or
resignation. Each Nominee has indicated a willingness to serve as a member of
the Board of Trustees if elected. If any of the Nominees should not be available
for election, the persons named as proxies (or their substitutes) may vote for
other persons in their discretion. However, ACIM has no reason to believe that
any Nominee will be unavailable for election. In evaluating the Nominees, the
Trustees took into account their background and experience, including their
familiarity with the issues relating to these types of funds and investments as
well as their careers in business, finance, marketing and other areas. The
Trustees also considered the experience of the Nominees as Trustees or Directors
of certain American Century Funds.

INFORMATION REGARDING NOMINEES

The individuals listed in the table below serve as trustees or officers of
California Municipal Money Market and California Tax-Free Money Market. Trustees
listed as interested persons of the funds (as defined in the Investment Company
Act) are "interested" primarily by virtue of their engagement as officers of
American Century Companies, Inc. (ACC) or its wholly-owned subsidiaries,
including the funds' investment adviser, American Century Investment Management,
Inc. (ACIM); the funds' principal underwriter, American Century Investment
Services, Inc. (ACIS); and the funds' transfer agent, American Century Services
Corporation (ACSC).

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

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

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

- ---------------------------------------------------------------------------------------------------------------------------------------------
Interested Trustees

Interested Trustees

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

William M. Lyons Trustee 1 Chief Executive Officer, ACC 38 None
4500 Main Street and other ACC subsidiaries
Kansas City, MO 64111 (September 2000 to present)
(46) President, ACC (June 1997
to present)
Chief Operating Officer
ACC (June 1996 to
September 2000)
General Counsel, ACC, ACIM,
ACIS, ACSC and other ACC
subsidiaries (June 1989 to
June 1998)
Executive Vice President,
ACC (January 1995
to June 1997)
Also serves as: Executive
Vice President and Chief
Operating Officer, ACIM,
ACSC and other ACC
subsidiaries, and
Executive Vice President
of other ACC subsidiaries
Director, ACIM, ACSC and other
ACC subsidiaries

- ---------------------------------------------------------------------------------------------------------------------------------------------
Independent Trustees

Albert Eisenstat Trustee 6 General Partner, 38 Independent Director,
1665 Charleston Road Discovery Ventures Sungard Data Systems (1991 to present)
Mountain View, CA 94043 (Venture capital firm, Independent Director, Business Objects S/A
(71) 1996 to 1998) (1994 to present)

.............................................................................................................................................
Ronald J. Gilson Trustee 6 Charles J. Meyers Professor 38 None
1665 Charleston Road of Law and Business,
Mountain View, CA 94043 Stanford Law School
(55) (1979 to present)
Mark and Eva Stern
Professor of Law and
Business, Columbia
University School of Law
(1992 to present)
Counsel, Marron, Reid &
Sheehy (a San Francisco
law firm, 1984 to present)

Kathryn A. Hall Trustee 0 President and Managing 38 Director, Princeton University.
1665 Charleston Road Director, Laurel Management Investment Company and
Mountain View, CA 94043 Company, L.L.C Stanford Management Company
(44) (1989 to present)

Myron S. Scholes Trustee 21 Partner, Oak Hill Capital 38 Director, Dimensional Fund Advisors
1665 Charleston Road Management, (1999-present) (investment advisor, 1982 to present)
Mountain View, CA 94043 Principal, Long-Term Director, Smith Breeden Family of
(60) Capital Management Funds (1992 to present)
(investment advisor,
1993 to January 1999)
Frank E. Buck Professor
of Finance, Stanford
Graduate School of Business
(1981 to present)

- ---------------------------------------------------------------------------------------------------------------------------------------------
Kenneth E. Scott Trustee 30 Ralph M. Parsons Professor 38 Director, RCM Capital Funds, Inc.
1665 Charleston Road of Law and Business, (1994 to present)
Mountain View, CA 94043 Stanford Law School
(73) (1972 to present)

.............................................................................................................................................
Jeanne D. Wohlers Trustee 17 Director and Partner,, 38 Director, Indus International
1665 Charleston Road Windy Hill Productions, LP (software solutions,
Mountain View, CA 94043 (educational software, January 1999 to present)
(56) 1994 to 1998) Director, Quintus Corporation
(automation solutions,
1995 to present)

- ---------------------------------------------------------------------------------------------------------------------------------------------
Officers
William M. Lyons President 1 See entry above under 38 See entry above under
4500 Main Street "Interested Trustees". "Interested Trustees".
Kansas City, MO 64111
(46)

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

Maryanne Roepke, CPA Senior Vice 1 Senior Vice President and Not Not applicable
4500 Main St. President, Assistant Treasurer, ACSC applicable
Kansas City, MO 64111 Treasurer
(45) and Chief
Accounting
Officer
David C. Tucker Senior Vice 3 Senior Vice President, ACIM, Not Not applicable
4500 Main St. President ACIS, ACSC and other ACC applicable
Kansas City, MO 64111 and subsidiaries
(43) General (June 1998 to present)
Counsel General Counsel, ACC,
ACIM, ACIS, ACSC and
other ACC subsidiaries
(June 1998 to present)
Consultant to mutual
fund industry
(May 1997 to April 1998)

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

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

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

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

THE BOARD OF TRUSTEES

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

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

Committees

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

Meetings Held

During last

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

.............................................................................................................................................
Nominating Kenneth E. Scott The Nominating Committee primarily considers and 5
Ronald J. Gilson recommends individuals for nomination as trustees. The
Albert Eisenstat names of potential trustee candidates are drawn from a
Myron S. Scholes number of sources, including recommendations from members
Jeanne D. Wohlers of the board, management and shareholders. This committee
also reviews and makes recommendations to the board with
respect to the composition of board committees and other
board-related matters, including its organization, size,
composition, responsibilities, functions and compensation.

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

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

Selection of Independent Auditors

The 1940 Act requires that a fund's independent auditors be selected by a
majority of those Trustees who are not "interested persons" (as defined in the
1940 Act) of the Fund. One of the purposes of the Audit Committee is to
recommend to a fund's Board of Trustees the selection, retention or termination
of independent auditors for the fund. A copy of the Audit Committee's charter,
which describes the Audit Committee's purposes, duties and powers, is attached
as Appendix I to this Prospectus/Proxy Statement.

At meetings held according to the following schedule, the Audit Committee
recommended, and the Board of Trustees/Directors, including a majority of those
Trustees who are not "interested persons," approved the selection of
PricewaterhouseCoopers LLP as the independent auditors for each Fund overseen by
the Board.

Fund Company Date Approved by Board Fiscal Year End
- ------------ ---------------------- ---------------
American Century Investment Trust 03/13/02 02/28/03
American Century Government Income Trust 03/13/02 03/31/03
American Century Municipal Trust 03/06/01 05/31/02
American Century California Tax-Free and Municipal Funds 08/06/01 09/30/02
American Century Target Maturities Trust 08/06/01 09/30/02
American Century Quantitative Equity Funds 12/14/01 12/31/02
American Century International Bond Funds 12/14/01 12/31/02

PricewaterhouseCoopers LLP, a major international accounting firm, has acted as
auditor of the funds overseen by the Board of Trustees since October 1997. After
reviewing the audited financial statements for the fiscal year ended August 31,
2001, the Audit Committee recommended to the Board of Trustees that such
financial statements be included in each fund's annual report to shareholders. A
copy of the audit committee's report for each fund are attached as Appendix II
to this proxy statement.

Audit Fees. For the fiscal year ending in 2001, PricewaterhouseCoopers LLP
billed American Century funds $754,825.00 for services rendered for the audit
of each fund's annual financial statements.

All Other Fees. For the fiscal years ending in 2001, PricewaterhouseCoopers LLP
billed American Century funds $1,125,719.00 for services other than those
described above. The Audit Committee considered the compatibility of these
non-audit services with PricewaterhouseCoopers' independence.

Compensation of Trustees

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

The following table shows the aggregate compensation paid by all the funds
issued by American Century California Tax-Free and Municipal Funds for the
periods indicated and by the seven other investment companies served by the
Board of Trustees to each Trustee who is not an interested person as defined in
the Investment Company Act.

Aggregate Trustee Compensation for Fiscal Year Ended August 31, 2001

Total Compensation Total Compensation from the
Name of Trustee(1) from the Funds(2) American Century Family of Funds(3)
Albert Eisenstat $8,970 $79,750

....................................................................................................................................
Ronald J. Gilson 9,737 87,750

Myron S. Scholes 8,427 74,000

Kenneth E. Scott 9,128 81,250

Jeanne D. Wohlers 8,550 75,250
- ------------------------------------------------------------------------------------------------------------------------------------

1 Mr. Isaac Stein retired from the board on September 15, 2000. He received
$583 from the funds during the fiscal year ended August 31, 2001.

2 Includes compensation paid to the trustees during the fiscal year ended
August 31, 2001, and also includes amounts deferred at the election of the
trustees under the Amended and Restated American Century Mutual Funds
Deferred Compensation Plan for Non-Interested Directors. The total amount
of deferred compensation included in the preceding table is as follows: Mr.
Eisenstat, $17,000; Mr. Gilson, $87,750; Mr. Scholes, $74,000; Mr. Scott,
$40,625; and Ms. Wohlers, $38,445.

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

The funds have adopted the Amended and Restated American Century Deferred
Compensation Plan for Non-Interested Directors. Under the plan, the independent
Trustees may defer receipt of all or any part of the fees to be paid to them for
serving as trustees of the funds.

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

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

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

No deferred fees were paid to any Trustee under the plan during the fiscal year
ended August 31, 2001.

Ownership of Fund Shares

The Trustees owned shares in the funds as of December 31, 2001, as shown in the
table below:

Name of Trustees(1)
- ---------------------------------------------------------------------------------------------------------------------------------------------

James E. William M. Albert Ronald J.
Stowers III Lyons Eisenstat Gilson
- ---------------------------------------------------------------------------------------------------------------------------------------------
Dollar Range of Equity Securities in the Funds:
California Tax-Free Money Market A A A C
California Municipal Money Market A A A A
Aggregate Dollar Range of Equity
Securities in all Registered Investment
Companies Overseen by Director in
Family of Investment Companies E E E E

Name of Trustees(1)
- ---------------------------------------------------------------------------------------------------------------------------------------------

Myron S. Kenneth E. Jeanne D.
Scholes Scott Wohlers
- ---------------------------------------------------------------------------------------------------------------------------------------------
Dollar Range of Equity Securities in the Funds:
California Tax-Free Money Market A B A
California Municipal Money Market E A E
Aggregate Dollar Range of Equity
Securities in all Registered Investment
Companies Overseen by Trustee in
Family of Investment Companies E E E

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

1 Kathryn A. Hall did not own any shares as of December 31, 2001.

Voting Information

Each Nominee will be elected to the Board of Trustees of American Century
California Tax-Free and Municipal Funds if he or she receives the approval of a
majority of the votes of American Century California Tax-Free and Municipal
Funds represented at the meeting, provided at least a quorum (50% of the
outstanding votes), is represented in person or by proxy. The election of
Trustees is determined by the votes received from all American Century
California Tax-Free and Municipal Funds shareholders without regard to whether a
majority of shares of any one fund voted in favor of a particular Nominee or all
Nominees as a group. By completing the proxy, you give the named proxies the
right to cast your votes. If you elect to withhold authority for any nominees,
you may do so by striking a line through the Nominee name on the proxy, as
further explained on the proxy itself. The Board of Trustees does not
contemplate that any Nominee will be unable to serve as a member of the Board of
Trustees for any reason, but if that should occur prior to the Special Meeting,
the individuals named as proxies reserve the right to substitute another person
or persons of their choice as Nominee or Nominees.

THE BOARD OF TRUSTEES, INCLUDING THE INDEPENDENT TRUSTEES, UNANIMOUSLY
RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" EACH OF THE NOMINEES.

PROPOSAL 2: REORGANIZATION

COMPARISON OF CERTAIN INFORMATION
REGARDING THE FUNDS

The following chart is provided to show a comparison of certain key attributes
of California Municipal Money Market with California Tax-Free Money Market. For
additional information about the funds, see the section titled "Information
About the Funds" starting on page _____ .

California Municipal Money Market California Tax-Free Money Market
- ---------------------------------------------------------------------------------------------------------------------------------------------

Type of Fund California Tax-Exempt Money Market California Tax-Exempt Money Market

Investment Objective Same as California Tax-Free The fund seeks safety of principal and high
Money Market current income that is exempt from federal and
California income taxes.

Investment Policies Invests in high-quality, very short Invests in high-quality, very short-term debt
term debt securities with interest securities with interest payments exempt from
payments exempt from federal and federal and California income taxes.
California income taxes but not
necessarily exempt from the federal
alternative minimum tax.

Credit Quality AAA - A AAA - A

Total Expense Ratio 0.49% 0.49%

Distribution Policy Same as California Tax-Free Distributions from net income are declared
Money Market daily and paid monthly. Capital gains
distributions are paid once a year, usually
in December.

Purchases and Exchanges Same as California Tax-Free See pages 19-22 of accompanying Prospectus
Money Market

Redemption Policies Same as California Tax-Free See pages 19-22 of accompanying Prospectus
Money Market

Investment Advisor Same as California Tax-Free American Century Investment Management,
Money Market Inc. ("ACIM")

Transfer Agent Same as California Tax-Free American Century Services Corporation
Money Market ("ACSC")

Distributor Same as California Tax-Free American Century Investment Services, Inc.
Money Market ("ACIS")

Custodians Same as California Tax-Free J.P. Morgan Chase and Co. and Commerce
Money Market Bank, N.A.

Independent Auditors Same as California Tax-Free PricewaterhouseCoopers LLP
Money Market

PRIMARY FEDERAL INCOME TAX CONSEQUENCES

The exchange of California Municipal Money Market shares for California Tax-Free
Money Market shares in the reorganization will be tax-free to shareholders. We
will obtain a tax opinion confirming that the reorganization will not be a
taxable event for shareholders of either fund for federal income tax purposes. A
shareholder's aggregate tax basis and holding period for California Tax-Free
Money Market shares received in the reorganization will be identical to the
aggregate tax basis and holding period for the California Municipal Money Market
shares exchanged in the transaction. The tax consequences of the reorganization
are described in more detail on page _____ of this Combined Prospectus/Proxy
Statement.

RISK FACTORS

California Municipal Money Market and California Tax-Free Money Market invest in
high-quality, very short-term debt securities. These securities are among the
safest securities available and, therefore, the interest they pay is among the
lowest for income-paying securities. Accordingly, the yield on these funds will
likely be lower than the yield on funds that invest in longer-term or
lower-quality securities.

Because the funds invest primarily in California municipal securities, they will
be sensitive to events that affect California's economy. They may be riskier
than funds that invest in a larger universe of securities.

Your Board of Trustees does not believe that the reorganization exposes
shareholders of California Municipal Money Market to any substantially new or
different risks than they are exposed to as shareholders of California Municipal
Money Market. For a discussion of the various investment policies, approaches
and procedures of California Tax-Free Money Market, and the risks associated
therewith, please see the accompanying Prospectus beginning at page 10.

TRANSACTION AND OPERATING
EXPENSE INFORMATION

The tables below compare various shareholder transaction and annual fund
operating expenses of California Municipal Money Market as of its most recent
fiscal year end (August 31, 2001) with California Tax-Free Money Market as of
its most recent fiscal year end (August 31, 2001). After the reorganization, the
expense levels of the surviving fund will be the same as those shown for
California Tax-Free Money Market (Pro Forma).

Annual Operating Expenses (expenses that are deducted from fund assets)

Management Distribution and Other Total Annual Fund
Fee(1) Service (12b-1) Fees Expenses(2) Operating
Expenses

- ---------------------------------------------------------------------------------------------------------------------------------------------
California Municipal Money Market 0.50% None 0.01% 0.51%
.............................................................................................................................................
California Tax-Free Money Market 0.50% None 0.01% 0.51%
California Tax-Free Money Market (Pro Forma) 0.50% None 0.01% 0.51%

1 Based on expenses incurred during the funds' most recent fiscal year. The
funds have stepped fee schedules. As a result, the funds' management fee rate
generally decreases as fund assets increase.

2 Other expenses include the fees and expenses of the funds' independent
trustees, their legal counsel, interest and portfolio insurance

Examples

The examples in the table below are intended to help you compare the costs of
investing in a fund with the costs of investing in other mutual funds. Assuming
you . . .

* invest $10,000 in the fund
* redeem all of your shares at the end of the periods shown below
* earn a 5% return each year
* incur the same operating expenses as shown above

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

1 year 3 years 5 years 10 years
- ---------------------------------------------------------------------------------------------------------------------------------------------
California Municipal Money Market $52 $163 $285 $640
.............................................................................................................................................
California Tax-Free Money Market $52 $163 $285 $640
California Tax-Free Money Market (Pro Forma) $52 $163 $285 $640
.............................................................................................................................................
CALLOUT

Use this example to compare the costs of investing in other funds. Of course,
your actual costs may be higher or lower.

ADDITIONAL INFORMATION
ABOUT THE PROPOSED TRANSACTION

SUMMARY OF PLAN OF REORGANIZATION

Subject to receipt of shareholder approval, the reorganization will be carried
out according to the terms of the Agreement and Plan of Reorganization between
the funds. The following is a brief summary of some of the important terms of
that Agreement.

EFFECTIVE TIME OF THE REORGANIZATION. The Agreement requires that the exchange
of assets for stock take place after the close of business on one business day
but before (or as of) the opening of business on the next business day (the
"Effective Time"). It is currently anticipated that the reorganization will take
place after the close of business on August 30, 2002, but before (or as of) the
opening of business on September 3, 2002. However, the Agreement gives the
officers of the funds the flexibility to choose another date.

EXCHANGE OF ASSETS. After the close of business on August 30, 2002, the funds
will determine the value of their assets and liabilities in the same manner as
described on page 23 in the enclosed California Tax-Free Money Market
Prospectus. The assets and liabilities of California Municipal Money Market will
then be transferred to California Tax-Free Money Market in exchange for that
number of full and fractional shares (rounded to the third decimal place) that
have the same aggregate net asset value as the value of the net assets received
in the exchange.

LIQUIDATING DISTRIBUTIONS AND TERMINATION OF CALIFORNIA MUNICIPAL MONEY MARKET.
Immediately after the exchange of its assets for the California Tax-Free Money
Market shares, California Municipal Money Market will distribute pro rata all of
the shares received in the exchange to its shareholders of record at the
Effective Time. All of the outstanding shares of California Municipal Money
Market will be redeemed and canceled and its stock books closed. As a result of
the distribution, California Municipal Money Market shareholders will become
shareholders of California Tax-Free Money Market.

SHAREHOLDER APPROVAL. Consummation of the reorganization requires approval of
California Municipal Money Market shareholders.

REPRESENTATIONS AND WARRANTIES. The Agreement contains representations and
warranties made by California Municipal Money Market to California Tax-Free
Money Market concerning California Municipal Money Market's formation and
existence under applicable state law, its power to consummate the
reorganization, its qualification as a "regulated investment company" under
applicable tax law, the registration of its shares under federal law and other
matters that are customary in a reorganization of this type. The representations
and warranties terminate at the Effective Time.

CONDITIONS TO CLOSING. The Agreement contains conditions to closing the proposed
reorganization that benefit each fund. The conditions include (i) that
California Municipal Money Market shareholders approve the proposed
reorganization, (ii) that all representations of the funds be true in all
material respects, (iii) receipt of the tax opinion described on page _____
under the caption "Federal Income Tax Consequences"," and (iv) such other
matters as are customary in a reorganization of this type.

TERMINATION OF AGREEMENT. The Agreement may be terminated by a fund as a result
of the failure by the other fund to meet one of its conditions to closing, or by
mutual consent.

GOVERNING LAW. The Agreement states that it is to be interpreted under
Massachusetts law, the state of organization of California Tax-Free Money Market
and California Municipal Money Market.

DESCRIPTION OF THE SECURITIES OF CALIFORNIA TAX-FREE MONEY MARKET

California Tax-Free Money Market is a series of shares offered by American
Century California Tax-Free and Municipal Funds. Each series is commonly
referred to as a mutual fund. The assets belonging to each series of shares are
held separately by the custodian.

American Century California Tax-Free and Municipal Funds is a Massachusetts
business trust, which means its activities are overseen by a Board of Trustees.

Like California Municipal Money Market, California Tax-Free Money Market
currently offers one class of shares, the Investor Class, although it may offer
additional classes in the future. The Investor Class of shares of California
Tax-Free Money Market has no up-front charges, commissions or 12b-1 fees.

Your Board of Trustees believes there are no material differences between the
rights of a California Municipal Money Market shareholder and the rights of a
California Tax-Free Money Market shareholder. Each share, irrespective of series
or class of a series, is entitled to one vote for each dollar of net asset value
applicable to such share on all questions, except for those matters that must be
voted on separately by the series or class of a series affected. Matters
affecting only one class of a series are voted upon only by that series or
class.

Shares have non-cumulative voting rights, which means that the holders of more
than 50% of the votes cast in an election of trustees can elect all of the
trustees if they choose to do so, and in such event the holders of the remaining
votes will not be able to elect any person or persons to the Board of Trustees.

Unless required by the Investment Company Act of 1940, it is not necessary for
California Tax-Free Money Market to hold annual meetings of shareholders. As a
result, shareholders may not vote each year on the election of trustees.
However, pursuant to each fund's bylaws, the holders of at least 10% of the
votes entitled to be cast may request the fund to hold a special meeting of
shareholders.

REASONS SUPPORTING THE REORGANIZATION

The Reorganization is part of a broader restructuring program proposed by
American Century Investment Management, Inc. ("ACIM") to respond to changing
industry conditions and investor needs and desires in the fixed-income area. The
mutual fund industry has grown dramatically over the last ten years. During this
period of rapid growth, investment managers have expanded the range of
fixed-income fund offerings that they make available to investors in an effort
to meet and anticipate the growing and changing needs and desires of an
increasingly large and dynamic group of investors. The family of funds advised
by ACIM has followed this pattern. With this expansion, however, has come
increased complexity and competition among fixed-income mutual funds, as well as
increased confusion among investors.

As a result, ACIM has sought ways to restructure and streamline the management
and operations of the funds it advises. ACIM believes, and has advised the Board
of Trustees, that the consolidation of certain ACIM-advised funds would benefit
fund shareholders. ACIM has, therefore, proposed the consolidation of a number
of ACIM-advised funds that ACIM believes have similar or compatible investment
objectives and policies. In many cases, the proposed consolidations are designed
to eliminate the substantial overlap in current offerings by the American
Century family of funds. Consolidation plans are proposed for other American
Century funds that have not gathered enough assets to operate efficiently and,
therefore, face the risk of closure and resulting tax liability for many
shareholders. ACIM believes that these consolidations may help to enhance
investment performance and increase efficiency of operations.

ACIM recommended to the Board of Trustees that, among other reasons, because
California Municipal Money Market and California Tax-Free Money Market are
managed very similarly, the funds should be combined to establish a larger fund
that has substantially similar investment policies. As part of its analysis, the
Board of Trustees recognized that a large fund may be able to realize certain
potential cost savings that could benefit the shareholders of the funds if the
Reorganization is completed. The Reorganization was also recommended to combine
similar funds in an effort to eliminate duplication of expenses and internal
competition. The Board of Trustees reviewed the expense ratios of both funds and
the projected expenses of the combined fund; the comparative investment
performance of the funds; the compatibility of the investment objectives,
policies, restrictions and investments of the funds; the benefits that may
result to ACIM and its affiliates if the Reorganization is consummated; and the
tax consequences of the Reorganization. The Board of Trustees also noted that
the same portfolio management team manages both funds. During the course of its
deliberations, the Board of Trustees noted that the expenses of the
Reorganization will be borne by ACIM.

The Board of Trustees concluded that the Reorganization is in the best interests
of the shareholders of California Municipal Money Market, and that no dilution
of value would result to the shareholders of the funds from the Reorganization.
The Board of Trustees, including those who are not "interested persons" (as
defined in the 1940 Act), approved the Plan and recommended that shareholders of
California Municipal Money Market vote to approve the Reorganization.

FOR THE REASONS DISCUSSED ABOVE, THE BOARD OF TRUSTEES RECOMMENDS THAT YOU VOTE
FOR THE PLAN.

FEDERAL INCOME TAX CONSEQUENCES

Consummation of the reorganization is subject to the condition that we receive a
tax opinion to the effect that for federal income tax purposes (i) no gain or
loss will be recognized by you, California Municipal Money Market or California
Tax-Free Money Market, (ii) your basis in the California Tax-Free Money Market
shares that you receive will be the same in the aggregate as your basis in the
California Municipal Money Market shares held by you immediately prior to the
reorganization, and (iii) your holding period for the California Tax-Free Money
Market shares will include your holding period for your California Municipal
Money Market shares.

We have not sought a tax ruling from the Internal Revenue Service, but are
relying upon the tax opinion referred to above. That opinion is not binding on
the IRS and does not preclude it from taking a contrary position. The opinion
does not cover state or local taxes and you should consult your own advisers
concerning potential tax consequences.

The Agreement and Plan of Reorganization provides that California Municipal
Money Market will declare and pay dividends prior to the reorganization which,
together with all previous dividends, is intended to have the effect of
distributing to the California Municipal Money Market shareholders all
undistributed ordinary income, tax-exempt income, and net realized capital gains
earned up to and including the Effective Time of the reorganization. The
distributions are necessary to ensure that the reorganization will not create
adverse tax consequences to California Municipal Money Market. The distributions
to shareholders generally will be taxable to the extent ordinary income and
capital gains distributions are taxable to such shareholders, and nontaxable to
the extent tax-exempt income distributions are nontaxable to such shareholders.

CAPITALIZATION (unaudited)

California Tax Free
As of August 31,2001 California Tax Free California Municipal Money Market
Money-Market Money Market Pro Forma Combined
- ---------------------------------------------------------------------------------------------------------------------------------------------

Net Assets $551,722,018 $177,552,701 $ 729,274,719
Shares Outstanding 551,718,122 177,587,560 729,305,682
Net Asset Value Per Share $1.00 $1.00 $1.00

INFORMATION ABOUT THE FUNDS

Complete information about California Tax-Free Money Market and California
Municipal Money Market is contained in their Prospectus. The California Tax-Free
Money Market and California Municipal Money Market Prospectus dated January 1,
2002, is included with this Prospectus/Proxy Statement. The content of the
Prospectus is incorporated into this document by reference. Below is a list of
types of information about California Tax-Free Money Market and California
Municipal Money Market and the pages in their Prospectus where the information
can be found.

INFORMATION ABOUT THE
FOLLOWING ITEMS CAN BE FOUND ON THE FOLLOWING PAGES
- ------------------------------------------------------------------------------------------------------------------------------------

California Tax-Free Money Market California Municipal Money Market
Investor Class Investor Class
- ------------------------------------------------------------------------------------------------------------------------------------
An Overview of the Funds 2-3 2-3
Fees and Expenses 9 9
Objectives, Strategies and Risks 10 10
Management 17-18 17-18
Investing with American Century 19-22 19-22
Share Price and Distributions 23-24 23-24
Taxes 25-26 25-26
Financial Highlights 27-28 27, 29

FUNDAMENTAL INVESTMENT POLICIES

Fundamental investment policies contained in the Statement of Additional
Information dated January 1, 2002, and the investment objectives of California
Tax-Free Money Market may not be changed without shareholder approval. The Board
of Trustees may change any other policies and investment strategies.

INFORMATION RELATING TO VOTING MATTERS

GENERAL INFORMATION

This Combined Prospectus/Proxy Statement is being furnished in connection with
the solicitation of proxies by the Board of Trustees of California Municipal
Money Market. Proxies may be solicited by officers and employees of the
investment advisor of the funds, their affiliates and employees. American
Century Investment Management, Inc., has hired Alamo Direct to act as proxy
solicitor for the reorganization. It is anticipated that the solicitation of
proxies will be primarily by mail, telephone, facsimile or other electronic
means, or personal interview. Authorizations to execute proxies may be obtained
by telephonic or electronically transmitted instructions in accordance with
procedures designed to authenticate the shareholder's identity and to confirm
that the shareholder has received the Combined Prospectus/Proxy Statement and
proxy card. If you have any questions regarding voting your shares or the proxy,
please call us at 1-800-331-8331.

VOTING AND REVOCATION OF PROXIES

The fastest and most convenient way to vote your shares is to complete, sign and
mail the enclosed proxy voting card to us in the enclosed envelope. If you have
access to the Internet, you can vote online, by accessing the website listed on
the proxy card (you will need the control number that appears on the right-hand
side of your proxy card). You also may vote by telephone by calling the
toll-free number listed on your proxy card. In addition, you may vote by faxing
both sides of the completed proxy card to the toll-free number listed on the
proxy card. Your prompt response will help us obtain a quorum for the meeting
and avoid the cost of additional proxy solicitation efforts. If you return your
proxy to us, we will vote it EXACTLY as you tell us. If you simply sign the card
and return it, we will follow the recommendation of the Board of Trustees and
vote "FOR" all proposals.

Any shareholder giving a proxy may revoke it at any time before it is exercised
using any of the voting procedures described on the proxy vote card or by
attending the meeting and voting in person.

RECORD DATE

Only California Municipal Money Market shareholders of record at the close of
business on April 5, 2002, will be entitled to vote at the meeting. The number
of outstanding votes entitled to vote at the meeting or any adjournment of the
meeting as of the close of business on March 15, 2002 is:

California Municipal Money Market

Investor

Because the record date is April 5, 2002, the total number of votes at the
meeting may be different.

QUORUM

A quorum is the number of shareholders legally required to be at a meeting in
order to conduct business. The quorum for the Special Shareholders Meeting is
40% of the outstanding shares of California Municipal Money Market entitled to
vote at the meeting. Shares may be represented in person or by proxy. Proxies
properly executed and marked with a negative vote or an abstention will be
considered to be present at the meeting for purposes of determining the
existence of a quorum for the transaction of business. If a quorum is not
present at the meeting, or if a quorum is present at the meeting but sufficient
votes are not received to approve the Agreement and Plan of Reorganization, the
persons named as proxies may propose one or more adjournments of the meeting to
permit further solicitation of proxies. Any such adjournment will require the
affirmative vote of a majority of those shares affected by the adjournment that
are represented at the meeting in person or by proxy. If a quorum is not
present, the persons named as proxies will vote those proxies for which they are
required to vote "FOR" the Agreement and Plan of Reorganization in favor of such
adjournments, and will vote those proxies for which they are required to vote
"AGAINST" such proposals against any such adjournments.

SHAREHOLDER VOTE REQUIRED

The Agreement and Plan of Reorganization must be approved by the holders of a
majority of the outstanding votes of California Municipal Money Market present
at the Special Meeting in person or by proxy in accordance with the provisions
of its Agreement and Declaration of Trust and the requirements of the Investment
Company Act of 1940. The term "majority of the outstanding shares" means more
than 50% of the fund's outstanding shares present at the Special Meeting in
person or by proxy.

In tallying shareholder votes, abstentions and broker non-votes (i.e., proxies
sent in by brokers and other nominees that cannot be voted on a proposal because
instructions have not been received from the beneficial owners) will be counted
for purposes of determining whether or not a quorum is present for purposes of
convening the meeting. Abstentions and broker non-votes will, however, be
considered to be a vote against the Agreement and Plan of Reorganization.

Approval of the reorganization by shareholders of California Tax-Free Money
Market is not being solicited because their approval is not legally required.

COST OF PROXY SOLICITATION. The cost of the proxy solicitation and Special
Meeting will be borne by American Century Investment Management, Inc. and NOT by
the shareholders of the funds.

CERTAIN SHAREHOLDERS

The following table lists, as of March 15, 2002, the names, addresses and
percentage of ownership of each person who owned of record or is known by either
fund to own beneficially 5% or more of any class of California Municipal Money
Market or California Tax-Free Money Market. The percentage of shares to be owned
after consummation of the reorganization is based upon their holdings and the
outstanding shares of both funds as of March 15, 2002. Beneficial ownership
information is not required to be disclosed to the funds, so to the extent that
information is provided below, it is done so using the best information that the
funds have been provided.

Number of Percent of Percent Owned After
Shareholder Name and Address Shares Owned Ownership Reorganization
- ------------------------------------------------------------------------------------------------------------------------------------
California Municipal Money Market % %

....................................................................................................................................
California Tax-Free Money Market
% %

% %

As of March 15, 2002, the directors and officers of the issuer of California
Municipal Money Market, as a group, owned less than 1% of the outstanding shares
of California Municipal Money Market. As of March 15, 2002, the trustees and
officers of the issuer of California Tax-Free Money Market, as a group, owned
less than 1% of the outstanding shares of California Tax-Free Money Market.

APPRAISAL RIGHTS

Shareholders of California Municipal Money Market are not entitled to any rights
of share appraisal under its Agreement and Declaration of Trust, or under the
laws of the State of Massachusetts.

Shareholders have, however, the right to redeem their California Municipal Money
Market shares until the reorganization. Thereafter, shareholders may redeem the
California Tax-Free Money Market shares they received in the reorganization at
California Tax-Free Money Market's net asset value as determined in accordance
with its then-current prospectus.

ANNUAL MEETINGS

California Tax-Free Money Market does not intend to hold annual meetings of
shareholders. Shareholders of California Tax-Free Money Market have the right to
call a special meeting of shareholders and such meeting will be called when
requested in writing by the shareholders of record of 10% or more of the fund's
votes. To the extent required by law, American Century California Tax-Free and
Municipal Funds will assist in shareholder communications on such matters.

California Municipal Money Market will hold an annual meeting of shareholders
this year for the election of trustees.

ADDITIONAL INFORMATION

Information about California Municipal Money Market and California Tax-Free
Money Market is incorporated into this document by reference from their
Prospectus dated January 1, 2002 and Statement of Additional Information dated
January 1, 2002. A copy of the Prospectus accompanies this document, and a copy
of the funds' Statement of Additional Information, or their most recent annual
or semiannual reports may be obtained without charge by calling us at
1-800-331-8331.

Reports and other information filed by California Municipal Money Market and
California Tax-Free Money Market may be inspected and copied at the Public
Reference Facilities maintained by the SEC at 450 Fifth Street, N.W.,
Washington, D.C. 20549, and copies of such materials may be obtained by mail
from the Public Reference Branch, Office of Consumer Affairs and Information
Services, Securities and Exchange Commission, Washington, D.C. 20549, at
prescribed rates. This information may also be obtained from the EDGAR database
at www.sec.gov, or by email request at publicinfo@sec.gov.

LITIGATION

Neither California Municipal Money Market nor California Tax-Free Money Market
is involved in any litigation or proceeding.

OTHER BUSINESS

The Board of Trustees is not aware of any other business to be brought before
the meeting. However, if any other matters come before the meeting, it is the
intention that proxies that do not contain specific restrictions to the contrary
will be voted on such matters in accordance with the judgment of the persons
named in the enclosed form of proxy.

SHAREHOLDER INQUIRIES

Shareholder inquiries may be addressed to us at the address or telephone number
set forth on the cover page of this Combined Prospectus/Proxy Statement.

SHAREHOLDERS ARE REQUESTED TO DATE AND SIGN EACH ENCLOSED PROXY AND RETURN IT IN
THE ENCLOSED ENVELOPE. PLEASE RETURN YOUR PROXY CARD EVEN IF YOU ARE PLANNING TO
ATTEND THE MEETING. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.

MANAGEMENT'S DISCUSSION
OF FUND PERFORMANCE CALIFORNIA TAX-FREE MONEY MARKET

The following are excerpts of management's discussion of fund performance from
the Annual Report of California Tax-Free Money Market dated August 31, 2001. For
a complete copy of the report, please call us at 1-800-331-8331.

REPORT HIGHLIGHTS
CALIFORNIA TAX-FREE MONEY MARKET
Total Returns: AS OF 8/31/01
6 Months 1.26%(1)
1 Year 2.86%
7-Day Current Yield: 1.69%
Inception Date: 11/9/83
Net Assets: $551.7 million

1 Not annualized.

OUR MESSAGE TO YOU

Although the enclosed annual reports for the American Century California
Tax-Free and Municipal Money Market funds focus primarily on the one-year period
ended August 31, 2001, we'd be remiss in failing to mention the horrifying and
unprecedented terrorist attacks on September 11. We pay tribute to the many
members of the investment community - and the brave emergency personnel who came
to their rescue - who died that day.

The terrorists sought to devastate America, but our business community -
including your American Century investment management team - has been working
hard to keep the U.S. financial markets up, active, and functioning smoothly. On
the following pages, the municipal team discusses what affected the funds during
the fiscal year, and how the team is responding to the current economic
environment.

In other news, our investment team's executive leadership recently underwent
some important changes. Effective July 1, 2001, Randall Merk, formerly a senior
vice president and chief investment officer (CIO) for American Century's fixed
income discipline, became president and CIO of American Century's investment
management subsidiary. He succeeded Robert Puff, Jr., who became the
subsidiary's chairman. Randy is now responsible for all of American Century's
investment management functions, including portfolio management, research, and
trading.

David MacEwen, a senior vice president who previously oversaw all of American
Century's municipal and money market portfolios and municipal credit research,
assumed Randy's role as CIO for fixed income. Dave is responsible for portfolio
management and research for all of the company's bond and money market products.
And Steven Permut, a vice president and senior portfolio and credit research
manager, was promoted to succeed Dave as leader of American Century's municipal
fund and credit research teams.

As always, we appreciate your continued confidence in American Century,
especially during these difficult times.

Sincerely,

James E. Stowers, Jr. James E. Stowers III
Chairman of the Board and Founder Co-Chairman of the Board

PERFORMANCE & PORTFOLIO INFORMATION

TOTAL RETURNS AS OF AUGUST 31, 2001

CALIFORNIA TAX-FREE CALIFORNIA TAX-EXEMPT MONEY MARKET FUNDS(2)
MONEY MARKET AVERAGE RETURN FUND'S RANKING
================================================================================
6 MONTHS(1) 1.26% 1.16% --
1 YEAR 2.86% 2.63% 9 OUT OF 58
================================================================================
AVERAGE ANNUAL RETURNS
3 YEARS 2.86% 2.68% 11 OUT OF 49
5 YEARS 2.97% 2.79% 10 OUT OF 46
10 YEARS 2.85% 2.75% 11 OUT OF 36

The fund's inception date was 11/9/83.

(1) Returns for periods less than one year are not annualized.

(2) According to Lipper Inc., an independent mutual fund ranking service.

YIELDS AS OF August 31, 2001 PORTFOLIO AT A GLANCE
- ---------------------------- ---------------------
7-Day Current Yield 1.69% 8/31/01 8/31/00
7-Day Effective Yield 1.71% Number of Securities 84 103
34.70% Tax Bracket 2.59% Weighted Average
37.42% Tax Bracket 2.70% Maturity 68 days 64 days
41.95% Tax Bracket 2.91% Expense Ratio 0.50% 0.50%
45.22% Tax Bracket 3.08%

Past performance does not guarantee future results.

Money market funds are neither insured nor guaranteed by the FDIC or any other
government agency.

Yields will fluctuate, and although the fund seeks to preserve the value of your
investment at $1 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.

MANAGEMENT Q&A

An interview with Todd Pardula, a portfolio manager on the California Tax-Free
and Municipal Money Market funds investment team.

How did California Tax-Free Money Market perform for the year ended August 31,
2001?

The fund returned 2.86%, providing more income than its Lipper peer group on
average. Relative to other asset classes, money markets vastly outperformed
stocks, while trailing bonds.

Why did the fund's yield decline during the fiscal year?

The Federal Reserve cut short-term interest rates nearly in half, from 6.5% to
3.5% to combat economic weakness. That was the most rapid rate shift in recent
history, and it pushed all money market yields sharply lower.

Yields on California money market securities are heavily influenced by technical
factors. This year, note yields rose in mid-April as tax time reduced demand.
Yields remained attractive into June as investors anticipated additional
issuance as a result of the power crisis. Proceeds from the "power bonds" were
intended to pay for power purchases, but the bond deal was postponed until
lawmakers agree upon the terms.

How did you outpace the Lipper peer group?

First off, our lower-than-average expenses helped. All else being equal, lower
expenses mean more income for our shareholders.

We also locked in some high yields back in November just before the Fed started
cutting rates. We added to our note holdings again between April and June when
note yields were attractive relative to other types of money market securities.
Those decisions helped support the fund's return as interest rates continued to
decline further.

What's your outlook?

Although we aren't expecting the $12.5 billion California power issuance until
next year, another large state issuance in September - $5.7 billion in
California revenue anticipation notes (RANs) - may provide a chance to lock in
attractive yields for our shareholders. This will be the first California RAN
issuance in several years, because the state's prosperity in recent years
eliminated its need to borrow annually.

We are expecting the issuance to make yields attractive, as the state will have
to entice investors with higher-yielding notes. As always, we'll continue to
scour our market for high-quality securities with competitive yields, while
monitoring the pulse of the national and state economies.

PORTFOLIO COMPOSITION BY CREDIT RATING % of fund investments
As of As of
8/31/01 2/28/01

A-1+ 80% 84%
A-1 20% 16%

Ratings provided by Standard & Poor's.

PORTFOLIO COMPOSITION BY MATURITY
As of August 31, 2001
1-30 days 78%
31-90 days 1%
More than 181 days 21%

As of February 28, 2001
1-30 days 72%
31-90 days 14%
91-180 days 13%
More than 181 days 1%

Notes

Appendix I.

AMERICAN CENTURY FUNDS
CHARTER OF THE AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS

ORGANIZATION

* The Audit Committee of the Board of Directors shall be composed entirely of
directors who are independent of the management of the Funds and have no
relationship with the Funds that might interfere with the exercise of their
independence as committee members.

STATEMENT OF PURPOSE

* The Audit Committee shall be responsible for assisting the Directors in
fulfilling their responsibilities to the shareholders in the areas of the
Funds' accounting and financial reporting policies and practices, internal
controls and compliance with applicable laws and regulations.

* The Audit Committee shall oversee the independent audit of the Funds'
financial statements.

* The Audit Committee shall be responsible for fostering communication of
information among the Directors, internal auditors and independent auditors.

* The Audit Committee shall act as a liaison between the Funds' independent
auditors and the full Board of Directors.

The function of the Audit Committee is oversight; it is management's
responsibility to maintain appropriate systems for accounting and internal
control, and the auditor's responsibility to plan and carry out a proper
audit.

DUTIES AND POWERS

The Audit Committee shall have the following duties and responsibilities:

* To recommend to the Board of Directors the selection, retention or
termination of the Funds' independent auditors and evaluate the independence
of such auditors;

* To meet with the Funds' independent auditors, including private meetings, as
necessary;

* to review the arrangements for and the scope of the current year's annual
audit and any special audits;

* to discuss any matters of concern relating to the Funds' financial
statements, including any adjustments to such statements recommended by
the independent auditors, or other results of such audits;

* to consider the independent auditors' comments with respect to the Funds'
financial policies, procedures and internal accounting controls and
management's responses thereto; and

* to review the form of opinion the independent auditors propose to render
to the Board of Directors and the shareholders;

* To review the auditors' assessment of the adequacy and effectiveness of the
Funds' internal controls and elicit recommendations for improving such
controls;

* To review the fees charged for Fund auditing and other services provided by
the independent auditors pursuant to engagements authorized by the Committee
or the Board of Directors;

* To assess significant risks or exposures identified by the auditors and steps
recommended to minimize such risks and exposures;

* To review and consider changes in Fund accounting policies or practices
proposed by management or the independent auditors;

* To retain outside counsel or other experts at the expense of the Funds in
order to fully discharge its responsibilities;

* To investigate any matters brought to the Audit Committee's attention that
are within the scope of its duties; and

* To review this Charter at least annually and recommend any changes to the
full Board of Directors.

MEETINGS

* The Audit Committee shall hold regular meetings and special meetings, if
necessary, to carry out its designated duties and responsibilities.

* The Audit Committee shall meet regularly with the Treasurer and internal
auditors.

Appendix II.

American Century California Tax-Free and Municipal Funds

Report of the Audit Committee

The Audit Committee oversees the Fund's financial reporting process on behalf of
the Board of Directors/Trustees. Management has the primary responsibility for
the financial statements and the reporting process including the systems of
internal controls. In fulfilling its oversight responsibilities, the committee
reviewed the audited financial statements in the Annual Report with management
including a discussion of the quality, not just the acceptability, of the
accounting principles, the reasonableness of significant judgments, and the
clarity of disclosures in the financial statements.

The Committee reviewed with the independent auditors, who are responsible for
expressing an opinion on the conformity of those audited financial statements
with generally accepted accounting principles, their judgments as to the
quality, not just the acceptability, of the Fund's accounting principles and
such other matters as are required to be discussed with the Committee under
generally accepted auditing standards. In addition, the Committee has discussed
with the independent auditors the auditors' independence from management and the
Fund including the auditor's letter and the matters in the written disclosure
required by the Independence Standards Board and considered the compatibility of
non-audit services with the auditors' independence.

The Committee discussed with the Fund's independent auditors the overall scope
and plans for the audits. The Committee meets with independent auditors, with
and without management present, to discuss the results of their examinations,
their evaluations of the Fund's internal controls, and the overall quality of
the Fund's financial reporting.

In reliance on the reviews and discussions referred to above, the Committee
recommended to the Board of Trustees/Directors (and the Board has approved) that
the audited financial statements be included in the Annual Report to
shareholders for the year ended August 31, 2001. The Committee and the Board
also have approved the selection of PricewaterhouseCoopers, LLP as the Fund's
independent auditors.

Jeanne D. Wohlers, Committee Chair

Albert Eisenstat, Committee Member

Kenneth E. Scott, Committee Member

AMERICAN CENTURY CALIFORNIA TAX-FREE AND MUNICIPAL FUNDS
American Century Investments
4500 Main Street
P.O. Box 419200
Kansas City, Missouri 64141-6200
1-800-331-8331

Statement of Additional Information

2002 Special Meeting of Shareholders of American Century California Tax-Free and
Municipal Funds

This Statement of Additional Information is not a prospectus but should
be read in conjunction with the Combined Proxy Statement/Prospectus dated April
15, 2002 for the Special Meeting of Shareholders to be held on August 2, 2002.
Copies of the Combined Proxy Statement/Prospectus may be obtained at no charge
by calling 1-800-331-8331.

Unless otherwise indicated, capitalized terms used herein and not
otherwise defined have the same meanings as are given to them in the Combined
Proxy Statement/Prospectus.

Further information about California Tax-Free Money Market is contained
in and incorporated herein by reference to its Statement of Additional
Information dated January 1, 2002. The audited financial statements and related
independent accountant's report for California Tax-Free Money Market contained
in the Annual Report dated August 31, 2001 are incorporated herein by reference.
No other parts of the Annual Report are incorporated by reference herein.

Further information about California Municipal Money Market is
contained in and incorporated herein by reference to its Statement of Additional
Information dated January 1, 2002. The audited financial statements and related
independent accountant's report for California Municipal Money Market contained
in the Annual Report dated August 31, 2001 are incorporated herein by reference.
No other parts of the Annual Report are incorporated by reference herein.

The date of this Statement of Additional Information is April 15, 2002.

TABLE OF CONTENTS

General Information
Pro Forma Financial Statements

GENERAL INFORMATION

The shareholders of California Municipal Money Market are being asked
to approve or disapprove an Agreement and Plan of Reorganization (the
"Reorganization Agreement") dated as of __________ , 2002 between American
Century California Tax-Free and Municipal Funds and the transactions
contemplated thereby. The Reorganization Agreement contemplates the transfer of
substantially all of the assets and liabilities California Municipal Money
Market to California Tax-Free Money Market in exchange for full and fractional
shares representing interests in California Tax-Free Money Market. The shares
issued by California Tax-Free Money Market will have an aggregate net asset
value equal to the aggregate net asset value of the shares California Municipal
Money Market, that are outstanding immediately before the effective time of the
Reorganization.

Following the exchange, California Municipal Money Market will each
make a liquidating distribution to its shareholders of the California Tax-Free
Money Market shares received in the exchange. Each shareholder owning shares of
California Municipal Money Market at the Effective Time of the reorganization
will receive shares of California Tax-Free Money Market of equal value, plus the
right to receive any unpaid dividends that were declared before the Effective
Time of the Reorganization on the California Municipal Money Market shares
exchanged.

The Special Meeting of Shareholders to consider the Reorganization
Agreement and the related transactions will be held at 10:00 a.m. Central time
on August 2, 2002 at American Century Tower I, 4500 Main Street, Kansas City,
Missouri. For further information about the transaction, see the Combined Proxy
Statement/Prospectus.

Pro Forma Combining
American Century California Municipal Money Market and
American Century California Tax-Free Money Market Fund

California Tax-Free Money Market and California Municipal Money Market Proforma
Statement of Assets and Liabilities

AUGUST 31, 2001 (UNAUDITED)

California California
Tax-Free Municipal Pro Forma
Money Market Money Market Combining
Fund Fund Adjustments (Note 1)
---- ---- ----------- --------
ASSETS

Investment securities at value
(amortized cost and cost for
federal income tax purposes) $ 552,346,525 $ 180,295,259 $ 732,641,784
Cash 8,702,057 - 8,702,057
Interest receivable 2,051,215 564,451 2,615,666
Prepaid portfolio insurance 27,955 8,026 35,981
-------------- ------------------ ------------ ----------------
563,127,752 180,867,736 0 743,995,488
============== ================== ============ ===============

LIABILITIES
Disbursements in excess
of demand deposit cash - 3,241,419 3,241,419
Payable for investments purchased 11,011,389 - 11,011,389
Accrued management fees 233,747 73,189 306,936
Dividends payable 159,234 - 159,234
Payable for trustees' fees and expenses 1,364 427 1,791
-------------- ------------------ ------------ ----------------
11,405,734 3,315,035 0 14,720,769
-------------- ------------------ ------------ ----------------
Net Assets $551,722,018 $177,552,701 $0 $729,274,719
============== ================== ============ ===============

CAPITAL SHARES
Outstanding (unlimited number
of shares authorized) 551,718,122 177,587,560 0 729,305,682
============== ================== ============ ===============

Net Asset Value Per Share $1.00 $1.00 $1.00

NET ASSETS CONSIST OF:
Capital paid in $551,718,122 $177,587,560 $729,305,682
Undistributed net investment income 275,802 122,436 398,238
Accumulated net realized loss
on investment transactions (271,906) (157,295) (429,201)
-------------- ------------------ ------------ ----------------
$551,722,018 $177,552,701 $0 $729,274,719
============== ================== ============ ===============

California Tax-Free Money Market and California Municipal Money Market Proforma
Statements of Operation

YEAR ENDED AUGUST 31, 2001 (UNAUDITED)

California California Pro Forma
Tax-Free Money Municipal Money Combining
Market Fund Market Fund Adjustments (Note 1)
----------- ----------- ----------- --------
INVESTMENT INCOME

Income:
Interest $20,175,419 $6,140,260 $0 $26,315,679
-------------- ------------------ ------------ ----------------

Expenses:
Management fees 2,958,588 878,891 3,837,479
Trustees' fees and expenses 20,155 5,994 26,149
Portfolio insurance 38,732 11,117 49,849
-------------- ------------------ ------------ ----------------
3,017,475 896,002 0 3,913,477
-------------- ------------------ ------------ ----------------
Net investment income 17,157,944 5,244,258 0 22,402,202
-------------- ------------------ ------------ ----------------
Net realized gain
on investment transactions 6,901 1,674 0 8,575
-------------- ------------------ ------------ ----------------
Net Increase in Net Assets
Resulting from Operations $17,164,845 $5,245,932 $0 $22,410,777
============== ================== ============ ===============
Notes to Pro Forma Financial Statements (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
California Tax-Free Money Market Fund and California Municipal Money Market
Fund (the funds) at and for the year ended August 31, 2001. The Pro Forma
Combining Schedule of Investments and Pro Forma Combining Statement of Assets
and Liabilities assumes the combination was consummated after the close of
business on August 31, 2001. The Pro Forma Combining Statement of Operations
assumes the combination was consummated at the beginning of the fiscal year
ended August 31, 2001.

The pro forma statements give effect to the proposed transfer of the assets
and stated liabilities of the non-surviving fund, California Municipal Money
Market, in exchange for shares of the surviving fund, for purposes of
maintaining the financial statements and performance, California Tax Free
Money Market.

In accordance with accounting principals 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 restated. The pro
forma statements do not reflect the expenses of either fund in carrying out
its obligation under the Agreement and Plan of Reorganization. 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- Securities are valued at amortized cost, which
approximates current market value. When valuations are not readily available,
securities are valued at fair value as determined in accordance with
procedures adopted by the Board of Trustees.

3. 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 August 31,
2001, 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 fund, as of August 31, 2001, divided by the net asset value per
share of the shares of the surviving fund as of August 31, 2001. The pro
forma total number of shares outstanding for the combined fund consists of
the following at August 31, 2001:

Additional Shares
Combined Total Outstanding Shares of Assumed Issued
Fund Shares Surviving Fund in Reorganization
-----------------------------------------------------------------------------------
California Tax-Free
Money Market 729,305,682 551,718,122 177,587,560

4. INVESTMENTS-At August 31, 2001, the funds had the following net capital loss
carryovers for federal income tax purposes available to offset future capital
gains. 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.

Net Capital Loss
Fund Carryover
-----------------------------------------------------------------------------
California Tax-Free Money Market $271,183
California Municipal Money Market $157,293

For the ten-month period ended August 31, 2001, California Tax-Free Money Market
and California Municipal Money Market incurred net capital losses of $723 and
$2, 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 CALIFORNIA TAX-FREE AND MUNICIPAL FUNDS

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

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
to Exhibit (a) to the Registration Statement, Indemnification "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 becomes involved by
virtue of his 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 the Trustees."

Registrant hereby incorporates by reference, as though set forth fully
herein, Article VI of the Registrant's Bylaws, amended on March 9,
1998, appearing as Exhibit (b)(2) to Post-Effective Amendment No. 28.

ITEM 16 EXHIBITS (All exhibits not filed herewith are being incorporated
herein by reference.)

(1) (a) Amended and Restated Agreement and Declaration of Trust dated
March 9, 1998 and amended March 1, 1999, (filed electronically as
Exhibit a1 to Post-Effective Amendment No. 29 to the Registration
Statement, on December 29, 1999, File No. 2-82734).

(b) Amendment No. 1 to the Declaration of Trust dated March 6, 2001
(filed electronically as Exhibit a2 to Post-Effective Amendment No. 32
to the Registration Statement, on April 18, 2001, File No. 2-82734).

(2) Amended and Restated Bylaws dated March 9, 1998 (filed electronically
as Exhibit 2b to Post-Effective Amendment No. 23 to the Registration
Statement of American Century Municipal Trust, on March 26, 1998, File
No. 2-91229).

(3) Not applicable

(4) Agreement and Plan of Reorganization is included herein.

(5) Not applicable

(6) (a) Management Agreement (Investor Class) between American Century
California Tax-Free and Municipal Funds and American Century
Investment Management, Inc., dated August 1, 1997 (filed
electronically as Exhibit 5 to Post-Effective Amendment No. 33 to the
Registration Statement of American Century Government Income Trust, on
July 31, 1997, File No. 2-99222).

(b) Amendment to the Management Agreement (Investor Class) between
American Century California Tax-Free and Municipal Funds and American
Century Investment Management, Inc., dated March 31, 1998 (filed
electronically as Exhibit 5b to Post-Effective Amendment No. 23 to the
Registration Statement of American Century Municipal Trust on March
26, 1998, File No. 2-91229).

(c) Amendment to the Management Agreement (Investor Class) between
American Century California Tax-Free and Municipal Funds and American
Century Investment Management, Inc., dated July 1, 1998 (filed
electronically as Exhibit d3 to Post-Effective Amendment No. 39 to the
Registration Statement of American Century Government Income Trust, on
July 28, 1999, File No. 2-99222).

(d) Amendment No. 1 to the Management Agreement (Investor Class)
between American Century California Tax-Free and Municipal Funds and
American Century Investment Management, Inc. dated September 16, 2000
(filed electronically as Exhibit d4 of Post-Effective Amendment No. 30
to the Registration Statement of the Registrant on December 29, 2000,
File No. 2-82734).

(e) Amendment No. 2 to the Management Agreement (Investor Class)
between American Century California Tax-Free and Municipal Funds and
American Century Investment Management, Inc. dated August 1, 2001
(filed electronically as Exhibit d5 to Post-Effective Amendment No. 44
to the Registration Statement of American Century Government Income
Trust, on July 31, 2001, File No. 2-99222).

(f) Amendment No. 3 to the Management Agreement (Investor Class)
between American Century California Tax-Free and Municipal Funds and
American Century Investment Management, Inc. dated December 3, 2001
(filed electronically as Exhibit d6 to Post-Effective Amendment No. 16
to the Registration Statement of American Century Investment Trust, on
November 30, 2001, File No. 33-65170).

(g) Management Agreement (C Class) between American Century Target
Maturities Trust, American Century California Tax-Free and Municipal
Funds, American Century Government Income Trust, American Century
Investment Trust, American Century Quantitative Equity Funds, American
Century Municipal Trust and American Century Investment Management
Inc., dated September 16, 2000 (filed electronically as Exhibit d6 to
Post-Effective Amendment No. 35 to the Registration Statement of
American Century Target Maturities Trust on April 17, 2001, File No.
2-94608).

(h) Amendment No. 1 to the Management Agreement (C Class) between
American Century Target Maturities Trust, American Century California
Tax-Free and Municipal Funds, American Century Government Income
Trust, American Century Investment Trust, American Century
Quantitative Equity Funds, American Century Municipal Trust and
American Century Investment Management Inc., dated August 1, 2001
(filed electronically as Exhibit d10 to Post-Effective Amendment No.
44 to the Registration Statement of American Century Government Income
Trust, on July 31, 2001, File No. 2-99222).

(i) Amendment No. 2 to the Management Agreement (C Class) between
American Century Target Maturities Trust, American Century California
Tax-Free and Municipal Funds, American Century Government Income
Trust, American Century Investment Trust, American Century
Quantitative Equity Funds, American Century Municipal Trust and
American Century Investment Management Inc., dated December 3, 2001
(filed electronically as Exhibit d13 to Post-Effective Amendment No.
16 to the Registration Statement of American Century Investment Trust,
on November 30, 2001, File No. 33-65170).

(7) (a) Distribution Agreement between American Century California
Tax-Free and Municipal Funds and American Century Investment Services,
Inc. dated March 13, 2000 (filed electronically as Exhibit e7 to
Post-Effective Amendment No. 17 to the Registration Statement of
American Century World Mutual Funds, Inc. on March 30, 2000, File No
33-39242).

(b) Amendment No. 1 to the Distribution Agreement between American
Century California Tax-Free and Municipal Funds and American Century
Investment Services, Inc. dated June 1, 2000 (filed electronically as
Exhibit e9 to Post-Effective Amendment No. 19 to the Registration
Statement of American Century World Mutual Funds, Inc. on May 24,
2000, File No. 33-39242).

(c) Amendment No. 2 to the Distribution Agreement between American
Century California Tax-Free and Municipal Funds and American Century
Investment Services, Inc. dated November 20, 2000 (filed
electronically as Exhibit e10 to Post-Effective Amendment No. 29 to
the Registration Statement of American Century Variable Portfolios,
Inc. on December 1, 2000, File No. 33-14567).

(d) Amendment No. 3 to the Distribution Agreement between American
Century California Tax-Free and Municipal Funds and American Century
Investment Services, Inc. dated March 1, 2001 (filed electronically as
Exhibit e4 to Post-Effective Amendment No. 35 to the Registration
Statement of American Century Target Maturities Trust on April 17,
2001, File No. 2-94608).

(e) Amendment No. 4 to the Distribution Agreement between American
Century California Tax-Free and Municipal Funds and American Century
Investment Services, Inc. dated April 30, 2001 (filed electronically
as Exhibit e5 to Post-Effective Amendment No. 35 to the Registration
Statement of American Century Target Maturities Trust on April 17,
2001, File No. 2-94608).

(f) Amendment No. 5 to the Distribution Agreement between American
Century California Tax-Free and Municipal Funds and American Century
Investment Services, Inc., dated August 1, 2001 (filed as Exhibit e6
to Post-Effective Amendment No. 21 to the Registration Statement of
American Century Capital Portfolios, Inc., on July 30, 2001, File No.
33-64872).

(g) Amendment No 6 to the Distribution Agreement between American
Century California Tax-Free and Municipal Funds and American Century
Investment Services, Inc., dated August 1, 2001 (filed as Exhibit e7
to Post-Effective Amendment No. 21 to the Registration Statement of
American Century Capital Portfolios, Inc., on July 30, 2001, File No.
33-64872).

(h) Amendment No. 7 to the Distribution Agreement between American
Century Government Income Trust and American Century Investment
Services, Inc., dated August 1, 2001 (filed electronically as Exhibit
d8 to Post-Effective Amendment No. 16 to the Registration Statement of
American Century Investment Trust, on November 30, 2001, File No.
33-65170).

(i) Amendment No. 8 to the Distribution Agreement between American
Century Government Income Trust and American Century Investment
Services, Inc., dated March 1, 2002 (filed electronically as Exhibit
e9 to Post-Effective Amendment No. 96 to the Registration Statement of
American Century Mutual Funds, Inc., on February 28, 2002, File No.
2-14213).

(j) Amendment No. 9 to the Distribution Agreement between American
Century Government Income Trust and American Century Investment
Services, Inc., dated March 6, 2002 (filed electronically as Exhibit
e10 to Post-Effective Amendment No. 96 to the Registration Statement
of American Century Mutual Funds, Inc., on February 28, 2002, File No.
2-14213).

(8) Not applicable.

(9) (a) Master Agreement by and between Commerce Bank N.A. and Twentieth
Century Services, Inc. dated January 22, 1997 (filed electronically as
Exhibit g2 to Post-Effective Amendment No. 76 to the Registration
Statement of American Century Mutual Funds, Inc., on February 28,
1997, File No. 2-14213).

(b) Global Custody Agreement between American Century Investments and
The Chase Manhattan Bank, dated August 9, 1996 (filed electronically
as Exhibit 8 of Post-Effective Amendment No. 31 to the Registration
Statement of the American Century Government Income Trust, on February
7, 1997, File No. 2-99222).

(c) Amendment to Global Custody Agreement between American Century
Investments and The Chase Manhattan Bank dated December 9, 2000 (filed
electronically as Exhibit g2 of Pre-Effective Amendment No. 2 to the
Registration Statement of American Century Variable Portfolios II,
Inc., on January 9, 2001, File No. 333-46922).

(10) (a) Master Distribution and Individual Shareholder Services Plan of
American Century Government Income Trust, American Century Investment
Trust, American Century California Tax-Free and Municipal Funds,
American Century Municipal Trust, American Century Target Maturities
Trust and American Century Quantitative Equity Funds (C Class) dated
September 16, 2000 (filed electronically as Exhibit m3 to
Post-Effective Amendment No. 35 to the Registration Statement of
American Century Target Maturities Trust on April 17, 2001, File No.
2-94608).

(b) Amendment No. 1 to the Master Distribution and Individual
Shareholder Services Plan of American Century Government Income Trust,
American Century Investment Trust, American Century California
Tax-Free and Municipal Funds, American Century Municipal Trust,
American Century Target Maturities Trust and American Century
Quantitative Equity Funds (C Class) dated August 1, 2001 (filed
electronically as Exhibit m5 to Post-Effective Amendment No. 44 to the
Registration Statement of American Century Government Income Trust, on
July 31, 2001, File No. 2-99222).

(c) Amendment No. 2 to the Master Distribution and Individual
Shareholder Services Plan of American Century Government Income Trust,
American Century Investment Trust, American Century California
Tax-Free and Municipal Funds, American Century Municipal Trust,
American Century Target Maturities Trust and American Century
Quantitative Equity Funds (C Class), dated December 3, 2001 (filed
electronically as Exhibit m7 to Post-Effective Amendment No. 16 to the
Registration Statement of American Century Investment Trust, on
November 30, 2001, File No. 33-65170).

(d) Amended and Restated Multiple Class Plan of American Century
California Tax-Free and Municipal Funds, American Century Government
Income Trust, American Century International Bond Funds, American
Century Investment Trust, American Century Municipal Trust, American
Century Target Maturities Trust and American Century Quantitative
Equity Funds dated November 20, 2000 (filed electronically as Exhibit
n to Post-Effective Amendment No. 35 to the Registration Statement of
American Century Target Maturities Trust on April 17, 2001, File No.
2-94608).

(e) Amendment No. 1 to the Amended and Restated Multiple Class Plan of
American Century California Tax-Free and Municipal Funds, American
Century Government Income Trust, American Century International Bond
Funds, American Century Investment Trust, American Century Municipal
Trust, American Century Target Maturities Trust and American Century
Quantitative Equity Funds dated August 1, 2001 (filed electronically
as Exhibit n2 to Post-Effective Amendment No. 44 to the Registration
Statement of American Century Government Income Trust, on July 31,
2001, File No. 2-99222).

(f) Amendment No. 2 to the Amended and Restated Multiple Class Plan of
American Century California Tax-Free and Municipal Funds, American
Century Government Income Trust, American Century International Bond
Fund, American Century Investment Trust, American Century Municipal
Trust, American Century Target Maturities Trust and American Century
Quantitative Equity Funds, dated December 3, 2001 (filed
electronically as Exhibit n3 to Post-Effective Amendment No. 16 to the
Registration Statement of American Century Investment Trust, on
November 30, 2001, File No. 33-65170).

(g) Amendment No. 3 to the Amended and Restated Multiple Class Plan of
American Century California Tax-Free and Municipal Funds, American
Century Government Income Trust, American Century International Bond
Fund, American Century Investment Trust, American Century Municipal
Trust, American Century Target Maturities Trust and American Century
Quantitative Equity Funds (filed electronically as Exhibit n4 to
Post-Effective Amendment No. 46 to the Registration Statement of the
Registrant, on March 4, 2002, File NO. 2-99222).

(11) Opinion and consent of counsel as to the legality of the securities
being registered (filed electronically as Exhibit to Post-Effective
Amendment No. 30 to the Registration Statement of the Registrant on
December 29, 1999, File No. 2-82734).

(12) Opinion and Consent of Counsel as to the tax matters and consequences
to shareholders is included herein.

(13) (a) Transfer Agency Agreement between American Century California
Tax-Free and Municipal Funds and American Century Services
Corporation, dated August 1, 1997 (filed electronically as Exhibit 9
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 to Post-Effective Amendment
No. 33 to the Registration Statement of American Century Government
Income Trust on July 31, 1997, File No. 2-99222).

(b) Amendment to the Transfer Agency Agreement between American
Century California Tax-Free and Municipal Funds and American Century
Services Corporation dated March 9, 1998 (filed electronically as
Exhibit 9 to Post-Effective Amendment No. 23 to the Registration
Statement of American Century Municipal Trust on March 26, 1998, File
No. 2-91229).

(c) Amendment No. 1 to the Transfer Agency Agreement between American
Century California Tax-Free and Municipal Funds and 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).

(d) Amendment No. 2 to the Transfer Agency Agreement between American
Century California Tax-Free and Municipal Funds and American Century
Services Corporation dated November 20, 2000 (filed electronically as
Exhibit h4 to Post-Effective Amendment No. 30 to the Registration
Statement of the Registrant on December 29, 2000, File No. 2-82734).

(e) Amendment No. 3 to the Transfer Agency Agreement between American
Century California Tax-Free and Municipal Funds and American Century
Services Corporation, dated August 1, 2001 (filed electronically as
Exhibit h5 to Post-Effective Amendment No. 44 to the Registration
Statement of American Century Government Income Trust, on July 31,
2001, File No. 2-99222).

(f) Amendment No. 4 to the Transfer Agency Agreement between American
Century Government Income Trust and American Century Services
Corporation dated December 3, 2001 (filed electronically as Exhibit h6
to Post-Effective Amendment No. 16 to the Registration Statement of
American Century Investment Trust, on November 30, 2001, File No.
33-65170).

(g) Credit Agreement between American Century Funds and The Chase
Manhattan Bank, as Administrative Agent dated as of December 19, 2000
(filed electronically as Exhibit h5 to Post-Effective Amendment No. 33
to the Registration Statement of American Century Target Maturities
Trust, on January 31, 2001, File No. 2-94608).

(14) (a) Consent of PricewaterhouseCoopers LLP, independent accountants (to
be filed by amendment)

(b) Consent of KPMG Peat Marwick, LLP, independent auditors (filed
electronically as an Exhibit to Post-Effective Amendment No. 28 to the
Registration Statement of the Registrant on December 28, 1998).

(15) Not applicable.

(16) Power of Attorney dated September 16, 2000 (filed electronically as
Exhibit j3 to Post-Effective Amendment No. 30 to the Registration
Statement of the Registrant on December 29, 2000, File No. 2-82734).

(17) (a)Form of proxy vote cards is filed herein.

(b)California Municipal Money Market and California Tax-Free Money
Prospectus Investor Class and Statement of Additional Information
dated January 1, 2002 (filed electronically as a part of
Post-Effective Amendment No. 33 to the Registration Statement of the
Registrant on December 28, 2001, File No. 2-82734).

(c)California Municipal Money Market and California Tax-Free Money
Annual Reports dated August 31, 2001 (filed electronically on November
1, 2001).

ITEM 17. Undertakings - Not applicable.

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed on behalf of the Registrant, in the
City of Kansas City, and State of Missouri, on the 13th day of March, 2002.

AMERICAN CENTURY CALIFORNIA TAX-FREE AND MUNICIPAL FUNDS

By: /*/William M. Lyons
President and Principal Executive Officer

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.

Signature Title Date
- --------- ----- ----

*William M. Lyons President and March 13, 2002
- --------------------------------- Principal Executive
William M. Lyons Officer

*Maryanne Roepke Senior Vice President, March 13, 2002
- --------------------------------- Treasurer and Chief
Maryanne Roepke Accounting Officer

*James E. Stowers III Director and March 13, 2002
- --------------------------------- Chairman of the Board
James E. Stowers III

*Albert A. Eisenstat Director March 13, 2002
- ---------------------------------
Albert A. Eisenstat

*Ronald J. Gilson Director March 13, 2002
- ---------------------------------
Ronald J. Gilson

*Myron S. Scholes Director March 13, 2002
- ---------------------------------
Myron S. Scholes

*Kenneth E. Scott Director March 13, 2002
- ---------------------------------
Kenneth E. Scott

*Jeanne D. Wohlers Director March 13, 2002
- ---------------------------------
Jeanne D. Wohlers

/s/Janet A. Nash
*by Janet A. Nash, Attorney in Fact (pursuant to a Power of Attorney dated
September 16, 2000).

EX-99 4 ex-indx.htm EXHIBIT INDEX exhibit index


AMERICAN CENTURY CALIFORNIA TAX-FREE AND MUNICIPAL FUNDS


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

EXHIBIT INDEX

EXHIBIT   DESCRIPTION
EX-99.1a  Amended and Restated Agreement and Declaration of Trust dated
          March 9, 1998 and amended March 1, 1999, (filed electronically as
          Exhibit a1 to Post-Effective Amendment No. 29 to the Registration
          Statement, on December 29, 1999, File No. 2-82734).

EX-99.1b  Amendment No. 1 to the Declaration of Trust dated March 6, 2001 (filed
          electronically as Exhibit a2 to Post-Effective Amendment No. 32 to the
          Registration Statement, on April 18, 2001, File No. 2-82734).

EX-99.2   Amended and Restated Bylaws dated March 9, 1998 (filed electronically
          as Exhibit 2b to Post-Effective Amendment No. 23 to the Registration
          Statement of American Century Municipal Trust, on March 26, 1998, File
          No. 2-91229).

EX-99.4   Agreement and Plan of Reorganization.

EX-99.6a  Management Agreement (Investor Class) between American Century
          California Tax-Free and Municipal Funds and American Century
          Investment Management, Inc., dated August 1, 1997 (filed
          electronically as Exhibit 5 to Post-Effective Amendment No. 33 to the
          Registration Statement of American Century Government Income Trust, on
          July 31, 1997, File No. 2-99222).

EX-99.6b  Amendment to the Management Agreement (Investor Class) between
          American Century California Tax-Free and Municipal Funds and American
          Century Investment Management, Inc., dated March 31, 1998 (filed
          electronically as Exhibit 5b to Post-Effective Amendment No. 23 to the
          Registration Statement of American Century Municipal Trust on March
          26, 1998, File No. 2-91229).

EX-99.6c  Amendment to the Management Agreement (Investor Class) between
          American Century California Tax-Free and Municipal Funds and American
          Century Investment Management, Inc., dated July 1, 1998 (filed
          electronically as Exhibit d3 to Post-Effective Amendment No. 39 to the
          Registration Statement of American Century Government Income Trust, on
          July 28, 1999, File No. 2-99222).

EX-99.6d  Amendment No. 1 to the Management Agreement (Investor Class) between
          American Century California Tax-Free and Municipal Funds and American
          Century Investment Management, Inc. dated September 16, 2000 (filed
          electronically as Exhibit d4 of Post-Effective Amendment No. 30 to the
          Registration Statement of the Registrant on December 29, 2000, File
          No. 2-82734).

EX-99.6e  Amendment No. 2 to the Management Agreement (Investor Class) between
          American Century California Tax-Free and Municipal Funds and American
          Century Investment Management, Inc. dated August 1, 2001 (filed
          electronically as Exhibit d5 to Post-Effective Amendment No. 44 to the
          Registration Statement of American Century Government Income Trust, on
          July 31, 2001, File No. 2-99222).

EX-99.6f  Amendment No. 3 to the Management Agreement (Investor Class) between
          American Century California Tax-Free and Municipal Funds and American
          Century Investment Management, Inc. dated December 3, 2001 (filed
          electronically as Exhibit d6 to Post-Effective Amendment No. 16 to the
          Registration Statement of American Century Investment Trust, on
          November 30, 2001, File No. 33-65170).

EX-99.6g  Management Agreement (C Class) between American Century Target
          Maturities Trust, American Century California Tax-Free and Municipal
          Funds, American Century Government Income Trust, American Century
          Investment Trust, American Century Quantitative Equity Funds, American
          Century Municipal Trust and American Century Investment Management
          Inc., dated September 16, 2000 (filed electronically as Exhibit d6 to
          Post-Effective Amendment No. 35 to the Registration Statement of
          American Century Target Maturities Trust on April 17, 2001, File No.
          2-94608).

EX-99.6h  Amendment No. 1 to the Management Agreement (C Class) between American
          Century Target Maturities Trust, American Century California Tax-Free
          and Municipal Funds, American Century Government Income Trust,
          American Century Investment Trust, American Century Quantitative
          Equity Funds, American Century Municipal Trust and American Century
          Investment Management, Inc., dated August 1, 2001 (filed
          electronically as Exhibit d10 to Post-Effective Amendment No. 44 to
          the Registration Statement of American Century Government Income
          Trust, on July 31, 2001, File No. 2-99222).

EX-99.6i  Amendment No. 2 to the Management Agreement (C Class) between American
          Century Target Maturities Trust, American Century California Tax-Free
          and Municipal Funds, American Century Government Income Trust,
          American Century Investment Trust, American Century Quantitative
          Equity Funds, American Century Municipal Trust and American Century
          Investment Management, Inc., dated December 3, 2001 (filed
          electronically as Exhibit d13 to Post-Effective Amendment No. 16 to
          the Registration Statement of American Century Investment Trust, on
          November 30, 2001, File No. 33-65170).

EX-99.7a  Distribution Agreement between American Century California Tax-Free
          and Municipal Funds and American Century Investment Services, Inc.
          dated March 13, 2000 (filed electronically as Exhibit e7 to
          Post-Effective Amendment No. 17 to the Registration Statement of
          American Century World Mutual Funds, Inc. on March 30, 2000, File No
          33-39242).

EX-99.7b  Amendment No. 1 to the Distribution Agreement between American Century
          California Tax-Free and Municipal Funds and American Century
          Investment Services, Inc. dated June 1, 2000 (filed electronically as
          Exhibit e9 to Post-Effective Amendment No. 19 to the Registration
          Statement of American Century World Mutual Funds, Inc. on May 24,
          2000, File No. 33-39242).

EX-99.7c  Amendment No. 2 to the Distribution Agreement between American Century
          California Tax-Free and Municipal Funds and American Century
          Investment Services, Inc. dated November 20, 2000 (filed
          electronically as Exhibit e10 to Post-Effective Amendment No. 29 to
          the Registration Statement of American Century Variable Portfolios,
          Inc. on December 1, 2000, File No. 33-14567).

EX-99.7d  Amendment No. 3 to the Distribution Agreement between American Century
          California Tax-Free and Municipal Funds and American Century
          Investment Services, Inc. dated March 1, 2001 (filed electronically as
          Exhibit e4 to Post-Effective Amendment No. 35 to the Registration
          Statement of American Century Target Maturities Trust on April 17,
          2001, File No. 2-94608).

EX-99.7e  Amendment No. 4 to the Distribution Agreement between American Century
          California Tax-Free and Municipal Funds and American Century
          Investment Services, Inc. dated April 30, 2001 (filed electronically
          as Exhibit e5 to Post-Effective Amendment No. 35 to the Registration
          Statement of American Century Target Maturities Trust on April 17,
          2001, File No. 2-94608).

EX-99.7f  Amendment No. 5 to the Distribution Agreement between American Century
          California Tax-Free and Municipal Funds and American Century
          Investment Services, Inc., dated August 1, 2001 (filed as Exhibit e6
          to Post-Effective Amendment No. 21 to the Registration Statement of
          American Century Capital Portfolios, Inc., on July 30, 2001, File No.
          33-64872).

EX-99.7g  Amendment No. 6 to the Distribution Agreement between American Century
          California Tax-Free and Municipal Funds and American Century
          Investment Services, Inc., dated August 1, 2001 (filed as Exhibit e7
          to Post-Effective Amendment No. 21 to the Registration Statement of
          American Century Capital Portfolios, Inc., on July 30, 2001, File No.
          33-64872).

EX-99.7h  Amendment No. 7 to the Distribution Agreement between American Century
          Government Income Trust and American Century Investment Services,
          Inc., dated August 1, 2001 (filed electronically as Exhibit d8 to
          Post-Effective Amendment No. 16 to the Registration Statement of
          American Century Investment Trust, on November 30, 2001, File No.
          33-65170).

EX-99.7i  Amendment No. 8 to the Distribution Agreement between American Century
          Government Income Trust and American Century Services, Inc., dated
          March 1, 2002 (filed electronically as Exhibit e9 to Post-Effective
          Amendment No. 96 to the Registration Statement of American Century
          Mutual Funds, Inc. on February 28, 2002, File No. 2-14213).

EX-99.7j  Amendment No. 9 to the Distribution Agreement between American Century
          Government Income Trust and American Century Investment Services,
          Inc., dated March 6, 2002 (filed electronically as Exhibit e10 to
          Post-Effective Amendment No. 96 to the Registration Statement of
          American Century Mutual Funds, Inc., on February 28, 2002, File No.
          2-14213).

EX-99.9a  Master Agreement by and between Commerce Bank N.A. and Twentieth
          Century Services, Inc. dated January 22, 1997 (filed electronically as
          Exhibit g2 to Post-Effective Amendment No. 76 to the Registration
          Statement of American Century Mutual Funds, Inc., on February 28,
          1997, File No. 2-14213).

EX-99.9b  Global Custody Agreement between American Century Investments and The
          Chase Manhattan Bank, dated August 9, 1996 (filed electronically as
          Exhibit 8 of Post-Effective Amendment No. 31 to the Registration
          Statement of the American Century Government Income Trust, on February
          7, 1997, File No. 2-99222).

EX-99.9c  Amendment to Global Custody Agreement between American Century
          Investments and The Chase Manhattan Bank dated December 9, 2000 (filed
          electronically as Exhibit g2 of Pre-Effective Amendment No. 2 to the
          Registration Statement of American Century Variable Portfolios II,
          Inc., on January 9, 2001, File No. 333-46922).

EX-99.10a Master Distribution and Individual Shareholder Services Plan of
          American Century Government Income Trust, American Century Investment
          Trust, American Century California Tax-Free and Municipal Funds,
          American Century Municipal Trust, American Century Target Maturities
          Trust and American Century Quantitative Equity Funds (C Class) dated
          September 16, 2000 (filed electronically as Exhibit m3 to
          Post-Effective Amendment No. 35 to the Registration Statement of
          American Century Target Maturities Trust on April 17, 2001, File No.
          2-94608).

EX-99.10b Amendment No. 1 to the Master Distribution and Individual Shareholder
          Services Plan of American Century Government Income Trust, American
          Century Investment Trust, American Century California Tax-Free and
          Municipal Funds, American Century Municipal Trust, American Century
          Target Maturities Trust and American Century Quantitative Equity Funds
          (C Class) dated August 1, 2001 (filed electronically as Exhibit m5 to
          Post-Effective Amendment No. 44 to the Registration Statement of
          American Century Government Income Trust, on July 31, 2001, File No.
          2-99222).

EX-99.10c Amendment No. 2 to the Master Distribution and Individual Shareholder
          Services Plan of American Century Government Income Trust, American
          Century Investment Trust, American Century California Tax-Free and
          Municipal Funds, American Century Municipal Trust, American Century
          Target Maturities Trust and American Century Quantitative Equity Funds
          (C Class), dated December 3, 2001 (filed electronically as Exhibit m7
          to Post-Effective Amendment No. 16 to the Registration Statement of
          American Century Investment Trust, on November 30, 2001, File No.
          33-65170).

EX-99.10d Amended and Restated Multiple Class Plan of American Century
          California Tax-Free and Municipal Funds, American Century Government
          Income Trust, American Century International Bond Funds, American
          Century Investment Trust, American Century Municipal Trust, American
          Century Target Maturities Trust and American Century Quantitative
          Equity Funds dated November 20, 2000 (filed electronically as Exhibit
          n to Post-Effective Amendment No. 35 to the Registration Statement of
          American Century Target Maturities Trust on April 17, 2001, File No.
          2-94608).

EX-99.10e Amendment No. 1 to the Amended and Restated Multiple Class Plan of
          American Century California Tax-Free and Municipal Funds, American
          Century Government Income Trust, American Century International Bond
          Funds, American Century Investment Trust, American Century Municipal
          Trust, American Century Target Maturities Trust and American Century
          Quantitative Equity Funds dated August 1, 2001 (filed electronically
          as Exhibit n2 to Post-Effective Amendment No. 44 to the Registration
          Statement of American Century Government Income Trust, on July 31,
          2001, File No. 2-99222).

EX-99.10f Amendment No. 2 to the Amended and Restated Multiple Class Plan of
          American Century California Tax-Free and Municipal Funds, American
          Century Government Income Trust, American Century International Bond
          Fund, American Century Investment Trust, American Century Municipal
          Trust, American Century Target Maturities Trust and American Century
          Quantitative Equity Funds, dated December 3, 2001 (filed
          electronically as Exhibit n3 to Post-Effective Amendment No. 16 to the
          Registration Statement of American Century Investment Trust, on
          November 30, 2001, File No. 33-65170).

EX-99.10g Amendment No. 3 to the Amended and Restated Multiple Class Plan of
          American Century California Tax-Free and Municipal Funds, American
          Century Government Income Trust, American Century International Bond
          Fund, American Century Investment Trust, American Century Municipal
          Trust, American Century Target Maturities Trust and American Century
          Quantitative Equity Funds (filed electronically as Exhibit n4 to
          Post-Effective Amendment No. 46 to the Registration Statement of the
          Registrant, on March 4, 2002, File No. 2-99222).

EX-99.11  Opinion and consent of counsel as to the legality of the securities
          being registered (filed electronically as Exhibit to Post-Effective
          Amendment No. 30 to the Registration Statement of the Registrant on
          December 29, 1999, File No. 2-82734).

EX-99.12  Opinion and Consent of Counsel as to the tax matters and consequences
          to shareholders.

EX-99.13a Transfer Agency Agreement between American Century California Tax-Free
          and Municipal Funds and American Century Services Corporation, dated
          August 1, 1997 (filed electronically as Exhibit 9 to Post-Effective
          Amendment No. 33 to the Registration Statement of American Century
          Government Income Trust on July 31, 1997, File No. 2-99222).

EX-99.13b Amendment to the Transfer Agency Agreement between American Century
          California Tax-Free and Municipal Funds and American Century Services
          Corporation dated March 9, 1998 (filed electronically as Exhibit 9 to
          Post-Effective Amendment No. 23 to the Registration Statement of
          American Century Municipal Trust on March 26, 1998, File No. 2-91229).

EX-99.13c Amendment No. 1 to the Transfer Agency Agreement between American
          Century California Tax-Free and Municipal Funds and 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).

EX-99.13d Amendment No. 2 to the Transfer Agency Agreement between American
          Century California Tax-Free and Municipal Funds and American Century
          Services Corporation dated November 20, 2000 (filed electronically as
          Exhibit h4 to Post-Effective Amendment No. 30 to the Registration
          Statement of the Registrant on December 29, 2000, File No. 2-82734).

EX-99.13e Amendment No. 3 to the Transfer Agency Agreement between American
          Century California Tax-Free and Municipal Funds and American Century
          Services Corporation, dated August 1, 2001 (filed electronically as
          Exhibit h5 to Post-Effective Amendment No. 44 to the Registration
          Statement of American Century Government Income Trust, on July 31,
          2001, File No. 2-99222).

EX099.13f Amendment No. 4 to the Transfer Agency Agreement between American
          Century Government Income Trust and American Century Services
          Corporation dated December 3, 2001 (filed electronically as Exhibit h6
          to Post-Effective Amendment No. 16 to the Registration Statement of
          American Century Investment Trust, on November 30, 2001, File No.
          33-65170).

EX-99.13g Credit Agreement between American Century Funds and The Chase
          Manhattan Bank, as Administrative Agent dated as of December 19, 2000
          (filed electronically as Exhibit h5 to Post-Effective Amendment No. 33
          to the Registration Statement of American Century Target Maturities
          Trust, on January 31, 2001, File No. 2-94608).

EX-99.14a Consent of PricewaterhouseCoopers LLP, independent accountants. (to be
          filed by amendment)

EX-99.14b Consent of KPMG Peat Marwick, LLP, independent auditors (filed
          electronically as an Exhibit to Post-Effective Amendment No. 28 to the
          Registration Statement of the Registrant on December 28, 1998).

EX-99.16  Power of Attorney dated September 16, 2000 (filed electronically as
          Exhibit j3 to Post-Effective Amendment No. 30 to the Registration
          Statement of the Registrant on December 29, 2000, File No. 2-82734).

EX-99.17a Form of proxy vote card.

EX-99.17b California Municipal Money Market and California Tax-Free Money Market
          Prospectus Investor Class and Statement of Additional Information
          dated January 1, 2002 (filed electronically as a part of
          Post-Effective Amendment No. 33 to the Registration Statement of the
          Registrant on December 28, 2001, File No. 2-82734).

EX-99.17c California Municipal Money Market and California Tax-Free Money Market
          Annual Reports dated August 31, 2001 (filed electronically on November
          1, 2001).

EX-99 5 ex-4.htm AGREEMENT AND PLAN OF REORGANIZATION Exhibit 4

                      AGREEMENT AND PLAN OF REORGANIZATION

                                       BY

            AMERICAN CENTURY CALIFORNIA TAX-FREE AND MUNICIPAL FUNDS


                                TABLE OF CONTENTS


         Preamble................................................................................1
1.       Transfer of Assets of California Municipal Money Market.................................1
2.       Liquidating Distribution and Termination of California Municipal Money Market...........2
3.       Valuation Time..........................................................................3
4.       Certain Representations, Warranties and Agreements of ACCTFMF...........................3
5.       Certain Representations, Warranties and Agreements of ACCTFMF...........................6
6.       Shareholder Action on Behalf of California Municipal Money Market.......................7
7.       Registration Statement and Proxy Solicitation Materials.................................8
8.       Effective Time of the Reorganization....................................................8
9.       ACCTFMF Conditions.....................................................................10
10.      ACCTFMF 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.      ACCTFMF 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 California Tax-Free and Municipal Funds, a Massachusetts
business trust ("ACCTFMF").

         WHEREAS, the parties desire that substantially all of the assets and
liabilities of the California Municipal Money Market portfolio of ACCTFMF
("California Municipal Money Market") be transferred to, and be acquired and
assumed by, the California Tax-Free Money Market portfolio of ACCTFMF
("California Tax-Free Money Market") in exchange for shares of California
Tax-Free Money Market which shall thereafter be distributed by ACCTFMF to the
holders of shares of California Municipal Money Market, 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 California Municipal Money Market 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,
California Municipal Money Market 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, ACCTFMF agrees as follows:

1.       TRANSFER OF ASSETS OF CALIFORNIA MUNICIPAL MONEY MARKET.

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

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

         1.3.     The net asset values of shares of California Tax-Free Money
                  Market and of California Municipal Money Market shall be
                  determined as of the Valuation Time, as defined in Section 3.

         1.4.     The net asset value of shares of California Tax-Free Money
                  Market shall be computed in the manner set forth in California
                  Tax-Free Money Market's then-current prospectus under the
                  Securities Act of 1933, as amended (the "1933 Act"). The net
                  asset value of the California Municipal Money Market Assets to
                  be transferred by ACCTFMF shall be computed by ACCTFMF. In
                  determining the value of the securities transferred by
                  California Municipal Money Market to California Tax-Free Money
                  Market, each security shall be priced in accordance with the
                  policies and procedures of ACCTFMF as described in its
                  then-current prospectus and statement of additional
                  information and adopted by ACCTFMF's Board of Trustees. Price
                  quotations and the security characteristics relating to
                  establishing such quotations shall be determined by ACCTFMF.

2.       LIQUIDATING DISTRIBUTION AND TERMINATION OF CALIFORNIA MUNICIPAL MONEY
         MARKET.

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

4.       CERTAIN REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF         ACCTFMF.

         ACCTFMF, on behalf of itself and California Municipal Money Market,
         represents and warrants to, and agrees with the following:

         4.1.     ACCTFMF 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,
                  California Municipal Money Market 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.     ACCTFMF 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 ACCTFMF, and represents ACCTFMF'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 ACCTFMF'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.     California Municipal Money Market 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 California Municipal
                  Money Market Assets or properly shown to be due on any return
                  filed by California Municipal Money Market 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 California Municipal Money
                  Market Assets.

         4.6.     The financial statements of California Municipal Money Market
                  for the fiscal year ended August 31, 2001, audited by
                  PricewaterhouseCoopers, LLP, independent auditors, copies of
                  which have been previously furnished to ACCTFMF, present
                  fairly the financial position of California Municipal Money
                  Market as of August 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, California Municipal Money Market
                  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 California Municipal Money Market'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 California Municipal Money
                  Market'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 California Municipal Money Market prior to
                  the Effective Date.

         4.8.     At both the Valuation Time and the Effective Time, there shall
                  be no known liabilities of California Municipal Money Market,
                  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 ACCTFMF's knowledge threatened, against ACCTFMF
                  or California Municipal Money Market which could result in
                  liability on the part of California Municipal Money Market.

         4.10.    Subject to the approval of shareholders, at both the Valuation
                  Time and the Effective Time, ACCTFMF shall have full right,
                  power and authority to assign, transfer and deliver the
                  California Municipal Money Market Assets and, upon delivery
                  and payment for the California Municipal Money Market Assets
                  as contemplated herein, California Tax-Free Money Market 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
                  ACCTFMF 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 ACCTFMF, the registration
                  statement filed by ACCTFMF on Form N-14 relating to the shares
                  of California Tax-Free Money Market that will be registered
                  with the SEC pursuant to this Agreement, which, without
                  limitation, shall include a proxy statement and prospectus of
                  ACCTFMF 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 ACCTFMF for use in
                  the N-14 Registration Statement.

         4.13.    All of the issued and outstanding shares of California
                  Municipal Money Market 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 California Municipal
                  Money Market has any preemptive right of subscription or
                  purchase in respect of such shares.

5.       CERTAIN REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF ACCTFMF.

         ACCTFMF, on behalf of itself and California Tax-Free Money Market,
         represents and warrants to, and agrees with the following:

         5.1.     ACCTFMF 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,
                  California Tax-Free Money Market 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.     ACCTFMF 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 ACCTFMF, and represents ACCTFMF'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 ACCTFMF'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.     California Tax-Free Money Market 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 California Tax-Free Money Market
                  for its fiscal year ended August 31, 2001, audited by
                  PricewaterhouseCoopers LLP, independent auditors, copies of
                  which have been previously furnished to ACCTFMF, present
                  fairly the financial position of California Tax-Free Money
                  Market as of August 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 California Tax-Free Money Market
                  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 ACCTFMF or
                  California Tax-Free Money Market that could result in
                  liability on the part of ACCTFMF or California Tax-Free Money
                  Market.

         5.8.     No consent, approval, authorization or order of any court or
                  governmental authority is required for the consummation by
                  ACCTFMF 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 ACCTFMF, 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
                  ACCTFMF for use in the N-14 Registration Statement.

         5.10.    The shares of California Tax-Free Money Market to be issued
                  and delivered to California Municipal Money Market for the
                  account of record holders of shares of California Municipal
                  Money Market 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 ACCTFMF shall have any preemptive right of
                  subscription or purchase in respect thereto.

6.       SHAREHOLDER ACTION ON BEHALF OF CALIFORNIA MUNICIPAL MONEY MARKET.

         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 ACCTFMF shall call, and ACCTFMF shall
                  hold, a meeting of the shareholders of California Municipal
                  Money Market 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 California Municipal
                                    Money Market Assets to California Tax-Free
                                    Money Market and the assumption by
                                    California Tax-Free Money Market of the
                                    California Municipal Money Market
                                    Liabilities, in exchange for shares of
                                    California Tax-Free Money Market, as
                                    described in this Agreement; and

                           6.1.1.2. The liquidation of California Municipal
                                    Money Market through the distribution to its
                                    record holders of the shares of California
                                    Tax-Free Money Market 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 California Municipal Money Market shall constitute the
                  waiver of the application of any fundamental policy of
                  California Municipal Money Market 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, ACCTFMF shall have furnished and shall continue to
         furnish the information relating to California Municipal Money Market
         and California Tax-Free Money Market 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 California Municipal Money Market Assets and the shares
         of California Tax-Free Money Market to be issued pursuant to Section 1
         and the liquidation of California Municipal Money Market 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 ACCTFMF. The date and time at which such actions are taken
         are referred to herein as the "Effective Time." To the extent any of
         the California Municipal Money Market Assets are, for any reason, not
         transferred at the Effective Time, ACCTFMF shall cause such California
         Municipal Money Market Assets to be transferred in accordance with this
         Agreement at the earliest practicable date thereafter.

9.       ACCTFMF CONDITIONS.

         The obligations of ACCTFMF hereunder with respect to California
         Tax-Free Money Market 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
                  California Municipal Money Market, in the manner required by
                  law.

         9.2.     ACCTFMF 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 ACCTFMF
                  and California Municipal Money Market in and to the California
                  Municipal Money Market Assets. The California Municipal Money
                  Market 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
                  California Municipal Money Market since August 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.     ACCTFMF shall have received a tax opinion addressed to ACCTFMF
                  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 California
                  Municipal Money Market Assets hereunder, and the assumption by
                  California Tax-Free Money Market of the California Municipal
                  Money Market Liabilities, in exchange for shares of California
                  Tax-Free Money Market, and the distribution of said shares to
                  the shareholders of California Municipal Money Market, as
                  provided in this Agreement, will constitute a reorganization
                  within the meaning of Section 368 of the Code, and California
                  Municipal Money Market and California Tax-Free Money Market
                  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 California Municipal Money Market
                  as a result of such transaction; (iii) no gain or loss will be
                  recognized by California Tax-Free Money Market as a result of
                  such transaction; (iv) no gain or loss will be recognized by
                  the shareholders of California Municipal Money Market on the
                  distribution to them by California Municipal Money Market of
                  shares of California Tax-Free Money Market in exchange for
                  their shares of California Municipal Money Market; (v) the
                  aggregate basis of California Tax-Free Money Market shares
                  received by each shareholder of California Municipal Money
                  Market will be the same as the aggregate basis of the
                  shareholder's California Municipal Money Market shares
                  immediately prior to the transaction; (vi) the basis of the
                  California Municipal Money Market Assets to California
                  Tax-Free Money Market will be the same as the basis of the
                  California Municipal Money Market Assets in the hands of
                  California Municipal Money Market immediately prior to the
                  exchange; (vii) a shareholder's holding period for California
                  Tax-Free Money Market shares will be determined by including
                  the period for which the shareholder held the shares of
                  California Municipal Money Market exchanged therefor, provided
                  that the shareholder held such shares of California Municipal
                  Money Market as a capital asset; and (viii) the holding period
                  of California Tax-Free Money Market with respect to the
                  California Municipal Money Market Assets will include the
                  period for which the California Municipal Money Market Assets
                  were held by California Municipal Money Market (except to the
                  extent that an activity or investment of California Tax-Free
                  Money Market 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 ACCTFMF, 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 ACCTFMF shall have
                  certified that ACCTFMF 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.      ACCTFMF CONDITIONS.

         The obligations of ACCTFMF hereunder with respect to California
         Municipal Money Market 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
                  California Municipal Money Market in the manner required by
                  law.

         10.2.    All representations and warranties of ACCTFMF 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 California Tax-Free Money Market since August 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.    ACCTFMF shall have received a tax opinion, addressed to
                  ACCTFMF 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 ACCTFMF, 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.    ACCTFMF shall not sell or otherwise dispose of any shares of
                  California Tax-Free Money Market 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 ACCTFMF shall have
                  certified that ACCTFMF 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.

         ACCTFMF shall have at the Effective Time confirmations or other
         adequate evidence as to the adjusted tax basis of the California
         Municipal Money Market Assets then delivered to California Tax-Free
         Money Market 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 ACCTFMF, as provided below:

         14.1.1.  With respect to California Tax-Free Money Market, by ACCTFMF
                  if the conditions set forth in Section 9 are not satisfied as
                  specified in said Section;

         14.1.2.  With respect to California Municipal Money Market, by ACCTFMF
                  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 ACCTFMF with respect
                  to California Tax-Free Money Market pursuant to Section 14.1.1
                  as a result of a breach by ACCTFMF with respect to California
                  Municipal Money Market of any of its representations,
                  warranties or covenants in this Agreement, or such termination
                  is by ACCTFMF with respect to California Municipal Money
                  Market pursuant to Section 14.1.2 as a result of a breach by
                  ACCTFMF with respect to California Tax-Free Money Market 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 ACCTFMF, (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.      ACCTFMF LIABILITY.

         19.1.    The name "American Century California Tax-Free and Municipal
                  Funds" and "Trustees of American Century California Tax-Free
                  and Municipal Funds" 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
                  1, 1999, 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
                  ACCTFMF. The obligations of ACCTFMF 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 ACCTFMF personally, but bind only the trust
                  property, and all persons dealing with any portfolio of
                  ACCTFMF must look solely to the trust property belonging to
                  such portfolio for the enforcement of any claims against
                  ACCTFMF.

         19.2.    Both parties specifically acknowledge and agree that any
                  liability of ACCTFMF under this Agreement with respect to
                  California Tax-Free Money Market, or in connection with the
                  transactions contemplated herein with respect to California
                  Tax-Free Money Market, shall be discharged only out of the
                  assets of California Tax-Free Money Market and that no other
                  portfolio of ACCTFMF, if any, shall be liable with respect
                  thereto.

         19.3.    Both parties specifically acknowledge and agree that any
                  liability of ACCTFMF under this Agreement with respect to
                  California Municipal Money Market, or in connection with the
                  transactions contemplated herein with respect to California
                  Municipal Money Market, shall be discharged only out of the
                  assets of California Municipal Money Market and that no other
                  portfolio of ACCTFMF, 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 California Tax-Free and Municipal Funds:

                                            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 CALIFORNIA
TAX-FREE AND MUNICIPAL FUNDS


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


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

EX-99 6 ex-12.htm PCW DRAFT OPINION Exhibit 12


PricewaterhouseCoopers
________________________________________________________________________________


                                                      PricewaterhouseCoopers LLP
                                                      333 Market Street
                                                      San Francisco, CA 94105
                                                      Telephone (415) 498-5000
                                                      Facsimile (415) 498-7100







                                                 DRAFT OF OPINION ANTICIPATED
                                                 TO BE RENDERED AT CLOSING


                                _______________, 2002


Board of Trustees
American Century California Tax-Free and Municipal Funds
4500 Main Street
Kansas City, Missouri 64141-6200

Gentlemen:

         You have requested our opinion regarding certain Federal income tax
consequences to the American Century California Municipal Money Market Fund (the
"Fund"), a series of American Century California Tax-Free and Municipal Funds
(the "Trust"), to American Century California Tax-Free Money Market Fund
("Acquiring"), another series of Trust, and to the holders of the shares of the
Fund, in connection with the proposed transfer of substantially all of the
properties of Fund to Acquiring in exchange solely for voting shares of
Acquiring ("Acquiring Shares") and the assumption by Acquiring of Fund's
liabilities, followed by the distribution of such Acquiring Shares received by
Fund in complete liquidation and termination of Fund (the "Reorganization"), all
pursuant to the Agreement and Plan of Reorganization (the "Agreement") included
as an exhibit to Form N-14 filed by Trust on ___________, 2002 (the "Form N-14")
with the Securities and Exchange Commission.

         For purposes of this opinion, we have examined and rely upon the
following: (1) the Agreement; (2) the Form N-14; and (3) such other documents
and instruments as we have deemed necessary or appropriate. We assume that the
Reorganization will be carried out in accordance with the terms of the Agreement
and as described in the documents and instruments we have examined.

This opinion is based upon the assumption by us that Fund and Acquiring have and
that they will each separately qualify and be treated as regulated investment
companies under Subchapter M of the Internal Revenue Code of 1986, as amended
(the "Code") for their respective taxable years that includes the closing date
of the Reorganization. If this


Board of Trustees
American Century California Tax-Free and Municipal Funds
____________, 2002
Page 2




assumption is not correct, the Reorganization may not qualify as a tax-free
reorganization and, therefore, our opinion could be altered. For purposes of
rendering this opinion, we have not been requested to undertake, nor have we
undertaken, any investigation or inquiry as to whether this assumption is and
will be correct.

         Based upon and subject to the foregoing and the conditions below, it is
our opinion that, for Federal income tax purposes:

         (1) The transfer to Acquiring of substantially all of Fund's properties
         in exchange solely for Acquiring Shares and the assumption by Acquiring
         of Fund's liabilities, followed by the distribution of Acquiring Shares
         received by Fund in the Reorganization and of any money and other
         property of Fund to the shareholders of Fund in complete liquidation
         and termination of Fund, will constitute a reorganization within the
         meaning of section 368(a)(1) of the Code. The Fund and Acquiring will
         each be "a party to a reorganization" within the meaning of Section
         368(b) of the Code.

         (2) No gain or loss will be recognized by Fund upon the transfer to
         Acquiring of substantially all of Fund's properties in exchange solely
         for Acquiring Shares and the assumption by Acquiring of Fund's
         liabilities or upon the distribution of the Acquiring Shares received
         by Fund in the Reorganization to Fund shareholders in complete
         liquidation and termination of Fund.

         (3) Acquiring will recognize no gain or loss upon receiving properties
         of the Fund in exchange for Acquiring Shares and the assumption by
         Acquiring of Fund's liabilities.

         (4) No gain or loss will be recognized by a shareholder of Fund on the
         distribution to such shareholder by Fund of Acquiring Shares received
         in the Reorganization in exchange for shares of Fund.

         (5) The basis to Acquiring of the properties of Fund transferred to
         Acquiring in the Reorganization will be the same as the basis of those
         properties in the hands of Fund immediately before the exchange.

         (6) The basis of Acquiring Shares received by a shareholder of Fund in
         the Reorganization will be the same in the aggregate as the basis of
         Fund shares surrendered by the shareholder in exchange therefor.

         (7) A Fund shareholder's holding period for the Acquiring Shares
         received by the shareholder in the Reorganization will include the
         holding period during which the shareholder held the Fund shares
         surrendered in exchange therefor, provided that the shareholder held
         such Fund shares as a capital asset on the date of the Reorganization.

PricewaterhouseCoopers


Board of Trustees
American Century California Tax-Free and Municipal Funds
____________, 2002
Page 3


         (8) Acquiring's holding periods with respect to Fund's properties that
         Acquiring acquires in the Reorganization will include the respective
         periods for which those properties were held by Fund (except to the
         extent that an activity or investment of Acquiring has the effect of
         diminishing or eliminating a holding period with respect to an asset).

         The conclusions reached in this opinion represent and are based upon
our best judgment regarding the application of Federal income tax laws arising
under the Code, judicial decisions, administrative regulations, published
rulings and other tax authorities existing as of the date of this opinion. This
opinion is not binding upon the Internal Revenue Service or the courts and there
is no guarantee that the Internal Revenue Service will not successfully assert
or that a court would not sustain a contrary position. Furthermore, no assurance
can be given that future legislative or administrative changes, on either a
prospective or retroactive basis, would not adversely affect the accuracy of the
conclusions stated herein. PricewaterhouseCoopers LLP undertakes no
responsibility to advise any party or shareholder of any new developments in the
application or interpretation of the Federal income tax laws.

         This opinion does not address any Federal tax consequences of the
transactions set forth herein, or transactions related or proximate to such
transactions, except as specifically set forth herein. This opinion does not
address any state, local, foreign, or other tax consequences that may result
from any of the transactions set forth herein, or transactions related to such
transactions. This opinion may not be relied upon by any other party to this
transaction or in any other transaction without our prior written consent.

         This opinion is based upon the representations made to us and upon the
documents, facts, and assumptions that have been included or referenced herein.
In rendering our opinion, we have relied upon such representations, documents
and facts as being true, accurate and authentic without independent verification
on our part. Our opinion may be altered if all the transactions described herein
are not consummated as described herein without waiver or breach of any material
provision thereof or if the facts and assumptions set forth herein or the
representations made to us are not true and accurate at all relevant times. In
the event any one of the facts or assumptions is incorrect, in whole or in part,
the conclusions reached in this opinion might be adversely affected.

PricewaterhouseCoopers


Board of Trustees
American Century California Tax-Free and Municipal Funds
____________, 2002
Page 4



         We express no opinion as to the tax consequences of the Reorganization
except as expressly set forth above, or as to any transaction except the
Reorganization.



                                                     Very truly yours,

EX-99 7 ex-17.htm PROXY CARD exhibit 17

American Century California Tax-Free and Municipal Funds

PROXY FOR SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON AUGUST 2, 2002
This Proxy is solicited on behalf of the Board of Trustees/Directors

This proxy shall be voted on the Proposals described in the accompanying proxy
statement as specified below. By signing below, I (we) appoint as proxies
Charles A. Etherington, Charles C.S. Park, and Anastasia H. Enneking, and each
of them, as attorneys, with full power of substitution to vote for the
undersigned all shares of common stock I (we) own in the fund(s). The authority
I am (we are) granting applies to the above-referenced meeting and any
adjournments of that meeting, with all the power I (we) would have if personally
present. The shares represented by this proxy shall be deemed to grant authority
to vote FOR all proposals relating to the Company or the series or class, as
applicable.

YOUR VOTE IS IMPORTANT. Please date and sign this proxy below and either return
it in the enclosed envelope to: American Century Investments, c/o Proxy
Tabulator, P.O. Box 9043, Smithtown, NY 11787-9831, or fax both sides to 1-888-
________. If you prefer, you can vote online at https://vote.proxy-direct.com.
This proxy will not be voted unless it is dated and signed exactly as instructed
on this card.

VOTE VIA THE INTERNET: https://vote.proxy-direct.com

CONTROL NUMBER: 999 9999 9999 999

If shares are held by an individual, sign your name exactly as
it appears on this card. If shares are held jointly, either
party may sign, but the name of the party signing should
conform exactly to the name shown on this proxy card. If
shares are held by a corporation, partnership or similar
account, the name and the capacity of the individual signing
the proxy card should be indicated - for example: "ABC Corp.,
John Doe, Treasurer."

__________________________________
Signature

__________________________________
Signature (if held jointly)

__________________________________
Date

FUNDNAME DROP-IN

Please vote by filling in the appropriate box below. If you do not mark one or
more Proposals, your Proxy will be voted FOR each such proposal.

________ To vote FOR all Funds on all Proposals, mark this box. (No other vote
is necessary)

1. Election of Trustees: 01 Albert Eisenstat 02 Ronald J. Gilson 03 Kathryn A. Hall
04 William M. Lyons 05 Myron S. Scholes 06 Kenneth E. Scott
07 James E. Stowers III 08 Jeanne D. Wohlers

FOR ALL WITHHOLD ALL FOR ALL EXCEPT
_______ ____________ ______________

To withhold authority to vote for any nominee(s), mark "FOR ALL EXCEPT"
and write the Nominee number(s) on the line provided: ________________

2. Approval of proposed Agreement and Plan of Reorganization and all
transactions necessary to implement the Agreement as described in the proxy
statement.

FOR AGAINST ABSTAIN

PLEASE SIGN AND DATE THE FRONT OF THIS CARD

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