docment 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, L5nvDTEvYiPD4kMlBvtrkrMq1VocItM1WuYx7YxvXFSyjU2wQ1OSu/FzHpQeGQOH ytjzQHrD8jsqbOMYi0atQw== 0000746458-02-000012.txt : 20020415 0000746458-02-000012.hdr.sgml : 20020415 ACCESSION NUMBER: 0000746458-02-000012 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: 333-84246 FILM NUMBER: 02574381 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 docment 2

N-14
Initial Statement

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

Registration Nos. 2-91229 and 811-4025

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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 MUNICIPAL TRUST
(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. 2-91229 and 811-4025) 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

Limited-Term Tax-Free 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
Compensation of Trustees .................................................. X
Ownership of Fund Shares .................................................. 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 Tax-Free Bond ............................ 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 Limited-Term Tax-Free 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 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 Limited-Term Tax-Free Fund,
you are being asked to approve the combination of your fund with the American
Century Tax-Free Bond 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 to manage 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 this important proposal. 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 Municipal Trust. In addition, your Board
of Trustees has recommended combining Limited-Term Tax-Free into Tax-Free Bond.
This combination requires approval of Limited-Term Tax-Free 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
Municipal Trust. 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 A. 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
smaller funds.

How will the reorganization be accomplished?

Shareholders of Limited-Term Tax-Free are being asked to approve the combination
of their fund with Tax-Free Bond according to the Agreement and Plan of
Reorganization described on page ___ . The reorganization will take the form of a
transfer of assets by Limited-Term Tax-Free in exchange for shares of Tax-Free
Bond. Limited-Term Tax-Free will then make a liquidating distribution to its
shareholders of the Tax-Free Bond 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 Tax-Free
Bond in an amount equal to the value of your Limited-Term Tax-Free 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 Tax-Free Bond may be different from the net
asset value of Limited-Term Tax-Free, you may receive a different number of
shares than the number of shares of Limited-Term Tax-Free that you have. After
the reorganization, you will own shares of Tax-Free Bond rather than shares of
Limited-Term Tax-Free.

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 Limited-Term Tax-Free 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 the funds and shareholders if the
reorganization is consummated.

Will the exchange of Limited-Term Tax-Free shares for shares of Tax-Free Bond
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 Tax-Free Bond compare to that of
Limited-Term Tax-Free?

The total expense ratios of the funds are the same.

Is Tax-Free Bond riskier than Limited-Term Tax-Free?

Only slightly. Each fund invests in quality debt securities issued by cities,
counties and other municipalities. The primary difference between the funds is
their weighted average portfolio maturity and sensitivity to interest rate
changes.

Tax-Free Bond's weighted average portfolio maturity, although unrestricted, is
typically between five and ten years, while Limited-Term Tax-Free's weighted
average portfolio maturity is typically five years or less. Funds with longer
weighted average maturities generally have a higher potential for income, but
they also are more sensitive to interest rate changes. Both Tax-Free Bond and
Limited-Term Tax-Free share values will decline when interest rates rise, but
the share value of the fund with the longer weighted average portfolio maturity,
Tax-Free Bond, generally will decline further.

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, Limited-Term Tax-Free will
transfer its assets and liabilities to Tax-Free Bond in exchange for the
appropriate number of Tax-Free Bond shares. Limited-Term Tax-Free will then make
a liquidating distribution of those Tax-Free Bond 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 Limited-Term Tax-Free?

No. American Century Investment Management, Inc. will continue to manage the
assets of Tax-Free Bond after the reorganization, and the portfolio management
team of Limited-Term Tax-Free also serves as the portfolio management team of
Tax-Free Bond.

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

They won't. Tax-Free Bond has the same distribution, purchase and exchange
policies and procedures as Limited-Term Tax-Free.

How will the proposed changes affect your account?

If the proxy proposals are approved, Limited-Term Tax-Free will be combined with
Tax-Free Bond 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 deposit,
* 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, please note that this
option is not available with Tax-Free Bond. If you have CheckWriting
checks for other funds, you may continue to use those checks. We will
not honor Limited-Term Tax-Free checks after September 3. All
Limited-Term Tax-Free checks must clear by this date.

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" the reorganization. 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 Tax-Free Bond's Prospectus accompanies this proxy statement. In
addition, the Manager's Discussion and Analysis of Fund Performance portion of
Tax-Free Bond's most recent Annual Report to Shareholders is included in this
document on page . If you would like a copy of Limited-Term Tax-Free'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 MUNICIPAL TRUST
American Century Investments
P. O. Box 419200
Kansas City, Missouri 64141-6200
1-800-331-8331

To be held on Friday, August 2, 2002

To American Century Limited-Term Tax-Free Shareholders:

NOTICE IS HEREBY GIVEN THAT a Special Meeting of the shareholders of the
American Century Limited-Term Tax-Free Fund, a portfolio of American Century
Municipal Trust ("Limited-Term Tax-Free"), 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
Limited-Term Tax-Free to the American Century Tax-Free Bond Fund, another
investment portfolio of American Century Municipal Trust ("Tax-Free Bond"), in
exchange for shares in Tax-Free Bond; and

(b) the distribution of Tax-Free Bond shares to the shareholders of Limited-Term
Tax-Free 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.

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.

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 Municipal 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 MUNICIPAL TRUST

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 Municipal
Trust on behalf of its Limited-Term Tax-Free Fund ("Limited-Term Tax-Free"), in
connection with a Special Meeting of Shareholders to be held on Friday, August,
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 Limited-Term Tax-Free are being asked to
elect a Board of Trustees of eight members to hold office until their successors
are duly elected and qualified.

In addition, shareholders of Limited-Term Tax-Free are being asked to approve
the combination of their fund with the American Century Tax-Free Bond Fund,
another series of American Century Municipal Trust ("Tax-Free Bond").

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 Tax-Free
Bond 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 Tax-Free Bond, dated October 1, 2001,
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 Limited-Term Tax-Free and Tax-Free Bond 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 Limited-Term Tax-Free, Tax-Free Bond 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 Municipal Trust (the "Trust") has
nominated eight individuals (the "Nominees") for election to the Board. At the
meeting, the shareholders of Limited-Term Tax-Free will be asked to elect the
Nominees to serve on the American Century Municipal Trust 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 Municipal Trust 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. 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, the advisor 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
Limited-Term Tax-Free and Tax-Free Bond. 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

.............................................................................................................................................
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 "Independent Trustees". "Independent 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 Municipal Trust 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 By-laws providing for the
regulation and management of the affairs of the Funds and may amend and repeal
them to the extent that such By-laws 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
o f 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 May 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 Municipal Trust 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 May 31, 2001

Total Compensation Total Compensation from the
Name of Trustee from the Funds(1) American Century Family of Funds(2)
.............................................................................................................................................
Albert Eisenstat $4,615 $78,250

Ronald J. Gilson 4,945 88,500

Myron S. Scholes 4,404 71,750

Kenneth E. Scott 4,684 80,000

Isaac Stein (3) 1,633 9,583

Jeanne D. Wohlers 4,450 73,000
- ---------------------------------------------------------------------------------------------------------------------------------------------

1 Includes compensation paid to the trustees during the fiscal year ended May
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, $28,250; Mr. Gilson, $88,500; Mr. Scholes, $71,750; Mr. Scott,
$40,000; and Ms. Wohlers, $31,515.

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

3 Mr. Stein retired from the Board on September 15, 2000. The amounts shown
represent compensation paid from June 1, 2000 to September 15, 2000.

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 May 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:
Limited-Term Tax-Free A A A A
Tax-Free Bond 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:
Limited-Term Tax-Free A A A
Tax-Free Bond A A A
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
Municipal Trust if he or she receives the approval of a majority of the votes of
American Century Municipal Trust 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 Municipal Trust shareholders without regard to whether a majority of
shares of any one fund voted in favor of a particular Nominee or all Nominees as
a group. 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 Limited-Term Tax-Free with Tax-Free Bond. For additional information about
the funds, see the section titled "Information About the Funds" starting on page
_____ .

Limited-Term Tax-Free Tax-Free Bond
- ---------------------------------------------------------------------------------------------------------------------------------------------

Type of Fund Short-Intermediate Municipal Intermediate Municipal Debt
Debt

Investment Objective Same as Tax-Free Bond The fund seeks safety of principal and high current income
that is exempt from federal income tax.

Investment Policies Same as Tax-Free Bond The fund managers buy quality debt securities with interest payments
exempt from federal income tax, and may invest up to 20% of the fund's
assets in quality debt securities with interest payments subject to the
alternative minimum tax.

Weighted Average
Portfolio Maturity 5 years or less No limitation

Credit Quality

Total Expense Ratio Investor Class 0.51% Investor Class 0.51%

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

Purchases and Exchanges Same as Tax-Free Bond See pages 17-20 of accompanying Prospectus

Redemption Policies Same as Tax-Free Bond See pages 17-20 of accompanying Prospectus

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

Transfer Agent Same as Tax-Free Bond American Century Services Corporation
("ACSC")

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

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

Independent Auditors Same as Tax-Free Bond PricewaterhouseCoopers LLP

PRIMARY FEDERAL INCOME TAX CONSEQUENCES

The exchange of Limited-Term Tax-Free shares for Tax-Free Bond 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 Tax-Free Bond shares received in the reorganization
will be identical to the aggregate tax basis and holding period for the
Limited-Term Tax-Free 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

Interest rate changes affect the share value of both Limited-Term Tax-Free and
Tax-Free Bond. Generally, when interest rates rise, the funds' share values will
decline. The opposite is true when interest rates decline. The degree to which
interest rate changes affect a fund's performance varies and is related to the
weighted average maturity of a particular fund. In general, when interest rates
rise, you can expect the share value of a long-term bond fund to fall more than
that of a short-term bond fund. When rates fall, the opposite is true. Because
Tax-Free Bond generally maintains a longer weighted average maturity than
Limited-Term Tax-Free, its share value is generally more sensitive to interest
rate fluctuation than Limited-Term Tax-Free.

Your Board of Trustees does not believe that the reorganization exposes
shareholders of Limited-Term Tax-Free to any substantially new or different
risks than they are exposed to as shareholders of Limited-Term Tax-Free. For a
discussion of the various investment policies, approaches and procedures of
Tax-Free Bond, and the risks associated therewith, please see the accompanying
Prospectus beginning at page 8.

TRANSACTION AND OPERATING
EXPENSE INFORMATION

The tables below compare various shareholder transaction and annual fund
operating expenses of Limited-Term Tax-Free as of its most recent fiscal year
end (May 31, 2001) with Tax-Free Bond as of its most recent fiscal year end
(May 31, 2001). After the reorganization, the expense levels of the surviving
fund will be the same as those shown for Tax-Free Bond (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

- ---------------------------------------------------------------------------------------------------------------------------------------------
Limited-Term Tax-Free 0.50% None 0.01% 0.51%
.............................................................................................................................................
Tax-Free Bond 0.50% None 0.01% 0.51%
Tax-Free Bond (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, which include the fees and expenses of the funds' independent
Trustees, their legal counsel and interest, are expected to be less than 0.005%
for the current fiscal year.

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
- ---------------------------------------------------------------------------------------------
Limited-Term Tax-Free $52 $163 $285 $640
.............................................................................................
Tax-Free Bond $52 $163 $285 $640
Tax-Free Bond (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 21 in the enclosed Tax-Free Bond Prospectus. The assets and
liabilities of Limited-Term Tax-Free will then be transferred to Tax-Free Bond
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 LIMITED-TERM TAX-FREE. Immediately
after the exchange of its assets for the Tax-Free Bond shares, Limited-Term
Tax-Free 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 Limited-Term Tax-Free will be redeemed and canceled and its stock books
closed. As a result of the distribution, Limited-Term Tax-Free shareholders will
become shareholders of Tax-Free Bond.

SHAREHOLDER APPROVAL. Consummation of the reorganization requires approval of
Limited-Term Tax-Free shareholders.

REPRESENTATIONS AND WARRANTIES. The Agreement contains representations and
warranties made by Limited-Term Tax-Free to Tax-Free Bond concerning
Limited-Term Tax-Free'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
Limited-Term Tax-Free 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 Tax-Free Bond and Limited-Term
Tax-Free.

DESCRIPTION OF THE SECURITIES OF TAX-FREE BOND

Tax-Free Bond is a series of shares offered by American Century Municipal Trust.
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 Municipal Trust is a Massachusetts business trust, which means
its activities are overseen by a Board of Trustees.

Like Limited-Term Tax-Free, Tax-Free Bond currently offers one class of shares,
the Investor Class, although it may offer additional classes in the future. The
Investor Class of shares of Tax-Free Bond 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 Limited-Term Tax-Free shareholder and the rights of a Tax-Free Bond
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
Tax-Free Bond 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 the
current market demand for municipal bond funds is generally weak and
Limited-Term Tax-Free and Tax-Free Bond 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 Limited-Term Tax-Free, 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 Limited-Term
Tax-Free vote to approve the Reorganization.

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

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, Limited-Term Tax-Free or Tax-Free Bond, (ii)
your basis in the Tax-Free Bond shares that you receive will be the same in the
aggregate as your basis in the Limited-Term Tax-Free shares held by you
immediately prior to the reorganization, and (iii) your holding period for the
Tax-Free Bond shares will include your holding period for your Limited-Term
Tax-Free 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 Limited-Term Tax-Free
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
Limited-Term Tax-Free 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 Limited-Term
Tax-Free. 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)

Limited-Term Tax-Free Bond
As of May 31, 2001 Tax-Free Bond Tax-Free Pro Forma Combined

(in thousands except per share amounts)
- ---------------------------------------------------------------------------------------------------------------------------------------------
Investor Class
Net Assets $301,948 $37,227 $ 338,575
Shares Outstanding 28,697 3,640 32,242
Net Asset Value Per Share $10.50 $10.23 $10.50

INFORMATION ABOUT THE FUNDS

Complete information about Tax-Free Bond and Limited-Term Tax-Free is contained
in their Prospectus. The Tax-Free Bond and Limited-Term Tax-Free Prospectus
dated October 1, 2001, 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 Tax-Free Bond and Limited-Term Tax-Free
and the pages in their Prospectus where the information can be found.

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

Limited-Term Tax-Free Tax-Free Bond
Investor Class Investor Class
- ---------------------------------------------------------------------------------------------------------------------------------------------
An Overview of the Funds 2 2
Fees and Expenses 6 6
Objectives, Strategies and Risks 8-9 8-9
Management 15-16 15-16
Investing with American Century 17-20 17-20
Share Price and Distributions 21-22 21-22
Taxes 23-24 23-24
Multiple Class Information 25 25
Financial Highlights 26, 28 26, 29

FUNDAMENTAL INVESTMENT POLICIES

Fundamental investment policies contained in the Statement of Additional
Information dated October 1, 2001, and the investment objectives of Tax-Free
Bond 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 Limited-Term Tax-Free.
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" the reorganization.

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 Limited-Term Tax-Free 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:

Limited-Term Tax-Free

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 Limited-Term Tax-Free 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 Limited-Term Tax-Free 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 Tax-Free Bond 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 Limited-Term Tax-Free or
Tax-Free Bond. 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
- ---------------------------------------------------------------------------------------------------------------------------------------------
Limited-Term Tax-Free
% %

.............................................................................................................................................
Tax-Free Bond
% %

% %

As of March 15, 2002, the directors and officers of the issuer of Limited-Term
Tax-Free, as a group, owned less than 1% of the outstanding shares of
Limited-Term Tax-Free. As of March 15, 2002, the Trustees and officers of the
issuer of Tax-Free Bond, as a group, owned less than 1% of the outstanding
shares of Tax-Free Bond.

APPRAISAL RIGHTS

Shareholders of Limited-Term Tax-Free 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 Limited-Term Tax-Free
shares until the reorganization. Thereafter, shareholders may redeem the
Tax-Free Bond shares they received in the reorganization at Tax-Free Bond's net
asset value as determined in accordance with its then-current prospectus.

ANNUAL MEETINGS

Tax-Free Bond does not intend to hold annual meetings of shareholders.
Shareholders of Tax-Free Bond 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 Municipal Trust will assist in shareholder
communications on such matters.

Limited-Term Tax-Free will not hold an annual meeting of shareholders this year
for the election of Trustees.

ADDITIONAL INFORMATION

Information about Limited-Term Tax-Free and Tax-Free Bond is incorporated into
this document by reference from their Prospectus and Statement of Additional
Information dated October 1, 2001. 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 Limited-Term Tax-Free and Tax-Free Bond
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 Limited-Term Tax-Free nor Tax-Free Bond 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 TAX-FREE BOND

The following are excerpts of management's discussion of fund performance from
the Annual Report of Intermediate-Term Tax-Free Bond dated May 31, 2001.
Effective August 8, 2001, the name of Intermediate-Term Tax-Free was changed to
Tax-Free Bond. Accordingly, all references to the Intermediate-Term Tax-Free
fund in the following excerpts have been changed to Tax-Free Bond. For a
complete copy of the report, please call us at 1-800-331-8331.

REPORT HIGHLIGHTS
TAX-FREE BOND
Total Returns: AS OF 5/31/01
6 Months 4.46%(1)
1 Year 10.77%
30-Day SEC Yield: 3.86%
Inception Date: 3/2/87
Net Assets: $188 million
Ticker Symbol: TWTIX

1 Not annualized.

OUR MESSAGE TO YOU

The American Century Tax-Free Bond fund generated exceptionally strong returns
for the year ended May 31, 2001. Demand for bonds surged because of economic
weakness, falling interest rates, and plummeting stock prices. The fund's
investment team reviews the economic and market climate, as well as portfolio
strategy and performance below.

We're pleased to announce some important changes in the investment team's
executive leadership. Effective July 1, 2001, Robert Puff, Jr., president and
chief investment officer (CIO) of American Century Investment Management, Inc.
(ACIM American Century's investment management subsidiary), became the
subsidiary's chairman.

The chairmanship is a newly-created position that allows us to continue to
benefit from Bob's 30 years of investment experience while removing the
responsibility for the day-to-day management of ACIM. Bob can focus more on
business strategy and professional development of investment managers, serving
as a mentor and resource for the various investment management teams.

Randall Merk, formerly a senior vice president and CIO for American Century's
fixed-income discipline, succeeded Bob as ACIM president and CIO. As our top
investment management executive, Randy is responsible for all of American
Century's investment management functions, including portfolio management,
research, and trading.

David MacEwen, a senior vice president who 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 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.

Our heartiest congratulations to these investment team leaders and colleagues.
We strongly believe they will continue to serve you and American Century well.
As always, we appreciate your continued confidence in American Century.

Sincerely,

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

PERFORMANCE & PORTFOLIO INFORMATION

Effective August 8, 2001, the name of Intermediate-Term Tax-Free was changed to
Tax-Free Bond.

Total Returns as of May 31, 2001

Intermediate-Term Lehman 5-Year Intermediate Municipal Debt Fund(2)

Tax-Free Municipal GO Index AverageReturn Fund's Ranking
6 Months(1) 4.46% 4.92% 4.31% -
1 Year 10.77% 10.17% 9.97% 23 out of 117
AVERAGE ANNUAL RETURNS
3 Years 5.01% 5.17% 4.15% 11 out of 111
5 Years 5.78% 5.71% 5.27% 13 out of 98
10 Years 5.96% 6.13% 5.97% 12 out of 24

The fund's inception date was 3/2/87.

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

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

Growth of $10,000 Over 10 Years

GROWTH OF $10,000 OVER LIFE OF FUND
Value on 5/31/01
Arizona Intermediate-Term Municipal* $15,066
Lehman 5-Year Municipal GO Index $15,007

Arizona Intermediate- Lehman 5-Year
Term Municipal* Municipal GO Index
DATE VALUE VALUE
4/11/1994 $10,000 $10,000
6/30/1994 $10,170 $10,134
9/30/1994 $10,309 $10,217
12/31/1994 $10,204 $10,183
3/31/1995 $10,674 $10,596
6/30/1995 $10,969 $10,866
9/30/1995 $11,248 $11,163
12/31/1995 $11,546 $11,367
3/31/1996 $11,485 $11,402
6/30/1996 $11,548 $11,452
9/30/1996 $11,736 $11,639
12/31/1996 $11,978 $11,892
3/31/1997 $11,935 $11,874
6/30/1997 $12,252 $12,169
9/30/1997 $12,539 $12,435
12/31/1997 $12,803 $12,663
3/31/1998 $12,892 $12,812
6/30/1998 $13,044 $12,942
9/30/1998 $13,457 $13,298
12/31/1998 $13,557 $13,403
3/31/1999 $13,638 $13,541
6/30/1999 $13,416 $13,384
9/30/1999 $13,439 $13,502
12/31/1999 $13,429 $13,498
3/31/2000 $13,714 $13,654
6/30/2000 $13,947 $13,874
9/30/2000 $14,210 $14,148
12/31/2000 $14,735 $14,534
3/31/2001 $15,065 $14,940
5/31/2001 $15,066 $15,007

$10,000 investment made 4/11/94**

The graph at left shows the growth of a $10,000 investment in the fund over 10
years, while the graph below shows the fund's year-by-year performance. The
Lehman 5-Year Municipal GO Index is provided for comparison in each graph.
Intermediate-Term Tax-Free's total returns include operating expenses (such as
transaction costs and management fees) that reduce returns, while the total
returns of the index do not. Past performance does not guarantee future results.
Investment return and principal value will fluctuate, and redemption value may
be more or less than original cost.

One-Year Returns Over 10 Years (Periods ended May 31)

Arizona Intermediate- Lehman 5-Year
Term Municipal* Municipal GO Index
DATE RETURN RETURN
5/31/1994** 1.99% 0.56%
5/31/1995 7.52% 6.89%
5/31/1996 4.65% 4.74%
5/31/1997 5.77% 6.08%
5/31/1998 7.19% 6.95%
5/31/1999 4.51% 4.90%
5/31/2000 0.20% 0.65%
5/31/2001 10.57% 10.17%

* Fund returns and rankings would have been lower if management fees had not
been waived from 4/11/94 to 12/31/95. Beginning on 1/1/96, management fees
were phased in at a rate of 0.10% each month until 7/1/96.

** Fund data from 4/11/94, the fund's inception date. Index data from 3/31/94,
the date nearest the fund's inception for which index data are available.

YIELDS AS OF MAY 31, 2001 PORTFOLIO AT A GLANCE
- ------------------------- ---------------------
30-Day SEC Yield 3.86% 5/31/01 5/31/00
30-Day Tax-Equivalent Yields: Number of Securities 131 99
28.0% Tax Bracket 6.99% Weighted Average
31.0% Tax Bracket 5.59% Maturity 8.5 yrs 9.9 yrs
36.0% Tax Bracket 6.03% Expense Ratio (for
39.6% Tax Bracket 6.39% Investor Class) 0.51% 0.51%

MANAGEMENT Q&A

An interview with Ken Salinger, a portfolio manager on the Tax-Free Bond
investment team.

How did Tax-Free Bond perform during the year ended May 31, 2001?

The fund provided investors a very attractive return that outpaced the Lipper
average. Tax-Free Bond returned 10.77%, not far from double its 5.96% average
annual return of the last 10 years. The 117 "Other States Intermediate Municipal
Debt Funds" tracked by Lipper Inc. returned 9.97% on average. Tax-Free Bond's
three- and five-year returns were even more impressive compared with its peers.

What fueled the fund's very solid return?

As with many short- and intermediate-term bond funds, Tax-Free Bond benefited
from the Federal Reserve's (the Fed's) aggressive interest rate cuts. But we
also made a number of good decisions that boosted the fund's performance above
and beyond that of the Lipper peer average. For example, we continued to shift
the portfolio's exposure to various states when attractive opportunities
presented themselves.

Can you talk about some of your state shifts?

Sure. Take a look at the Top Five States table and you'll notice that the
percentage of the portfolio in Arizona municipals rose during the last six
months. The story there provides a good example of the value plays that we
employ to try and boost returns.

For most of 2000, Arizona experienced fairly low new municipal bond issuance.
But several large bond deals came to market earlier this year, pressuring prices
lower and yields higher. We took advantage of that supply influx to add some of
the state's bonds at what we considered very attractive prices. That play made
sense to us because the outlook for Arizona municipal bond supply lightens
considerably. As new supply dries up, we expect the bonds we added to appreciate
and boost fund returns.

We also selectively added some California municipal bonds. That's why California
municipals represented the portfolio's highest state exposure at the end of May.

Given California's ongoing electric utilities crisis, isn't that increased
exposure a big risk?

Not at all. California definitely faces some challenges concerning electric
power for its residents. And while those challenges aren't likely to be resolved
in the immediate future, we believe we have several important factors working to
limit that risk for shareholders.

The first is our seasoned credit research team, which identified California's
potential power crisis well in advance of the actual event. Thanks to the team,
we held no direct exposure to the California utilities that experienced
financial difficulties. The team also helped us limit the portfolio's indirect
exposure to the situation.

Second, many of the bonds that we picked up are backed by strong California
school districts. In other words, the issuers have solid credit stories that met
our credit research team's strict criteria.

The third helpful factor is bond insurance, which most of the California bonds
in the portfolio have-they're largely rated AAA and backed by bond insurance
companies.

Adding those top-quality California bonds also fit in well with our strategy to
increase the portfolio's AAA holdings. With the economy slowing, we felt adding
high-credit bonds made sense. Simply put, issuers of AAA bonds are less likely
to experience significant financial difficulties during challenging economic
times than are issuers of lower-rated bonds.

Shifting gears, what's your outlook for the economy and interest rates?

The Fed's aggressive short-term interest rate cuts this year should set the
stage for an economic turnaround at some point. But such actions take time to
work through the system. So for the near-term, we're likely to see continued
economic weakness, further corporate profit warnings, and possibly even
additional layoffs.

Given those conditions, we wouldn't be surprised if the Fed reduces rates one or
two more times. But we think that the magnitude of any additional cuts will be
far less aggressive than the ones we've seen so far this year.

With those thoughts in mind, what are your plans for the portfolio?

We feel that the portfolio is fairly well positioned for the current
environment, but we will continue to monitor a few key developments to see
whether modifications are needed. In particular, we may adjust the portfolio's
bond maturity structure (its ratio of short- to intermediate- to long-term
securities) by increasing intermediate-term bond holdings at some point and
decreasing holdings of other maturities.

Are there any other notable changes you're planning for the fund?

Yes. Effective August 8, 2001, we will remove all restrictions on the fund's
weighted average maturity. That is, the fund will be able to invest in municipal
securities across all maturities. Reflecting that average maturity change, the
fund will be renamed "American Century Tax-Free Bond."

How will this affect your investment strategy?

We will still use the same disciplined investment approach, but we will have
more flexibility to look for the best relative values, yields, and appreciation
potential throughout the municipal market. Overall, though, investors aren't
likely to notice big differences in fund strategy or performance. That's because
optimal municipal yields and returns relative to risk (price volatility) still
tend to be found in the intermediate-term maturity area.

What's the main reason for the changes?

We want to help make choosing a municipal bond fund easier for investors. People
who know that they want a tax-advantaged bond investment but aren't sure what
maturity to choose will be able to invest in a "core" municipal fund where we
make the maturity decisions for them.

1 All fund returns and yields referenced in this interview are for Investor
Class shares.

TYPES OF INVESTMENTS IN THE PORTFOLIO BY STATE (Top Five States)(as of 5/31/01)

California 11.3%
Arizona 10.6%
Indiana 8.0%
Texas 7.3%
Washington 5.7%

TYPES OF INVESTMENTS IN THE PORTFOLIO BY STATE (Top Five States)
(as of 11/31/00)

Texas 12.2%
Washington 8.5%
New York 7.6%
Utah 6.1%
Colorado 5.7%

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 Municipal Trust

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 May 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 MUNICIPAL TRUST
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 Municipal Trust

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 Tax-Free Bond is contained in and
incorporated herein by reference to its Statement of Additional Information
dated October 1, 2001. The audited financial statements and related independent
accountant's report for Tax-Free Bond contained in the Annual Report dated May
31, 2001 are incorporated herein by reference. No other parts of the Annual
Report are incorporated by reference herein.

Further information about Limited-Term Tax-Free is contained in and
incorporated herein by reference to its Statement of Additional Information
dated October 1, 2001. The audited financial statements and related independent
accountant's report for Limited-Term Tax-Free contained in the Annual Report
dated May 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 Limited-Term Tax-Free are being asked to approve or
disapprove an Agreement and Plan of Reorganization (the "Reorganization
Agreement") dated as of , 2002 between American Century Municipal Trust and the
transactions contemplated thereby. The Reorganization Agreement contemplates the
transfer of substantially all of the assets and liabilities Limited-Term
Tax-Free to Tax-Free Bond in exchange for full and fractional shares
representing interests in Tax-Free Bond. The shares issued by Tax-Free Bond will
have an aggregate net asset value equal to the aggregate net asset value of the
shares Limited-Term Tax-Free , that are outstanding immediately before the
effective time of the Reorganization.

Following the exchange, Limited-Term Tax-Free will each make a
liquidating distribution to its shareholders of the Tax-Free Bond shares
received in the exchange. Each shareholder owning shares of Limited-Term
Tax-Free at the Effective Time of the reorganization will receive shares of
Tax-Free Bond of equal value, plus the right to receive any unpaid dividends
that were declared before the Effective Time of the Reorganization on the
Limited-Term Tax-Free 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 Limited-Term Tax-Free and
American Century Tax-Free Bond Fund

TAX-FREE BOND AND LIMITED-TERM TAX-FREE PROFORMAS

Statements of Assets and Liabilities

MAY 31, 2001 (UNAUDITED)
Tax-Free Limited-Term Pro Forma
Bond Tax-Free Adjustments Combining (Note 1)
---- -------- ----------- ------------------
ASSETS (In Thousands Except Per-Share Amounts)

Investment securities at value
(cost of $315,581, $37,794, and
$353,375, respectively) $324,677 $38,835 $363,512
Receivable for investments sold 560 - 560
Receivable for capital shares sold 1,068 4 1,072
Interest receivable 4,496 574 5,070
-------------- ------------------ -------------- -------------
330,801 39,413 370,214
-------------- ------------------ -------------- -------------

LIABILITIES
Disbursements in excess of
demand deposit cash 9,547 398 9,945
Payable for investments purchased 19,568 1,746 21,314
Accrued management fees 128 16 144
Dividends payable 209 26 235
Payable for trustees'
fees and expenses 1 - 1
-------------- ------------------ -------------- -------------
29,453 2,186 31,639
-------------- ------------------ -------------- -------------
Net Assets $301,348 $37,227 $338,575
============= ================== ============== =============
CAPITAL SHARES
Outstanding 28,697 3,640 (95) (a) 32,242
============= ================== ============== =============
Net Asset Value Per Share $10.50 $10.23 $10.50
============= ================== ============== =============
NET ASSETS CONSIST OF:
Capital paid in $292,695 $36,490 $329,185
Undistributed net investment income 45 - 45
Accumulated net realized loss on
investment transactions (488) (304) (792)
Net unrealized appreciation
on investments 9,096 1,041 10,137
-------------- ------------------ -------------- -------------
$301,348 $37,227 $338,575
============= ================== ============== =============

(a) Adjustment to reflect the issuance of Tax-Free Bond shares in exchange for
shares of the Limited-Term Tax-Free in connection with the proposed
reorganization.

TAX-FREE BOND AND LIMITED-TERM TAX-FREE PROFORMAS
Statement of Operations

YEAR ENDED MAY 31, 2001 (UNAUDITED)

Pro Forma
Tax-Free Bond Limited-Term Tax-Free Adjustments Combining (Note 1)
------------- --------------------- ----------- ------------------

Investment Income (in Thousands)
Income:
Interest $14,440 $1,685 $16,125
-------------- ----------------- --------------- ------------

Expenses:
Management fees 1,377 173 1,550
Trustees' fees and expenses 12 2 14
-------------- ----------------- --------------- ------------
1,389 175 1,564
-------------- ----------------- --------------- ------------
Net investment income 13,051 1,510 14,561
-------------- ----------------- --------------- ------------

REALIZED AND UNREALIZED GAIN

Net realized gain on
investment transactions 4,533 96 4,629
Change in net unrealized
appreciation on investments 10,465 1,271 11,736
-------------- ----------------- --------------- ------------
Net realized and unrealized
gain on investments 14,998 1,367 16,365
-------------- ----------------- --------------- ------------
Net Increase in Net Assets
Resulting from Operations $28,049 $2,877 $30,926
============= ================= ============== ============
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 Tax-Free
Bond Fund and Limited-Term Tax-Free Fund (the funds) at and for the year
ended May 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 May 31, 2001. The Pro Forma
Combining Statement of Operations assumes the combination was consummated at
the beginning of the fiscal year ended May 31, 2001.

The pro forma statements give effect to the proposed transfer of the assets
and stated liabilities of the non-surviving fund, Limited-Term Tax-Free, in
exchange for shares of the surviving fund, for purposes of maintaining the
financial statements and performance, Tax-Free Bond. Financial information
for Tax-Free Bond as of May 31, 2001, has been adjusted to reflect the plan
of reorganization effective December 3, 2001, for Tax-Free Bond and Long-Term
Tax-Free. Tax-Free Bond acquired substantially all of the assets of Long-Term
Tax-Free in exchange for shares of equal value of Tax-Free Bond and the
assumption by Tax-Free Bond of all liabilities of Long-Term Tax-Free.

In accordance with accounting principles generally accepted in the United
States of America, the historical cost of investment securities will be
carried forward to the surviving fund and the results of operations for
pre-combination periods for the surviving fund will not be 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 through a commercial pricing
service or at the mean of the most recent bid and asked prices. 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 May 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 May 31, 2001, divided by the net asset value per share of the
shares of the surviving fund as of May 31, 2001. The pro forma total number
of shares outstanding for the combined fund consists of the following at May
31, 2001:

Total Outstanding Additional Shares
Combined Shares Shares of Assumed Issued
Fund (in thousands) Surviving Fund in Reorganization
----------------------------------------------------------------------------
Tax-Free Bond 32,242 28,697 3,545

4 INVESTMENTS - At May 31, 2001, the funds had the following net realized
capital loss carryovers available to offset future net realized capital gains
for federal income tax purposes. To the extent that those loss carryovers are
used to offset capital gains, it is probable that any gains offset will not
be distributed.

Fund Net Capital Loss Carryover
-----------------------------------------------------------------------------
Tax-Free Bond $1,148,018
Limited-Term Tax-Free $ 302,731

AMERICAN CENTURY MUNICIPAL TRUST

PART C OTHER INFORMATION

Item 15. Indemnification.

As stated in Article VII, Section 3 of the Amended Declaration of Trust,
incorporated herein by reference to Exhibit a to the Registration Statement,
"The Trustees shall be entitled and empowered to the fullest extent permitted by
law to purchase insurance for and to provide by resolution or in the Bylaws for
indemnification out of Trust assets for liability and for all expenses
reasonably incurred or paid or expected to be paid by a Trustee or officer in
connection with any claim, action, suit, or proceeding in which he or she
becomes involved by virtue of his or her capacity or former capacity with the
Trust. The provisions, including any exceptions and limitations concerning
indemnification, may be set forth in detail in the Bylaws or in a resolution
adopted by the Board of Trustees."

Registrant hereby incorporates by reference, as though set forth fully herein,
Article VI of the Registrant's Bylaws, amended and restated on March 9, 1998,
incorporated herein by reference to Exhibit b to Post-Effective Amendment No. 23
to the Registration Statement on March 26, 1998, File No. 2-91229.

The Registrant has purchased an insurance policy insuring its officers and
directors against certain liabilities which such officers and trustees may incur
while acting in such capacities and providing reimbursement to the Registrant
for sums which it may be permitted or required to pay to its officers and
trustees by way of indemnification against such liabilities, subject in either
case to clauses respecting deductibility and participation.

Item 16 EXHIBITS (all exhibits not filed herewith are being incorporated
herein by reference).

(1) (a) Amended Declaration of Trust, dated March 9, 1998 and amended
March 1, 1999 (filed electronically as Exhibit a to Post-Effective
Amendment No. 27 to the Registration Statement of the Registrant on
September 2, 1999, File No. 2-91229).

(b) Amendment to the Declaration of Trust, dated March 6, 2001 is
included herein (filed electronically as Exhibit a2 to Post-Effective
Amendment No. 31 to the Registration Statement of the Registrant on
April 20, 2001, File No. 2-91229).

(c) Amendment No. 2 to the Declaration of Trust dated August 1, 2001
(filed electronically as Exhibit a3 to Post-Effective Amendment No. 34
to the Registration Statement of the Registrant on September 28, 2001,
File No. 2-91229).

(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 the Registrant on March 26, 1998, File No. 2-91229).

(3) Not applicable

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

(5) Not applicable

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

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

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

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

(e) Amendment No. 2 to the Management Agreement (Investor Class)
between American Century Municipal Trust 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 Government Income Trust 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 Municipal Trust
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 Municipal Trust 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 Municipal Trust 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 Municipal Trust 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 Municipal Trust 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 Municipal Trust 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 Municipal Trust 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 Twentieth Century Services, Inc.
and Commerce Bank, N.A., 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 to Post-Effective Amendment No. 31 to the Registration
Statement of American Century Government Income Trust on February 7,
1997, File No. 2-99222).

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

(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 Fund, 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
Fund, 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 i to Post-Effective
Amendment No. 27 to the Registration Statement of the Registrant on
September 2, 1999, File No. 2-91229).

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

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

(b) Amendment to the Transfer Agency Agreement between American
Century Municipal Trust and American Century Services Corporation,
dated March 9, 1998 (filed electronically as Exhibit B9b to
Post-Effective Amendment No. 23 to the Registration Statement of the
Registrant on March 26, 1998, File No. 2-91229).

(c) Amendment No. 1 to the Transfer Agency Agreement between American
Century Municipal Trust 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 Municipal Trust and American Century Services Corporation,
dated November 20, 2000 (filed electronically as Exhibit h4 to
Post-Effective Amendment No. 30 to the Registration Statement of
American Century California Tax-Free and Municipal Funds on December
29, 2000, File No. 2-82734).

(e) Amendment No. 3 to the Transfer Agency Agreement between American
Century Municipal Trust 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 Exhibit 11 to Post-Effective Amendment No. 33 to the
Registration Statement of American Century Government Income Trust on
July 31, 1997, File No. 2-99222).

(15) Not applicable.

(16) Power of Attorney, dated September 16, 2000 (filed electronically as
Exhibit j3 to Post-Effective Amendment No. 29 to the Registration
Statement of the Registrant, on September 28, 2000, File No. 2-91229).

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

(b) Limited-Term Tax-Free and Tax-Free Bond Prospectus dated October
1, 2001 (filed electronically on September 28, 2001).

(d) Limited-Term Tax-Free and Tax-Free Bond Annual Reports dated May
31, 2001 (filed electronically on July 25, 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 MUNICIPAL TRUST

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 MUNICIPAL TRUST


EXHIBIT INDEX

EXHIBIT   DESCRIPTION

EX-99.1a  Amended Declaration of Trust, dated March 9, 1998 and amended March 1,
          1999 (filed electronically as Exhibit a to Post-Effective Amendment
          No. 27 to the Registration Statement of the Registrant on September 2,
          1999, File No. 2-91229).

EX-99.1b  Amendment to the Declaration of Trust, dated March 6, 2001 is included
          herein (filed electronically as Exhibit a2 to Post-Effective Amendment
          No. 31 to the Registration Statement of the Registrant on April 20,
          2001, File No. 2-91229).

EX-99.1c  Amendment No. 2 to the Declaration of Trust dated August 1, 2001
          (filed electronically as Exhibit a3 to Post-Effective Amendment No. 34
          to the Registration Statement of the Registrant on September 28, 2001,
          File No. 2-91229).

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 the Registrant 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
          Municipal Trust and American Century Investment Management, Inc.,
          dated August 1, 1997 (filed electronically as Exhibit 5 to
          Post-Effective Amendment No. 33 to the Registration Statement of
          American Century Government Income Trust on July 31, 1997, File No.
          2-99222).

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

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

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

EX-99.6e  Amendment No. 2 to the Management Agreement (Investor Class) between
          American Century Municipal Trust 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 Government Income Trust 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 Municipal Trust 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
          Municipal Trust 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
          Municipal Trust 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
          Municipal Trust 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
          Municipal Trust 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
          Municipal Trust 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
          Municipal Trust 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 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).

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 Twentieth Century Services, Inc. and
          Commerce Bank, N.A., 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 to Post-Effective Amendment No. 31 to the Registration
          Statement of American Century Government Income Trust on February 7,
          1997, File No. 2-99222).

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

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 Fund, 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
          Fund, 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 i to Post-Effective
          Amendment No. 27 to the Registration Statement of the Registrant on
          September 2, 1999, File No. 2-91229).

EX-99.12  Opinion and Consent as to the tax matters and consequences to
          Shareholders

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

EX-99.13b Amendment to the Transfer Agency Agreement between American Century
          Municipal Trust and American Century Services Corporation, dated March
          9, 1998 (filed electronically as Exhibit B9b to Post-Effective
          Amendment No. 23 to the Registration Statement of the Registrant on
          March 26, 1998, File No. 2-91229).

EX-99.13c Amendment No. 1 to the Transfer Agency Agreement between American
          Century Municipal Trust 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 Municipal Trust and American Century Services Corporation,
          dated November 20, 2000 (filed electronically as Exhibit h4 to
          Post-Effective Amendment No. 30 to the Registration Statement of
          American Century California Tax-Free and Municipal Funds on December
          29, 2000, File No. 2-82734).

EX-99.13e Amendment No. 3 to the Transfer Agency Agreement between American
          Century Municipal Trust 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).

EX-99.13f 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.

EX-99.14b Consent of KPMG Peat Marwick, LLP, independent auditors (filed
          electronically as Exhibit 11 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-99.16  Power of Attorney, dated September 16, 2000 (filed electronically as
          Exhibit j3 to Post-Effective Amendment No. 29 to the Registration
          Statement of the Registrant, on September 28, 2000, File No. 2-91229).

EX-99.17a Form of proxy vote card.

EX-99.17b Limited-Term Tax-Free and Tax-Free Bond Prospectuses dated October 1,
          2001 (filed electronically on September 28, 2001).

EX-99.17c Statement of Additional Information dated October 1, 2001 (filed
          electronically on September 28, 2001).

EX-99.17d Limited-Term Tax-Free and Tax-Free Bond Annual Reports dated May 31,
          2001 (filed electronically on July 25, 2001).

EX-99 5 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 Municipal Trust
4500 Main Street
Kansas City, Missouri 64141-6200

Gentlemen:

         You have requested our opinion regarding certain Federal income tax
consequences to the American Century Limited-Term Tax-Free Fund (the "Fund"), a
series of American Century Municipal Trust (the "Trust"), to American Century
Tax-Free Bond 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 the 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 the Fund and Acquiring have
and 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 assumption is not correct, the Reorganization may
not qualify as a tax-free reorganization




PricewaterhouseCoopers


Board of Trustees
American Century Municipal Trust
____________, 2002
Page 2




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 the 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

PricewaterhouseCoopers



Board of Trustees
American Century Municipal Trust
____________, 2002
Page 3




         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.

         (8) Acquiring's holding periods with respect to Fund' 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 Municipal Trust
____________, 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 6 ex-4.htm AGREEMENT AND PLAN REORGANIZATION Exhibit 4

                      AGREEMENT AND PLAN OF REORGANIZATION

                                       BY

                        AMERICAN CENTURY MUNICIPAL TRUST


                                TABLE OF CONTENTS


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

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

1.       TRANSFER OF ASSETS OF LIMITED-TERM TAX-FREE.

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

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

          1.3.      The net asset values of shares of Tax-Free Bond and of
                    Limited-Term Tax-Free shall be determined as of the
                    Valuation Time, as defined in Section 3.

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

2.        LIQUIDATING DISTRIBUTION AND TERMINATION OF LIMITED-TERM TAX-FREE

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

4.        CERTAIN REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF ACMT.

          ACMT, on behalf of itself and Limited-Term Tax-Free, represents and
          warrants to, and agrees with the following:

          4.1.      ACMT 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,
                    Limited-Term Tax-Free 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.      ACMT 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 ACMT, and represents ACMT'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 ACMT'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.      Limited-Term Tax-Free 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 Limited-Term
                    Tax-Free Assets or properly shown to be due on any return
                    filed by Limited-Term Tax-Free 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 Limited-Term Tax-Free Assets.

          4.6.      The financial statements of Limited-Term Tax-Free for the
                    fiscal year ended May 31, 2001, audited by
                    PricewaterhouseCoopers, LLP, independent auditors, copies of
                    which have been previously furnished to ACMT, present fairly
                    the financial position of Limited-Term Tax-Free as of May
                    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, Limited-Term Tax-Free 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 Limited-Term Tax-Free'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 Limited-Term Tax-Free'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 Limited-Term Tax-Free prior to the Effective
                    Date.

          4.8.      At both the Valuation Time and the Effective Time, there
                    shall be no known liabilities of Limited-Term Tax-Free,
                    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 ACMT's knowledge threatened, against ACMT or
                    Limited-Term Tax-Free which could result in liability on the
                    part of Limited-Term Tax-Free.

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

          4.11.     No consent, approval, authorization or order of any court or
                    governmental authority is required for the consummation by
                    ACMT 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 ACMT, the registration
                    statement filed by ACMT on Form N-14 relating to the shares
                    of Tax-Free Bond that will be registered with the SEC
                    pursuant to this Agreement, which, without limitation, shall
                    include a proxy statement and prospectus of ACMT 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 ACMT for use in the N-14 Registration Statement.

          4.13.     All of the issued and outstanding shares of Limited-Term
                    Tax-Free 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 Limited-Term Tax-Free has any
                    preemptive right of subscription or purchase in respect of
                    such shares.

5.        CERTAIN REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF ACMT.

          ACMT, on behalf of itself and Tax-Free Bond, represents and warrants
          to, and agrees with the following:

          5.1.      ACMT 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,
                    Tax-Free Bond is registered with the SEC as an open-end
                    management investment company under the 1940 Act and such
                    registration is in full force and effect.

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

          5.5.      The financial statements of Tax-Free Bond for its fiscal
                    year ended May 31, 2001, audited by PricewaterhouseCoopers
                    LLP, independent auditors, copies of which have been
                    previously furnished to ACMT, present fairly the financial
                    position of Tax-Free Bond as of May 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 Tax-Free Bond whether
                    accrued, absolute, contingent or otherwise, not reflected in
                    the net asset value per share of its shares to be issued
                    pursuant to this Agreement.

          5.7.      There are no legal, administrative or other proceedings
                    pending or, to its knowledge, threatened against ACMT or
                    Tax-Free Bond that could result in liability on the part of
                    ACMT or Tax-Free Bond.

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

          5.10.     The shares of Tax-Free Bond to be issued and delivered to
                    Limited-Term Tax-Free for the account of record holders of
                    shares of Limited-Term Tax-Free 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 ACMT shall have any
                    preemptive right of subscription or purchase in respect
                    thereto.

6.        SHAREHOLDER ACTION ON BEHALF OF LIMITED-TERM TAX-FREE.

          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 ACMT shall call, and ACMT shall hold,
                    a meeting of the shareholders of Limited-Term Tax-Free 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 Limited-Term
                                        Tax-Free Assets to Tax-Free Bond and the
                                        assumption by Tax-Free Bond of the
                                        Limited-Term Tax-Free Liabilities, in
                                        exchange for shares of Tax-Free Bond, as
                                        described in this Agreement; and

                              6.1.1.2.  The liquidation of Limited-Term Tax-Free
                                        through the distribution to its record
                                        holders of the shares of Tax-Free Bond
                                        as described in this Agreement; and

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

          6.2.      Approval of this Reorganization Agreement by the
                    shareholders of Limited-Term Tax-Free shall constitute the
                    waiver of the application of any fundamental policy of
                    Limited-Term Tax-Free 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, ACMT shall have furnished and shall continue to
          furnish the information relating to Limited-Term Tax-Free and Tax-Free
          Bond that is required by the 1933 Act, the 1934 Act, the 1940 Act, the
          rules and regulations under each of those Acts and state securities
          laws, to be included in the N-14 Registration Statement.

8.       EFFECTIVE TIME OF THE REORGANIZATION.

          Delivery of the Limited-Term Tax-Free Assets and the shares of
          Tax-Free Bond to be issued pursuant to Section 1 and the liquidation
          of Limited-Term Tax-Free 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 ACMT. The date
          and time at which such actions are taken are referred to herein as the
          "Effective Time." To the extent any of the Limited-Term Tax-Free
          Assets are, for any reason, not transferred at the Effective Time,
          ACMT shall cause such Limited-Term Tax-Free Assets to be transferred
          in accordance with this Agreement at the earliest practicable date
          thereafter.

9.       ACMT CONDITIONS.

          The obligations of ACMT hereunder with respect to Tax-Free Bond shall
          be subject to the following conditions precedent:

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

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

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

          9.6.      The N-14 Registration Statement shall have become effective
                    under the 1933 Act and no stop order suspending such
                    effectiveness shall have been instituted or, to the
                    knowledge of ACMT, 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 ACMT shall have
                    certified that ACMT 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.      ACMT CONDITIONS.

          The obligations of ACMT hereunder with respect to Limited-Term
          Tax-Free 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
                    Limited-Term Tax-Free in the manner required by law.

          10.2.     All representations and warranties of ACMT 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 Tax-Free Bond since May 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.     ACMT shall have received a tax opinion, addressed to ACMT 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 ACMT, 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.     ACMT shall not sell or otherwise dispose of any shares of
                    Tax-Free Bond to be received in the transactions
                    contemplated herein, except in distribution to its
                    shareholders as contemplated herein.

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

          10.7.     The President or a Vice President of ACMT shall have
                    certified that ACMT 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.

          ACMT shall have at the Effective Time confirmations or other adequate
          evidence as to the adjusted tax basis of the Limited-Term Tax-Free
          Assets then delivered to Tax-Free Bond in accordance with the terms of
          this Agreement.

12.       FURTHER ASSURANCES.

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

13.       TERMINATION OF REPRESENTATIONS AND WARRANTIES.

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

14.       TERMINATION OF AGREEMENT.

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

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

                    14.1.2.   With respect to Limited-Term Tax-Free, by ACMT 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 ACMT with
                    respect to Tax-Free Bond pursuant to Section 14.1.1 as a
                    result of a breach by ACMT with respect to Limited-Term
                    Tax-Free of any of its representations, warranties or
                    covenants in this Agreement, or such termination is by ACMT
                    with respect to Limited-Term Tax-Free pursuant to Section
                    14.1.2 as a result of a breach by ACMT with respect to
                    Tax-Free Bond of any of its representations, warranties or
                    covenants in this Agreement, nothing herein shall affect the
                    non-breaching party's right to damages on account of such
                    other party's breach.

15.       AMENDMENT AND WAIVER.

          At any time prior to or (to the fullest extent permitted by law) after
          approval of this Agreement by the shareholders of ACMT, (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.       ACMT LIABILITY.

          19.1.     The name "American Century Municipal Trust" and "Trustees of
                    American Century Municipal Trust" refer respectively to the
                    trust created and the trustees, as trustees but not
                    individually or personally, acting from time to time under
                    an Amended and Restated Agreement and Declaration of Trust
                    dated as of March 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 ACMT. The obligations of ACMT
                    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
                    ACMT personally, but bind only the trust property, and all
                    persons dealing with any portfolio of ACMT must look solely
                    to the trust property belonging to such portfolio for the
                    enforcement of any claims against ACMT.

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

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

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

21.       EXPENSES.

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

22.       ENTIRE AGREEMENT.

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

23.       COUNTERPARTS.

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




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


AMERICAN CENTURY MUNICIPAL TRUST


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


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

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

American Century Municipal Trust

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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