CERTIFIED SHAREHOLDER REPORT

N-CSR 1 n-csr.htm CERTIFIED SHAREHOLDER REPORT CERTIFIED SHAREHOLDER REPORT

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                   FORM N-CSR
                   CERTIFIED SHAREHOLDER REPORT OF REGISTERED
                         MANAGEMENT INVESTMENT COMPANIES



Investment Company Act file number   811-4025
                                  ----------------------------------------------


                        AMERICAN CENTURY MUNICIPAL TRUST
--------------------------------------------------------------------------------
               (Exact name of registrant as specified in charter)



4500 MAIN STREET, KANSAS CITY, MISSOURI                                 64111
--------------------------------------------------------------------------------
(Address of principal executive offices)                            (Zip code)



DAVID C. TUCKER, ESQ., 4500 MAIN STREET, 9TH FLOOR, KANSAS CITY, MISSOURI 64111
--------------------------------------------------------------------------------
                    (Name and address of agent for service)


Registrant's telephone number, including area code: 816-531-5575
                                                   -----------------------------

Date of fiscal year end:  5-31
                        --------------------------------------------------------

Date of reporting period: 5-31-2006
                         -------------------------------------------------------



ITEM 1.  REPORTS TO STOCKHOLDERS.

American Century Investments
ANNUAL REPORT

MAY 31, 2006

[photo of man and woman]

Tax-Free Money Market Fund
Tax-Free Bond Fund

[american century investments logo and text logo]




Table of Contents

Our Message to You . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Market Perspective . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
   U.S. Fixed-Income Total Returns . . . . . . . . . . . . . . . . . . . . . 2

TAX-FREE MONEY MARKET
Performance  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Portfolio Commentary . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
   Yields  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
   Portfolio Composition by Credit Rating  . . . . . . . . . . . . . . . . . 5
   Portfolio Composition by Maturity . . . . . . . . . . . . . . . . . . . . 5
Schedule of Investments  . . . . . . . . . . . . . . . . . . . . . . . . . . 6

TAX-FREE BOND
Performance  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Portfolio Commentary  . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
   Yields . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
   Portfolio Composition by Credit Rating . . . . . . . . . . . . . . . . . 12
   Top Five States  . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Schedule of Investments . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Shareholder Fee Examples  . . . . . . . . . . . . . . . . . . . . . . . . . 24

FINANCIAL STATEMENTS
Statement of Assets and Liabilities . . . . . . . . . . . . . . . . . . . . 26
Statement of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Statement of Changes in Net Assets  . . . . . . . . . . . . . . . . . . . . 28
Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . . 29
Financial Highlights  . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Report of Independent Registered Public Accounting Firm . . . . . . . . . . 37

OTHER INFORMATION
Management  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Approval of Management Agreement for
Tax-Free Money Market and Tax-Free Bond . . . . . . . . . . . . . . . . . . 41
Share Class Information . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Additional Information  . . . . . . . . . . . . . . . . . . . . . . . . . . 47

The opinions expressed in the Market Perspective and each of the Portfolio
Commentaries reflect those of the portfolio management team as of the date of
the report, and do not necessarily represent the opinions of American Century or
any other person in the American Century organization. Any such opinions are
subject to change at any time based upon market or other conditions and American
Century disclaims any responsibility to update such opinions. These opinions may
not be relied upon as investment advice and, because investment decisions made
by American Century funds are based on numerous factors, may not be relied upon
as an indication of trading intent on behalf of any American Century fund.
Security examples are used for representational purposes only and are not
intended as recommendations to purchase or sell securities. Performance
information for comparative indices and securities is provided to American
Century by third party vendors. To the best of American Century's knowledge,
such information is accurate at the time of printing.




Our Message to You

[photo of James E. Stowers III and James E. Stowers, Jr.]

JAMES E. STOWERS III WITH JAMES E. STOWERS, JR.

We are pleased to provide you with the annual report for the American Century
Tax-Free Money Market and Tax-Free Bond funds for the 12 months ended May 31,
2006. We hope you find this information helpful in monitoring your investment.
Another useful resource we offer is our Web site, americancentury.com, where we
post quarterly portfolio commentaries, the views of our senior investment
officers, and other communications about investments, portfolio strategy, and
the markets.

Our Web site presents American Century's recently-announced strategic
collaboration with Lance Armstrong and the Lance Armstrong Foundation (LAF). Our
new campaign, featuring Lance, is designed to encourage investors to take a more
active role in planning their financial futures and make every investment
decision count.

American Century's collaboration with Lance Armstrong and the LAF is a perfect
fit. Like members of our family, Lance is a cancer survivor and shares our
values of optimism, focus, and determination. In addition, Lance and our family
have dedicated our success to improving lives, through the LAF and the Stowers
Institute for Medical Research, respectively. To learn more about American
Century's collaboration with Lance Armstrong and the LAF, please visit
www.lanceface.com on the Web and click on the links to related sites.

Besides the exciting new collaboration, we've enjoyed other good news -- in
January, American Century was named, for the seventh consecutive year, one of
FORTUNE magazine's 100 Best Companies to Work For in America. Fostering a
positive work environment can benefit fund investors as well as our company --
it helps us continue to attract and retain talented people.

As always, we deeply appreciate your investment with American Century
Investments.

Sincerely,

      /s/James E. Stowers, Jr.
      James E. Stowers, Jr.
      FOUNDER
      AMERICAN CENTURY COMPANIES, INC.

      /s/James E. Stowers III
      James E. Stowers III
      CHAIRMAN OF THE BOARD
      AMERICAN CENTURY COMPANIES, INC.


------
1


Market Perspective

[photo of David MacEwen]

BY DAVID MACEWEN, CHIEF INVESTMENT OFFICER, FIXED INCOME

ECONOMIC GROWTH PUSHED COMMODITY PRICES & INTEREST RATES HIGHER

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

TREASURY YIELDS INVERTED, INDICATING POSSIBLE ECONOMIC WEAKNESS AHEAD

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

MUNICIPAL MARKET GENERALLY OUTPERFORMED TAXABLE MARKET

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

U.S. FIXED-INCOME TOTAL RETURNS

For the 12 months ended May 31, 2006
--------------------------------------------------------------------------------
LEHMAN BROTHERS MUNICIPAL MARKET INDICES
--------------------------------------------------------------------------------
Municipal Bond                                                1.90%
--------------------------------------------------------------------------------
3-Year Municipal Bond                                         1.59%
--------------------------------------------------------------------------------
5-Year General Obligation (GO)                                1.24%
--------------------------------------------------------------------------------
Long-Term Municipal Bond (22+ years)                          3.20%
--------------------------------------------------------------------------------
Non-Investment-Grade (High-Yield)                             7.20%
--------------------------------------------------------------------------------
TAXABLE MARKET RETURNS
--------------------------------------------------------------------------------
Lehman Bros. U.S. Aggregate Index                            -0.48%
--------------------------------------------------------------------------------
Lehman Bros. U.S. Treasury Index                             -1.39%
--------------------------------------------------------------------------------
3-Month Treasury Bill                                         3.85%
--------------------------------------------------------------------------------
10-Year Treasury Note                                        -5.25%
--------------------------------------------------------------------------------

Source: Lehman Brothers Inc.


------
2


Tax-Free Money Market - Performance

TOTAL RETURNS AS OF MAY 31, 2006
                             --------------------------------------
                                    AVERAGE ANNUAL RETURNS
--------------------------------------------------------------------------------
                                                         SINCE       INCEPTION
                    1 YEAR    5 YEARS   10 YEARS(1)   INCEPTION(1)      DATE
-------------------------------------------------------------------------------
INVESTOR CLASS       2.51%     1.43%       2.39%        3.31%         7/31/84
-------------------------------------------------------------------------------
AVERAGE RETURN
OF LIPPER'S
TAX-EXEMPT MONEY
MARKET FUNDS(2)      2.16%     1.14%       2.12%        3.16%(3)        --
-------------------------------------------------------------------------------
Fund's Lipper
Ranking as
of 5/31/06(2)      9 of 115   8 of 95     6 of 80      5 of 28(3)       --
-------------------------------------------------------------------------------
Fund's Lipper
Ranking as
of 6/30/06(2)      9 of 115   8 of 96     6 of 79      5 of 28(3)       --
-------------------------------------------------------------------------------

(1) Fund returns and rankings would have been lower if management fees had not
    been waived from 8/1/97 to 7/31/98. Beginning on 8/1/98, management fees
    were phased in at a rate of 0.10% each month until 12/1/98.

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

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

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

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

(3) Since 8/31/84, the date nearest the fund's inception for which data are
    available.

Data presented reflect past performance. Past performance is no guarantee of
future results. Current performance may be higher or lower than the performance
shown. To obtain performance data current to the most recent month end, please
call 1-800-345-2021 or visit americancentury.com. Investment income may be
subject to certain state and local taxes and, depending on your tax status, the
federal alternative minimum tax (AMT). Capital gains are not exempt from state
and federal income tax.

An investment in the fund is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency. Although the fund seeks to
preserve the value of your investment at $1.00 per share, it is possible to lose
money by investing in the fund.

The 7-day current yield more closely reflects the current earnings of the fund
than the total return.


------
3


Tax-Free Money Market - Portfolio Commentary

PORTFOLIO MANAGER: TODD PARDULA

MR. PARDULA, A MEMBER OF THE MUNICIPAL BOND INVESTMENT-MANAGEMENT TEAM WHO
JOINED AMERICAN CENTURY INVESTMENTS IN 1990, REPLACED ALAN KRUSS AS TEAM LEADER
FOR TAX-FREE MONEY MARKET WHEN MR. KRUSS' ROLE IN THE MANAGEMENT OF SEVERAL
AMERICAN CENTURY MUNICIPAL BOND FUNDS WAS EXPANDED.

PERFORMANCE SUMMARY

Tax-Free Money Market returned 2.51% for the year ended May 31, 2006,
outperforming the 2.16% average return of the 115 funds in Lipper's "Tax-Exempt
Money Market Funds" category, and ranking the fund in the top 8% (#9 out of 115)
of the Lipper peers. Tax-Free Money Market also ranks in the top 9% for the
5-year and 10-year periods ended May 31 (see the previous page for performance
numbers.)

MARKET PERSPECTIVE

As the Federal Reserve pushed short-term U.S. interest rates up two percentage
points over the course of the period, money market yields rose accordingly.
Municipal money market yields also displayed their typical seasonal
fluctuations--yields spiked in late December 2005 when money market supply
increased as dealers tried to clear their inventory before year end. But yields
fell again in early January as bond maturities and calls boosted demand for
money market securities. A similar cycle played out in April and May of 2006, as
investors withdrew funds from their money market accounts to pay taxes, causing
demand for money markets to plummet and yields to spike. Overall, Tax-Free Money
Market's 7-day current yield rose from 2.41% on May 31, 2005, to 3.02% on May
31, 2006.

PORTFOLIO POSITIONING & STRATEGY

Managers kept most of Tax-Free Money Market's assets in variable rate demand
notes (VRDNs). These are short-term, floating-rate municipal notes with weekly
yield resets (though some are daily or monthly). This benefits the fund when
interest rates are rising, as they were during the fiscal year, or when demand
for money-market securities falls, as it did in December and April. VRDNs can
capture higher yields more quickly than other short-term securities, giving
Tax-Free Money Market's yield a boost. As of May 31, 2006, VRDNs made up about
93% of the portfolio's holdings. The remainder was invested in municipal notes
and bonds, municipal mandatory put bonds, and municipal commercial paper.

YIELDS AS OF MAY 31, 2006
--------------------------------------------------------------------------------
7-DAY CURRENT YIELD
--------------------------------------------------------------------------------
                                                  3.02%
--------------------------------------------------------------------------------
7-DAY EFFECTIVE YIELD
--------------------------------------------------------------------------------
                                                  3.06%
--------------------------------------------------------------------------------
7-DAY TAX-EQUIVALENT CURRENT YIELDS(1)
--------------------------------------------------------------------------------
25.0% Tax Bracket                                 4.03%
--------------------------------------------------------------------------------
28.0% Tax Bracket                                 4.19%
--------------------------------------------------------------------------------
33.0% Tax Bracket                                 4.51%
--------------------------------------------------------------------------------
35.0% Tax Bracket                                 4.65%
--------------------------------------------------------------------------------

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

                                                                    (continued)


------
4


Tax-Free Money Market - Portfolio Commentary

Tax-Free Money Market's weighted average maturity fell steadily between
September 2005 and May 2006, ending the period at 11 days on May 31. Much of the
decline resulted as the investment team steered clear of municipal notes, which
didn't offer very attractive yields. These notes typically have a one-year
maturity, and so push the fund's WAM higher--without them, the WAM tends to
shorten significantly.


HOW THE FUND FITS IN A DIVERSIFIED INVESTMENT STRATEGY

Tax-Free Money Market is designed to supply the "cash" component in a
diversified investment portfolio, offering capital preservation and liquidity.
Tax-Free Money Market provides federally tax-exempt current income by investing
in high-quality, very short-term debt securities issued by cities, counties, and
other municipalities.

PORTFOLIO COMPOSITION BY CREDIT RATING
--------------------------------------------------------------------------------
                                          % OF FUND             % OF FUND
                                         INVESTMENTS           INVESTMENTS
                                            AS OF                 AS OF
                                           5/31/06              11/30/05
--------------------------------------------------------------------------------
A-1+                                        71%                   68%
--------------------------------------------------------------------------------
A-1                                         29%                   32%
--------------------------------------------------------------------------------

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

PORTFOLIO COMPOSITION BY MATURITY
--------------------------------------------------------------------------------
                                          % OF FUND             % OF FUND
                                         INVESTMENTS           INVESTMENTS
                                            AS OF                 AS OF
                                           5/31/06              11/30/05
--------------------------------------------------------------------------------
1-30 days                                   95%                   93%
--------------------------------------------------------------------------------
31-90 days                                   1%                    --
--------------------------------------------------------------------------------
91-180 days                                  4%                    1%
--------------------------------------------------------------------------------
More than 180 days                           --                    6%
--------------------------------------------------------------------------------


------
5


Tax-Free Money Market - Schedule of Investments

MAY 31, 2006

Principal Amount                    ($ IN THOUSANDS)                 Value
--------------------------------------------------------------------------------

MUNICIPAL SECURITIES -- 98.7%

ALABAMA - 2.5%
--------------------------------------------------------------------------------
           $1,500  Birmingham Public Park &
                   Recreation Board Rev., (Children's
                   Zoo), VRDN, 3.59%, 6/1/06
                   (LOC: AmSouth Bank)                                 $   1,500
--------------------------------------------------------------------------------
            2,500  Birmingham Special Care
                   Facilities Financing Auth. Rev.,
                   (United Cerebral Palsy Project),
                   VRDN, 3.59%, 6/1/06
                   (LOC: AmSouth Bank)                                     2,500
--------------------------------------------------------------------------------
              800  Mobile Industrial Development
                   Board Rev., (Holnam Inc.),
                   VRDN, 3.36%, 6/7/06
                   (LOC: Bayerische Landesbank)                              800
--------------------------------------------------------------------------------
            2,005  Tuscaloosa Health Care Auth.
                   Rev., (Pine Valley), VRDN, 3.59%,
                   6/1/06 (LOC: AmSouth Bank)                              2,005
--------------------------------------------------------------------------------
                                                                           6,805
--------------------------------------------------------------------------------
ARIZONA - 2.5%
--------------------------------------------------------------------------------
            6,750  Maricopa County Industrial
                   Development Auth. Rev.,
                   (Michael Pylman Dairies),
                   VRDN, 3.62%, 6/1/06
                   (LOC: LaSalle Bank N.A)                                 6,750
--------------------------------------------------------------------------------
CALIFORNIA - 3.5%
--------------------------------------------------------------------------------
            1,387  Alameda County Industrial
                   Development Auth. Rev.,
                   (Design Workshops), VRDN,
                   3.72%, 6/1/06 (LOC: Wells
                   Fargo Bank N.A.)                                        1,387
--------------------------------------------------------------------------------
            1,022  California Economic Development
                   Financing Auth. Rev., (Wesflex
                   Pipe Manufacturing), VRDN,
                   3.78%, 6/1/06 (LOC: Wells
                   Fargo Bank N.A.)                                        1,022
--------------------------------------------------------------------------------
            7,000  Puttable Floating Option
                   Tax-Exempt Receipts, VRDN,
                   4.07%, 6/1/06
                   (LOC: Lloyds Bank plc)                                  7,000
--------------------------------------------------------------------------------
                                                                           9,409
--------------------------------------------------------------------------------
COLORADO - 4.1%
--------------------------------------------------------------------------------
            3,095  Arvada Water Enterprise Rev.,
                   VRDN, 3.80%, 6/1/06 (FSA)
                   (SBBPA: Dexia Credit Local)                             3,095
--------------------------------------------------------------------------------
            2,200  Colorado Health Facilities Auth.
                   Rev., (Boulder Community
                   Hospital), VRDN, 3.35%, 6/7/06
                   (LOC: JPMorgan Chase Bank)                              2,200
--------------------------------------------------------------------------------
            5,800  Colorado Housing & Finance
                   Auth. Rev., (Kroger Co.),
                   VRDN, 3.57%, 6/1/06
                   (LOC: U.S. Bank Trust N.A.)                             5,800
--------------------------------------------------------------------------------
                                                                          11,095
--------------------------------------------------------------------------------

Principal Amount                    ($ IN THOUSANDS)                 Value
--------------------------------------------------------------------------------
FLORIDA - 4.8%
--------------------------------------------------------------------------------
           $1,075  Broward County Health Facilities
                   Auth. Rev., (John Knox Village),
                   VRDN, 3.67%, 6/1/06 (RADIAN)
                   (SBBPA: SunTrust Bank)                               $  1,075
--------------------------------------------------------------------------------
            4,930  Florida Housing Finance Agency
                   Rev., VRDN, 3.60%, 6/1/06
                   (SBBPA: Merrill Lynch Capital
                   Services) (Acquired 2/6/04 -
                   4/19/04, Cost $4,930)(1)                                4,930
--------------------------------------------------------------------------------
            4,300  Miami-Dade County Industrial
                   Development Auth. Rev.,
                   (Palmer Trinity Private College),
                   VRDN, 3.55%, 6/1/06
                   (LOC: Keybank N.A.)                                     4,300
--------------------------------------------------------------------------------
            1,950  Pinellas County Health Facility
                   Auth. Rev., (Pooled Hospital
                   Loan Program), VRDN, 3.60%,
                   6/1/06 (Ambac) (SBBPA:
                   Wachovia Bank N.A.)                                     1,950
--------------------------------------------------------------------------------
              800  Seminole County Industrial
                   Development Auth. Rev., VRDN,
                   3.67%, 6/1/06 (LOC: Bank
                   of America N.A.)                                          800
--------------------------------------------------------------------------------
                                                                          13,055
--------------------------------------------------------------------------------
GEORGIA - 2.0%
--------------------------------------------------------------------------------
            5,495  Fulton County Development Auth.
                   Rev., (Automatic Data Processing),
                   VRDN, 3.65%, 6/15/06                                    5,495
--------------------------------------------------------------------------------
HAWAII - 1.8%
--------------------------------------------------------------------------------
            3,000  Hawaii Pacific Health Rev.,
                   Series 2004 B, (Department
                   Budget & Finance), VRDN,
                   3.30%, 6/7/06 (RADIAN)
                   (SBBPA: Bank of Nova Scotia)                            3,000
--------------------------------------------------------------------------------
            2,000  Hawaii Pacific Health Rev.,
                   Series 2004 B2, (Department
                   Budget & Finance), VRDN,
                   3.30%, 6/7/06 (RADIAN)
                   (SBBPA: Bank of Nova Scotia)                            2,000
--------------------------------------------------------------------------------
                                                                           5,000
--------------------------------------------------------------------------------
IDAHO - 1.1%
--------------------------------------------------------------------------------
            3,000  Lincoln County Industrial
                   Development Corp. Rev.,
                   (Double A Dairy), VRDN,
                   3.62%, 6/1/06
                   (LOC: Bank of America N.A.)                             3,000
--------------------------------------------------------------------------------
ILLINOIS - 0.7%
--------------------------------------------------------------------------------
            1,900  City of Chicago GO, Series
                   2005 D, VRDN, 3.47%, 6/1/06
                   (FSA) (LOC: Dexia Credit Local)                         1,900
--------------------------------------------------------------------------------
INDIANA - 9.3%
--------------------------------------------------------------------------------
            2,800  Jasper County Industrial
                   Development Rev., (Newberry
                   Farms LLC), VRDN, 3.62%,
                   6/1/06 (LOC: Bank of the West)                          2,800
--------------------------------------------------------------------------------
            5,615  La Porte Industrial Development
                   Rev., (KKO Realty), VRDN, 3.62%,
                   6/1/06 (LOC: Bank of New York                           5,615
--------------------------------------------------------------------------------

See Notes to Financial Statements.                                  (continued)


------
6


Tax-Free Money Market - Schedule of Investments

MAY 31, 2006

Principal Amount                    ($ IN THOUSANDS)                 Value
--------------------------------------------------------------------------------
           $1,565  Morgan County Rev., Series
                   2002 A, (Morgan Hospital &
                   Medical Center), VRDN, 3.60%,
                   6/1/06 (LOC: Fifth Third Bank)                       $  1,565
--------------------------------------------------------------------------------
           11,815  Morgan County Rev., Series
                   2002 B, (Morgan Hospital &
                   Medical Center), VRDN, 3.55%,
                   6/1/06 (LOC: Fifth Third Bank)                         11,815
--------------------------------------------------------------------------------
            3,625  Vincennes Economic
                   Development Rev., (Grandview
                   Care Inc.), VRDN, 3.70%, 6/1/06
                   (LOC: JPMorgan Chase Bank)                              3,625
--------------------------------------------------------------------------------
                                                                          25,420
--------------------------------------------------------------------------------
KENTUCKY - 2.6%
--------------------------------------------------------------------------------
            5,000  Kentucky Asset Liability
                   Commission Tax and Rev.
                   Anticipation Notes, Series
                   2005 A, 4.00%, 6/28/06                                  5,005
--------------------------------------------------------------------------------
            1,000  Murray Industrial Building Rev.,
                   (Kroger Co.), VRDN, 3.57%,
                   6/1/06 (LOC: U.S. Bank N.A.)                            1,000
--------------------------------------------------------------------------------
            1,000  Winchester Industrial Building
                   Rev., (Kroger Co.), VRDN, 3.57%,
                   6/1/06 (LOC: U.S. Bank N.A.)                            1,000
--------------------------------------------------------------------------------
                                                                           7,005
--------------------------------------------------------------------------------
LOUISIANA - 4.7%
--------------------------------------------------------------------------------
            2,800  Louisiana Local Government
                   Environmental Facilities &
                   Community Development Auth.
                   Rev., (Trinity Episcopal School),
                   VRDN, 3.32%, 6/7/06
                   (LOC: SunTrust Bank)                                    2,800
--------------------------------------------------------------------------------
           10,000  Louisiana Local Government
                   Environmental Facilities &
                   Community Development Auth.
                   Rev., Series 2006 A, VRDN,
                   3.57%, 6/1/06 (Ambac)
                   (SBBPA: BNP Paribas)                                   10,000
--------------------------------------------------------------------------------
                                                                          12,800
--------------------------------------------------------------------------------
MARYLAND - 0.4%
--------------------------------------------------------------------------------
            1,000  Maryland Economic Development
                   Corp. Rev., Series 2002 B,
                   (Federation of American
                   Societies), VRDN, 3.32%,
                   6/7/06 (LOC: SunTrust Bank)                             1,000
--------------------------------------------------------------------------------
MASSACHUSSETTS - 1.8%
--------------------------------------------------------------------------------
            5,000  Massachusetts Development
                   Finance Agency Rev.,
                   (Wentworth Technology  Institute),
                   VRDN, 3.55%,  6/1/06 (RADIAN)
                   (SBBPA: Bank of New York)                               5,000
--------------------------------------------------------------------------------
MINNESOTA - 4.9%
--------------------------------------------------------------------------------
            6,940  Dakota County Community
                   Development Agency Rev.,
                   (Catholic Finance Corp.),  VRDN,
                   3.35%, 6/7/06
                   (LOC: U.S. Bank N.A.)                                   6,940
--------------------------------------------------------------------------------

Principal Amount                    ($ IN THOUSANDS)                 Value
--------------------------------------------------------------------------------
           $6,500  East Grand Forks Rev.,
                   (American Crystal Sugar Co.),
                   VRDN, 3.62%, 6/1/06
                   (LOC: Wachovia Bank N.A.)                            $  6,500
--------------------------------------------------------------------------------
                                                                          13,440
--------------------------------------------------------------------------------
MISSISSIPPI - 0.9%
--------------------------------------------------------------------------------
            2,570  Mississippi Business Finance
                   Corp. Rev., Series 2004 B,
                   VRDN, 3.59%, 6/1/06
                   (LOC: Wells Fargo Bank N.A.)                            2,570
--------------------------------------------------------------------------------
MISSOURI - 6.9%
--------------------------------------------------------------------------------
            6,700  Jackson County Industrial
                   Development Auth. Rev.,
                   (Linda Hall Library), VRDN,
                   3.59%, 6/1/06
                   (LOC: Commerce Bank N.A.)                               6,700
--------------------------------------------------------------------------------
            2,560  Kansas City Industrial
                   Development Auth. Rev.,
                   (Plaza Manor Nursing),
                   VRDN, 3.62%, 6/1/06
                   (LOC: Comerica Bank)                                    2,560
--------------------------------------------------------------------------------
            9,400  Missouri State Health &
                   Educational Facilities Auth. COP,
                   (Pembroke Hill School),
                   VRDN, 3.59%, 6/1/06
                   (LOC: Commerce Bank N.A.)                               9,400
--------------------------------------------------------------------------------
                                                                          18,660
--------------------------------------------------------------------------------
NEVADA - 1.3%
--------------------------------------------------------------------------------
            3,600  Clark County Economic
                   Development Rev., (Lutheran
                   Secondary School Association),
                   VRDN, 3.67%, 6/1/06
                   (LOC: Allied Irish Bank plc)                            3,600
--------------------------------------------------------------------------------
NORTH CAROLINA - 4.9%
--------------------------------------------------------------------------------
            1,480  North Carolina Medical Care
                   Commission Retirement
                   Facilities Rev., (Aldersgate),
                   VRDN, 3.30%, 6/7/06
                   (LOC: Branch Banking & Trust)                           1,480
--------------------------------------------------------------------------------
           11,900  North Carolina Medical Care
                   Commission Retirement
                   Facilities Rev., Series 2001 C,
                   (Village at Brookwood),
                   VRDN, 3.30%, 6/7/06
                   (LOC: Branch Banking & Trust)                          11,900
--------------------------------------------------------------------------------
                                                                          13,380
--------------------------------------------------------------------------------
OREGON - 4.8%
--------------------------------------------------------------------------------
           13,100  Port of Portland Public Grain
                   Elevator Rev., (Columbia Grain Inc.),
                   VRDN, 3.59%, 6/1/06
                   (LOC: Wachovia Bank N.A.)                              13,100
--------------------------------------------------------------------------------
SOUTH CAROLINA - 3.0%
--------------------------------------------------------------------------------
            8,150  South Carolina Jobs Economic
                   Development Auth Rev.,
                   (Greenville Technical College),
                   VRDN, 3.59%, 6/1/06
                   (LOC: SunTrust Bank)                                    8,150
--------------------------------------------------------------------------------

See Notes to Financial Statements.                                   (continued)


------
7


Tax-Free Money Market -  Schedule of Investments

MAY 31, 2006

Principal Amount                    ($ IN THOUSANDS)                 Value
--------------------------------------------------------------------------------
TENNESSEE - 7.0%
--------------------------------------------------------------------------------
           $7,880  Bradley County Industrial
                   Development Board Rev.,
                   (Kroger Co.), VRDN, 3.57%,
                   6/1/06 (LOC: U.S. Bank N.A.)                         $  7,880
--------------------------------------------------------------------------------
              700  Cookeville Industrial Development
                   Board Rev., Series 2001 A,
                   (Advocacy & Resources Project),
                   VRDN, 3.59%, 6/1/06
                   (LOC: AmSouth Bank)                                       700
--------------------------------------------------------------------------------
            2,300  Knox County Industrial
                   Development Board Rev.,
                   (Kroger Co.), VRDN,  3.57%, 6/1/06
                   (LOC: U.S. Bank Trust N.A.)                             2,300
--------------------------------------------------------------------------------
            8,200  Shelby County Health
                   Educational & Housing Facilities
                   Board Rev., (Kings Daughter
                   &  Sons), VRDN, 3.59%, 6/1/06
                   (LOC: AmSouth Bank)                                     8,200
--------------------------------------------------------------------------------
                                                                          19,080
--------------------------------------------------------------------------------
TEXAS - 16.2%
--------------------------------------------------------------------------------
           10,000  Crawford Education Facilities
                   Corp. Rev., (University Package
                   System A), VRDN, 3.56%,
                   6/1/06 (LOC: BNP Paribas)                              10,000
--------------------------------------------------------------------------------
            5,500  Gulf Coast Industrial
                   Development Auth. Rev.,
                   (Petrounited Term Inc.),
                   VRDN, 3.56%, 6/1/06
                   (LOC: BNP Paribas)                                      5,500
--------------------------------------------------------------------------------
            3,000  Hale County Industrial
                   Development Corp. Rev.,
                   (Struikmans), VRDN, 3.62%,
                   6/1/06 (LOC: Bank of the West)                          3,000
--------------------------------------------------------------------------------
            4,000  Hale County Industrial
                   Development Corp. Rev.,
                   (White River Ranch),
                   VRDN, 3.62%, 6/1/06
                   (LOC: Wells Fargo Bank N.A.)                            4,000
--------------------------------------------------------------------------------
            2,470  Lubbock Health Facilities
                   Development Corp. Rev.,
                   (Saint Joseph Health System),
                   5.00%, 7/1/06 (FSA)                                     2,474
--------------------------------------------------------------------------------
            5,500  Muleshoe Economic
                   Development Corp. Rev.,
                   (John Lyle & Grace Ajean),
                   VRDN, 3.62%, 6/1/06
                   (LOC: Wells Fargo Bank N.A.)                            5,500
--------------------------------------------------------------------------------
            3,645  San Antonio Education Facilities
                   Corp. Rev., Series 2004 A,
                   (Phase 1 Dormitory), VRDN,
                   3.54%, 6/1/06
                   (LOC: Allied Irish Bank plc)                            3,645
--------------------------------------------------------------------------------
           10,000  Texas Tax & Rev. Anticipation
                   Notes, 4.50%, 8/31/06                                  10,037
--------------------------------------------------------------------------------
                                                                          44,156
--------------------------------------------------------------------------------

Principal Amount                    ($ IN THOUSANDS)                 Value
--------------------------------------------------------------------------------
VERMONT - 0.8%
--------------------------------------------------------------------------------
           $2,190  Vermont Educational & Health
                   Buildings Financing Agency Rev.,
                   Series 2004 B, (Landmark
                   College), VRDN, 3.50%, 6/1/06
                   (RADIAN) (LOC: SunTrust Bank)                        $  2,190
--------------------------------------------------------------------------------
VIRGINIA - 3.3%
--------------------------------------------------------------------------------
            2,400  Bristol Industrial Development
                   Auth. Rev., (Bristol Health Care
                   Center Inc.), VRDN, 3.70%,
                   6/1/06 (LOC: Regions Bank)                              2,400
--------------------------------------------------------------------------------
            6,600  Suffolk Industrial Development
                   Auth. Rev., (Lake Prince Center),
                   VRDN, 3.43%, 6/7/06
                   (LOC: Branch Banking & Trust)                           6,600
--------------------------------------------------------------------------------
                                                                           9,000
--------------------------------------------------------------------------------
WEST VIRGINIA - 1.5%
--------------------------------------------------------------------------------
            4,000  West Virginia Economic
                   Development Auth. Rev.,
                   (Collins Hardwood Co.),
                   VRDN, 3.62%, 6/1/06
                   (LOC: Bank of America N.A.)                             4,000
--------------------------------------------------------------------------------
WISCONSIN - 0.8%
--------------------------------------------------------------------------------
            2,125  Wisconsin Health & Educational
                   Facilities Auth. Rev., Series
                   2006 A, (Marshfield Clinic),
                   VRDN, 3.56%, 6/1/06 (LIQ FAC:
                   Merrill Lynch Capital Services)                         2,125
--------------------------------------------------------------------------------
WYOMING - 0.6%
--------------------------------------------------------------------------------
            1,500  City of Gillette Rev.,
                   VRDN, 3.31%, 6/7/06
                   (LOC: Barclay's Bank plc)                               1,500
--------------------------------------------------------------------------------
TOTAL INVESTMENT SECURITIES -- 98.7%                                     268,685
--------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES -- 1.3%                                       3,523
--------------------------------------------------------------------------------
TOTAL NET ASSETS -- 100.0%                                              $272,208
================================================================================

NOTES TO SCHEDULE OF INVESTMENTS

Ambac = Ambac Assurance Corporation

COP = Certificates of Participation

FSA = Financial Security Assurance, Inc.

GO = General Obligation

LIQ FAC = Liquidity Facilities

LOC = Letter of Credit

RADIAN = Radian Asset Assurance, Inc.

SBBPA = Standby Bond Purchase Agreement

VRDN = Variable Rate Demand Note. Interest reset date is indicated. Rate shown
is effective May 31, 2006.

(1) Security was purchased under Rule 144A of the Securities Act of 1933
    or is a private placement and, unless registered under the Act or
    exempted from registration, may only be sold to qualified
    institutional investors. The aggregate value of restricted securities
    at May 31, 2006 was $4,930 (in thousands), which represented 1.8% of
    total net assets.

See Notes to Financial Statements.


------
8


Tax-Free Bond - Performance

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

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

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

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

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

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

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

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

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

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

                                                                    (continued)


------
9


Tax-Free Bond - Performance

GROWTH OF $10,000 OVER 10 YEARS

$10,000 investment made May 31, 1996

ONE-YEAR RETURNS OVER 10 YEARS

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

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

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

------
10

Tax-Free Bond - Portfolio Commentary

PORTFOLIO TEAM LEADER: ROBERT J. MILLER

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

PERFORMANCE SUMMARY

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

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

YIELD SUMMARY

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

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

PORTFOLIO STRATEGY & OUTLOOK

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

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

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

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

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

(continued)

------
11

Tax-Free Bond - Portfolio Commentary

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

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

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

TAX-FREE BOND'S PLACE IN YOUR PORTFOLIO

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

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

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

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

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

------
12

Tax-Free Bond - Schedule of Investments

MAY 31, 2006

Principal Amount ($ IN THOUSANDS) Value
--------------------------------------------------------------------------------
MUNICIPAL SECURITIES -- 101.3%

ALABAMA - 1.0%
--------------------------------------------------------------------------------
$ 865 Alabama Water Pollution
Control Auth. GO, 5.75%,
8/15/18 (Ambac) $ 930
--------------------------------------------------------------------------------
190 East Central Industrial
Development Auth. Rev., 5.25%,
9/1/08, Prerefunded at 100%
of Par (Ambac)(1) 197
--------------------------------------------------------------------------------
810 East Central Industrial
Development Auth. Rev.,
5.25%, 9/1/13 (Ambac) 835
--------------------------------------------------------------------------------
840 Helena Utilities Board Rev.,
5.75%, 4/1/12, Prerefunded
at 101% of Par (MBIA)(1) 931
--------------------------------------------------------------------------------
645 Helena Utilities Board Rev.,
5.75%, 4/1/12, Prerefunded
at 101% of Par (MBIA)(1) 714
--------------------------------------------------------------------------------
1,035 Helena Utilities Board Rev.,
5.75%, 4/1/20 (MBIA) 1,138
--------------------------------------------------------------------------------
790 Helena Utilities Board Rev.,
5.75%, 4/1/22 (MBIA) 866
--------------------------------------------------------------------------------
1,250 Huntsville Health Care Auth.
Rev., Series 2002 A, 3.80%,
6/1/06 (MBIA) 1,249
--------------------------------------------------------------------------------
6,860
--------------------------------------------------------------------------------
ARIZONA - 8.7%
--------------------------------------------------------------------------------
935 Arizona Board of Regents COP,
Series 2006 A, (University of
Arizona), 5.00%, 6/1/18 (Ambac) 989
--------------------------------------------------------------------------------
1,275 Arizona Health Facilities Auth.
Rev., (Blood Systems
Incorporated), 4.00%, 4/1/12 1,258
--------------------------------------------------------------------------------
1,175 Arizona Health Facilities Auth.
Rev., (Blood Systems
Incorporated), 4.50%, 4/1/16 1,161
--------------------------------------------------------------------------------
8,155 Arizona School Facilities Board
Rev., (State School Improvement),
5.50%, 7/1/12, Prerefunded
at 100% of Par(1)(2) 8,816
--------------------------------------------------------------------------------
1,000 Arizona Tourism & Sports
Auth. Rev., (Baseball Training
Facilities), 5.00%, 7/1/11 1,030
--------------------------------------------------------------------------------
1,000 Arizona Tourism & Sports
Auth. Rev., (Baseball Training
Facilities), 5.00%, 7/1/12 1,030
--------------------------------------------------------------------------------
2,000 Arizona Tourism & Sports
Auth. Rev., Series 2003 A,
(Multipurpose Stadium Facility),
5.25%, 7/1/17 (MBIA) 2,133
--------------------------------------------------------------------------------
2,925 Chandler Water & Sewer Rev.,
4.50%, 7/1/06 (FSA) 2,927
--------------------------------------------------------------------------------
2,130 Energy Management Services
LLC Rev., (Arizona State
University - Main Campus),
4.50%, 7/1/12 (MBIA) 2,207
--------------------------------------------------------------------------------

Principal Amount ($ IN THOUSANDS) Value
--------------------------------------------------------------------------------
$ 305 Gilbert Water Resource Municipal
Property Corp. Rev., 4.25%,
10/1/06, Prerefunded at
100% of Par(1) $ 305
--------------------------------------------------------------------------------
1,625 Gilbert Water Resource
Municipal Property Corp. Rev.,
4.25%, 4/1/11 1,613
--------------------------------------------------------------------------------
3,000 Gilbert Water Resource
Municipal Property Corp. Rev.,
(Development Fee & Sub-Lien),
4.90%, 4/1/19 3,006
--------------------------------------------------------------------------------
1,000 Glendale Water & Sewer Rev.,
5.00%, 7/1/06 (FGIC) 1,001
--------------------------------------------------------------------------------
4,000 Maricopa County Community
College District GO, Series
1997 B, 5.00%, 7/1/06,
Prerefunded at 101% of Par(1) 4,045
--------------------------------------------------------------------------------
1,155 Maricopa County Gilbert Unified
School District No. 41 GO,
5.75%, 7/1/11 (FSA) 1,261
--------------------------------------------------------------------------------
2,415 Maricopa County Saddle
Mountain Unified School
District No. 90 GO, Series
2003 A, 5.25%, 7/1/11 2,520
--------------------------------------------------------------------------------
2,000 Maricopa County Saddle
Mountain Unified School
District No. 90 GO, Series
2003 A, 5.25%, 7/1/12 2,094
--------------------------------------------------------------------------------
1,000 Mohave County Community
College District Rev.,
(State Board of Directors),
6.00%, 3/1/20 (MBIA) 1,075
--------------------------------------------------------------------------------
2,155 Mohave County Industrial
Development Auth. GO, Series
2004 A, (Mohave Prison),
5.00%, 4/1/14 (XLCA) 2,279
--------------------------------------------------------------------------------
1,200 Pima County Indian
Oasis-Baboquivari Unified School
District No. 40 GO, Series
2002 A, 4.60%, 7/1/13 (MBIA) 1,244
--------------------------------------------------------------------------------
2,600 Pima County Tucson Unified
School District No. 1 GO,
4.625%, 7/1/13 (FSA) 2,700
--------------------------------------------------------------------------------
3,970 Pinal County COP,
5.00%, 12/1/25 4,035
--------------------------------------------------------------------------------
1,425 Pinal County COP,
5.00%, 12/1/26 1,447
--------------------------------------------------------------------------------
5,000 Salt River Project Agricultural
Improvement & Power District
Rev, Series 2002 C, (Salt River),
5.00%, 1/1/12 5,303
--------------------------------------------------------------------------------
3,085 South Tucson Municipal Property
Corp. Rev., 5.50%, 6/1/24 3,193
--------------------------------------------------------------------------------
58,672
--------------------------------------------------------------------------------
CALIFORNIA - 4.6%
--------------------------------------------------------------------------------
2,000 California Health Facilities
Financing Auth. Rev., Series
2006 A, (Kaiser Permanente),
5.25%, 4/1/39(3) 2,071
--------------------------------------------------------------------------------

See Notes to Financial Statements. (continued)

------
13

Tax-Free Bond - Schedule of Investments

MAY 31, 2006

Principal Amount ($ IN THOUSANDS) Value
--------------------------------------------------------------------------------
$1,000 California Public Works Board
Lease COP, Series 1994 A,
(Various University of California
Projects), 6.20%, 10/1/08 $ 1,008
--------------------------------------------------------------------------------
1,000 California Statewide Communities
Development Auth. Rev., Series
2002 E, (Kaiser Permanente),
4.70%, 6/1/09 1,016
--------------------------------------------------------------------------------
1,075 California Statewide Communities
Development Auth. Water &
Waste Rev., Series 2004 A,
(Pooled Financing Program),
5.00%, 10/1/12 (FSA) 1,148
--------------------------------------------------------------------------------
2,000 California Statewide Communities
Development Auth. Water &
Waste Rev., Series 2004 A,
(Pooled Financing Program),
5.25%, 10/1/19 (FSA) 2,141
--------------------------------------------------------------------------------
3,000 Imperial Irrigation District COP,
(Water Systems), 5.50%,
7/1/29 (Ambac) 3,219
--------------------------------------------------------------------------------
5,000 Los Angeles Department of
Water & Power Rev., Series
2001 AA3, (Power Systems),
5.25%, 7/1/24 5,006
--------------------------------------------------------------------------------
2,200 Manteca Unified School District
GO, 5.25%, 8/1/14, Prerefunded
at 100% of Par (FSA)(1) 2,405
--------------------------------------------------------------------------------
1,000 Plumas Unified School District
GO, 5.25%, 8/1/20 (FSA) 1,098
--------------------------------------------------------------------------------
2,145 San Francisco Uptown Parking
Corporation Rev., (Union Square),
5.50%, 7/1/15 (MBIA) 2,318
--------------------------------------------------------------------------------
1,000 San Francisco Uptown Parking
Corporation Rev., (Union Square),
6.00%, 7/1/20 (MBIA) 1,113
--------------------------------------------------------------------------------
2,000 San Francisco Uptown Parking
Corporation Rev., (Union Square),
6.00%, 7/1/31 (MBIA) 2,200
--------------------------------------------------------------------------------
1,575 San Marcos Public Facilities
Auth. Tax Allocation Rev., Series
2006 A, 5.00%, 8/1/20 (Ambac) 1,659
--------------------------------------------------------------------------------
2,455 San Marcos Public Facilities
Auth. Tax Allocation Rev., Series
2006 A, 5.00%, 8/1/25 (Ambac) 2,555
--------------------------------------------------------------------------------
2,055 Westlands Water District COP,
Series 2005 A, 5.00%,
9/1/24 (MBIA) 2,125
--------------------------------------------------------------------------------
31,082
--------------------------------------------------------------------------------
COLORADO - 2.3%
--------------------------------------------------------------------------------
1,100 Arapahoe County Water &
Wastewater Public Improvement
District GO, Series 2002 B,
5.75%, 12/1/17 (MBIA) 1,211
--------------------------------------------------------------------------------
1,550 Colorado Educational & Cultural
Facilities Auth. Rev., (Excel
Academy Charter School),
5.50%, 12/1/33 (XLCA) 1,677
--------------------------------------------------------------------------------

Principal Amount ($ IN THOUSANDS) Value
--------------------------------------------------------------------------------
$ 530 Colorado Educational & Cultural
Facilities Auth. Rev., (University
Facilities-Northwest Nazarene),
4.50%, 11/1/09 $ 532
--------------------------------------------------------------------------------
900 Colorado Educational & Cultural
Facilities Auth. Rev., (University
Facilities-Northwest Nazarene),
4.75%, 11/1/10 914
--------------------------------------------------------------------------------
800 Colorado Educational & Cultural
Facilities Auth. Rev., (University
Facilities-Northwest Nazarene),
4.60%, 11/1/16 782
--------------------------------------------------------------------------------
500 Colorado Health Facilities Auth.
Rev., (Vail Valley Medical Center),
4.00%, 1/15/07 500
--------------------------------------------------------------------------------
335 Colorado Health Facilities Auth.
Rev., (Vail Valley Medical Center),
4.50%, 1/15/09 339
--------------------------------------------------------------------------------
450 Colorado Water Resources &
Power Development Auth. Rev.,
Series 2000 A, 6.25%, 9/1/10,
Prerefunded at 100% of Par(1) 494
--------------------------------------------------------------------------------
50 Colorado Water Resources &
Power Development Auth. Rev.,
Series 2000 A, 6.25%, 9/1/16 55
--------------------------------------------------------------------------------
1,430 Denver West Metropolitan
District GO, 5.25%, 12/1/24 1,455
--------------------------------------------------------------------------------
1,000 Douglas & Elbert Counties
School District No. Re-1 GO,
Series 2002 B, 5.75%, 12/15/12,
Prerefunded at 100% of Par
(FSA/State Aid Withholding)(1) 1,109
--------------------------------------------------------------------------------
1,100 Eagle Bend Metropolitan
District No. 2 GO, 5.25%,
12/1/23 (RADIAN) 1,147
--------------------------------------------------------------------------------
5,000 University of Colorado Regents
COP, 6.00%, 12/1/22 (MBIA-IBC) 5,420
--------------------------------------------------------------------------------
15,635
--------------------------------------------------------------------------------
CONNECTICUT - 0.7%
--------------------------------------------------------------------------------
2,150 City of Bridgeport GO, Series
2004 A, 5.25%, 8/15/22,
Prerefunded at 100% of
Par (MBIA)(1) 2,338
--------------------------------------------------------------------------------
2,215 New Haven Air Rights
Package Facility Rev., 5.00%,
12/1/10 (Ambac) 2,331
--------------------------------------------------------------------------------
4,669
--------------------------------------------------------------------------------
DISTRICT OF COLUMBIA - 0.4%
--------------------------------------------------------------------------------
1,385 District of Columbia GO, Series
1999 B, 5.50%, 6/1/09 (FSA) 1,453
--------------------------------------------------------------------------------
1,155 District of Columbia Rev.,
(Gonzaga College High School),
5.20%, 7/1/12 (FSA) 1,209
--------------------------------------------------------------------------------
2,662
--------------------------------------------------------------------------------
FLORIDA - 3.0%
--------------------------------------------------------------------------------
2,585 Greater Orlando Aviation Auth.
Rev., Series 2003 A, 5.00%,
10/1/13 (FSA) 2,745
--------------------------------------------------------------------------------

See Notes to Financial Statements. (continued)

------
14

Tax-Free Bond - Schedule of Investments

MAY 31, 2006

Principal Amount ($ IN THOUSANDS) Value
--------------------------------------------------------------------------------
$ 500 Highlands County Health
Facilities Auth. Rev., Series
2005 A, (Adventist Health),
5.00%, 11/15/11 $ 520
--------------------------------------------------------------------------------
500 Highlands County Health
Facilities Auth. Rev., Series
2005 B, (Adventist Health),
5.00%, 11/15/09 516
--------------------------------------------------------------------------------
500 Highlands County Health
Facilities Auth. Rev., Series
2005 B, (Adventist Health),
5.00%, 11/15/10 518
--------------------------------------------------------------------------------
1,000 Highlands County Health
Facilities Auth. Rev., Series
2005 B, (Adventist Health),
5.00%, 11/15/11 1,041
--------------------------------------------------------------------------------
2,500 JEA St. Johns River Power
Park System Rev., Series 21,
Issue 2, 5.00%, 10/1/11 (MBIA) 2,644
--------------------------------------------------------------------------------
2,500 JEA St. Johns River Power
Park System Rev., Series 21,
Issue 2, 5.00%, 10/1/12 (MBIA) 2,657
--------------------------------------------------------------------------------
1,500 Martin County Health Facilities
Auth. Rev., Series 2002 A,
(Martin Memorial Medical
Center), 4.00%, 11/15/06 1,499
--------------------------------------------------------------------------------
5,000 Orange County Rev., 5.25%,
10/1/09, Prerefunded at 100%
of Par (Ambac)(1) 5,242
--------------------------------------------------------------------------------
1,500 Orlando Utilities Commission
Rev., Series 2005 A, 4.00%,
10/1/11 (MBIA) 1,518
--------------------------------------------------------------------------------
1,000 Orlando Utilities Commission
Water & Electric Rev., Series
1989 D, 6.75%, 10/1/17(1) 1,182
--------------------------------------------------------------------------------
20,082
--------------------------------------------------------------------------------
GEORGIA - 0.2%
--------------------------------------------------------------------------------
255 Georgia Municipal Electric Power
Auth. Rev., Series 1991 V, 6.50%,
1/1/09, Prerefunded at
100% of Par (MBIA-IBC)(1) 269
--------------------------------------------------------------------------------
20 Georgia Municipal Electric Power
Auth. Rev., Series 1991 V, 6.50%,
1/1/11 (MBIA-IBC) 22
--------------------------------------------------------------------------------
110 Georgia Municipal Electric Power
Auth. Rev., Series 1991 V, 6.50%,
1/1/12 (MBIA-IBC)(1) 123
--------------------------------------------------------------------------------
615 Georgia Municipal Electric Power
Auth. Rev., Series 1991 V, 6.50%,
1/1/12 (MBIA-IBC) 673
--------------------------------------------------------------------------------
1,087
--------------------------------------------------------------------------------
HAWAII - 0.1%
--------------------------------------------------------------------------------
500 Maui County GO, Series 2000 A,
6.50%, 3/1/10, Prerefunded at
101% of Par (FGIC)(1) 553
--------------------------------------------------------------------------------
IDAHO - 0.7%
--------------------------------------------------------------------------------
1,000 Blaine County Hailey School
District No. 61 GO, 5.00%,
7/30/10 (Ambac) 1,051
--------------------------------------------------------------------------------

Principal Amount ($ IN THOUSANDS) Value
--------------------------------------------------------------------------------
$3,800 Idaho Tax Anticipation Notes GO,
4.00%, 6/30/06 $ 3,801
--------------------------------------------------------------------------------
4,852
--------------------------------------------------------------------------------
ILLINOIS - 3.6%
--------------------------------------------------------------------------------
2,000 Bedford Park GO, Series 2004 A,
5.25%, 12/15/20 (FSA) 2,140
--------------------------------------------------------------------------------
4,000 Chicago O'Hare International
Airport Rev., Series 1993 A,
(Senior Lien), 5.00%, 1/1/12
(MBIA-IBC) 4,220
--------------------------------------------------------------------------------
2,000 Illinois Dedicated Tax Rev.,
(Civic Center), 6.25%,
12/15/20 (Ambac) 2,346
--------------------------------------------------------------------------------
595 Illinois Development Finance
Auth. Rev., Series 2001 B,
(Midwestern University),
5.00%, 5/15/08 606
--------------------------------------------------------------------------------
655 Illinois Development Finance
Auth. Rev., Series 2001 B,
(Midwestern University),
5.125%, 5/15/10 677
--------------------------------------------------------------------------------
400 Illinois Development Finance
Auth. Rev., Series 2001 B,
(Midwestern University),
5.75%, 5/15/16 422
--------------------------------------------------------------------------------
1,140 Illinois Health Facilities Auth.
Rev., Series 1992 C, (Evangelical
Hospital), 6.75%, 4/15/12(1) 1,264
--------------------------------------------------------------------------------
1,000 Illinois Regional Transportation
Auth. Rev., Series 1990 A,
7.20%, 11/1/20 (Ambac) 1,227
--------------------------------------------------------------------------------
930 Kane County Community Unit
School District No. 304 GO,
6.20%, 1/1/24 (FSA) 1,070
--------------------------------------------------------------------------------
1,145 Ogle Lee & De Kalb Counties
Township High School District
No. 212 GO, 6.00%, 12/1/11,
Prerefunded at 100% of
Par (MBIA)(1) 1,270
--------------------------------------------------------------------------------
1,035 Ogle Lee & De Kalb Counties
Township High School District
No. 212 GO, 6.00%, 12/1/11,
Prerefunded at 100% of
Par (MBIA)(1) 1,148
--------------------------------------------------------------------------------
70 Ogle Lee & De Kalb Counties
Township High School District
No. 212 GO, 6.00%,
12/1/17 (MBIA) 77
--------------------------------------------------------------------------------
75 Ogle Lee & De Kalb Counties
Township High School District
No. 212 GO, 6.00%,
12/1/18 (MBIA) 83
--------------------------------------------------------------------------------
1,855 Peoria County School District
No. 150 Peoria GO, Series
2005 A, 5.00%, 1/1/10 (FSA) 1,931
--------------------------------------------------------------------------------
1,000 Southwestern Illinois
Development Auth. Rev.,
(Triad School District No. 2),
5.00%, 10/1/18
(MBIA/GO of District)(3) 1,057
--------------------------------------------------------------------------------

See Notes to Financial Statements. (continued)

------
15

Tax-Free Bond - Schedule of Investments

MAY 31, 2006

Principal Amount ($ IN THOUSANDS) Value
--------------------------------------------------------------------------------
$1,250 Town of Cicero GO, Series
2005 A, 5.25%, 1/1/20 (XLCA) $ 1,328
--------------------------------------------------------------------------------
1,000 Town of Cicero GO, Series
2005 A, 5.25%, 1/1/21 (XLCA) 1,062
--------------------------------------------------------------------------------
1,000 University of Illinois COP,
(Utility Infrastructure),
5.75%, 8/15/08 (MBIA) 1,042
--------------------------------------------------------------------------------
1,000 University of Illinois COP, Series
2006 A, (Academic Facilities),
5.00%, 3/15/16 (Ambac)(3) 1,060
--------------------------------------------------------------------------------
24,030
--------------------------------------------------------------------------------
INDIANA - 3.5%
--------------------------------------------------------------------------------
8,750 Hobart Building Corp. Rev.,
6.50%, 1/15/29 (FGIC/State
Aid Withholding)(2) 10,583
--------------------------------------------------------------------------------
1,520 Indiana Bond Bank Rev., Series
2006 A, 5.00%, 8/1/17 (FSA) 1,616
--------------------------------------------------------------------------------
1,600 Indiana Bond Bank Rev., Series
2006 A, 5.00%, 8/1/18 (FSA) 1,696
--------------------------------------------------------------------------------
1,680 Indiana Bond Bank Rev., Series
2006 A, 5.00%, 8/1/19 (FSA) 1,775
--------------------------------------------------------------------------------
1,900 Indiana Health Facilities
Financing Auth. Hospital Rev.,
(Holy Cross Health System
Corp.), 5.375%, 12/1/12 (MBIA) 1,968
--------------------------------------------------------------------------------
780 Indiana Transportation Finance
Auth. Rev., Series 1990 A,
7.25%, 6/1/15 927
--------------------------------------------------------------------------------
220 Indiana Transportation Finance
Auth. Rev., Series 1990 A, 7.25%,
6/1/15(1) 248
--------------------------------------------------------------------------------
1,500 Mount Vernon of Hancock
County Multi-School Building
Corp. Rev., Series 2001 B,
(First Mortgage), 5.75%, 7/15/11,
Prerefunded at 100% of
Par (Ambac)(1) 1,637
--------------------------------------------------------------------------------
1,650 Valparaiso Middle Schools
Building Corp. Rev., (First
Mortgage), 5.75%, 7/15/11,
Prerefunded at 100%
of Par (FGIC)(1) 1,796
--------------------------------------------------------------------------------
1,000 Zionsville Community Schools
Building Corp. GO, (First
Mortgage), 5.75%, 1/15/12
(FGIC/State Aid Withholding) 1,096
--------------------------------------------------------------------------------
23,342
--------------------------------------------------------------------------------
IOWA - 0.5%
--------------------------------------------------------------------------------
3,350 Coralville GO, Series 2005 K-2,
5.00%, 6/1/07 3,380
--------------------------------------------------------------------------------
KANSAS - 0.4%
--------------------------------------------------------------------------------
1,280 Wichita Hospital Facilities Rev.,
Series 2001 III, 5.25%, 11/15/13 1,337
--------------------------------------------------------------------------------
1,195 Wichita Hospital Facilities Rev.,
Series 2001 III, 5.50%, 11/15/16 1,252
--------------------------------------------------------------------------------
2,589
--------------------------------------------------------------------------------

Principal Amount ($ IN THOUSANDS) Value
--------------------------------------------------------------------------------
LOUISIANA - 0.5%
--------------------------------------------------------------------------------
$1,740 Louisiana Local Government
Environmental Facilities &
Community Development Auth.
Rev., (Ascension Parish Library),
5.25%, 4/1/23 (Ambac) $ 1,842
--------------------------------------------------------------------------------
1,215 Louisiana Local Government
Environmental Facilities &
Community Development Auth.
Rev., (Ascension Parish Library),
5.25%, 4/1/35 (Ambac) 1,271
--------------------------------------------------------------------------------
3,113
--------------------------------------------------------------------------------
MASSACHUSETTS - 0.2%
--------------------------------------------------------------------------------
1,000 Massachusetts Health &
Educational Facilities Auth.
Rev., Series 1992 F, 6.25%,
7/1/12 (Ambac) 1,071
--------------------------------------------------------------------------------
MICHIGAN - 2.3%
--------------------------------------------------------------------------------
3,500 Detroit GO, Series 2004 A-1,
5.25%, 4/1/23 (Ambac) 3,697
--------------------------------------------------------------------------------
1,485 Grand Valley State University
Rev., 5.75%, 12/1/10,
Prerefunded at 100% of
Par (FGIC)(1) 1,608
--------------------------------------------------------------------------------
2,345 Michigan Higher Education
Facilities Auth. Rev., (Limited
Obligation - Hillsdale
College), 5.00%, 3/1/26 2,387
--------------------------------------------------------------------------------
575 Taylor GO, 5.00%, 9/1/11 (MBIA) 608
--------------------------------------------------------------------------------
2,010 Wayne Charter County Airport
Rev., Series 2002 C, 5.00%,
12/1/11 (FGIC) 2,120
--------------------------------------------------------------------------------
2,215 Wayne Charter County Airport
Rev., Series 2002 C, 5.375%,
12/1/13 (FGIC) 2,388
--------------------------------------------------------------------------------
2,335 Wayne Charter County Airport
Rev., Series 2002 C, 5.375%,
12/1/14 (FGIC) 2,504
--------------------------------------------------------------------------------
15,312
--------------------------------------------------------------------------------
MINNESOTA - 0.2%
--------------------------------------------------------------------------------
1,500 Minnesota Higher Education
Facilities Auth. Rev., Series
2005-6G, (Saint John University),
5.00%, 10/1/12 1,588
--------------------------------------------------------------------------------
MISSISSIPPI - 1.4%
--------------------------------------------------------------------------------
1,000 Mississippi Development Bank
Special Obligation Rev., Series
2006 A, (Municipal Energy
Agency Power Supply), 5.00%,
3/1/17 (XLCA)(3) 1,051
--------------------------------------------------------------------------------
7,925 State of Mississippi GO, (Capital
Improvement), 5.25%, 11/1/12,
Prerefunded at 100% of Par
(FGIC)(1)(2) 8,510
--------------------------------------------------------------------------------
9,561
--------------------------------------------------------------------------------

See Notes to Financial Statements. (continued)

------
16

Tax-Free Bond - Schedule of Investments

MAY 31, 2006

Principal Amount ($ IN THOUSANDS) Value
--------------------------------------------------------------------------------
MISSOURI - 1.9%
--------------------------------------------------------------------------------
$1,000 Camdenton Reorganized School
District No. R-III GO, 5.25%,
3/1/22 (FSA) $ 1,073
--------------------------------------------------------------------------------
1,145 Jackson County Public Building
Corp. COP, Series 2000 A, 6.00%,
11/1/18, Prerefunded at
101% of Par(1) 1,217
--------------------------------------------------------------------------------
1,425 Jackson County Public Building
Corp. Rev., Series 2006 A,
(Capital Improvements), 5.00%,
12/1/15 (MBIA) 1,518
--------------------------------------------------------------------------------
2,775 Missouri Development Finance
Board COP, Series 2000 A,
(Midtown Redevelopment),
5.75%, 4/1/22 (MBIA) 2,953
--------------------------------------------------------------------------------
2,650 Missouri Health & Educational
Facilities Auth. Rev., Series
1998 A, (Park Lane Medical
Center), 5.60%, 1/1/15 (MBIA) 2,835
--------------------------------------------------------------------------------
3,145 Missouri Joint Municipal Electric
Utility Commission Rev., (Plum
Point), 5.00%, 1/1/16 (MBIA) 3,356
--------------------------------------------------------------------------------
12,952
--------------------------------------------------------------------------------
NEVADA - 1.2%
--------------------------------------------------------------------------------
1,000 Clark County School District GO,
Series 1997 B, (Building &
Renovation), 5.25%, 6/15/07,
Prerefunded at 101% of
Par (FGIC)(1) 1,027
--------------------------------------------------------------------------------
3,295 Las Vegas Redevelopment
Agency Tax Increment Rev.,
Series 2003 A, (Fremont Street),
4.50%, 6/15/10 3,319
--------------------------------------------------------------------------------
1,550 Reno Sales and Room Tax Rev.,
(ReTrac-Reno Transportation Rail
Access Corridor), (Senior
Lien), 5.50%, 6/1/12, Prerefunded at
100% of Par (Ambac) 1,686
--------------------------------------------------------------------------------
1,865 Reno Sales and Room Tax Rev.,
(ReTrac-Reno Transportation Rail
Access Corridor), (Senior
Lien), 5.50%, 6/1/12, Prerefunded at
100% of Par (Ambac) 2,028
--------------------------------------------------------------------------------
8,060
--------------------------------------------------------------------------------
NEW HAMPSHIRE - 1.0%
--------------------------------------------------------------------------------
1,660 New Hampshire Health &
Education Facilities Auth. Rev.,
Series 2004 A, (Kendal at
Hanover), 5.00%, 10/1/11 1,698
--------------------------------------------------------------------------------
680 New Hampshire Health &
Education Facilities Auth. Rev.,
Series 2004 A, (Kendal at
Hanover), 5.00%, 10/1/12 697
--------------------------------------------------------------------------------
1,030 New Hampshire Health &
Education Facilities Auth. Rev.,
Series 2004 A, (Kendal at
Hanover), 5.00%, 10/1/13 1,049
--------------------------------------------------------------------------------

Principal Amount ($ IN THOUSANDS) Value
--------------------------------------------------------------------------------
$3,000 New Hampshire Health &
Education Facilities Auth. Rev.,
Series 2004 A, (Kendal at
Hanover), 5.00%, 10/1/18 $ 3,001
--------------------------------------------------------------------------------
6,445
--------------------------------------------------------------------------------
NEW JERSEY - 10.6%
--------------------------------------------------------------------------------
320 New Jersey Economic
Development Auth. Rev.,
Series 2005 A, (Cranes Mill),
5.00%, 6/1/15 324
--------------------------------------------------------------------------------
33,200 New Jersey Tax & Rev.
Anticipation Notes, Series
2005 A, 4.00%, 6/23/06 33,207
--------------------------------------------------------------------------------
4,235 New Jersey Transit Corporation
COP, 5.00%, 10/1/12 (FSA) 4,479
--------------------------------------------------------------------------------
5,595 New Jersey Transit Corporation
COP, 5.00%, 10/1/13 (FSA) 5,929
--------------------------------------------------------------------------------
7,400 New Jersey Transportation Trust
Fund Auth. Rev., Series 2004 B,
5.25%, 12/15/12 (FGIC)(2) 7,957
--------------------------------------------------------------------------------
3,000 New Jersey Transportation Trust
Fund Auth. Rev., Series 2006 A,
5.25%, 12/15/19(3) 3,237
--------------------------------------------------------------------------------
15,000 New Jersey Transportation Trust
Fund Auth. Rev., Series 2006 A,
5.25%, 12/15/20(3) 16,216
--------------------------------------------------------------------------------
71,349
--------------------------------------------------------------------------------
NEW MEXICO - 1.3%
--------------------------------------------------------------------------------
6,675 Los Alamos County Inc.
Rev., Series 2004 A, 5.00%,
7/1/11 (FSA)(2) 7,044
--------------------------------------------------------------------------------
1,415 San Juan County Gross
Receipts Tax Rev., Series 2001 A,
5.75%, 9/15/21 (Ambac) 1,545
--------------------------------------------------------------------------------
8,589
--------------------------------------------------------------------------------
NEW YORK - 3.9%
--------------------------------------------------------------------------------
2,975 City of New York GO, Series
2002 B, 5.25%, 8/1/09 (CIFG) 3,108
--------------------------------------------------------------------------------
2,885 City of New York GO, Series
2002 C, 5.25%, 8/1/09 (CIFG) 3,014
--------------------------------------------------------------------------------
5,000 City of New York GO, Series
2003 I, 5.75%, 3/1/20 5,445
--------------------------------------------------------------------------------
1,375 City of New York GO, Series
2004 I, 5.00%, 8/1/08 1,413
--------------------------------------------------------------------------------
4,000 City of New York GO, Series
2006 J-1, 5.00%, 6/1/18(3) 4,191
--------------------------------------------------------------------------------
855 Monroe County Industrial
Development Agency Rev.,
(Highland Hospital Rochester),
4.00%, 8/1/09 852
--------------------------------------------------------------------------------
890 Monroe County Industrial
Development Agency Rev.,
(Highland Hospital Rochester),
4.00%, 8/1/10 884
--------------------------------------------------------------------------------
710 Monroe County Industrial
Development Agency Rev.,
(Highland Hospital Rochester),
4.00%, 8/1/10 705
--------------------------------------------------------------------------------

See Notes to Financial Statements. (continued)

------
17

Tax-Free Bond - Schedule of Investments

MAY 31, 2006

Principal Amount ($ IN THOUSANDS) Value
--------------------------------------------------------------------------------
$ 920 Monroe County Industrial
Development Agency Rev.,
(Highland Hospital Rochester),
5.00%, 8/1/11 $ 950
--------------------------------------------------------------------------------
2,000 New York City Transitional
Finance Auth. Rev., Series
2005 A1, 5.00%, 11/1/10 2,106
--------------------------------------------------------------------------------
1,440 New York Dormitory Auth.
Rev., Series 1990 A, (UNIC
Educational Facilities), 7.50%,
5/15/13 (MBIA-IBC) 1,741
--------------------------------------------------------------------------------
1,000 New York Dormitory Auth.
Rev., Series 2005 F, 5.00%,
3/15/12 (FSA) 1,060
--------------------------------------------------------------------------------
1,000 Niagara Falls Bridge Commission
Toll Rev., Series 1993 B, 5.25%,
10/1/15 (FGIC) 1,070
--------------------------------------------------------------------------------
26,539
--------------------------------------------------------------------------------
NORTH CAROLINA - 2.1%
--------------------------------------------------------------------------------
1,300 Charlotte Airport Rev., Series
2004 A, 5.25%, 7/1/24 (MBIA) 1,378
--------------------------------------------------------------------------------
1,195 City of Lincolnton Rev.,
(Combined Enterprise System),
4.00%, 5/1/12 (XLCA) 1,201
--------------------------------------------------------------------------------
1,000 North Carolina GO, 5.00%, 3/1/11 1,058
--------------------------------------------------------------------------------
4,150 North Carolina Medical Care
Commission Rev., Series 2004 A,
(Health Care Housing - ARC
Projects), 5.50%, 10/1/24 4,348
--------------------------------------------------------------------------------
1,000 North Carolina Municipal Power
Agency No. 1 Catawba Electric
Rev., Series 1992, 6.00%,
1/1/10 (MBIA) 1,073
--------------------------------------------------------------------------------
2,000 North Carolina Municipal
Power Agency No. 1 Catawba
Electric Rev., Series 2003 A,
5.50%, 1/1/13 2,143
--------------------------------------------------------------------------------
1,100 University of North Carolina at
Chapel Hill Rev., Series 2005 A,
5.00%, 2/1/08 1,121
--------------------------------------------------------------------------------
1,000 University of North Carolina at
Chapel Hill Rev., Series 2005 A,
5.00%, 2/1/09 1,028
--------------------------------------------------------------------------------
1,000 University of North Carolina at
Wilmington COP, (Student
Housing), 5.00%, 6/1/37 (FGIC) 1,023
--------------------------------------------------------------------------------
14,373
--------------------------------------------------------------------------------
NORTH DAKOTA - 0.3%
--------------------------------------------------------------------------------
1,500 Grand Forks Health Care System
Rev., (Altru Health System
Obligation Group), 7.125%,
8/15/24 1,651
--------------------------------------------------------------------------------
OHIO - 1.6%
--------------------------------------------------------------------------------
500 Erie County Hospital Facilities
Rev., Series 2002 A, (Firelands
Regional Medical Center),
4.50%, 8/15/07 503
--------------------------------------------------------------------------------

Principal Amount ($ IN THOUSANDS) Value
--------------------------------------------------------------------------------
$1,150 Mad River Local School District
GO, (Classroom Facilities), 5.75%,
12/1/19, Prerefunded at
100% of Par (FGIC)(1) $ 1,274
--------------------------------------------------------------------------------
1,700 Milford Exempt Village School
District GO, (School Improvement),
6.00%, 12/1/11 (FSA) 1,887
--------------------------------------------------------------------------------
1,005 Ohio GO, Series 2005 A,
(Infrastructure Improvement),
5.00%, 9/1/11 1,064
--------------------------------------------------------------------------------
1,365 Ohio GO, Series 2005 A,
(Infrastructure Improvement),
5.00%, 9/1/12 1,453
--------------------------------------------------------------------------------
750 Ohio Higher Educational Facility
Commission Rev., Series 1990 B,
(Case Western Reserve
University), 6.50%, 10/1/20 897
--------------------------------------------------------------------------------
1,505 Summit County GO, 5.75%,
12/1/12, Prerefunded at 101%
of Par (FGIC)(1) 1,674
--------------------------------------------------------------------------------
1,550 Tri Valley Local School District
GO, 5.75%, 12/1/21 (FGIC) 1,690
--------------------------------------------------------------------------------
10,442
--------------------------------------------------------------------------------
OKLAHOMA - 2.1%
--------------------------------------------------------------------------------
1,000 Comanche County Hospital Auth.
Rev., 5.00%, 7/1/11 (RADIAN) 1,044
--------------------------------------------------------------------------------
1,525 Comanche County Hospital Auth.
Rev., 5.00%, 7/1/12 (RADIAN) 1,597
--------------------------------------------------------------------------------
1,730 Durant Community Facilities
Auth. GO, 5.75%, 11/1/24 (XLCA) 1,920
--------------------------------------------------------------------------------
1,135 McClain County Economic
Development Auth. Rev,
(Newcastle Public Schools),
5.00%, 9/1/10 1,170
--------------------------------------------------------------------------------
750 McClain County Economic
Development Auth. Rev,
(Newcastle Public Schools),
5.00%, 9/1/11 777
--------------------------------------------------------------------------------
500 McClain County Economic
Development Auth. Rev,
(Newcastle Public Schools),
5.00%, 9/1/12 520
--------------------------------------------------------------------------------
1,640 McClain County Economic
Development Auth. Rev,
(Newcastle Public Schools),
5.00%, 9/1/13 1,698
--------------------------------------------------------------------------------
5,225 Tulsa County Industrial
Auth. Rev., Series 2005 C,
5.00%, 5/15/10 (FSA) 5,469
--------------------------------------------------------------------------------
14,195
--------------------------------------------------------------------------------
OREGON - 2.0%
--------------------------------------------------------------------------------
1,325 City of Eugene GO, (Public
Safety Park & Open Space),
4.00%, 6/1/12 (Ambac) 1,338
--------------------------------------------------------------------------------
1,000 City of Eugene GO, (Public
Safety Park & Open Space),
4.00%, 6/1/13 (Ambac) 1,006
--------------------------------------------------------------------------------

See Notes to Financial Statements. (continued)

------
18

Tax-Free Bond - Schedule of Investments

MAY 31, 2006

Principal Amount ($ IN THOUSANDS) Value
--------------------------------------------------------------------------------
$1,000 City of Eugene GO, (Public
Safety Park & Open Space),
4.00%, 6/1/14 (Ambac) $ 1,001
--------------------------------------------------------------------------------
685 City of Eugene GO, (Public
Safety Park & Open Space),
4.00%, 6/1/15 (Ambac) 682
--------------------------------------------------------------------------------
2,135 Clackamas County School
District No. 108 GO, (Estacada),
5.50%, 6/15/23 (FSA) 2,421
--------------------------------------------------------------------------------
1,200 Clackamas County School
District No. 108 GO, (Estacada),
5.50%, 6/15/24 (FSA) 1,366
--------------------------------------------------------------------------------
2,015 Clackamas County School
Distrist No. 62 GO, 5.50%,
6/15/10 (School Bond Guarantee) 2,149
--------------------------------------------------------------------------------
400 Oregon State Facilities Auth.
Rev., Series 2005 A, (Linfield
College), 5.00%, 10/1/13 416
--------------------------------------------------------------------------------
925 Oregon State Facilities Auth.
Rev., Series 2005 A, (Linfield
College), 5.00%, 10/1/14 960
--------------------------------------------------------------------------------
2,115 Oregon State Facilities Auth.
Rev., Series 2005 A, (Linfield
College), 5.00%, 10/1/25 2,152
--------------------------------------------------------------------------------
13,491
--------------------------------------------------------------------------------
PENNSYLVANIA - 4.3%
--------------------------------------------------------------------------------
1,150 Central Dauphin School District
GO, 7.00%, 2/1/27 (MBIA/State
Aid Withholding) 1,408
--------------------------------------------------------------------------------
15,805 City of Pittsburgh GO, Series
2006 B, 5.25%, 9/1/16 (FSA)(3) 17,191
--------------------------------------------------------------------------------
1,000 Oxford Area School District GO,
Series 2001 A, 5.50%, 2/15/12,
Prerefunded at 100% of Par
(FGIC/State Aid Withholding)(1) 1,086
--------------------------------------------------------------------------------
2,975 Philadelphia School District GO,
Series 2002 A, 5.25%, 2/1/11
(FSA/State Aid Withholding) 3,161
--------------------------------------------------------------------------------
4,380 Philadelphia School District GO,
Series 2002 A, 5.50%, 2/1/12,
Prerefunded at 100% of Par
(FSA/State Aid Withholding)(1) 4,753
--------------------------------------------------------------------------------
1,500 Pittsburgh School District GO,
5.25%, 9/1/09 (FSA) 1,569
--------------------------------------------------------------------------------
29,168
--------------------------------------------------------------------------------
PUERTO RICO - 7.9%
--------------------------------------------------------------------------------
11,000 Government Development Bank
of Puerto Rico Rev., 3.90%,
8/4/06 (Acquired 2/23/06,
Cost $11,000)(4) 10,987
--------------------------------------------------------------------------------
10,000 Government Development Bank
of Puerto Rico Rev., 3.85%,
10/3/06 (Acquired 1/13/06,
Cost $10,000)(4) 9,969
--------------------------------------------------------------------------------
14,000 Government Development Bank
of Puerto Rico Rev., 3.85%,
10/5/06 (Acquired 1/20/06,
Cost $14,000)(4) 13,955
--------------------------------------------------------------------------------

Principal Amount ($ IN THOUSANDS) Value
--------------------------------------------------------------------------------
$12,000 Government Development Bank
of Puerto Rico Rev., 3.87%,
10/6/06 (Acquired 1/24/06,
Cost $12,000)(4) $ 11,962
--------------------------------------------------------------------------------
2,500 Puerto Rico Highway &
Transportation Auth. Rev., 5.00%,
7/1/08 (CIFG) 2,563
--------------------------------------------------------------------------------
3,700 Puerto Rico Municipal Finance
Agency GO, Series 2005 A,
5.00%, 8/1/11 3,835
--------------------------------------------------------------------------------
53,271
--------------------------------------------------------------------------------
RHODE ISLAND - 0.7%
--------------------------------------------------------------------------------
1,000 Cranston GO, 6.375%,
11/15/09, Prerefunded at
101% of Par (FGIC)(1) 1,096
--------------------------------------------------------------------------------
2,000 Rhode Island Depositors
Economic Protection Corp.
Special Obligation Rev., Series
1993 A, 6.25%, 8/1/16 (MBIA)(1) 2,345
--------------------------------------------------------------------------------
1,300 Rhode Island Depositors
Economic Protection Corp.
Special Obligation Rev., Series
1993 B, 6.00%, 8/1/17 (MBIA)(1) 1,371
--------------------------------------------------------------------------------
4,812
--------------------------------------------------------------------------------
SOUTH CAROLINA - 3.2%
--------------------------------------------------------------------------------
1,700 Florence Water & Sewer Rev.,
7.50%, 3/1/18 (Ambac) 1,934
--------------------------------------------------------------------------------
2,300 Lancaster Educational Assistance
Program Inc. Rev., (School
District Lancaster County),
5.00%, 12/1/26 2,316
--------------------------------------------------------------------------------
3,500 Laurens County School District
No. 55 Rev., 5.25%, 12/1/30 3,577
--------------------------------------------------------------------------------
875 Piedmont Municipal Power
Agency Rev., 6.75%,
1/1/19 (FGIC) 1,070
--------------------------------------------------------------------------------
625 Piedmont Municipal Power
Agency Rev., 6.75%,
1/1/19 (FGIC)(1) 774
--------------------------------------------------------------------------------
140 Piedmont Municipal Power
Agency Rev., Series 1991 A,
6.50%, 1/1/16 (FGIC)(1) 166
--------------------------------------------------------------------------------
375 Piedmont Municipal Power
Agency Rev., Series 1991 A,
6.50%, 1/1/16 (FGIC) 437
--------------------------------------------------------------------------------
485 Piedmont Municipal Power
Agency Rev., Series 1991 A,
6.50%, 1/1/16 (FGIC)(1) 575
--------------------------------------------------------------------------------
3,115 Piedmont Municipal Power
Agency Rev., Series 2002 A,
4.00%, 1/1/07 (FGIC) 3,116
--------------------------------------------------------------------------------
3,035 South Carolina Jobs Economic
Development Auth. Hospital
Facilities Rev., Series 2003 C,
(Palmetto Health), 5.00%,
8/1/08 (ACA) 3,092
--------------------------------------------------------------------------------

See Notes to Financial Statements. (continued)

------
19

Tax-Free Bond - Schedule of Investments

MAY 31, 2006

Principal Amount ($ IN THOUSANDS) Value
--------------------------------------------------------------------------------
$3,195 South Carolina Jobs Economic
Development Auth. Hospital
Facilities Rev., Series 2003 C,
(Palmetto Health), 5.50%,
8/1/09 (ACA) $ 3,327
--------------------------------------------------------------------------------
1,095 Spartanburg County Health
Services District Inc. Hospital
Rev., 5.50%, 4/15/16 (FSA) 1,168
--------------------------------------------------------------------------------
21,552
--------------------------------------------------------------------------------
TENNESSEE - 1.1%
--------------------------------------------------------------------------------
4,460 Chattanooga Health Educational
& Housing Facility Board Rev.,
Series 2005 A, (Campus
Development Foundation, Inc.
Phase I LLC), 5.00%, 10/1/15 4,498
--------------------------------------------------------------------------------
1,050 Clarksville Water, Sewer &
Gas Rev., 4.25%, 2/1/07 (FSA) 1,055
--------------------------------------------------------------------------------
1,685 Clarksville Water, Sewer &
Gas Rev., 4.85%, 2/1/15 (FSA) 1,751
--------------------------------------------------------------------------------
7,304
--------------------------------------------------------------------------------
TEXAS - 10.8%
--------------------------------------------------------------------------------
1,000 Canadian River Municipal
Water Auth. Rev., (Conjunctive
Use Groundwater), 5.00%,
2/15/19 (Ambac) 1,050
--------------------------------------------------------------------------------
2,035 Cash Special Utility District
Rev., 5.25%, 9/1/24 (MBIA) 2,159
--------------------------------------------------------------------------------
2,390 City of Houston GO, Series
2006 B, 5.00%, 3/1/26 (Ambac) 2,482
--------------------------------------------------------------------------------
1,815 Clint Independent School District
GO, 6.00%, 2/15/17 (PSF-GTD) 1,985
--------------------------------------------------------------------------------
1,500 Corpus Christi Independent
School District GO, 5.00%,
8/15/11 (PSF-GTD) 1,525
--------------------------------------------------------------------------------
500 Corpus Christi Independent
School District GO, 4.00%,
8/15/13 (PSF-GTD) 500
--------------------------------------------------------------------------------
1,000 Corpus Christi Utility System
Rev., 5.50%, 7/15/07 (FSA) 1,020
--------------------------------------------------------------------------------
2,035 Del Valle Independent School
District GO, (School Building),
5.00%, 6/15/27 (PSF-GTD) 2,094
--------------------------------------------------------------------------------
525 Denison Hospital Auth. Rev.,
(Texoma Medical Center),
5.90%, 8/15/07, Prerefunded
at 102% of Par (ACA)(1) 535
--------------------------------------------------------------------------------
1,000 Denton Utility System Rev.,
Series 1996 A, 5.95%,
12/1/06, Prerefunded at 100%
of Par (MBIA)(1) 1,012
--------------------------------------------------------------------------------
2,000 Donna Independent School
District GO, 5.00%,
2/15/15 (PSF-GTD) 2,128
--------------------------------------------------------------------------------
1,115 Edcouch-Elsa Independent
School District GO, 5.00%,
2/15/14 (PSF-GTD) 1,185
--------------------------------------------------------------------------------
2,370 Forney Independent School
District GO, Series 2006 A,
5.25%, 8/15/31 (PSF-GTD) 2,495
--------------------------------------------------------------------------------

Principal Amount ($ IN THOUSANDS) Value
--------------------------------------------------------------------------------
$ 540 Garza County Public Facility
Corp. Rev., 4.50%, 10/1/06 $ 540
--------------------------------------------------------------------------------
380 Garza County Public Facility
Corp. Rev., 4.50%, 10/1/07 381
--------------------------------------------------------------------------------
400 Garza County Public Facility
Corp. Rev., 4.75%, 10/1/08 402
--------------------------------------------------------------------------------
420 Garza County Public Facility
Corp. Rev., 4.75%, 10/1/09 424
--------------------------------------------------------------------------------
585 Garza County Public Facility
Corp. Rev., 4.75%, 10/1/10 589
--------------------------------------------------------------------------------
610 Garza County Public Facility
Corp. Rev., 5.00%, 10/1/11 622
--------------------------------------------------------------------------------
2,015 Garza County Public Facility
Corp. Rev., 5.00%, 10/1/13 2,042
--------------------------------------------------------------------------------
1,115 Garza County Public Facility
Corp. Rev., 5.25%, 10/1/14 1,147
--------------------------------------------------------------------------------
1,225 Garza County Public Facility
Corp. Rev., 5.25%, 10/1/15 1,255
--------------------------------------------------------------------------------
1,145 Garza County Public Facility
Corp. Rev., 5.25%, 10/1/16 1,170
--------------------------------------------------------------------------------
890 Harris County Housing
Finance Corporation Rev.,
(Las Americas Apartments),
4.90%, 3/1/11 (FNMA) 905
--------------------------------------------------------------------------------
2,300 Hays Consolidated Independent
School District GO, 5.20%,
8/15/11 (PSF-GTD)(1)(5) 1,871
--------------------------------------------------------------------------------
700 Hays Consolidated Independent
School District GO, 5.20%,
8/15/11 (PSF-GTD)(1)(5) 570
--------------------------------------------------------------------------------
1,295 Hidalgo County GO, 5.50%,
8/15/19 (FGIC) 1,398
--------------------------------------------------------------------------------
1,750 Hidalgo County GO, 5.50%,
8/15/21 (FGIC) 1,878
--------------------------------------------------------------------------------
1,500 Houston Water & Sewer System
Rev., Series 1997 C, (Junior
Lien), 5.375%, 12/1/07,
Prerefunded at 101% of
Par (FGIC)(1) 1,552
--------------------------------------------------------------------------------
1,375 Kerrville Health Facilities
Development Corp. Rev.,
(Sid Peterson Memorial
Hospital), 5.00%, 8/15/11 1,408
--------------------------------------------------------------------------------
1,630 Live Oak GO, 5.25%,
8/1/22 (MBIA) 1,735
--------------------------------------------------------------------------------
1,000 Lubbock Health Facilities
Development Corp. Rev.,
(Lutheran Retirement), 6.00%,
3/20/29 (GNMA) 1,073
--------------------------------------------------------------------------------
3,250 Mansfield Independent School
District GO, 5.00%,
2/15/24 (PSF-GTD) 3,375
--------------------------------------------------------------------------------
1,740 Montgomery County GO,
5.50%, 3/1/24 (Ambac) 1,882
--------------------------------------------------------------------------------
550 Pasadena Independent School
District GO, Series 2001 A,
6.05%, 2/15/16 (PSF-GTD) 627
--------------------------------------------------------------------------------

See Notes to Financial Statements. (continued)

------
20

Tax-Free Bond - Schedule of Investments

MAY 31, 2006

Principal Amount ($ IN THOUSANDS) Value
--------------------------------------------------------------------------------
$1,500 Pearland Independent School
District GO, 6.00%, 2/15/09,
Prerefunded at 100% of Par
(PSF-GTD)(1) $ 1,588
--------------------------------------------------------------------------------
2,000 San Antonio Electric and Gas
Rev., 7.10%, 2/1/09 (FGIC)(1)(5) 1,806
--------------------------------------------------------------------------------
1,715 San Benito Consolidated
Independent School District
GO, 5.00%, 2/15/24 (PSF-GTD) 1,782
--------------------------------------------------------------------------------
1,800 San Benito Consolidated
Independent School District GO,
5.00%, 2/15/25 (PSF-GTD) 1,863
--------------------------------------------------------------------------------
1,505 Seguin Independent School
District GO, 5.25%,
4/1/23 (PSF-GTD) 1,605
--------------------------------------------------------------------------------
2,120 Southside Independent School
District GO, Series 2004 A,
5.25%, 8/15/25 (PSF-GTD) 2,253
--------------------------------------------------------------------------------
2,345 Texas Municipal Power Agency
COP, (Sub-Lien), 4.00%,
9/1/09 (FGIC) 2,352
--------------------------------------------------------------------------------
1,230 Texas Public Finance Auth.
Building Rev., (Technical College),
6.25%, 8/1/09 (MBIA) 1,282
--------------------------------------------------------------------------------
1,000 Texas Technical University Rev.,
5.00%, 8/15/08 (MBIA) 1,028
--------------------------------------------------------------------------------
1,000 Travis County Health Facilities
Development Corp. Rev., Series
1999 A, (Ascension Health
Credit), 5.875%, 11/15/09,
Prerefunded at 101% of
Par (Ambac)(1) 1,077
--------------------------------------------------------------------------------
1,000 Tyler Health Facilities
Development Corp. Rev.,
(Mother Frances Hospital),
4.50%, 7/1/06 1,001
--------------------------------------------------------------------------------
2,000 Tyler Health Facilities
Development Corp. Rev.,
(Mother Frances Hospital),
5.00%, 7/1/08 2,037
--------------------------------------------------------------------------------
1,265 West Oso Independent School
District GO, 5.50%,
8/15/26 (PSF-GTD) 1,359
--------------------------------------------------------------------------------
4,340 Williamson County GO,
5.50%, 2/15/11, Prerefunded
at 100% of Par (FSA)(1) 4,661
--------------------------------------------------------------------------------
72,710
--------------------------------------------------------------------------------
U.S. VIRGIN ISLANDS - 0.3%
--------------------------------------------------------------------------------
2,000 Virgin Islands Public Finance
Auth. Rev., Series 1998 A,
(Senior Lien), 5.20%, 10/1/09 2,067
--------------------------------------------------------------------------------
UTAH - 1.5%
--------------------------------------------------------------------------------
1,000 Salt Lake City Hospital Rev.,
Series 1988 A, (Intermountain
Health Corporation),
8.125%, 5/15/15(1) 1,190
--------------------------------------------------------------------------------
1,495 Utah County Municipal Building
Auth. Lease Rev., 5.00%,
11/1/09 (Ambac)(1) 1,558
--------------------------------------------------------------------------------

Principal Amount ($ IN THOUSANDS) Value
--------------------------------------------------------------------------------
$1,915 Utah County Municipal Building
Auth. Lease Rev., 5.25%,
11/1/11, Prerefunded at
100% of Par (Ambac)(1) $ 2,047
--------------------------------------------------------------------------------
1,820 Utah County Municipal Building
Auth. Lease Rev., 5.25%,
11/1/11, Prerefunded at
100% of Par (Ambac)(1) 1,946
--------------------------------------------------------------------------------
1,000 Utah County Municipal Building
Auth. Lease Rev., 5.50%,
11/1/11, Prerefunded at
100% of Par (Ambac)(1) 1,082
--------------------------------------------------------------------------------
1,130 West Valley City Municipal
Building Auth. Lease Rev., Series
2002 A, 5.00%, 8/1/10 (Ambac) 1,182
--------------------------------------------------------------------------------
1,305 West Valley City Utility Sales
Tax Rev., Series 2001 A, 5.50%,
7/15/16 (MBIA) 1,405
--------------------------------------------------------------------------------
10,410
--------------------------------------------------------------------------------
VIRGINIA - 1.1%
--------------------------------------------------------------------------------
3,650 Commonwealth of Virginia GO,
5.00%, 6/1/11, Prerefunded
at 100% of Par(1) 3,865
--------------------------------------------------------------------------------
1,500 Fairfax County COP,
5.30%, 4/15/23 1,586
--------------------------------------------------------------------------------
1,000 Hampton Industrial Development
Auth. Rev., Series 1994 A,
(Sentara General Hospital),
6.50%, 11/1/06, Prerefunded
at 100% of Par(1) 1,012
--------------------------------------------------------------------------------
1,115 Pittsylvania County GO, Series
2001 B, 5.75%, 3/1/18 (MBIA) 1,226
--------------------------------------------------------------------------------
7,689
--------------------------------------------------------------------------------
WASHINGTON - 7.0%
--------------------------------------------------------------------------------
1,000 Benton County Public Utility
District No. 1 Rev., Series 2001 A,
5.625%, 11/1/19 (FSA) 1,080
--------------------------------------------------------------------------------
5,000 City of Tacoma Rev., Series
2001 A, 5.625%, 1/1/11,
Prerefunded at 101% of
Par (FSA)(1) 5,434
--------------------------------------------------------------------------------
1,000 Cowlitz County Kelso School
District No. 458 GO, 5.75%,
12/1/18 (FSA) 1,093
--------------------------------------------------------------------------------
500 Energy Northwest Rev., 5.00%,
7/1/10 (MBIA) 523
--------------------------------------------------------------------------------
1,750 Energy Northwest Rev., 4.75%,
7/1/20 (MBIA) 1,782
--------------------------------------------------------------------------------
3,500 Energy Northwest Rev., Series
2002 A, (Columbia Generating),
5.75%, 7/1/18 (MBIA) 3,829
--------------------------------------------------------------------------------
10,000 Energy Northwest Rev., Series
2002 B, (Columbia Generating),
6.00%, 7/1/18 (Ambac)(2) 11,083
--------------------------------------------------------------------------------
2,000 King County GO, Series 1997 D,
5.75%, 12/1/07, Prerefunded
at 102% of Par(1) 2,100
--------------------------------------------------------------------------------

See Notes to Financial Statements. (continued)

------
21

Tax-Free Bond - Schedule of Investments

MAY 31, 2006

Principal Amount ($ IN THOUSANDS) Value
--------------------------------------------------------------------------------
$1,555 King County Lake Washington
School District No. 414 GO,
5.75%, 12/1/15 $ 1,715
--------------------------------------------------------------------------------
1,000 Kitsap County School District
No. 303 Bainbridge Island GO,
5.00%, 12/1/17 (MBIA/School
Bond Guarantee) 1,059
--------------------------------------------------------------------------------
1,260 Mason County Shelton School
District No. 309 GO, 5.625%,
12/1/17 (FGIC) 1,363
--------------------------------------------------------------------------------
1,000 Metropolitan Park District of
Tacoma GO, 6.00%, 12/1/11,
Prerefunded at 100%
of Par (Ambac)(1) 1,109
--------------------------------------------------------------------------------
1,120 Metropolitan Park District
of Tacoma GO, 6.00%,
12/1/11, Prerefunded at
100% of Par (Ambac)(1) 1,242
--------------------------------------------------------------------------------
2,815 Snohomish County Edmonds
School District No. 15 GO,
5.00%, 12/1/17 (FGIC/School
Bond Guarantee)(3) 2,992
--------------------------------------------------------------------------------
1,720 University of Washington Rev.,
(Student Facilities Fee),
5.875%, 6/1/10, Prerefunded
at 101% of Par (FSA)(1) 1,872
--------------------------------------------------------------------------------
1,000 Washington GO, Series 1990 A,
6.75%, 2/1/15 1,147
--------------------------------------------------------------------------------
1,000 Washington Public Power
Supply System Rev., Series
1996 A, (Nuclear Project No. 1),
5.75%, 7/1/12 (MBIA) 1,022
--------------------------------------------------------------------------------
4,570 Washington Public Power Supply
System Rev., Series 1998 A,
(Nuclear Project No. 2),
5.00%, 7/1/12 (FSA) 4,756
--------------------------------------------------------------------------------
1,500 Whitman County Pullman
School District No. 267 GO,
5.625%, 12/1/16 (FSA) 1,633
--------------------------------------------------------------------------------
46,834
--------------------------------------------------------------------------------
WISCONSIN - 1.1%
--------------------------------------------------------------------------------
1,990 Wisconsin Clean Water Rev.,
6.875%, 6/1/11 2,199
--------------------------------------------------------------------------------
2,590 Wisconsin Health & Educational
Facilities Auth. Rev., (Aurora
Medical Group), 6.00%,
11/15/10 (FSA) 2,812
--------------------------------------------------------------------------------
500 Wisconsin Health & Educational
Facilities Auth. Rev., (Blood Center
Southeastern), 5.50%, 6/1/24 521
--------------------------------------------------------------------------------
750 Wisconsin Health & Educational
Facilities Auth. Rev., (Blood Center
Southeastern), 5.75%, 6/1/34 796
--------------------------------------------------------------------------------
1,225 Wisconsin State Health &
Educational Facilities Auth. Rev.,
(Wheaton Franciscan Services),
4.00%, 8/15/06 1,225
--------------------------------------------------------------------------------
7,553
--------------------------------------------------------------------------------
TOTAL MUNICIPAL SECURITIES
(Cost $670,678) 681,596
--------------------------------------------------------------------------------

Principal Amount ($ IN THOUSANDS) Value
--------------------------------------------------------------------------------
SHORT-TERM MUNICIPAL SECURITIES -- 3.4%

ALABAMA - 1.3%
--------------------------------------------------------------------------------
$8,900 Birmingham Baptist Medical
Centers Special Care Facilities
Financing Auth. Rev., Series
2000 C, (Baptist Health System),
VRDN, 4.35%, 7/1/06,
Prerefunded at 100% of Par(1) $ 8,906
--------------------------------------------------------------------------------
ARIZONA - 0.1%
--------------------------------------------------------------------------------
900 Pima County Industrial
Development Auth. Rev., (Tucson
Electric), VRDN, 3.30%, 6/7/06
(LOC: Bank of New York) 900
--------------------------------------------------------------------------------
FLORIDA - 1.2%
--------------------------------------------------------------------------------
500 Brevard County Health Facilities
Auth. Rev., (Health First Inc.),
VRDN, 3.59%, 6/1/06
(LOC: SunTrust Bank) 500
--------------------------------------------------------------------------------
3,540 Broward County Health Facilities
Auth. Rev., (John Knox Village),
VRDN, 3.67%, 6/1/06 (RADIAN)
(SBBPA: SunTrust Bank) 3,540
--------------------------------------------------------------------------------
4,200 Sarasota County Public Hospital
Board Rev., Series 2003 A,
(Sarasota Memorial Hospital),
VRDN, 3.62%, 6/1/06 (Ambac) 4,200
--------------------------------------------------------------------------------
8,240
--------------------------------------------------------------------------------
NEW MEXICO - 0.3%
--------------------------------------------------------------------------------
1,900 Farmington Pollution, VRDN,
3.55%, 6/1/06
(LOC: Barclays Bank plc) 1,900
--------------------------------------------------------------------------------
NEW YORK - 0.3%
--------------------------------------------------------------------------------
2,050 New York City Transitional
Finance Auth. Rev., Series 2003-3,
VRDN, 3.50%, 6/1/06
(SBBPA: Royal Bank of Canada) 2,050
--------------------------------------------------------------------------------
TENNESSEE - 0.2%
--------------------------------------------------------------------------------
1,200 Clarksville Public Building
Authority Rev., (Tennessee
Municipal Bond Fund),
VRDN, 3.58%, 6/1/06
(LOC: Bank of America N.A.) 1,200
--------------------------------------------------------------------------------
TOTAL SHORT-TERM MUNICIPAL SECURITIES
(Cost $23,190) 23,196
--------------------------------------------------------------------------------
TOTAL INVESTMENT SECURITIES -- 104.7%
(Cost $693,868) 704,792
--------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES -- (4.7)% (31,493)
--------------------------------------------------------------------------------
TOTAL NET ASSETS -- 100.0% $673,299
================================================================================

See Notes to Financial Statements. (continued)

------
22

Tax-Free Bond - Schedule of Investments

MAY 31, 2006

NOTES TO SCHEDULE OF INVESTMENTS

ACA = American Capital Access

Ambac = Ambac Assurance Corporation

CIFG = CDC IXIS Financial Guaranty North America

COP = Certificates of Participation

FGIC = Financial Guaranty Insurance Co.

FNMA = Federal National Mortgage Association

FSA = Financial Security Assurance, Inc.

GNMA = Government National Mortgage Association

GO = General Obligation

LOC = Letter of Credit

MBIA = MBIA Insurance Corporation

MBIA-IBC = MBIA Insured Bond Certificates

PSF-GTD = Permanent School Fund - Guaranteed

RADIAN = Radian Asset Assurance, Inc.

SBBPA = Standby Bond Purchase Agreement

VRDN = Variable Rate Demand Note. Interest reset date is indicated. Rate shown
is effective May 31, 2006.

XLCA = XL Capital Ltd.

(1) Escrowed to maturity in U.S. government securities or state and local
government securities.

(2) Security, or a portion thereof, has been segregated for a when-issued
security.

(3) When-issued security.

(4) Security was purchased under Rule 144A of the Securities Act of 1933 or is
a private placement and, unless registered under the Act or exempted from
registration, may only be sold to qualified institutional investors. The
aggregate value of restricted securities at May 31, 2006 was $46,873 (in
thousands), which represented 7.0% of total net assets.

(5) Security is a zero-coupon municipal bond. The rate indicated is the yield
to maturity at purchase. Zero-coupon securities are issued at a substantial
discount from their value at maturity.

See Notes to Financial Statements.

------
23

Shareholder Fee Examples (Unaudited)

Fund shareholders may incur two types of costs: (1) transaction costs, including
sales charges (loads) on purchase payments and redemption/exchange fees; and (2)
ongoing costs, including management fees; distribution and service (12b-1) fees;
and other fund expenses. This example is intended to help you understand your
ongoing costs (in dollars) of investing in your fund and to compare these costs
with the ongoing cost of investing in other mutual funds.

The example is based on an investment of $1,000 made at the beginning of the
period and held for the entire period from December 1, 2005 to May 31, 2006.

ACTUAL EXPENSES

The table provides information about actual account values and actual expenses
for each class. You may use the information, together with the amount you
invested, to estimate the expenses that you paid over the period. First,
identify the share class you own. Then simply divide your account value by
$1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then
multiply the result by the number under the heading "Expenses Paid During
Period" to estimate the expenses you paid on your account during this period.

If you hold Investor Class shares of any American Century fund, or Institutional
Class shares of the American Century Diversified Bond Fund, in an American
Century account (i.e., not a financial intermediary or retirement plan account),
American Century may charge you a $12.50 semiannual account maintenance fee if
the value of those shares is less than $10,000. We will redeem shares
automatically in one of your accounts to pay the $12.50 fee. In determining your
total eligible investment amount, we will include your investments in all
PERSONAL ACCOUNTS (including American Century Brokerage accounts) registered
under your Social Security number. PERSONAL ACCOUNTS include individual
accounts, joint accounts, UGMA/UTMA accounts, personal trusts, Coverdell
Education Savings Accounts and IRAs (including traditional, Roth, Rollover,
SEP-, SARSEP- and SIMPLE-IRAs), and certain other retirement accounts. If you
have only business, business retirement, employer-sponsored or American Century
Brokerage accounts, you are currently not subject to this fee. We will not
charge the fee as long as you choose to manage your accounts exclusively online.
If you are subject to the Account Maintenance Fee, your account value could be
reduced by the fee amount.

HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES

The table also provides information about hypothetical account values and
hypothetical expenses based on the actual expense ratio of each class of your
fund and an assumed rate of return of 5% per year before expenses, which is not
the actual return of a fund's share class. The hypothetical account values and
expenses may not be used to estimate the actual ending account balance or
expenses you paid for the period. You may use this information to compare the
ongoing costs of investing in your fund and other funds. To do so, compare this
5% hypothetical example with the 5% hypothetical examples that appear in the
shareholder reports of the other funds.

(continued)

------
24

Shareholder Fee Examples (Unaudited)

Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads) or redemption/exchange fees. Therefore, the table is useful in
comparing ongoing costs only, and will not help you determine the relative total
costs of owning different funds. In addition, if these transactional costs were
included, your costs would have been higher.

EXPENSES PAID
BEGINNING ENDING DURING PERIOD* ANNUALIZED
ACCOUNT VALUE ACCOUNT VALUE 12/1/05 - EXPENSE
12/1/05 5/31/06 5/31/06 RATIO*
--------------------------------------------------------------------------------
TAX-FREE MONEY MARKET SHAREHOLDER FEE EXAMPLE
--------------------------------------------------------------------------------
ACTUAL
--------------------------------------------------------------------------------
Investor Class $1,000 $1,014.10 $2.61 0.52%
--------------------------------------------------------------------------------
HYPOTHETICAL
--------------------------------------------------------------------------------
Investor Class $1,000 $1,022.34 $2.62 0.52%
--------------------------------------------------------------------------------
TAX-FREE BOND SHAREHOLDER FEE EXAMPLE
--------------------------------------------------------------------------------
ACTUAL
--------------------------------------------------------------------------------
Investor Class $1,000 $1,013.10 $2.46 0.49%
--------------------------------------------------------------------------------
Institutional Class $1,000 $1,014.10 $1.46 0.29%
--------------------------------------------------------------------------------
Advisor Class $1,000 $1,011.90 $3.71 0.74%
--------------------------------------------------------------------------------
HYPOTHETICAL
-------------------------------------------
Investor Class $1,000 $1,022.49 $2.47 0.49%
--------------------------------------------------------------------------------
Institutional Class $1,000 $1,023.49 $1.46 0.29%
--------------------------------------------------------------------------------
Advisor Class $1,000 $1,021.24 $3.73 0.74%
--------------------------------------------------------------------------------

*Expenses are equal to the class's annualized expense ratio listed in the table
above, multiplied by the average account value over the period, multiplied by
182, the number of days in the most recent fiscal half-year, divided by 365,
to reflect the one-half year period.

------
25

Statement of Assets and Liabilities

MAY 31, 2006
--------------------------------------------------------------------------------
TAX-FREE TAX-FREE
(AMOUNTS IN THOUSANDS EXCEPT AS NOTED) MONEY MARKET BOND
--------------------------------------------------------------------------------
ASSETS
--------------------------------------------------------------------------------
Investment securities, at value
(cost of $268,685 and $693,868, respectively) $268,685 $704,792
--------------------------------------------------
Cash 1,725 --
--------------------------------------------------
Receivable for investments sold -- 7,447
--------------------------------------------------
Receivable for capital shares sold 180 598
--------------------------------------------------
Interest receivable 1,705 10,410
--------------------------------------------------
Prepaid portfolio insurance 35 --
--------------------------------------------------------------------------------
272,330 723,247
--------------------------------------------------------------------------------
LIABILITIES
--------------------------------------------------------------------------------
Disbursements in excess of demand deposit cash -- 331
--------------------------------------------------
Payable for investments purchased -- 48,859
--------------------------------------------------
Accrued management fees 113 275
--------------------------------------------------
Dividends payable 9 483
--------------------------------------------------------------------------------
122 49,948
--------------------------------------------------------------------------------

Net Assets $272,208 $673,299
================================================================================
NET ASSETS CONSIST OF:
--------------------------------------------------------------------------------
Capital paid in $272,255 $663,035
--------------------------------------------------
Accumulated net realized loss on
investment and futures transactions (47) (660)
--------------------------------------------------
Net unrealized appreciation on investments -- 10,924
--------------------------------------------------------------------------------
$272,208 $673,299
================================================================================
INVESTOR CLASS ($ AND SHARES IN FULL)
--------------------------------------------------------------------------------
Net assets $272,207,969 $665,457,958
--------------------------------------------------
Shares outstanding 272,254,586 62,369,885
--------------------------------------------------
Net asset value per share $1.00 $10.67
--------------------------------------------------------------------------------
INSTITUTIONAL CLASS ($ AND SHARES IN FULL)
--------------------------------------------------------------------------------
Net assets N/A $7,815,478
--------------------------------------------------
Shares outstanding N/A 732,504
--------------------------------------------------
Net asset value per share N/A $10.67
--------------------------------------------------------------------------------
ADVISOR CLASS ($ AND SHARES IN FULL)
--------------------------------------------------------------------------------
Net assets N/A $25,377
--------------------------------------------------
Shares outstanding N/A 2,378
--------------------------------------------------
Net asset value per share N/A $10.67
--------------------------------------------------------------------------------

See Notes to Financial Statements.

------
26

Statement of Operations

YEAR ENDED MAY 31, 2006
--------------------------------------------------------------------------------
TAX-FREE
(AMOUNTS IN THOUSANDS) MONEY MARKET TAX-FREE BOND
--------------------------------------------------------------------------------
INVESTMENT INCOME (LOSS)
--------------------------------------------------------------------------------
INCOME:
-----------------------------------------------
Interest $8,473 $27,274
--------------------------------------------------------------------------------

EXPENSES:
-----------------------------------------------
Management fees 1,396 3,125
-----------------------------------------------
Trustees' fees and expenses 17 39
-----------------------------------------------
Portfolio insurance 49 --
-----------------------------------------------
Other expenses 1 2
--------------------------------------------------------------------------------
1,463 3,166
--------------------------------------------------------------------------------

NET INVESTMENT INCOME (LOSS) 7,010 24,108
--------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
--------------------------------------------------------------------------------
NET REALIZED GAIN (LOSS) ON:
-----------------------------------------------
Investment transactions 12 343
-----------------------------------------------
Futures transactions -- 844
--------------------------------------------------------------------------------
12 1,187
--------------------------------------------------------------------------------

CHANGE IN NET UNREALIZED
APPRECIATION (DEPRECIATION) ON:
-----------------------------------------------
Investments -- (13,355)
-----------------------------------------------
Futures -- 271
--------------------------------------------------------------------------------
-- (13,084)
--------------------------------------------------------------------------------

NET REALIZED AND UNREALIZED GAIN (LOSS) 12 (11,897)
--------------------------------------------------------------------------------

NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $7,022 $12,211
================================================================================

See Notes to Financial Statements.

------
27

Statement of Changes in Net Assets

YEARS ENDED MAY 31, 2006 AND MAY 31, 2005
--------------------------------------------------------------------------------
(AMOUNTS IN THOUSANDS) TAX-FREE MONEY MARKET TAX-FREE BOND
--------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS 2006 2005 2006 2005
--------------------------------------------------------------------------------
OPERATIONS
--------------------------------------------------------------------------------
Net investment income (loss) $ 7,010 $ 3,568 $ 24,108 $ 20,827
------------------------------------
Net realized gain (loss) 12 (1) 1,187 (374)
------------------------------------
Change in net unrealized
appreciation (depreciation) -- -- (13,084) 9,574
--------------------------------------------------------------------------------
Net increase (decrease)
in net assets
resulting from operations 7,022 3,567 12,211 30,027
--------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
--------------------------------------------------------------------------------
From net investment income:
------------------------------------
Investor Class (7,010) (3,568) (23,809) (20,531)
------------------------------------
Institutional Class -- -- (328) (299)
------------------------------------
Advisor Class -- -- (1) --
------------------------------------
From net realized gains:
------------------------------------
Investor Class -- -- (451) --
------------------------------------
Institutional Class -- -- (6) --
------------------------------------
Advisor Class -- -- -- --
--------------------------------------------------------------------------------
Decrease in net assets
from distributions (7,010) (3,568) (24,595) (20,830)
--------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
--------------------------------------------------------------------------------
Net increase (decrease)
in net assets from capital
share transactions (12,655) 8,607 66,467 18,619
--------------------------------------------------------------------------------

NET INCREASE (DECREASE)
IN NET ASSETS (12,643) 8,606 54,083 27,816
--------------------------------------------------------------------------------
NET ASSETS
--------------------------------------------------------------------------------
Beginning of period 284,851 276,245 619,216 591,400
--------------------------------------------------------------------------------
End of period $272,208 $284,851 $673,299 $619,216
================================================================================

Undistributed net
investment income -- -- -- $29
================================================================================

See Notes to Financial Statements.

------
28

Notes to Financial Statements

MAY 31, 2006 (AMOUNTS IN THOUSANDS)

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION -- American Century Municipal Trust (the trust), is registered
under the Investment Company Act of 1940 (the 1940 Act) as an open-end
management investment company. Tax-Free Money Market Fund (Tax-Free Money
Market) and Tax-Free Bond Fund (Tax-Free Bond) (collectively, the funds) are two
funds in a series issued by the trust. The funds are diversified under the 1940
Act. The funds' investment objective is to seek safety of principal and high
current income that is exempt from federal income tax. Tax-Free Money Market
invests primarily in cash-equivalent, high-quality municipal obligations.
Tax-Free Bond invests primarily in high-quality municipal obligations. The
following is a summary of the funds' significant accounting policies.

MULTIPLE CLASS -- Tax-Free Money Market is authorized to issue the Investor
Class. Tax-Free Bond is authorized to issue the Investor Class, the
Institutional Class and the Advisor Class. The share classes differ principally
in their respective shareholder servicing and distribution expenses and
arrangements. All shares of each fund represent an equal pro rata interest in
the assets of the class to which such shares belong, and have identical voting,
dividend, liquidation and other rights and the same terms and conditions, except
for class specific expenses and exclusive rights to vote on matters affecting
only individual classes. Income, non-class specific expenses, and realized and
unrealized capital gains and losses of the funds are allocated to each class of
shares based on their relative net assets. The Advisor Class of Tax-Free Bond
commenced operations on July 29, 2005.

SECURITY VALUATIONS -- Securities of Tax-Free Money Market are valued at
amortized cost, which approximates current market value. Securities of Tax-Free
Bond are valued at current market value as provided by a commercial pricing
service or at the mean of the most recent bid and asked prices. Debt securities
maturing within 60 days may be valued at cost, plus or minus any amortized
discount or premium. If the funds determine that the market price of a portfolio
security is not readily available, or that the valuation methods mentioned above
do not reflect the security's fair value, such security is valued at its fair
value as determined by, or in accordance with procedures adopted by, the Board
of Trustees or its designee if such fair value determination would materially
impact a fund's net asset value. Circumstances that may cause the fund to fair
value a security include: an event occurred after the close of the exchange on
which a portfolio security principally trades (but before the close of the New
York Stock Exchange) that was likely to have changed the value of the security;
a security has been declared in default; or trading in a security has been
halted during the trading day.

SECURITY TRANSACTIONS -- Security transactions are accounted for as of the trade
date. Net realized gains and losses are determined on the identified cost basis,
which is also used for federal income tax purposes.

INVESTMENT INCOME -- Interest income is recorded on the accrual basis and
includes accretion of discounts and amortization of premiums.

WHEN-ISSUED AND FORWARD COMMITMENTS -- The funds may engage in securities
transactions on a when-issued or forward commitment basis. Under these
arrangements, the securities' prices and yields are fixed on the date of the
commitment, but payment and delivery are scheduled for a future date. During
this period, securities are subject to market fluctuations. The funds will
segregate cash, cash equivalents or other appropriate liquid securities on their
records in amounts sufficient to meet the purchase price.

FUTURES CONTRACTS -- Tax-Free Bond may enter into futures contracts in order to
manage the fund's exposure to changes in market conditions. One of the risks of
entering into futures contracts is the possibility that the change in value of
the contract may not correlate with the changes in value of the underlying
securities. Upon entering into a futures contract, the funds are required to
deposit either cash or securities in an amount equal to a certain percentage of
the contract value (initial margin). Subsequent payments (variation margin) are
made or received daily, in cash, by the funds. The variation margin is equal to
the daily change in the contract value and is recorded as unrealized gains and
losses. Tax-Free Bond recognizes a realized gain or loss when the contract is
closed or expires. Net realized and unrealized gains and losses occurring during
the holding period of futures contracts are a component of realized gain (loss)
on futures transactions and unrealized appreciation (depreciation) on futures,
respectively.

INCOME TAX STATUS -- It is each fund's policy to distribute substantially all
net investment income and net realized gains to shareholders and to otherwise
qualify as a regulated investment company under provisions of the Internal
Revenue Code. Accordingly, no provision has been made for federal or state
income taxes.

DISTRIBUTIONS TO SHAREHOLDERS -- Distributions from net investment income are
declared daily and paid monthly. Distributions from net realized gains, if any,
are generally declared and paid annually. Tax-Free Money Market does not expect
to realize any long-term capital gains, and accordingly, does not expect to pay
any capital gains distributions.

(continued)

------
29

Notes to Financial Statements

MAY 31, 2006 (AMOUNTS IN THOUSANDS)

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

INDEMNIFICATIONS -- Under the trust's organizational documents, its officers and
trustees are indemnified against certain liabilities arising out of the
performance of their duties to the funds. In addition, in the normal course of
business, the funds enter into contracts that provide general indemnifications.
The funds' maximum exposure under these arrangements is unknown as this would
involve future claims that may be made against the funds. The risk of material
loss from such claims is considered by management to be remote.

USE OF ESTIMATES -- The financial statements are prepared in conformity with
accounting principles generally accepted in the United States of America, which
may require management to make certain estimates and assumptions at the date of
the financial statements. Actual results could differ from these estimates.

2. FEES AND TRANSACTIONS WITH RELATED PARTIES

MANAGEMENT FEES -- The trust has entered into a Management Agreement with
American Century Investment Management, Inc. (ACIM), under which ACIM provides
the funds with investment advisory and management services in exchange for a
single, unified management fee (the fee) per class. The Agreement provides that
all expenses of the funds, except brokerage commissions, taxes, portfolio
insurance, interest, fees and expenses of those trustees who are not considered
"interested persons" as defined in the 1940 Act (including counsel fees) and
extraordinary expenses, will be paid by ACIM. The fee is computed and accrued
daily based on the daily net assets of each specific class of shares of each
fund and paid monthly in arrears. The fee consists of (1) an Investment Category
Fee based on the daily net assets of the funds and certain other accounts
managed by the investment advisor that are in the same broad investment category
as each fund and (2) a Complex Fee based on the assets of all the funds in the
American Century family of funds. The rates for the Investment Category Fee
range from 0.1570% to 0.2700% for Tax-Free Money Market. The rates for the
Investment Category Fee range from 0.1625% to 0.2800% for Tax-Free Bond. Rates
for the Complex Fee range from 0.2500% to 0.3100% for the Investor Class. The
Institutional Class and the Advisor Class are 0.2000% and 0.2500%, respectively,
less at each point within the Complex Fee Range. The effective annual management
fee for the Investor Class of Tax-Free Money Market and Tax-Free Bond for the
year ended May 31, 2006 was 0.49% and 0.48%, respectively. The effective annual
management fee for the Institutional Class and the Advisor Class of Tax-Free
Bond for the year ended May 31, 2006 was 0.28% and 0.23%, respectively.

DISTRIBUTION AND SERVICE FEES -- The Board of Trustees has adopted a Master
Distribution and Shareholder Services Plan (the plan) for the Advisor Class,
pursuant to Rule 12b-1 of the 1940 Act. The plan provides that the Advisor Class
will pay American Century Investment Services, Inc. (ACIS) an annual
distribution fee equal to 0.25% and an annual service fee equal to 0.25%. The
fees are computed and accrued daily based on the Advisor Class's daily net
assets and paid monthly in arrears. The distribution fee provides compensation
for expenses incurred by financial intermediaries in connection with
distributing shares of the Advisor Class including, but not limited to, payments
to brokers, dealers, and financial institutions that have entered into sales
agreements with respect to shares of the funds. The service fee provides
compensation for shareholder and administrative services rendered by ACIS, its
affiliates or independent third party providers. Fees incurred under the plan
during the year ended May 31, 2006, are detailed in the Statement of Operations.

MONEY MARKET INSURANCE -- Tax-Free Money Market, along with other money market
funds managed by ACIM, has entered into an insurance agreement with Ambac
Assurance Corporation (Ambac). Ambac provides limited coverage for certain loss
events including issuer defaults as to payment of principal or interest and
insolvency of a credit enhancement provider. Tax-Free Money Market pays annual
premiums to Ambac, which are amortized daily over one year. For the year ended
May 31, 2006, the annualized ratio of money market insurance expense to average
net assets was 0.02%.

RELATED PARTIES -- Certain officers and trustees of the trust are also officers
and/or directors, and, as a group, controlling stockholders of American Century
Companies, Inc. (ACC), the parent of the trust's investment advisor, ACIM, the
distributor of the trust, ACIS, and the trust's transfer agent, American Century
Services, LLC.

Tax-Free Bond has a bank line of credit agreement with JPMorgan Chase Bank
(JPMCB). JPMCB is a custodian of the funds and a wholly owned subsidiary of J.P.
Morgan Chase & Co. (JPM). JPM is an equity investor in ACC.

(continued)

------
30

Notes to Financial Statements

MAY 31, 2006 (AMOUNTS IN THOUSANDS)

3. INVESTMENT TRANSACTIONS

Purchases and sales of investment securities for Tax-Free Bond, excluding
short-term investments, for the year ended May 31, 2006 were $509,203 and
$439,556, respectively. All investment transactions for Tax-Free Money Market
were considered short-term during the year ended May 31, 2006.

4. CAPITAL SHARE TRANSACTIONS

Transactions in shares of the funds were as follows (unlimited number of shares
authorized):
-----------------------------------------------------------------------------
TAX-FREE MONEY MARKET TAX-FREE BOND
-----------------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
-----------------------------------------------------------------------------
INVESTOR CLASS
-----------------------------------------------------------------------------
YEAR ENDED MAY 31, 2006
--------------------------------
Sold 215,988 $215,988 18,991 $204,384
--------------------------------
Issued in reinvestment
of distributions 6,881 6,881 1,750 18,842
--------------------------------
Redeemed (235,524) (235,524) (14,501) (155,962)
-----------------------------------------------------------------------------
Net increase (decrease) (12,655) $(12,655) 6,240 $ 67,264
=============================================================================
YEAR ENDED MAY 31, 2005
--------------------------------
Sold 189,979 $189,979 13,170 $142,894
--------------------------------
Issued in reinvestment
of distributions 3,493 3,493 1,443 15,658
--------------------------------
Redeemed (184,865) (184,865) (13,004) (140,935)
-----------------------------------------------------------------------------
Net increase (decrease) 8,607 $ 8,607 1,609 $ 17,617
=============================================================================
INSTITUTIONAL CLASS
-----------------------------------------------------------------------------
YEAR ENDED MAY 31, 2006
--------------------------------
Sold N/A N/A 9 $ 93
--------------------------------
Issued in reinvestment
of distributions 30 321
--------------------------------
Redeemed (115) (1,237)
-----------------------------------------------------------------------------
Net increase (decrease) (76) $(823)
=============================================================================
YEAR ENDED MAY 31, 2005
--------------------------------
Sold N/A N/A 455 $4,953
--------------------------------
Issued in reinvestment
of distributions 27 298
--------------------------------
Redeemed (393) (4,249)
-----------------------------------------------------------------------------
Net increase (decrease) 89 $1,002
=============================================================================
ADVISOR CLASS
-----------------------------------------------------------------------------
PERIOD ENDED MAY 31, 2006(1)
--------------------------------
Sold N/A N/A 2 $25
--------------------------------
Issued in reinvestment
of distributions -- 1
-----------------------------------------------------------------------------
Net increase (decrease) 2 $26
=============================================================================

(1) July 29, 2005 (commencement of sale) through May 31, 2006.

5. BANK LINE OF CREDIT

Tax-Free Bond, along with certain other funds managed by ACIM or American
Century Global Investment Management, Inc., has a $500 million unsecured bank
line of credit agreement with JPMCB. Tax-Free Bond may borrow money for
temporary or emergency purposes to fund shareholder redemptions. Borrowings
under the agreement bear interest at the Federal Funds rate plus 0.50%. Tax-Free
Bond did not borrow from the line during the year ended May 31, 2006.

(continued)

------
31

Notes to Financial Statements

MAY 31, 2006 (AMOUNTS IN THOUSANDS)

6. FEDERAL TAX INFORMATION

The tax character of distributions paid during the years ended May 31, 2006 and
May 31, 2005 were as follows:
------------------------------------------------------------------------------
TAX-FREE MONEY MARKET TAX-FREE BOND
------------------------------------------------------------------------------
2006 2005 2006 2005
------------------------------------------------------------------------------
DISTRIBUTIONS PAID FROM
------------------------------------------------------------------------------
Ordinary income $7,010 $3,568 $24,138 $20,830
------------------------------------------------------------------------------
Long-term capital gains -- -- $457 --
------------------------------------------------------------------------------

The book-basis character of distributions made during the year from net
investment income or net realized gains may differ from their ultimate
characterization for federal income tax purposes. These differences reflect the
differing character of certain income items and net realized gains and losses
for financial statement and tax purposes, and may result in reclassification
among certain capital accounts on the financial statements.

As of May 31, 2006, the components of distributable earnings on a tax-basis and
the federal tax cost of investments were as follows:

--------------------------------------------------------------------------------
TAX-FREE
MONEY MARKET TAX-FREE BOND
--------------------------------------------------------------------------------

Federal tax cost of investments $268,685 $693,869
================================================================================

Gross tax appreciation of investments -- $12,769
--------------------------------------------------

Gross tax depreciation of investments -- (1,846)
--------------------------------------------------------------------------------

Net tax appreciation (depreciation) of investments -- $10,923
================================================================================

Accumulated capital losses $(47) --
--------------------------------------------------

Capital loss deferrals -- $(659)
================================================================================

The difference between book-basis and tax-basis cost and unrealized appreciation
(depreciation) is attributable primarily to the tax deferral of losses on wash
sales.

The accumulated capital losses listed above represent net capital loss
carryovers that may be used to offset future realized capital gains for federal
income tax purposes. The capital loss carryovers expire as follows:

2009 2010 2011 2012 2013
----------------------------------------------------------------------
Tax-Free Money Market $(33) $(9) -- $(4) $(1)
----------------------------------------------------------------------

The capital loss deferrals represent net capital losses incurred in the
seven-month period ended May 31, 2006. The funds have elected to treat such
losses as having been incurred in the following fiscal year for federal income
tax purposes.

7. OTHER TAX INFORMATION (UNAUDITED) ($ IN FULL)

The following information is provided pursuant to provisions of the Internal
Revenue Code.

The funds designate exempt interest and capital gain distributions for the
fiscal year ended May 31, 2006, as follows:

--------------------------------------------------------------------------------
TAX-FREE
MONEY MARKET TAX-FREE BOND
--------------------------------------------------------------------------------
Exempt interest distributions $7,008,068 $24,061,771
------------------------------------
Long-term capital gain -- $457,040
--------------------------------------------------------------------------------

------
32

Tax-Free Money Market - Financial Highlights

For a Share Outstanding Throughout the Years Ended May 31
-------------------------------------------------------------------------------
INVESTOR CLASS
-------------------------------------------------------------------------------
2006 2005 2004 2003 2002
-------------------------------------------------------------------------------
PER-SHARE DATA
-------------------------------------------------------------------------------
Net Asset Value,
Beginning of Period $1.00 $1.00 $1.00 $1.00 $1.00
-------------------------------------------------------------------------------
Income From
Investment Operations
---------------------------
Net Investment
Income (Loss) 0.02 0.01 0.01 0.01 0.02
-------------------------------------------------------------------------------
Distributions
---------------------------
From Net
Investment Income (0.02) (0.01) (0.01) (0.01) (0.02)
-------------------------------------------------------------------------------
Net Asset Value,
End of Period $1.00 $1.00 $1.00 $1.00 $1.00
===============================================================================
TOTAL RETURN(1) 2.51% 1.33% 0.64% 1.05% 1.64%
-------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
-------------------------------------------------------------------------------
Ratio of Operating
Expenses to
Average Net Assets 0.52% 0.51% 0.51% 0.51% 0.51%
---------------------------
Ratio of Net Investment
Income (Loss)
to Average Net Assets 2.47% 1.31% 0.65% 1.04% 1.62%
---------------------------
Net Assets,
End of Period
(in thousands) $272,208 $284,851 $276,245 $272,256 $250,035
-------------------------------------------------------------------------------

(1) Total return assumes reinvestment of net investment income and capital
gains distributions, if any.

See Notes to Financial Statements.

------
33

Tax-Free Bond - Financial Highlights

For a Share Outstanding Throughout the Years Ended May 31
--------------------------------------------------------------------------------
INVESTOR CLASS
--------------------------------------------------------------------------------
2006 2005 2004 2003 2002
--------------------------------------------------------------------------------
PER-SHARE DATA
--------------------------------------------------------------------------------
Net Asset Value,
Beginning of Period $10.88 $10.71 $11.19 $10.63 $10.50
--------------------------------------------------------------------------------
Income From
Investment Operations
---------------------------
Net Investment
Income (Loss) 0.40 0.38 0.37 0.39 0.44
----------------------------
Net Realized and
Unrealized Gain (Loss) (0.20) 0.17 (0.45) 0.58 0.22
--------------------------------------------------------------------------------
Total From
Investment Operations 0.20 0.55 (0.08) 0.97 0.66
--------------------------------------------------------------------------------
Distributions
---------------------------
From Net
Investment Income (0.40) (0.38) (0.37) (0.39) (0.44)
----------------------------
From Net
Realized Gains (0.01) -- (0.03) (0.02) (0.09)
--------------------------------------------------------------------------------
Total Distributions (0.41) (0.38) (0.40) (0.41) (0.53)
--------------------------------------------------------------------------------
Net Asset Value,
End of Period $10.67 $10.88 $10.71 $11.19 $10.63
================================================================================
TOTAL RETURN(1) 1.87% 5.16% (0.79)% 9.31% 6.45%
--------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
--------------------------------------------------------------------------------
Ratio of Operating
Expenses to
Average Net Assets 0.49% 0.50% 0.51% 0.51% 0.51%
----------------------------
Ratio of Net
Investment Income (Loss)
to Average Net Assets 3.73% 3.46% 3.34% 3.62% 4.14%
----------------------------
Portfolio Turnover Rate 79% 77% 60% 57% 86%
----------------------------
Net Assets,
End of Period
(in thousands) $665,458 $610,420 $583,689 $620,000 $382,447
--------------------------------------------------------------------------------

(1) Total return assumes reinvestment of net investment income and capital
gains distributions, if any. The total return of the classes may not
precisely reflect the class expense differences because of the impact of
calculating values to two decimal places. If net asset values were
calculated to three decimal places, the total return differences would more
closely reflect the class expense differences. The calculation of net asset
values to two decimal places is made in accordance with SEC guidelines and
does not result in any gain or loss of value between one class and another.

See Notes to Financial Statements.

------
34

Tax-Free Bond - Financial Highlights

For a Share Outstanding Throughout the Years Ended May 31 (except as noted)
-----------------------------------------------------------------------------
INSTITUTIONAL CLASS
-----------------------------------------------------------------------------
2006 2005 2004 2003(1)
-----------------------------------------------------------------------------
PER-SHARE DATA
-----------------------------------------------------------------------------
Net Asset Value,
Beginning of Period $10.88 $10.71 $11.19 $10.90
-----------------------------------------------------------------------------
Income From Investment Operations
--------------------------------------
Net Investment Income (Loss) 0.42 0.40 0.39 0.05
--------------------------------------
Net Realized and
Unrealized Gain (Loss) (0.20) 0.17 (0.45) 0.29
-----------------------------------------------------------------------------
Total From Investment Operations 0.22 0.57 (0.06) 0.34
-----------------------------------------------------------------------------
Distributions
--------------------------------------
From Net Investment Income (0.42) (0.40) (0.39) (0.05)
--------------------------------------
From Net Realized Gains (0.01) -- (0.03) --
-----------------------------------------------------------------------------
Total Distributions (0.43) (0.40) (0.42) (0.05)
-----------------------------------------------------------------------------
Net Asset Value, End of Period $10.67 $10.88 $10.71 $11.19
=============================================================================
TOTAL RETURN(2) 2.07% 5.37% (0.60)% 3.14%
-----------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
-----------------------------------------------------------------------------
Ratio of Operating
Expenses to Average
Net Assets 0.29% 0.30% 0.31% 0.30%(3)
--------------------------------------
Ratio of Net Investment Income
(Loss) to Average Net Assets 3.93% 3.66% 3.54% 3.68%(3)
--------------------------------------
Portfolio Turnover Rate 79% 77% 60% 57%(4)
--------------------------------------
Net Assets, End of Period
(in thousands) $7,815 $8,796 $7,711 $7,609
-----------------------------------------------------------------------------

(1) April 15, 2003 (commencement of sale) through May 31, 2003.

(2) Total return assumes reinvestment of net investment income and capital
gains distributions, if any. Total returns for periods less than one year
are not annualized. The total return of the classes may not precisely
reflect the class expense differences because of the impact of calculating
values to two decimal places. If net asset values were calculated to three
decimal places, the total return differences would more closely reflect the
class expense differences. The calculation of net asset values to two
decimal places is made in accordance with SEC guidelines and does not
result in any gain or loss of value between one class and another.

(3) Annualized.

(4) Portfolio turnover is calculated at the fund level. Percentage indicated
was calculated for the year ended May 31, 2003.

See Notes to Financial Statements.

------
35

Tax-Free Bond - Financial Highlights

For a Share Outstanding Throughout the Period Indicated
--------------------------------------------------------------------------------
ADVISOR CLASS
--------------------------------------------------------------------------------
2006(1)
--------------------------------------------------------------------------------
PER-SHARE DATA
--------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $10.83
--------------------------------------------------------------------------------
Income From Investment Operations
--------------------------------------------------------------
Net Investment Income (Loss) 0.31
--------------------------------------------------------------
Net Realized and Unrealized Gain (Loss) (0.15)
--------------------------------------------------------------------------------
Total From Investment Operations 0.16
--------------------------------------------------------------------------------
Distributions
--------------------------------------------------------------
From Net Investment Income (0.31)
--------------------------------------------------------------
From Net Realized Gains (0.01)
--------------------------------------------------------------------------------
Total Distributions (0.32)
--------------------------------------------------------------------------------
Net Asset Value, End of Period $10.67
================================================================================
TOTAL RETURN(2) 1.51%
--------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
--------------------------------------------------------------------------------
Ratio of Operating Expenses to Average Net Assets 0.74%(3)
--------------------------------------------------------------
Ratio of Net Investment Income (Loss) to Average Net Assets 3.52%(3)
--------------------------------------------------------------
Portfolio Turnover Rate 79%(4)
--------------------------------------------------------------
Net Assets, End of Period (in thousands) $25
--------------------------------------------------------------------------------

(1) July 29, 2005 (commencement of sale) through May 31, 2006.

(3) Annualized.

(4) Portfolio turnover is calculated at the fund level. Percentage indicated
was calculated for the year ended May 31, 2006.

See Notes to Financial Statements.

------
36

Report of Independent Registered Public Accounting Firm

To the Trustees of the American Century Municipal Trust and Shareholders of the
Tax-Free Money Market Fund and Tax-Free Bond Fund:

In our opinion, the accompanying statements of assets and liabilities, including
the schedules of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of the Tax-Free Money Market Fund and
Tax-Free Bond Fund (two of the six funds in the American Century Municipal Trust
hereafter referred to as the "Funds") at May 31, 2006, the results of each of
their operations for the year then ended, the changes in each of their net
assets for each of the two years in the period then ended and the financial
highlights for each of the periods presented, in conformity with accounting
principles generally accepted in the United States of America. These financial
statements and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Funds' management; our responsibility
is to express an opinion on these financial statements based on our audits. We
conducted our audits of these financial statements in accordance with the
standards of the Public Company Accounting Oversight Board (United States).
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at May 31, 2006 by
correspondence with the custodian and brokers, provide a reasonable basis for
our opinion.

PricewaterhouseCoopers LLP
Kansas City, Missouri
July 18, 2006

------
37

Management

The individuals listed below serve as trustees or officers of the funds. Each
trustee serves until his or her successor is duly elected and qualified or until
he or she retires. Effective March 2004, mandatory retirement age for
independent trustees is 73. However, the mandatory retirement age may be
extended for a period not to exceed two years with the approval of the remaining
independent trustees. Those listed as interested trustees are "interested"
primarily by virtue of their engagement as officers of American Century
Companies, Inc. (ACC) or its wholly owned, direct or indirect, subsidiaries,
including the funds' investment advisor, American Century Investment Management,
Inc. (ACIM); the funds' principal underwriter, American Century Investment
Services, Inc. (ACIS); and the funds' transfer agent, American Century Services,
LLC (ACS).

The other trustees (more than three-fourths of the total number) are
independent; that is, they have never been employees or officers of, and have no
financial interest in, ACC or any of its wholly owned, direct or indirect,
subsidiaries, including ACIM, ACIS, and ACS. The trustees serve in this capacity
for eight registered investment companies in the American Century family of
funds.

All persons named as officers of the funds also serve in similar capacities for
the other 14 investment companies advised by ACIM or American Century Global
Investment Management, Inc. (ACGIM), a wholly owned subsidiary of ACIM, unless
otherwise noted. 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 and are appointed or
re-appointed on an annual basis.

INDEPENDENT TRUSTEES
--------------------------------------------------------------------------------
JOHN FREIDENRICH, 1665 Charleston Road, Mountain View, CA 94043

YEAR OF BIRTH: 1937

POSITION(S) HELD WITH FUND: Trustee

FIRST YEAR OF SERVICE: 2005

PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Member and Manager, Regis
Management Company, LLC (April 2004 to present); Partner and Founder, Bay
Partners (Venture capital firm, 1976 to present); Partner and Founder, Ware &
Freidenrich (1968 to present)

NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY TRUSTEE: 40

OTHER DIRECTORSHIPS HELD BY TRUSTEE: None
--------------------------------------------------------------------------------
RONALD J. GILSON, 1665 Charleston Road, Mountain View, CA 94043

YEAR OF BIRTH: 1946

POSITION(S) HELD WITH FUND: Trustee, Chairman of the Board

FIRST YEAR OF SERVICE: 1995

PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Charles J. Meyers Professor of Law
and Business, Stanford Law School (1979 to present); Marc and Eva Stern
Professor of Law and Business, Columbia University School of Law (1992 to
present)

NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY TRUSTEE: 40

OTHER DIRECTORSHIPS HELD BY TRUSTEE: None
--------------------------------------------------------------------------------

(continued)

------
38

Management

INDEPENDENT TRUSTEES (CONTINUED)
--------------------------------------------------------------------------------
KATHRYN A. HALL, 1665 Charleston Road, Mountain View, CA 94043

YEAR OF BIRTH: 1957

POSITION(S) HELD WITH FUND: Trustee

FIRST YEAR OF SERVICE: 2001

PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Co-Chief Executive Officer and
Chief Investment Officer, Offit Hall Capital Management, LLC (April 2002 to
present); President and Managing Director, Laurel Management Company, LLC (1996
to April 2002)

NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY TRUSTEE: 40

OTHER DIRECTORSHIPS HELD BY TRUSTEE: None
--------------------------------------------------------------------------------
MYRON S. SCHOLES, 1665 Charleston Road, Mountain View, CA 94043

YEAR OF BIRTH: 1941

POSITION(S) HELD WITH FUND: Trustee

FIRST YEAR OF SERVICE: 1980

PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Chairman, Oak Hill Platinum
Partners, and a Partner, Oak Hill Capital Management (1999 to present); Frank E.
Buck Professor of Finance-Emeritus, Stanford Graduate School of Business (1981
to present)

NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY TRUSTEE: 40

OTHER DIRECTORSHIPS HELD BY TRUSTEE: Director, Dimensional Fund Advisors
(investment advisor, 1982 to present); Director, Chicago Mercantile Exchange
(2000 to present)
--------------------------------------------------------------------------------
JOHN B. SHOVEN, 1665 Charleston Road, Mountain View, CA 94043

YEAR OF BIRTH: 1947

POSITION(S) HELD WITH FUND: Trustee

FIRST YEAR OF SERVICE: 2002

PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Professor of Economics, Stanford
University (1977 to present)

NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY TRUSTEE: 40

OTHER DIRECTORSHIPS HELD BY TRUSTEE: Director, Cadence Design Systems (1992 to
present); Director, Watson Wyatt Worldwide (2002 to present); Director,
Palmsource Inc. (2002 to present)
--------------------------------------------------------------------------------
JEANNE D. WOHLERS, 1665 Charleston Road, Mountain View, CA 94043

YEAR OF BIRTH: 1945

POSITION(S) HELD WITH FUND: Trustee

FIRST YEAR OF SERVICE: 1984

PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Retired, Director and Partner,
Windy Hill Productions, LP (educational software)

NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY TRUSTEE: 40

OTHER DIRECTORSHIPS HELD BY TRUSTEE: Director, Quintus Corporation (automation
solutions, 1995 to present)
--------------------------------------------------------------------------------

INTERESTED TRUSTEE
--------------------------------------------------------------------------------
WILLIAM M. LYONS, 4500 Main Street, Kansas City, MO 64111

YEAR OF BIRTH: 1955

POSITION(S) HELD WITH FUND: Trustee, President

FIRST YEAR OF SERVICE: 1997

PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Chief Executive Officer, ACC
(September 2000 to present); President, ACC (June 1997 to present). Also serves
as: Chief Executive Officer and President, ACIM, ACGIM, ACIS and other ACC
subsidiaries; Executive Vice President, ACS; Director, ACC, ACIM, ACGIM, ACS,
ACIS and other ACC subsidiaries

NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY TRUSTEE: 40

OTHER DIRECTORSHIPS HELD BY TRUSTEE: None
--------------------------------------------------------------------------------

(continued)

------
39

Management

OFFICERS
--------------------------------------------------------------------------------
JONATHAN THOMAS, 4500 Main Street, Kansas City, MO 64111

YEAR OF BIRTH: 1963

POSITION(S) HELD WITH FUND: Executive Vice President

FIRST YEAR OF SERVICE: 2005

PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Executive Vice President, ACC
(November 2005 to present); Chief Administrative Officer, ACC (February 2006 to
present). Also serves as: President, ACS; Chief Executive Officer, Chief
Financial Officer and Chief Accounting Officer, ACIM, ACGIM, ACS, ACIS and other
ACC subsidiaries; Managing Director, Morgan Stanley (March 2000 to November
2005)
--------------------------------------------------------------------------------
MARYANNE ROEPKE, 4500 Main Street, Kansas City, MO 64111

YEAR OF BIRTH: 1956

POSITION(S) HELD WITH FUND: Senior Vice President, Treasurer and Chief Financial
Officer

FIRST YEAR OF SERVICE: 2000

PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Assistant Treasurer, ACC (January
1995 to present). Also serves as: Senior Vice President, ACS; Assistant
Treasurer, ACIM, ACGIM, ACS, ACIS and other ACC subsidiaries
--------------------------------------------------------------------------------
DAVID C. TUCKER, 4500 Main Street, Kansas City, MO 64111

YEAR OF BIRTH: 1958

POSITION(S) HELD WITH FUND: Senior Vice President and General Counsel

FIRST YEAR OF SERVICE: 1998

PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Vice President, ACC (February 2001
to present); General Counsel, ACC (June 1998 to present). Also serves as: Senior
Vice President and General Counsel, ACIM, ACGIM, ACS, ACIS and other ACC
subsidiaries
--------------------------------------------------------------------------------
CHARLES C.S. PARK, 4500 Main Street, Kansas City, MO 64111

YEAR OF BIRTH: 1967

POSITION(S) HELD WITH FUND: Vice President and Chief Compliance Officer

FIRST YEAR OF SERVICE: 2000

PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Chief Compliance Officer, ACIM,
ACGIM and ACS (March 2005 to present); Vice President, ACS (February 2000 to
present); Assistant General Counsel, ACS (January 1998 to March 2005)
--------------------------------------------------------------------------------
ROBERT LEACH, 4500 Main Street, Kansas City, MO 64111

YEAR OF BIRTH: 1966

POSITION(S) HELD WITH FUND: Controller

FIRST YEAR OF SERVICE: 1996

PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Vice President, ACS (February 2000
to present); Controller-Fund Accounting, ACS (June 1997 to present)
--------------------------------------------------------------------------------
C. JEAN WADE, 4500 Main Street, Kansas City, MO 64111

YEAR OF BIRTH: 1964

POSITION(S) HELD WITH FUND: Controller(1)

FIRST YEAR OF SERVICE: 1996

PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Vice President, ACS (February 2000
to present); Controller-Fund Accounting, ACS (June 1997 to present)
--------------------------------------------------------------------------------
JON ZINDEL, 4500 Main Street, Kansas City, MO 64111

YEAR OF BIRTH: 1967

POSITION(S) HELD WITH FUND: Tax Officer

FIRST YEAR OF SERVICE: 1997

PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Vice President, ACC (October 2001
to present); Vice President, Corporate Tax, ACS (April 1998 to present). Also
serves as: Vice President, ACIM, ACGIM, ACIS and other ACC subsidiaries
--------------------------------------------------------------------------------

(1) Ms. Wade serves in a similar capacity for seven other investment companies
advised by ACIM.

The SAI has additional information about the funds' trustees and is available
without charge, upon request, by calling 1-800-345-2021.

------
40

Approval of Management Agreement for Tax-Free Money Market and Tax-Free Bond

Under Section 15(c) of the Investment Company Act, contracts for investment
advisory services are required to be reviewed, evaluated and approved by a
majority of a fund's independent directors or trustees (the "Directors") each
year. At American Century, this process is referred to as the "15(c) Process."
As a part of this process, the board reviews fund performance, shareholder
services, audit and compliance information, and a variety of other reports from
the advisor concerning fund operations. In addition to this annual review, the
board of directors oversees and evaluates on a continuous basis at its quarterly
meetings the nature and quality of significant services performed by the
advisor, fund performance, audit and compliance information, and a variety of
other reports relating to fund operations. The board, or committees of the
board, also holds special meetings as needed.

Under a Securities and Exchange Commission rule, each fund is required to
disclose in its annual or semiannual report, as appropriate, the material
factors and conclusions that formed the basis for the board's approval or
renewal of any advisory agreements within the fund's most recently completed
fiscal half-year period.

ANNUAL CONTRACT REVIEW PROCESS

As part of the annual 15(c) Process undertaken during the most recent fiscal
half-year period, the Directors reviewed extensive data and information compiled
by the advisor and certain independent providers of evaluative data (the "15(c)
Providers") concerning Tax-Free Money Market and Tax-Free Bond (the "funds") and
the services provided to the funds under the management agreement. The
information considered and the discussions held at the meetings included, but
were not limited to:

* the nature, extent and quality of investment management, shareholder services
and other services provided to the funds under the management agreement;

* reports on the advisor's activities relating to the wide range of programs and
services the advisor provides to the funds and its shareholders on a routine
and non-routine basis;

* data comparing the cost of owning the funds to the cost of owning similar
funds;

* data comparing the funds' performance to appropriate benchmarks and/or a peer
group of other mutual funds with similar investment objectives and
strategies;

* financial data showing the profitability of the funds to the advisor and the
overall profitability of the advisor; and

* data comparing services provided and charges to other investment management
clients of the advisor.

In keeping with its practice, the funds' board of directors held two regularly
scheduled meetings and one special meeting to review and discuss the information
provided by the advisor and to complete its negotiations with the advisor
regarding the renewal of the management agreement, including

(continued)

------
41

Approval of Management Agreement for Tax-Free Money Market and Tax-Free Bond

the setting of the applicable advisory fee. The board also had the benefit of
the advice of its independent counsel throughout the period.

FACTORS CONSIDERED

The Directors considered all of the information provided by the advisor, the
15(c) Providers, and the board's independent counsel, and evaluated such
information for each fund for which the board has responsibility. The Directors
did not identify any single factor as being all-important or controlling, and
each Director may have attributed different levels of importance to different
factors. In deciding to renew the agreement under the terms ultimately
determined by the board to be appropriate, the Directors' decision was based on
the following factors.

NATURE, EXTENT AND QUALITY OF SERVICES -- GENERALLY. Under the management
agreement, the advisor is responsible for providing or arranging for all
services necessary for the operation of the funds. The board noted that under
the management agreement, the advisor provides or arranges at its own expense a
wide variety of services including:

* fund construction and design

* portfolio security selection

* initial capitalization/funding

* securities trading

* custody of fund assets

* daily valuation of the funds' portfolio

* shareholder servicing and transfer agency, including shareholder
confirmations, recordkeeping and communications

* legal services

* regulatory and portfolio compliance

* financial reporting

* marketing and distribution

The Directors noted that many of these services have expanded over time both in
terms of quantity and complexity in response to shareholder demands, competition
in the industry and the changing regulatory environment. In performing their
evaluation, the Directors considered information received in connection with the
annual review, as well as information provided on an ongoing basis at their
regularly scheduled board and committee meetings.

INVESTMENT MANAGEMENT SERVICES. The nature of the investment management services
provided is quite complex and allows fund shareholders access to professional
money management, instant diversification of their investments within an asset
class, the opportunity to easily diversify among asset classes, and liquidity.
In evaluating investment performance, the board expects the advisor to manage
the funds in accordance with its investment objectives and approved strategies.
In providing these services, the advisor utilizes teams of investment
professionals (portfolio managers, analysts, research assistants, and securities
traders) who require extensive information technology, research,

(continued)

------
42

Approval of Management Agreement for Tax-Free Money Market and Tax-Free Bond

training, compliance and other systems to conduct their business. At each
quarterly meeting the Directors review investment performance information for
the funds, together with comparative information for appropriate benchmarks and
peer groups of funds managed similarly to the funds. The Directors also review
detailed performance information during the 15(c) Process comparing the funds'
performance with that of similar funds not managed by the advisor. If
performance concerns are identified, the Directors discuss with the advisor the
reasons for such results (e.g., market conditions, security selection) and any
efforts being undertaken to improve performance. Tax-Free Money Market's
performance for both the one and three year periods was above the median for its
peer group. Tax-Free Bond's performance was above the median for the one year
period and at the median for the three year period during part of the past year.
The board discussed Tax-Free Bond's performance with the advisor and was
satisfied with the efforts being undertaken by the advisor.

SHAREHOLDER AND OTHER SERVICES. The advisor provides the funds with a
comprehensive package of transfer agency, shareholder, and other services. The
Directors review reports and evaluations of such services at their regular
quarterly meetings, including the annual meeting concerning contract review, and
reports to the board. These reports include, but are not limited to, information
regarding the operational efficiency and accuracy of the shareholder and
transfer agency services provided, staffing levels, shareholder satisfaction (as
measured by external as well as internal sources), technology support, new
products and services offered to fund shareholders, securities trading
activities, portfolio valuation services, auditing services, and legal and
operational compliance activities. Certain aspects of shareholder and transfer
agency service level efficiency and the quality of securities trading activities
are measured by independent third party providers and are presented in
comparison to other fund groups not managed by the advisor.

COSTS OF SERVICES PROVIDED AND PROFITABILITY TO THE ADVISOR. The advisor
provides detailed information concerning its cost of providing various services
to the funds, its profitability in managing the funds, its overall
profitability, and its financial condition. The Directors have reviewed with the
advisor the methodology used to prepare this financial information. This
financial information regarding the advisor is considered in order to evaluate
the advisor's financial condition, its ability to continue to provide services
under the management agreement, and the reasonableness of the current management
fee.

ETHICS OF THE ADVISOR. The Directors generally consider the advisor's commitment
to providing quality services to shareholders and to conducting its business
ethically. They noted that the advisor's practices generally meet or exceed
industry best practices and that the advisor was not implicated in the industry
scandals of 2003 and 2004.

(continued)

------
43

Approval of Management Agreement for Tax-Free Money Market and Tax-Free Bond

ECONOMIES OF SCALE. The Directors review reports provided by the advisor on
economies of scale for the complex as a whole and the year-over-year changes in
revenue, costs, and profitability. The Directors concluded that economies of
scale are difficult to measure and predict with precision, especially on a
fund-by-fund basis. This analysis is also complicated by the additional
services and content provided by the advisor and its reinvestment in its
ability to provide and expand those services. Accordingly, the Directors also
seek to evaluate economies of scale by reviewing other information, such as
year-over-year profitability of the advisor generally, the profitability of its
management of the funds specifically, the expenses incurred by the advisor in
providing various functions to the funds, and the breakpoint fees of
competitive funds not managed by the advisor. The Directors believe the advisor
is appropriately sharing economies of scale through its competitive fee
structure, fee breakpoints as the fund complex and the funds increase in size,
and through reinvestment in its business to provide shareholders additional
content and services. In particular, separate breakpoint schedules based on
the size of the entire fund complex and on the size of the funds reflect the
complexity of assessing economies of scale.

COMPARISON TO OTHER FUNDS' FEES. The funds pay the advisor a single,
all-inclusive (or unified) management fee for providing all services necessary
for the management and operation of the funds, other than brokerage expenses,
taxes, interest, extraordinary expenses, and the fees and expenses of the funds'
independent directors (including their independent legal counsel). Under the
unified fee structure, the advisor is responsible for providing all investment
advisory, custody, audit, administrative, compliance, recordkeeping, marketing
and shareholder services, or arranging and supervising third parties to provide
such services. By contrast, most other funds are charged a variety of fees,
including an investment advisory fee, a transfer agency fee, an administrative
fee, distribution charges and other expenses. Other than their investment
advisory fees and Rule 12b-1 distribution fees, all other components of the
total fees charged by these other funds may be increased without shareholder
approval. The board believes the unified fee structure is a benefit to fund
shareholders because it clearly discloses to shareholders the cost of owning
fund shares, and, since the unified fee cannot be increased without a vote of
fund shareholders, it shifts to the advisor the risk of increased costs of
operating the funds and provides a direct incentive to minimize administrative
inefficiencies. Part of the Directors' analysis of fee levels involves reviewing
certain evaluative data compiled by the 15(c) Providers and comparing the funds'
unified fee to the total expense ratio of other funds in the funds' peer group.
The unified fee charged to shareholders of the funds was in the lowest quartile
of the total expense ratios of their peer groups.

COMPARISON TO FEES AND SERVICES PROVIDED TO OTHER CLIENTS OF THE ADVISOR. The
Directors also requested

(continued)

------
44

Approval of Management Agreement for Tax-Free Money Market and Tax-Free Bond

and received information from the concerning the nature of the services, fees,
and profitability of its advisory services to advisory clients other than the
funds. They observed that these varying types of client accounts require
different services and involve different regulatory and entrepreneurial risks
than the management of the funds. The Directors analyzed this information and
concluded that the fees charged and services provided to the funds were
reasonable by comparison.

COLLATERAL BENEFITS DERIVED BY THE ADVISOR. The Directors reviewed information
from the advisor concerning collateral benefits it receives as a result of its
relationship with the funds. They concluded that the advisor's primary business
is managing mutual funds and it generally does not use the fund or shareholder
information to generate profits in other lines of business, and therefore does
not derive any significant collateral benefits from them. The Directors noted
that the advisor receives proprietary research from broker dealers that execute
fund portfolio transactions and concluded that this research is likely to
benefit fund shareholders. The Directors also determined that the advisor is
able to provide investment management services to certain clients other than the
funds, at least in part, due to its existing infrastructure built to serve the
fund complex. The Directors concluded, however, that the assets of those other
clients are not material to the analysis and, in any event, are included with
the assets of the funds to determine breakpoints in the funds' fee schedule,
provided they are managed using the same investment team and strategy.

CONCLUSIONS OF THE DIRECTORS

As a result of this process, the independent directors, in the absence of
particular circumstances and assisted by the advice of legal counsel that is
independent of the advisor, taking into account all of the factors discussed
above and the information provided by the advisor concluded that the investment
management agreement between the funds and the advisor is fair and reasonable in
light of the services provided and should be renewed.

------
45

Share Class Information

One class of shares is authorized for sale by Tax-Free Money Market: Investor
Class. Three classes of shares are authorized for sale by Tax-Free Bond:
Investor Class, Institutional Class and Advisor Class. The total expense ratio
for Institutional Class shares is lower than that of Investor Class shares. The
total expense ratio for Advisor Class shares is higher than that of Investor
Class shares.

INVESTOR CLASS shares are available for purchase in two ways: 1) directly from
American Century without any commissions or other fees; or 2) through certain
financial intermediaries (such as banks, broker-dealers, insurance companies and
investment advisors), which may require payment of a transaction fee to the
financial intermediary.

INSTITUTIONAL CLASS shares are available to large investors such as endowments,
foundations, and retirement plans, and to financial intermediaries serving these
investors. This class recognizes the relatively lower cost of serving
institutional customers and others who invest at least $5 million ($3 million
for endowments and foundations) in an American Century fund or at least $10
million in multiple funds. In recognition of the larger investments and account
balances and comparatively lower transaction costs, the unified management fee
of Institutional Class shares is 0.20% less than the unified management fee of
Investor Class shares.

ADVISOR CLASS shares are sold primarily through institutions such as investment
advisors, banks, broker-dealers, insurance companies, and financial advisors.
Advisor Class shares are subject to a 0.50% annual Rule 12b-1 distribution and
service fee. The total expense ratio of Advisor Class shares is 0.25% higher
than the total expense ratio of Investor Class shares.

All classes of shares represent a pro rata interest in the funds and generally
have the same rights and preferences.

------
46

Additional Information

INDEX DEFINITIONS

The following indices are used to illustrate investment market, sector, or style
performance or to serve as fund performance comparisons. They are not investment
products available for purchase.

The LEHMAN BROTHERS 3-YEAR MUNICIPAL BOND INDEX is composed of those securities
included in the Lehman Brothers Municipal Bond Index that have maturities of 2-4
years.

The LEHMAN BROTHERS LONG-TERM MUNICIPAL BOND INDEX is composed of those
securities included in the Lehman Brothers Municipal Bond Index that have
maturities greater than 22 years.

The LEHMAN BROTHERS MUNICIPAL 5-YEAR GENERAL OBLIGATION (GO) INDEX is composed
of investment-grade U.S. municipal securities, with maturities of four to six
years, that are general obligations of a state or local government.

The LEHMAN BROTHERS MUNICIPAL BOND INDEX is a market value-weighted index
designed for the long-term tax-exempt bond market.

The LEHMAN BROTHERS NON-INVESTMENT-GRADE MUNICIPAL BOND INDEX is composed of
non-investment grade U.S. municipal securities with a remaining maturity of one
year or more.

The LEHMAN BROTHERS U.S. AGGREGATE INDEX represents securities that are taxable,
registered with the Securities and Exchange Commission, and U.S.
dollar-denominated. The index covers the U.S. investment-grade fixed-rate bond
market, with index components for government and corporate securities, mortgage
pass-through securities, and asset-backed securities.

The LEHMAN BROTHERS U.S. TREASURY INDEX is composed of those securities included
in the Lehman Brothers U.S. Aggregate Index that are public obligations of the
U.S. Treasury with a remaining maturity of one year or more.

PROXY VOTING GUIDELINES

American Century Investment Management, Inc., the funds' investment advisor, is
responsible for exercising the voting rights associated with the securities
purchased and/or held by the funds. A description of the policies and procedures
the advisor uses in fulfilling this responsibility is available without charge,
upon request, by calling 1-800-345-2021. It is also available on American
Century's Web site at americancentury.com and on the Securities and Exchange
Commission's Web site at sec.gov. Information regarding how the investment
advisor voted proxies relating to portfolio securities during the most recent
12-month period ended June 30 is available on the "About Us" page at
americancentury.com. It is also available at sec.gov.

QUARTERLY PORTFOLIO DISCLOSURE

The funds file their complete schedule of portfolio holdings with the Securities
and Exchange Commission (SEC) for the first and third quarters of each fiscal
year on Form N-Q. The funds' Forms N-Q are available on the SEC's Web site at
sec.gov, and may be reviewed and copied at the SEC's Public Reference Room in
Washington, DC. Information on the operation of the Public Reference Room may be
obtained by calling 1-800-SEC-0330. The funds also make their complete schedule
of portfolio holdings for the most recent quarter of their fiscal year available
on their Web site at americancentury.com and, upon request, by calling
1-800-345-2021.

------
47

Notes

------
48

AMERICANCENTURY.COM

AUTOMATED INFORMATION LINE:
1-800-345-8765

INVESTOR SERVICES REPRESENTATIVE:
1-800-345-2021 or 816-531-5575

BUSINESS, NOT-FOR-PROFIT,
EMPLOYER-SPONSORED RETIREMENT PLANS:
1-800-345-3533

BANKS AND TRUST COMPANIES, BROKER-DEALERS,
FINANCIAL PROFESSIONALS, INSURANCE COMPANIES:
1-800-345-6488

TELECOMMUNICATIONS DEVICE FOR THE DEAF:
1-800-634-4113 or 816-444-3485

AMERICAN CENTURY MUNICIPAL TRUST

INVESTMENT ADVISOR:
American Century Investment Management, Inc.
Kansas City, Missouri

THIS REPORT AND THE STATEMENTS IT CONTAINS ARE SUBMITTED FOR THE GENERAL
INFORMATION OF OUR SHAREHOLDERS. THE REPORT IS NOT AUTHORIZED FOR DISTRIBUTION
TO PROSPECTIVE INVESTORS UNLESS PRECEDED OR ACCOMPANIED BY AN EFFECTIVE
PROSPECTUS.

The American Century Investments logo, American Century
and American Century Investments are service marks
of American Century Proprietary Holdings, Inc.

American Century Investment Services, Inc., Distributor

0607
SH-ANN-50106N

[front cover]

American Century Investments
ANNUAL REPORT

[photo of man and woman]

MAY 31, 2006

Arizona Municipal Bond Fund
Florida Municipal Bond Fund
Long-Term Tax-Free Fund
High-Yield Municipal Fund

[american century investments logo and text logo]

Table of Contents

Our Message to You . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Market Perspective . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
U.S. Fixed-Income Total Returns . . . . . . . . . . . . . . . . . . . . . . 2

ARIZONA MUNICIPAL BOND
Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Portfolio Commentary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Schedule of Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . .7

FLORIDA MUNICIPAL BOND
Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
Portfolio Commentary . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
Schedule of Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

LONG-TERM TAX-FREE
Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
Portfolio Commentary . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18
Schedule of Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

HIGH-YIELD MUNICIPAL
Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
Portfolio Commentary . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26
Schedule of Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

Shareholder Fee Examples . . . . . . . . . . . . . . . . . . . . . . . . . . .34

FINANCIAL STATEMENTS
Statement of Assets and Liabilities . . . . . . . . . . . . . . . . . . . . . 37
Statement of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Statement of Changes in Net Assets . . . . . . . . . . . . . . . . . . . . . .41
Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . 44
Financial Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . .54
Report of Independent Registered Public Accounting Firm . . . . . . . . . . . 71

OTHER INFORMATION
Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
Approval of Management Agreements for Arizona Municipal Bond,
Florida Municipal Bond, and High-Yield Municipal . . . . . . . . . . . . . . .75
Approval of Management Agreement for Long-Term Tax-Free . . . . . . . . . . . 80
Share Class Information . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
Additional Information . . . . . . . . . . . . . . . . . . . . . . . . . . . .84
Index Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85

The opinions expressed in the Market Perspective and each of the Portfolio
Commentaries reflect those of the portfolio management team as of the date of
the report, and do not necessarily represent the opinions of American Century or
any other person in the American Century organization. Any such opinions are
subject to change at any time based upon market or other conditions and American
Century disclaims any responsibility to update such opinions. These opinions may
not be relied upon as investment advice and, because investment decisions made
by American Century funds are based on numerous factors, may not be relied upon
as an indication of trading intent on behalf of any American Century fund.
Security examples are used for representational purposes only and are not
intended as recommendations to purchase or sell securities. Performance
information for comparative indices and securities is provided to American
Century by third party vendors. To the best of American Century's knowledge,
such information is accurate at the time of printing.

Our Message to You

[photo of James E. Stowers III and James E. Stowers, Jr.]

JAMES E. STOWERS III WITH JAMES E. STOWERS, JR.

We are pleased to provide you with the annual report for the American Century
Arizona Municipal Bond, Florida Municipal Bond, Long-Term Tax-Free, and
High-Yield Municipal funds for the period ended May 31, 2006. We hope you find
this information helpful in monitoring your investment. Another useful resource
we offer is our Web site, americancentury.com, where we post quarterly portfolio
commentaries, the views of our senior investment officers, and other
communications about investments, portfolio strategy, and the markets.

Our Web site presents American Century's recently-announced strategic
collaboration with Lance Armstrong and the Lance Armstrong Foundation (LAF). Our
new campaign, featuring Lance, is designed to encourage investors to take a more
active role in planning their financial futures and make every investment
decision count.

American Century's collaboration with Lance Armstrong and the LAF is a perfect
fit. Like members of our family, Lance is a cancer survivor and shares our
values of optimism, focus, and determination. In addition, Lance and our family
have dedicated our success to improving lives, through the LAF and the Stowers
Institute for Medical Research, respectively. To learn more about American
Century's collaboration with Lance Armstrong and the LAF, please visit
www.lanceface.com on the Web and click on the links to related sites.

Besides the exciting new collaboration, we've enjoyed other good news--in
January, American Century was named, for the seventh consecutive year, one of
FORTUNE magazine's 100 Best Companies to Work For in America. Fostering a
positive work environment can benefit fund investors as well as our company--it
helps us continue to attract and retain talented people.

As always, we deeply appreciate your investment with American Century
Investments.

Sincerely,

/s/James E. Stowers, Jr.
James E. Stowers, Jr.
FOUNDER
AMERICAN CENTURY COMPANIES, INC.

/s/James E. Stowers III
James E. Stowers III
CHAIRMAN OF THE BOARD
AMERICAN CENTURY COMPANIES, INC.

------
1

Market Perspective

[photo of David MacEwen]

BY DAVID MACEWEN, CHIEF INVESTMENT OFFICER, FIXED INCOME

ECONOMIC GROWTH PUSHED COMMODITY PRICES & INTEREST RATES HIGHER

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

TREASURY YIELDS INVERTED, INDICATING POSSIBLE ECONOMIC WEAKNESS AHEAD

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

MUNICIPAL MARKET GENERALLY OUTPERFORMED TAXABLE MARKET

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

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

------
2

Arizona Municipal Bond - Performance

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

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

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

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

(continued)

------
3

Arizona Municipal Bond - Performance

GROWTH OF $10,000 OVER 10 YEARS

$10,000 investment made May 31, 1996

ONE-YEAR RETURNS OVER 10 YEARS

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

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

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


------
4


Arizona Municipal Bond - Portfolio Commentary

PORTFOLIO TEAM LEADER: ALAN KRUSS

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

PERFORMANCE SUMMARY

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

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

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

YIELD SUMMARY

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

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

PORTFOLIO STRATEGY & OUTLOOK

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

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

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

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

                                                                    (continued)


------
5


Arizona Municipal Bond - Portfolio Commentary

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

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

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

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

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

ARIZONA MUNICIPAL BOND'S PLACE IN YOUR PORTFOLIO

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

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

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

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


------
6


Arizona Municipal Bond - Schedule of Investments

MAY 31, 2006

Principal Amount                                                       Value
--------------------------------------------------------------------------------
MUNICIPAL SECURITIES -- 97.7%

ARIZONA -- 89.8%
--------------------------------------------------------------------------------
       $1,000,000  Arizona Health Facilities Auth.
                   Rev., (Blood Systems
                   Incorporated), 5.00%, 4/1/21                     $ 1,014,170
--------------------------------------------------------------------------------
        1,750,000  Arizona School Facilities Board
                   Rev., (State School
                   Improvement), 5.50%, 7/1/11,
                   Prerefunded at 100% of Par(1)                      1,891,750
--------------------------------------------------------------------------------
        1,000,000  Arizona Student Loan
                   Acquisition Auth. Rev., Series
                   1999 A1, (Guaranteed Student
                   Loans), 5.65%, 5/1/14                              1,052,860
--------------------------------------------------------------------------------
        1,880,000  Arizona Tourism & Sports Auth.
                   Tax Rev., (Baseball Training
                   Facilities), 5.00%, 7/1/13                         1,930,102
--------------------------------------------------------------------------------
        1,000,000  Arizona University COP, Series
                   2006 A, 5.00%, 6/1/18 (Ambac)                      1,057,660
--------------------------------------------------------------------------------
        1,910,000  Energy Management Services
                   LLC Rev., (Arizona State
                   University - Main Campus),
                   4.50%, 7/1/11 (MBIA)(2)                            1,976,130
--------------------------------------------------------------------------------
        1,000,000  Gilbert Water Resource
                   Municipal Property Corp. Rev.,
                   (Development Fee & Sub-Lien),
                   4.90%, 4/1/19                                      1,001,910
--------------------------------------------------------------------------------
          460,000  Glendale Industrial Development
                   Auth. Rev., Series 1998 A,
                   (Midwestern University),  5.375%,
                   5/15/08, Prerefunded
                   at 101% of Par(1)                                    479,168
--------------------------------------------------------------------------------
          540,000  Glendale Industrial Development
                   Auth. Rev., Series 1998 A,
                   (Midwestern University),
                   5.375%, 5/15/28                                      552,274
--------------------------------------------------------------------------------
          500,000  Glendale Industrial Development
                   Auth. Rev., Series 2001 A,
                   (Midwestern University),
                   5.75%, 5/15/21                                       532,195
--------------------------------------------------------------------------------
        1,740,000  Greater Arizona Development
                   Auth. Rev., Series 2005 A,
                   5.00%, 8/1/23 (MBIA)                               1,814,611
--------------------------------------------------------------------------------
        1,040,000  Maricopa County Kyrene
                   Elementary School District
                   No. 28 GO, Series 2001 B,
                   4.30%, 7/1/07 (MBIA)(3)                              998,868
--------------------------------------------------------------------------------
        1,615,000  Maricopa County Litchfield
                   Elementary School District  No.
                   79 GO, Series 2000 A,
                   (Projects of 1998), 4.55%,
                   7/1/07 (FSA)                                       1,630,003
--------------------------------------------------------------------------------
        1,000,000  Maricopa County Paradise Valley
                   Unified School District No. 69
                   GO, Series 2006 A, (School
                   Improvement), 4.50%, 7/1/19
                   (FSA)                                              1,010,880
--------------------------------------------------------------------------------
        1,000,000  Maricopa County Peoria Unified
                   School District No. 11 GO,
                   (School Improvement), 5.00%,
                   7/1/24 (MBIA)                                      1,047,990
--------------------------------------------------------------------------------

Principal Amount                                                       Value
--------------------------------------------------------------------------------

       $1,000,000  Maricopa County Phoenix
                   Elementary School District No. 1
                   GO, 5.50%, 7/1/07, Prerefunded
                   at 101% of Par (MBIA)(1)                         $ 1,029,870
--------------------------------------------------------------------------------
        1,445,000  Maricopa County Phoenix Union
                   High School District No. 210 GO,
                   4.75%, 7/1/11 (FSA)                                1,511,615
--------------------------------------------------------------------------------
        1,955,000  Maricopa County Saddle
                   Mountain Unified School District
                   No. 90 GO, Series 2003 A,
                   5.00%, 7/1/10                                      2,013,434
--------------------------------------------------------------------------------
        1,000,000  Maricopa County Scottsdale
                   Elementary School District
                   No. 48 GO, 6.60%, 7/1/12                           1,148,720
--------------------------------------------------------------------------------
        1,265,000  Mohave County Community
                   College District COP, 5.75%,
                   3/1/14 (Ambac)                                     1,349,009
--------------------------------------------------------------------------------
        1,150,000  Mohave County Community
                   College District Rev., (State
                   Board of Directors), 6.00%,
                   3/1/20 (MBIA)                                      1,236,446
--------------------------------------------------------------------------------
        1,815,000  Navajo County Unified School
                   District No. 20 Rev., Series
                   2006 A, 5.00%, 7/1/17 (MBIA)(4)                    1,938,402
--------------------------------------------------------------------------------
        1,000,000  Phoenix Civic Improvement
                   Corp. Water System Rev.,
                   (Junior Lien), 5.00%, 7/1/21
                   (MBIA)                                             1,049,460
--------------------------------------------------------------------------------
        1,000,000  Phoenix Civic Improvement
                   Corp. Water System Rev.,
                   (Junior Lien), 6.50%, 7/1/06                       1,002,380
--------------------------------------------------------------------------------
        1,000,000  Phoenix Civic Improvement
                   Corp. Water System Rev.,
                   (Junior Lien), 6.25%, 7/1/10,
                   Prerefunded at 101% of Par
                   (FGIC)(1)                                          1,103,790
--------------------------------------------------------------------------------
        1,000,000  Phoenix Civic Improvement
                   Corp. Water System Rev.,
                   (Junior Lien), 5.50%, 7/1/19
                   (FGIC)                                             1,079,970
--------------------------------------------------------------------------------
        1,070,000  Phoenix GO, Series 1995 A,
                   6.25%, 7/1/17                                      1,271,107
--------------------------------------------------------------------------------
        1,000,000  Phoenix GO, Series 1995 B,
                   5.25%, 7/1/06, Prerefunded at
                   102% of Par(1)                                     1,021,420
--------------------------------------------------------------------------------
          285,000  Phoenix Industrial Development
                   Auth. Single Family Mortgage
                   Rev., Series 1998 A, 6.60%,
                   12/1/29 (GNMA/FNMA/FHLMC)                            292,045
--------------------------------------------------------------------------------
        1,710,000  Pima County Metropolitan
                   Domestic Water Improvement
                   District Rev., 5.25%, 7/1/18
                   (Ambac)                                            1,877,871
--------------------------------------------------------------------------------
        1,800,000  Pima County Metropolitan
                   Domestic Water Improvement
                   District Rev., 5.25%, 7/1/19
                   (Ambac)(2)                                         1,982,015
--------------------------------------------------------------------------------
        1,125,000  Pima County Unified School
                   District No. 6 Marana GO,
                   5.50%, 7/1/15 (FGIC)                               1,204,549
--------------------------------------------------------------------------------

See Notes to Financial Statements.                                  (continued)


------
7


Arizona Municipal Bond - Schedule of Investments

MAY 31, 2006

Principal Amount                                                       Value
--------------------------------------------------------------------------------

       $  820,000  Pinal County COP, 4.75%,
                   6/1/13 (Ambac)                                   $   852,964
--------------------------------------------------------------------------------
        1,000,000  Pinal County COP, 5.00%,
                   12/1/26                                            1,015,640
--------------------------------------------------------------------------------
        1,100,000  Pinal County Unified School
                   District No. 43 Apache Junction
                   GO, Series 2005 A, (School
                   Improvement), 5.00%, 7/1/23
                   (MBIA)                                             1,146,849
--------------------------------------------------------------------------------
          775,000  Pinal County Unified School
                   District No. 43 Apache Junction
                   GO, Series 2006 B, (School
                   Improvement), 5.00%, 7/1/24
                   (FGIC)                                               812,836
--------------------------------------------------------------------------------
        1,600,000  Scottsdale GO, 6.25%, 7/1/09,
                   Prerefunded at 100% of Par(1)                      1,718,528
--------------------------------------------------------------------------------
        1,000,000  Sedona COP, 5.75%, 7/1/09,
                   Prerefunded at 101% of Par(1)                      1,067,660
--------------------------------------------------------------------------------
        1,645,000  University of Arizona COP,
                   Series 2002 A, 5.50%, 6/1/17
                   (Ambac)                                            1,771,385
--------------------------------------------------------------------------------
          500,000  University of Arizona COP,
                   Series 2005 B, 5.00%, 6/1/24
                   (Ambac)                                              518,145
--------------------------------------------------------------------------------
        1,725,000  University of Arizona COP,
                   Series 2005 D, 5.00%, 6/1/12
                   (Ambac)                                            1,824,878
--------------------------------------------------------------------------------
                                                                     50,831,559
--------------------------------------------------------------------------------
PUERTO RICO -- 7.9%
--------------------------------------------------------------------------------
        2,420,000  Government Development Bank
                   of Puerto Rico Rev., 3.85%,
                   10/5/06 (Acquired 1/20/06,
                   Cost $2,420,000)(5)                                2,412,329
--------------------------------------------------------------------------------
        1,000,000  Government Development Bank
                   of Puerto Rico Rev., 3.87%,
                   10/6/06 (Acquired 1/24/06,
                   Cost $1,000,000)(5)                                  996,870
--------------------------------------------------------------------------------

Principal Amount                                                       Value
--------------------------------------------------------------------------------

       $1,000,000  Government Development Bank
                   of Puerto Rico Rev., Series
                   2006 B, 5.00%, 12/1/16                           $ 1,037,320
--------------------------------------------------------------------------------
                                                                      4,446,519
--------------------------------------------------------------------------------
TOTAL MUNICIPAL SECURITIES
(Cost $53,820,763)                                                   55,278,078
--------------------------------------------------------------------------------
SHORT-TERM MUNICIPAL SECURITIES -- 4.1%

ARIZONA -- 4.1%
--------------------------------------------------------------------------------
        1,015,000  Pima County Industrial
                   Development Auth. Lease Rev.,
                   VRDN, 3.48%, 6/1/06 (SBBPA:
                   Societe Generale)                                  1,015,000
--------------------------------------------------------------------------------
        1,300,000  Pima County Industrial
                   Development Auth. Rev.,
                   (Tucson Electric), VRDN, 3.30%,
                   6/7/06 (LOC: Bank of New York)                     1,300,000
--------------------------------------------------------------------------------
TOTAL SHORT-TERM MUNICIPAL SECURITIES
(Cost $2,315,000)                                                     2,315,000
--------------------------------------------------------------------------------
TEMPORARY CASH INVESTMENTS -- 0.1%

           60,000  Federated Arizona Municipal
                   Cash Trust
(Cost $60,000)                                                           60,000
--------------------------------------------------------------------------------
TOTAL INVESTMENT SECURITIES -- 101.9%
(Cost $56,195,763)                                                   57,653,078
--------------------------------------------------------------------------------
OTHER ASSETS AND
LIABILITIES -- (1.9)%                                                (1,083,497)
--------------------------------------------------------------------------------
TOTAL NET ASSETS -- 100.0%                                          $56,569,581
================================================================================

SWAP AGREEMENTS

                                                                                        Unrealized
  Notional Amount           Description of Agreement             Expiration Date       Gain (Loss)
----------------------------------------------------------------------------------------------------
INTEREST RATE
----------------------------------------------------------------------------------------------------
   $1,500,000      Receive semiannually a variable rate based      October 2016             $622
                   on the weekly Bond Market Association                                ===========
                   Index and pay semiannually a fixed rate
                   equal to 4.137% with Morgan Stanley
                   Capital Services, Inc.

See Notes to Financial Statements.                                  (continued)


------
8


Arizona Municipal Bond - Schedule of Investments

MAY 31, 2006

NOTES TO SCHEDULE OF INVESTMENTS

Ambac = Ambac Assurance Corporation

COP = Certificates of Participation

FGIC = Financial Guaranty Insurance Co.

FHLMC = Federal Home Loan Mortgage Corporation

FNMA = Federal National Mortgage Association

FSA = Financial Security Assurance, Inc.

GNMA = Government National Mortgage Association

GO = General Obligation

LOC = Letter of Credit

MBIA = MBIA Insurance Corporation

SBBPA = Standby Bond Purchase Agreement

VRDN = Variable Rate Demand Note. Interest reset date is indicated. Rate shown
       is effective May 31, 2006.

(1) Escrowed to maturity in U.S. government securities or state and local
    government securities.

(2) Security, or a portion thereof, has been segregated for when-issued
    securities and/or swap agreements.

(3) Security is a zero-coupon municipal bond. The rate indicated is the yield to
    maturity at purchase. Zero-coupon securities are issued at a substantial
    discount from their value at maturity.

(4) When-issued security.

(5) Security was purchased under Rule 144A of the Securities Act of 1933 or is a
    private placement and, unless registered under the Act or exempted from
    registration, may only be sold to qualified institutional investors. The
    aggregate value of restricted securities at May 31, 2006 was $3,409,199,
    which represented 6.0% of total net assets.

See Notes to Financial Statements.


------
9


Florida Municipal Bond - Performance

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

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

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

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

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

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

                                                                    (continued)


------
10


Florida Municipal Bond - Performance

GROWTH OF $10,000 OVER 10 YEARS


$10,000 investment made May 31, 1996

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

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

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


------
11


Florida Municipal Bond - Portfolio Commentary

PORTFOLIO TEAM LEADER: ALAN KRUSS

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

PERFORMANCE SUMMARY

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

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

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

YIELD SUMMARY

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

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

PORTFOLIO STRATEGY & OUTLOOK

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

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

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

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

                                                                    (continued)


------
12


Florida Municipal Bond - Portfolio Commentary

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

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

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

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

FLORIDA MUNICIPAL BOND'S PLACE IN YOUR PORTFOLIO

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

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

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

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


------
13


Florida Municipal Bond - Schedule of Investments

MAY 31, 2006

Principal Amount                                                       Value
--------------------------------------------------------------------------------
MUNICIPAL SECURITIES -- 98.4%

FLORIDA -- 91.5%
--------------------------------------------------------------------------------
       $1,110,000  Broward County Airport
                   Systems Rev., (Passenger
                   Facility), (Conventional Lien
                   H-1), 5.25%, 10/1/12 (Ambac)                     $ 1,146,622
--------------------------------------------------------------------------------
          400,000  Broward County Educational
                   Facilities Auth. Rev., Series
                   2004 B, (Nova Southeastern),
                   5.00%, 4/1/14                                        413,992
--------------------------------------------------------------------------------
          500,000  Broward County Educational
                   Facilities Auth. Rev., Series
                   2004 B, (Nova Southeastern),
                   5.50%, 4/1/15                                        529,115
--------------------------------------------------------------------------------
          525,000  Broward County Educational
                   Facilities Auth. Rev., Series
                   2004 B, (Nova Southeastern),
                   5.50%, 4/1/16                                        554,090
--------------------------------------------------------------------------------
          500,000  Broward County School Board
                   COP, Series 2002 B, 5.375%,
                   7/1/11, Prerefunded at 100%
                   of Par (FSA)(1)                                      537,150
--------------------------------------------------------------------------------
        1,000,000  Callaway/Bay County
                   Wastewater System Rev.,
                   5.00%, 9/1/23 (MBIA)                               1,040,020
--------------------------------------------------------------------------------
          650,000  City of Gulf Breeze Rev., Series
                   1985 B, VRDN, 4.50%, 12/1/19
                   (FGIC)                                               639,984
--------------------------------------------------------------------------------
        1,475,000  Collier County School Board
                   COP, 5.50%, 2/15/12 (FSA)                          1,596,791
--------------------------------------------------------------------------------
          720,000  Covington Park Community
                   Development District Special
                   Assessment, (Capital
                   Improvement), 5.00%, 5/1/21                          711,180
--------------------------------------------------------------------------------
        1,150,000  Duval County School Board
                   COP, 5.75%, 7/1/16 (FSA)                           1,215,481
--------------------------------------------------------------------------------
        1,010,000  Emerald Coast Utilities System
                   Auth. Rev., 5.00%, 1/1/25
                   (FGIC)                                             1,047,027
--------------------------------------------------------------------------------
          115,000  Escambia County Housing
                   Finance Auth. Single Family
                   Mortgage Rev., Series 1998 A,
                   (Multi-County Program), 4.85%,
                   4/1/07 (GNMA/FNMA)                                   115,834
--------------------------------------------------------------------------------
        2,320,000  Florida Division of Bond
                   Finance GO, Series 1998 B,
                   (Environmental Protection -
                   Preservation), 5.25%, 7/1/10
                   (FSA)(2)                                           2,411,941
--------------------------------------------------------------------------------
          215,000  Florida Housing Finance Corp.
                   Rev., Series 1999-2,
                   (Homeowner Mortgage),
                   4.60%, 1/1/21 (FSA)                                  215,290
--------------------------------------------------------------------------------
        1,000,000  Florida Municipal Loan Council
                   GO, Series 2002 C, 5.25%,
                   11/1/21 (MBIA)                                     1,064,510
--------------------------------------------------------------------------------
          350,000  Gainesville Utilities System Rev.,
                   Series 1996 A, 5.75%, 10/1/09                        372,232
--------------------------------------------------------------------------------

Principal Amount                                                       Value
--------------------------------------------------------------------------------

       $  675,000  Greater Orlando Aviation Auth.
                   Rev., Series 1999 A, 5.25%,
                   10/1/09 (FGIC)                                   $   703,512
--------------------------------------------------------------------------------
          635,000  Hollywood Community
                   Redevelopment Agency Rev.,
                   (Beach), 4.50%, 3/1/07                               637,254
--------------------------------------------------------------------------------
          690,000  Hollywood Community
                   Redevelopment Agency Rev.,
                   (Beach), 5.00%, 3/1/08                               700,143
--------------------------------------------------------------------------------
        1,235,000  Indian River County Rev.,
                   (Spring Training Facility),
                   5.25%, 4/1/15 (FGIC)                               1,317,869
--------------------------------------------------------------------------------
          330,000  Julington Creek Plantation
                   Community Development
                   District Assessment Rev.,
                   3.65%, 5/1/09 (MBIA)                                 328,928
--------------------------------------------------------------------------------
          350,000  Julington Creek Plantation
                   Community Development
                   District Assessment Rev.,
                   3.85%, 5/1/10 (MBIA)                                 350,686
--------------------------------------------------------------------------------
          625,000  Julington Creek Plantation
                   Community Development
                   District Assessment Rev.,
                   4.00%, 5/1/11 (MBIA)                                 629,481
--------------------------------------------------------------------------------
          850,000  Lee County Industrial
                   Development Health Care
                   Facilities Auth. Rev., Series
                   1999 A, (Shell Point Village),
                   5.50%, 11/15/09                                      874,106
--------------------------------------------------------------------------------
        1,325,000  Martin County Health Facilities
                   Auth. Rev., Series 2002 A,
                   (Martin Memorial Medical
                   Center), 4.25%, 11/15/07                           1,322,350
--------------------------------------------------------------------------------
        1,000,000  Miami Beach Stormwater Rev.,
                   5.75%, 9/1/17 (FGIC)                               1,083,010
--------------------------------------------------------------------------------
        1,910,000  Miami Beach Water & Sewer
                   Rev., 5.625%, 9/1/16 (Ambac)                       2,060,201
--------------------------------------------------------------------------------
          650,000  Miami Parking Facilities Rev.,
                   5.25%, 10/1/15 (MBIA)                                702,995
--------------------------------------------------------------------------------
        1,000,000  Miami-Dade County School
                   Board COP, Series 2001 C,
                   5.50%, 10/1/11, Prerefunded
                   at 100% of Par (FSA)(1)                            1,083,070
--------------------------------------------------------------------------------
        1,000,000  Miami-Dade County School
                   Board COP, Series 2001 C,
                   5.50%, 10/1/11, Prerefunded
                   at 100% of Par (FSA)(1)                            1,083,070
--------------------------------------------------------------------------------
        1,875,000  Orange County School Board
                   COP, Series 2002 A, 5.50%,
                   8/1/12, Prerefunded at 100%
                   of Par (MBIA)(1)                                   2,044,575
--------------------------------------------------------------------------------
          450,000  Orlando and Orange County
                   Expressway Auth. Rev., 6.50%,
                   7/1/11 (FGIC)                                        505,778
--------------------------------------------------------------------------------
        1,000,000  Palm Beach County Airport
                   Systems Rev., 5.75%, 10/1/14
                   (MBIA)                                             1,115,040
--------------------------------------------------------------------------------
        1,000,000  Palm Beach County School
                   Board COP, Series 2002 A,
                   5.375%, 8/1/12, Prerefunded
                   at 100% of Par (FSA)(1)                            1,083,630
--------------------------------------------------------------------------------

See Notes to Financial Statements.                                  (continued)


------
14


Florida Municipal Bond - Schedule of Investments

MAY 31, 2006

Principal Amount                                                       Value
--------------------------------------------------------------------------------

       $2,000,000  Pasco County Solid Waste
                   Disposal & Resource Recovery
                   System Rev., 6.00%, 4/1/10
                   (Ambac)                                          $ 2,120,659
--------------------------------------------------------------------------------
          305,000  Pensacola Airport Rev., Series
                   1997 B, 5.40%, 10/1/07 (MBIA)                        309,081
--------------------------------------------------------------------------------
          300,000  Plantation Health Facilities Auth.
                   Rev., (Covenant Village of
                   Florida Inc.), 4.70%, 12/1/07                        301,911
--------------------------------------------------------------------------------
        1,015,000  St. Lucie County Public
                   Improvement COP, Series
                   2000 A, (800 MHZ Radio  System),
                   5.50%, 4/1/10
                   (MBIA)(1)                                          1,079,493
--------------------------------------------------------------------------------
        1,000,000  Sumter County School Board
                   COP, 5.50%, 1/1/21 (MBIA)                          1,075,780
--------------------------------------------------------------------------------
        1,000,000  Sunrise Utility System Rev.,
                   5.20%, 10/1/22 (Ambac)                             1,090,100
--------------------------------------------------------------------------------
        1,000,000  Tampa Bay Water Utility
                   System Rev., Series 1998 B,
                   5.125%, 10/1/08, Prerefunded
                   at 101% of Par (FGIC)(1)                           1,040,130
--------------------------------------------------------------------------------
          400,000  Tampa Guaranteed Entitlement
                   Rev., 6.00%, 10/1/18 (Ambac)                         450,424
--------------------------------------------------------------------------------
        1,000,000  Tampa Water & Sewer Rev.,
                   6.00%, 10/1/17 (FSA)                               1,162,600
--------------------------------------------------------------------------------
                                                                     39,867,135
--------------------------------------------------------------------------------
PUERTO RICO -- 6.9%
--------------------------------------------------------------------------------
        1,000,000  Government Development Bank
                   of Puerto Rico Rev., 4.75%,
                   8/10/06 (Acquired 5/5/06,
                   Cost $1,000,000)(3)                                1,000,330
--------------------------------------------------------------------------------

Principal Amount                                                       Value
--------------------------------------------------------------------------------

       $1,000,000  Government Development Bank
                   of Puerto Rico Rev., 3.85%,
                   10/5/06 (Acquired 1/20/06,
                   Cost $1,000,000)(3)                              $   996,830
--------------------------------------------------------------------------------
        1,000,000  Government Development Bank
                   of Puerto Rico Rev., Series
                   2006 B, 5.00%, 12/1/16                             1,037,320
--------------------------------------------------------------------------------
                                                                      3,034,480
--------------------------------------------------------------------------------
TOTAL MUNICIPAL SECURITIES
(Cost $41,631,639)                                                   42,901,615
--------------------------------------------------------------------------------
SHORT-TERM MUNICIPAL SECURITIES -- 0.6%

TENNESSEE -- 0.6%
--------------------------------------------------------------------------------
          250,000  Clarksville Public Building
                   Authority Rev., (Tennessee
                   Municipal Bond Fund), VRDN,
                   3.58%, 6/1/06 (LOC: Bank of
                   America N.A.)
(Cost $250,000)                                                         250,000
--------------------------------------------------------------------------------
TEMPORARY CASH INVESTMENTS -- 0.1%

           38,000  Federated Florida Municipal
                   Cash Trust
(Cost $38,000)                                                           38,000
--------------------------------------------------------------------------------
TOTAL INVESTMENT SECURITIES -- 99.1%
(Cost $41,919,639)                                                   43,189,615
--------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES -- 0.9%                                    379,312
--------------------------------------------------------------------------------
TOTAL NET ASSETS -- 100.0%                                          $43,568,927
================================================================================

FUTURES CONTRACTS

                              Expiration        Underlying Face      Unrealized
  Contracts Purchased            Date           Amount at Value      Gain (Loss)
--------------------------------------------------------------------------------
   5   U.S. Treasury
       10-Year Notes        September 2006          $524,609          $(4,347)
                                                ================================

NOTES TO SCHEDULE OF INVESTMENTS

Ambac = Ambac Assurance Corporation

COP = Certificates of Participation

FGIC = Financial Guaranty Insurance Co.

FNMA = Federal National Mortgage Association

FSA = Financial Security Assurance, Inc.

GNMA = Government National Mortgage Association

GO = General Obligation

LOC = Letter of Credit

MBIA = MBIA Insurance Corporation

VRDN = Variable Rate Demand Note. Interest reset date is indicated. Rate shown
       is effective May 31, 2006.

(1) Escrowed to maturity in U.S. government securities or state and local
    government securities.

(2) Security, or a portion thereof, has been segregated for a futures contract.

(3) Security was purchased under Rule 144A of the Securities Act of 1933 or is a
    private placement and, unless registered under the Act or exempted from
    registration, may only be sold to qualified institutional investors. The
    aggregate value of restricted securities at May 31, 2006 was $1,997,160,
    which represented 4.6% of total net assets.

See Notes to Financial Statements.


------
15


Long-Term Tax-Free - Performance

TOTAL RETURNS AS OF MAY 31, 2006
                                     --------------------------------
                                          AVERAGE ANNUAL RETURNS
--------------------------------------------------------------------------------
                                                              SINCE    INCEPTION
                       2 MONTHS(1)    1 YEAR      5 YEARS   INCEPTION    DATE
--------------------------------------------------------------------------------
A CLASS                                                                 3/31/97
   No sales charge*       0.40%        1.18%       4.89%      5.80%
   With sales charge*    -4.16%       -3.33%       3.92%      5.27%
--------------------------------------------------------------------------------
LEHMAN BROTHERS
MUNICIPAL BOND INDEX      0.41%        1.89%       5.27%      5.85%       --
--------------------------------------------------------------------------------
A Class's
Lipper Ranking
as of 5/31/06(2)            --      164 of 260   76 of 221  16 of 158     --
--------------------------------------------------------------------------------
A Class's
Lipper Ranking
as of 6/30/06(2)            --      180 of 259   81 of 224  18 of 157     --
--------------------------------------------------------------------------------
Investor Class(1)           --           --          --       0.42%     4/3/06
--------------------------------------------------------------------------------
Institutional Class(1)      --           --          --       0.45%     4/3/06
--------------------------------------------------------------------------------
B Class                                                                 3/31/97
   No sales charge*       0.28%        0.49%       4.20%      5.10%
   With sales charge*    -4.72%       -3.51%       4.03%      5.10%
--------------------------------------------------------------------------------
C Class(1)                                                              4/3/06
   No sales charge*         --           --          --       0.26%
   With sales charge*       --           --          --      -0.74%
--------------------------------------------------------------------------------
*Sales charges include initial sales charges and contingent deferred sales
 charges (CDSCs), as applicable. A Class shares have a 4.50% maximum initial
 sales charge for fixed income funds and may be subject to a maximum CDSC of
 1.00%. B Class shares redeemed within six years of purchase are subject to a
 CDSC that declines from 5.00% during the first year after purchase to 0.00% the
 sixth year after purchase. C Class shares redeemed within 12 months of purchase
 are subject to a maximum CDSC of 1.00%. Please see the Share Class Information
 pages for more about the applicable sales charges for each share class. The SEC
 requires that mutual funds provide performance information net of maximum sales
 charges in all cases where charges could be applied.

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

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

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

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

                                                                    (continued)


------
16


Long-Term Tax-Free - Performance

GROWTH OF $10,000 OVER LIFE OF CLASS


$10,000 investment made March 31, 1997


ONE-YEAR RETURNS OVER 10 YEARS
Periods ended May 31
----------------------------------------------------------------------------------------------------
                     1997*   1998    1999    2000     2001    2002    2003     2004    2005    2006
----------------------------------------------------------------------------------------------------
A Class
(no sales charge)    2.96%   9.61%   5.11%  -1.09%   12.57%   7.21%  10.63%   -0.81%   6.65%   1.18%
----------------------------------------------------------------------------------------------------
Lehman Brothers
Municipal
Bond Index           2.35%   9.39%   4.67%  -0.86%   12.14%   6.51%  10.36%   -0.03%   7.96%   1.89%
----------------------------------------------------------------------------------------------------
*From 3/31/97 (the class's inception date) to 5/31/97. Not annualized. Long-Term
 Tax-Free A Class's initial investment is $9,550 to reflect the maximum 4.50%
 initial sales charge.

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

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


------
17


Long-Term Tax-Free - Portfolio Commentary

PORTFOLIO TEAM LEADER: ROBERT MILLER

FUND REORGANIZATION

Effective March 31, 2006, American Century Investments reorganized 10 Mason
Street funds to become part of the American Century fund family. Mason Street
Municipal Bond was reorganized into American Century Long-Term Tax-Free, with
investment objectives and policies similar to its predecessor.

NEW MAY 31 & NOVEMBER 30 REPORTING PERIODS

Instead of Mason Street Municipal Bond's March 31 fiscal year end, Long-Term
Tax-Free will have a May 31 fiscal year end. Starting with this report,
Long-Term Tax-Free's annual shareholder reports will be dated May 31 and the
semiannuals will be dated November 30. This May 31, 2006, report will "bridge"
the old Mason Street fiscal year and the new American Century fiscal year,
covering just two months: April and May, 2006.

For market and investment information about the 10-12 months that preceded this
two-month "bridge" report, see the March 31, 2006, final annual report for the
Mason Street Funds, pages 86-95, available at masonstreetfunds.com, and our
Market Perspective on page 2 of this report.

PERFORMANCE SUMMARY FOR THE TWO-MONTH "BRIDGE" PERIOD

Long-Term Tax Free returned 0.40%* for the two months ended May 31, 2006,
compared with 0.41% for the Lehman Brothers Municipal Bond Index. This short
period was a microcosm of the longer trailing 12-month period (see page 2) as
municipal yields rose and bond prices declined due to inflation concerns that
affected the entire U.S. bond market. Taxable bonds generally suffered even more
than municipal--the (taxable) Lehman Brothers U.S. Aggregate Index returned
-0.29%.

PORTFOLIO STRATEGY

As mentioned under the Fund Reorganization heading, Long-Term Tax-Free's
investment objectives and policies are similar to Mason Street Municipal Bond's.
We seek a high level of federal tax-free income through a diverse portfolio
comprised primarily of long-term, investment-grade municipal bonds.

PORTFOLIO AT A GLANCE
--------------------------------------------------------------------------------
                                                        AS OF
                                                       5/31/06
--------------------------------------------------------------------------------
Weighted Average Maturity                             13.7 yrs
--------------------------------------------------------------------------------
Average Duration (Modified)                            5.4 yrs
--------------------------------------------------------------------------------

YIELDS AS OF MAY 31, 2006
--------------------------------------------------------------------------------
30-DAY SEC YIELD
--------------------------------------------------------------------------------
Investor Class                                         3.67%
--------------------------------------------------------------------------------
Institutional Class                                    3.87%
--------------------------------------------------------------------------------
A Class                                                3.27%
--------------------------------------------------------------------------------
B Class                                                2.67%
--------------------------------------------------------------------------------
C Class                                                2.68%
--------------------------------------------------------------------------------
INVESTOR CLASS 30-DAY TAX-EQUIVALENT YIELDS(1)
--------------------------------------------------------------------------------
25.00% Tax Bracket                                     4.89%
--------------------------------------------------------------------------------
28.00% Tax Bracket                                     5.10%
--------------------------------------------------------------------------------
33.00% Tax Bracket                                     5.48%
--------------------------------------------------------------------------------
35.00% Tax Bracket                                     5.65%
--------------------------------------------------------------------------------
(1) The tax brackets indicated are for federal taxes only. Actual tax-equivalent
    yields may be lower, if alternative minimum tax is applicable.

*All fund returns and yields referenced in this commentary are for A Class
 shares and are not reduced by sales charges. A Class shares are subject to a
 maximum sales charge of 4.50%. Had the sales charge been applied, returns would
 be lower than those shown. Total returns for periods less than one year are not
 annualized.

                                                                    (continued)


------
18


Long-Term Tax-Free - Portfolio Commentary

Our investment process uses a consistent, repeatable framework that seeks to
identify the best relative value among national municipal securities. We
actively apply a multi-step process, which includes yield curve/duration
positioning, security selection, portfolio construction, and attribution
analysis.

Consistent with those objectives, policies, and our investment outlook, we made
some portfolio adjustments following the fund's reorganization. We increased
liquidity by selling remaining "odd lots" of securities in favor of bigger
pieces of more liquid issues.

We also sought to align the portfolio more closely with its peers (as measured
by Lipper) in terms of its coupon structure, yield-curve positioning, and credit
quality. We moved in that direction by selling prerefunded bonds and buying
higher-yielding, lower-rated securities that still met our team's credit quality
guidelines.

Lower-quality, higher-yielding municipal securities generally outpaced their
higher-quality, lower yielding counterparts during the reporting period and
could continue to outperform as long as inflation remains a threat. Long-Term
Tax-Free is still, however, a very high-quality portfolio, as shown in the
accompanying credit rating table.

HOW THE FUND FITS IN A DIVERSIFIED INVESTMENT STRATEGY

Long-Term Tax-Free is designed to provide an attractive level of federal
tax-free current income and portfolio diversification benefits for
high-net-worth individuals with investment portfolios subject to federal income
tax. Municipal bonds typically behave differently than equity and taxable bond
investments under various economic and market scenarios. Diversification does
not insure against loss, however.

The fund is best suited for investors who: 1) seek the highest income
opportunity available from investment-grade municipal securities, 2) want
current income that is exempt from federal income taxes, 3) need a high-quality
fixed-income investment to diversify an equity-heavy portfolio, 4) need a
high-quality municipal debt investment to diversify a taxable bond-heavy
portfolio, and/or 5) can tolerate moderate share price fluctuation relative to
bond funds.

PORTFOLIO COMPOSITION BY CREDIT RATING
--------------------------------------------------------------------------------
                                                                % OF FUND
                                                               INVESTMENTS
                                                                  AS OF
                                                                 5/31/06
--------------------------------------------------------------------------------
AAA                                                                73%
--------------------------------------------------------------------------------
AA                                                                 18%
--------------------------------------------------------------------------------
A                                                                   3%
--------------------------------------------------------------------------------
BBB                                                                 6%
--------------------------------------------------------------------------------
Ratings provided by independent research companies. These ratings are listed in
Standard & Poor's format even if they were provided by other sources.

TOP FIVE SECTORS AS OF MAY 31, 2006
--------------------------------------------------------------------------------
                                                                % OF FUND
                                                               INVESTMENTS
--------------------------------------------------------------------------------
General Obligation (GO)                                            46%
--------------------------------------------------------------------------------
Prerefunded                                                        12%
--------------------------------------------------------------------------------
Hospital Revenue                                                   10%
--------------------------------------------------------------------------------
Higher Education                                                    5%
--------------------------------------------------------------------------------
Water and Sewer Revenue                                             5%
--------------------------------------------------------------------------------


------
19


Long-Term Tax-Free - Schedule of Investments

MAY 31, 2006

Principal Amount                                                       Value
--------------------------------------------------------------------------------
MUNICIPAL SECURITIES -- 94.0%

ALABAMA -- 3.1%
--------------------------------------------------------------------------------
       $  325,000  Alabama Water Pollution
                   Control Auth. Rev., Series
                   2002 B, 5.25%, 8/15/11
                   (Ambac)                                          $   347,207
--------------------------------------------------------------------------------
          430,000  City of Birmingham GO, Series
                   2001 A, 5.25%, 5/1/18                                459,421
--------------------------------------------------------------------------------
           20,000  Jefferson County Rev., Series
                   1997 D, 5.70%, 2/1/07,
                   Prerefunded at 101% of Par
                   (FGIC)(1)                                             20,464
--------------------------------------------------------------------------------
           20,000  Jefferson County Rev., Series
                   1999 A, (Capital Improvement),
                   5.75%, 2/1/09, Prerefunded at
                   101% of Par (MBIA-IBC)(1)                             21,229
--------------------------------------------------------------------------------
          255,000  Jefferson County Rev., Series
                   2001 A, (Capital Improvement),
                   5.00%, 2/1/11, Prerefunded at
                   101% of Par (FGIC)(1)                                269,706
--------------------------------------------------------------------------------
           40,000  Jefferson County Rev., Series
                   2002 D, (Capital Improvement),
                   5.00%, 8/1/12, Prerefunded at
                   100% of Par (FGIC)(1)                                 42,529
--------------------------------------------------------------------------------
                                                                      1,160,556
--------------------------------------------------------------------------------
ARIZONA -- 7.7%
--------------------------------------------------------------------------------
          610,000  Arizona School Facilities Board
                   Rev., (State School
                   Improvement), 5.50%, 7/1/11,
                   Prerefunded at 100% of Par(1)                        659,410
--------------------------------------------------------------------------------
          360,000  Arizona Transportation Board
                   Rev., Series 2002 B, 5.25%,
                   7/1/17                                               383,573
--------------------------------------------------------------------------------
        1,000,000  Arizona University COP, Series
                   2006 A, 5.00%, 6/1/18
                   (Ambac)(2)                                         1,057,659
--------------------------------------------------------------------------------
          775,000  Pinal County Unified School
                   District No. 43 Apache Junction
                   GO, Series 2006 B, (School
                   Improvement), 5.00%, 7/1/24
                   (FGIC)                                               812,836
--------------------------------------------------------------------------------
                                                                      2,913,478
--------------------------------------------------------------------------------
CALIFORNIA -- 4.2%
--------------------------------------------------------------------------------
        1,000,000  California Health Facilities
                   Financing Auth. Rev., Series
                   2006 A, (Kaiser Permanente),
                   5.25%, 4/1/39(3)                                   1,035,670
--------------------------------------------------------------------------------
           60,000  Foothill Eastern Transportation
                   Corridor Agency Rev., Series
                   1995 A, (Senior Lien), 7.20%,
                   1/1/18(1)(4)                                          35,671
--------------------------------------------------------------------------------
          190,000  Foothill Eastern Transportation
                   Corridor Agency Rev., Series
                   1995 A, (Senior Lien), 7.25%,
                   1/1/20(1)(4)                                         101,762
--------------------------------------------------------------------------------

Principal Amount                                                       Value
--------------------------------------------------------------------------------

       $  355,000  Riverside Community College
                   District GO, Series 2004 A,
                   5.50%, 8/1/14, Prerefunded
                   at 100% of Par (MBIA)(1)                         $   394,249
--------------------------------------------------------------------------------
            5,000  Riverside Community College
                   District GO, Series 2004 A,
                   5.50%, 8/1/29 (MBIA)                                   5,417
--------------------------------------------------------------------------------
                                                                      1,572,769
--------------------------------------------------------------------------------
CONNECTICUT -- 0.9%
--------------------------------------------------------------------------------
          325,000  Hartford Parking System Rev.,
                   Series 2000 A, 6.40%, 7/1/10,
                   Prerefunded at 100% of Par(1)                        356,090
--------------------------------------------------------------------------------
GEORGIA -- 0.6%
--------------------------------------------------------------------------------
           70,000  City of Atlanta Rev., Series
                   2000 A, 5.50%, 1/1/10,
                   Prerefunded at 101% of Par
                   (FGIC)(1)                                             74,913
--------------------------------------------------------------------------------
           15,000  City of Atlanta Rev., Series
                   2000 A, 5.60%, 1/1/10,
                   Prerefunded at 101% of Par
                   (FGIC)(1)                                             16,103
--------------------------------------------------------------------------------
           40,000  Municipal Electric Auth. Rev.,
                   Series 1998 Y, 6.40%, 1/1/13
                   (Ambac)                                               44,588
--------------------------------------------------------------------------------
           90,000  Municipal Electric Auth. Rev.,
                   Series 2002 A, 5.00%, 11/1/24
                   (MBIA)                                                91,225
--------------------------------------------------------------------------------
                                                                        226,829
--------------------------------------------------------------------------------
HAWAII -- 0.1%
--------------------------------------------------------------------------------
           25,000  Hawaii GO, Series 1998 CS,
                   5.00%, 4/1/07 (MBIA)                                  25,285
--------------------------------------------------------------------------------
ILLINOIS -- 5.2%
--------------------------------------------------------------------------------
           35,000  Chicago Board of Education GO,
                   Series 1999 A, (Chicago School
                   Reform Board), 5.25%,
                   12/1/20 (FGIC)                                        38,421
--------------------------------------------------------------------------------
          170,000  Chicago Public Building
                   Commission Rev., Series
                   1990 A, 7.30%, 1/1/08
                   (MBIA)(1)(4)                                         160,487
--------------------------------------------------------------------------------
          255,000  Cook County Community
                   Consolidated School District
                   No. 21-Wheeling GO, 4.80%,
                   12/1/09 (FSA)(1)(4)                                  222,908
--------------------------------------------------------------------------------
          360,000  Illinois Finance Auth. Rev.,
                   Series 2004 A, (University of
                   Chicago), 5.00%, 7/1/34                              368,032
--------------------------------------------------------------------------------
          575,000  Illinois Rev., 5.50%, 6/15/15                        617,549
--------------------------------------------------------------------------------
          420,000  Metropolitan Pier & Exposition
                   Auth. Rev., Series 1998 A,
                   5.50%, 6/15/18 (FGIC)(1)                             470,119
--------------------------------------------------------------------------------
           70,000  University of Illinois Rev.,
                   Series 2000 A, (Auxiliary
                   Facility System), 6.00%,
                   4/1/10, Prerefunded at 101%
                   of Par (MBIA)(1)                                      76,270
--------------------------------------------------------------------------------
                                                                      1,953,786
--------------------------------------------------------------------------------

See Notes to Financial Statements.                                  (continued)


------
20


Long-Term Tax-Free - Schedule of Investments

MAY 31, 2006

Principal Amount                                                       Value
--------------------------------------------------------------------------------
INDIANA -- 9.0%
--------------------------------------------------------------------------------
       $1,250,000  Hobart Building Corp. Rev.,
                   6.50%, 1/15/29 (FGIC/State
                   Aid Withholding)                                 $ 1,511,738
--------------------------------------------------------------------------------
        1,765,000  Indiana Bond Bank Rev., Series
                   2006 A, 5.00%, 8/1/20 (FSA)(2)                     1,859,092
--------------------------------------------------------------------------------
           35,000  Indiana Toll Finance Authority
                   Rev., 6.00%, 7/1/15                                   35,468
--------------------------------------------------------------------------------
                                                                      3,406,298
--------------------------------------------------------------------------------
IOWA -- 1.0%
--------------------------------------------------------------------------------
          360,000  Iowa Finance Authority Rev.,
                   5.875%, 2/15/10, Prerefunded
                   at 101% of Par (Ambac)(1)                            389,351
--------------------------------------------------------------------------------
KANSAS -- 2.8%
--------------------------------------------------------------------------------
          595,000  Cowley County Unified School
                   District No. 465 Winfield GO,
                   5.25%, 10/1/13 (MBIA)                                641,951
--------------------------------------------------------------------------------
           15,000  Kansas Department of
                   Transportation Rev., (Highway
                   Revenue Bonds), 5.00%,
                   9/1/09, Prerefunded at 100%
                   of Par(1)                                             15,600
--------------------------------------------------------------------------------
           20,000  Kansas Department of
                   Transportation Rev., (Highway
                   Revenue Bonds), 5.125%,
                   9/1/09, Prerefunded at 100%
                   of Par(1)                                             20,888
--------------------------------------------------------------------------------
          245,000  Kansas Development Finance
                   Auth. Rev., (Water Pollution),
                   4.75%, 11/1/08, Prerefunded
                   at 100% of Par(1)                                    251,299
--------------------------------------------------------------------------------
          115,000  Kansas Development Finance
                   Auth. Rev., (Water Pollution),
                   4.75%, 5/1/14                                        117,256
--------------------------------------------------------------------------------
                                                                      1,046,994
--------------------------------------------------------------------------------
LOUISIANA -- 0.3%
--------------------------------------------------------------------------------
           90,000  Louisiana Rev., Series 2002 A,
                   (Gasoline & Fuels Tax), 5.375%,
                   6/1/16 (Ambac)                                        94,860
--------------------------------------------------------------------------------
MICHIGAN -- 5.6%
--------------------------------------------------------------------------------
           60,000  Detroit Water Supply System
                   Rev., Series 2001 A, (Senior
                   Lien), 5.25%, 7/1/11,
                   Prerefunded at 100% of Par
                   (FGIC)(1)                                             64,114
--------------------------------------------------------------------------------
        1,225,000  Rochester Community School
                   District GO, (School Building &
                   Site), 5.00%, 5/1/14 (FGIC)                        1,306,695
--------------------------------------------------------------------------------
          160,000  West Ottawa Public School
                   District GO, Series 2002 A,
                   (School Building & Site),
                   5.00%, 11/1/12                                       169,826
--------------------------------------------------------------------------------
          575,000  West Ottawa Public School
                   District GO, Series 2002 A,
                   (School Building & Site),
                   5.00%, 5/1/22                                        595,447
--------------------------------------------------------------------------------
                                                                      2,136,082
--------------------------------------------------------------------------------

Principal Amount                                                       Value
--------------------------------------------------------------------------------
MISSISSIPPI -- 1.0%
--------------------------------------------------------------------------------
       $  360,000  Mississippi GO, Series 2003 D,
                   5.25%, 11/1/20                                   $   397,062
--------------------------------------------------------------------------------
MISSOURI -- 0.3%
--------------------------------------------------------------------------------
          120,000  Saline County Industrial
                   Development Auth. Rev., (John
                   Fitzgibbon Memorial Hospital
                   Inc.), 6.50%, 12/1/28                                123,731
--------------------------------------------------------------------------------
NEW YORK -- 9.1%
--------------------------------------------------------------------------------
          360,000  City of New York GO, Series
                   1997 I, 6.00%, 4/15/07,
                   Prerefunded at 101% of Par(1)                        370,904
--------------------------------------------------------------------------------
        1,500,000  City of New York GO, Series
                   2006 I, 5.00%, 4/1/23(2)                           1,551,136
--------------------------------------------------------------------------------
          360,000  Metropolitan Transportation
                   Auth. Rev., Series 1997 A,
                   5.625%, 7/1/07, Prerefunded
                   at 102% of Par (MBIA)(1)                             373,115
--------------------------------------------------------------------------------
          360,000  New York City Municipal Water
                   Finance Auth. Rev., Series
                   1997 B, 5.75%, 6/15/29,
                   Prerefunded at 101% of Par(1)                        371,416
--------------------------------------------------------------------------------
          360,000  New York City Transitional
                   Finance Auth. Rev., Series
                   2003 E, 5.25%, 2/1/22 (MBIA)                         381,974
--------------------------------------------------------------------------------
           70,000  New York Dormitory Auth. Rev.,
                   Series 1997-1, (City University
                   System), 5.125%, 1/1/08,
                   Prerefunded at 102% of Par
                   (MBIA)(1)                                             72,944
--------------------------------------------------------------------------------
          325,000  New York Dormitory Auth. Rev.,
                   Series 1998 E, (Bronx/Lebanon
                   Hospital), 5.125%, 2/15/08                           332,244
--------------------------------------------------------------------------------
                                                                      3,453,733
--------------------------------------------------------------------------------
NORTH CAROLINA -- 8.5%
--------------------------------------------------------------------------------
          180,000  Eastern Municipal Power
                   Agency Rev., Series 1988 A,
                   6.00%, 1/1/22, Prerefunded at
                   100% of Par(1)                                       213,691
--------------------------------------------------------------------------------
        1,500,000  North Carolina Medical Care
                   Commission Rev., Series
                   2004 A, (Health Care Housing -
                   ARC Projects), 5.50%, 10/1/24                      1,571,820
--------------------------------------------------------------------------------
           55,000  North Carolina Municipal Power
                   Agency No. 1 Catawba Rev.,
                   6.50%, 1/1/10 (MBIA)(1)                               60,112
--------------------------------------------------------------------------------
          315,000  North Carolina Municipal Power
                   Agency No. 1 Catawba Rev.,
                   5.00%, 1/1/20(1)                                     340,839
--------------------------------------------------------------------------------
        1,000,000  University of North Carolina at
                   Wilmington COP, (Student
                   Housing), 5.00%, 6/1/37 (FGIC)                     1,023,320
--------------------------------------------------------------------------------
                                                                      3,209,782
--------------------------------------------------------------------------------
OHIO -- 2.9%
--------------------------------------------------------------------------------
        1,000,000  Columbus City School District
                   GO, (School Facilities
                   Construction & Improvement),
                   5.50%, 12/1/16 (FSA)                               1,097,140
--------------------------------------------------------------------------------

See Notes to Financial Statements.                                  (continued)


------
21


Long-Term Tax-Free - Schedule of Investments

MAY 31, 2006

Principal Amount                                                       Value
--------------------------------------------------------------------------------

          $ 5,000  Ohio Housing Finance Agency
                   Rev., Series 2000 F, (Residential
                   Housing), 5.625%, 9/1/16
                   (GNMA)                                           $     5,084
--------------------------------------------------------------------------------
                                                                      1,102,224
--------------------------------------------------------------------------------
OKLAHOMA -- 1.3%
--------------------------------------------------------------------------------
          450,000  Oklahoma City GO, 5.50%,
                   7/1/10, Prerefunded at 100%
                   of Par(1)                                            480,159
--------------------------------------------------------------------------------
PENNSYLVANIA -- 6.1%
--------------------------------------------------------------------------------
        1,000,000  Central Dauphin School District
                   GO, 7.00%, 2/1/27 (MBIA/State
                   Aid Withholding)                                   1,224,520
--------------------------------------------------------------------------------
        1,000,000  City of Pittsburgh GO, Series
                   2006 B, 5.25%, 9/1/17 (FSA)(3)                     1,084,230
--------------------------------------------------------------------------------
                                                                      2,308,750
--------------------------------------------------------------------------------
PUERTO RICO -- 4.0%
--------------------------------------------------------------------------------
        1,500,000  Government Development Bank
                   of Puerto Rico Rev., 4.30%,
                   10/12/06 (Acquired 4/13/06,
                   Cost $1,500,000)(5)                                1,497,375
--------------------------------------------------------------------------------
RHODE ISLAND -- 0.1%
--------------------------------------------------------------------------------
           45,000  Depositors Economic Protection
                   Corp. Rev., Series 1993 A,
                   5.75%, 8/1/21 (FSA)(1)                                52,185
--------------------------------------------------------------------------------
TENNESSEE -- 3.6%
--------------------------------------------------------------------------------
        1,320,000  Rutherford County Consolidated
                   Utility District Rev., 5.00%,
                   2/1/26 (FSA)                                       1,378,040
--------------------------------------------------------------------------------
TEXAS -- 15.6%
--------------------------------------------------------------------------------
        1,435,000  Canutillo Independent School
                   District GO, Series 2006 A,
                   5.00%, 8/15/31(2)                                  1,473,788
--------------------------------------------------------------------------------
          490,000  Dallas Independent School
                   District GO, 5.50%, 2/15/12,
                   Prerefunded at 100% of Par(1)                        531,944
--------------------------------------------------------------------------------
           70,000  Dallas Independent School
                   District GO, 5.50%, 2/15/17                           75,249
--------------------------------------------------------------------------------
          465,000  Harris County GO, Series
                   1995 A, (Toll Road), 5.80%,
                   8/15/09 (MBIA)(4)                                    410,590
--------------------------------------------------------------------------------
          360,000  San Marcos Consolidated
                   Independent School District GO,
                   5.25%, 8/1/22                                        384,012
--------------------------------------------------------------------------------
          465,000  University of Texas Rev., Series
                   2002 A, 5.25%, 8/15/20                               511,305
--------------------------------------------------------------------------------

Principal Amount                                                       Value
--------------------------------------------------------------------------------

       $1,250,000  Wharton Independent School
                   District GO, (School Building),
                   5.00%, 2/15/37                                   $ 1,276,900
--------------------------------------------------------------------------------
        1,000,000  Winkler County GO, 5.25%,
                   2/15/25 (RADIAN)(3)                                1,047,160
--------------------------------------------------------------------------------
          110,000  Wylie Independent School
                   District GO, 4.40%, 8/15/08(1)(4)                    101,380
--------------------------------------------------------------------------------
          105,000  Wylie Independent School
                   District GO, 4.40%, 8/15/08(4)                        96,540
--------------------------------------------------------------------------------
                                                                      5,908,868
--------------------------------------------------------------------------------
VIRGINIA -- 1.0%
--------------------------------------------------------------------------------
          360,000  Virginia Public School Auth.
                   Rev., Series 2003 D, 5.25%,
                   8/1/19                                               396,950
--------------------------------------------------------------------------------
TOTAL MUNICIPAL SECURITIES
(Cost $35,251,255)                                                   35,591,237
--------------------------------------------------------------------------------
SHORT-TERM MUNICIPAL SECURITIES -- 6.1%

FLORIDA -- 6.1%
--------------------------------------------------------------------------------
        1,300,000  Broward County Health
                   Facilities Auth. Rev., (John
                   Knox Village), VRDN, 3.67%,
                   6/1/06 (RADIAN)(2)                                 1,300,000
--------------------------------------------------------------------------------
          995,000  Sarasota County Public Hospital
                   Board Rev., Series 2003 A,
                   (Sarasota Memorial Hospital),
                   VRDN, 3.62%, 6/1/06 (Ambac)                          995,000
--------------------------------------------------------------------------------
TOTAL SHORT-TERM MUNICIPAL SECURITIES
(Cost $2,295,000)                                                     2,295,000
--------------------------------------------------------------------------------
MUNICIPAL DERIVATIVES -- 1.2%

TEXAS -- 1.2%
--------------------------------------------------------------------------------
          360,000  Texas GO, VRDN, Inverse Floater,
                   8.62%, 9/30/11(6)
(Cost $422,157)                                                         437,357
--------------------------------------------------------------------------------
TOTAL INVESTMENT SECURITIES -- 101.3%
(Cost $37,968,412)                                                   38,323,594
--------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES -- (1.3)%                                 (483,687)
--------------------------------------------------------------------------------
TOTAL NET ASSETS -- 100.0%                                          $37,839,907
================================================================================

FUTURES CONTRACTS

                              Expiration        Underlying Face      Unrealized
  Contracts Purchased            Date           Amount at Value      Gain (Loss)
--------------------------------------------------------------------------------
  27   U.S. Treasury
       10-Year Notes        September 2006        $2,832,891           $23,353
                                                ================================

See Notes to Financial Statements.                                  (continued)


------
22


Long-Term Tax-Free - Schedule of Investments

MAY 31, 2006

NOTES TO SCHEDULE OF INVESTMENTS

Ambac = Ambac Assurance Corporation

COP = Certificates of Participation

FGIC = Financial Guaranty Insurance Co.

FSA = Financial Security Assurance, Inc.

GNMA = Government National Mortgage Association

GO = General Obligation

MBIA = MBIA Insurance Corporation

MBIA-IBC = MBIA Insured Bond Certificates

RADIAN = Radian Asset Assurance, Inc.

VRDN = Variable Rate Demand Note. Interest reset date is indicated. Rate shown
       is effective May 31, 2006.

(1) Escrowed to maturity in U.S. government securities or state and local
    government securities.

(2) Security, or a portion thereof, has been segregated for a futures contract
    and/or when issued securities.

(3) When-issued security.

(4) Security is a zero-coupon municipal bond. The rate indicated is the yield to
    maturity at purchase. Zero-coupon securities are issued at a substantial
    discount from their value at maturity.

(5) Security was purchased under Rule 144A of the Securities Act of 1933 or is a
    private placement and, unless registered under the Act or exempted from
    registration, may only be sold to qualified institutional investors. The
    aggregate value of restricted securities at May 31, 2006 was $1,497,375,
    which represented 4.0% of total net assets.

(6) Inverse floaters have interest rates that move inversely to market interest
    rates. Inverse floaters typically have durations longer than long-term
    bonds, which may cause their value to be more volatile than long-term bonds
    when interest rates change. Final maturity is indicated.

See Notes to Financial Statements.


------
23


High-Yield Municipal - Performance

TOTAL RETURNS AS OF MAY 31, 2006
                                             ----------------------
                                             AVERAGE ANNUAL RETURNS
--------------------------------------------------------------------------------
                                                           SINCE       INCEPTION
                                 1 YEAR      5 YEARS     INCEPTION       DATE
--------------------------------------------------------------------------------
INVESTOR CLASS                    4.91%       7.06%       6.02%(1)      3/31/98
--------------------------------------------------------------------------------
LEHMAN BROTHERS LONG-TERM
MUNICIPAL BOND INDEX              3.20%       6.81%       6.10%           --
--------------------------------------------------------------------------------
LIPPER HIGH-YIELD MUNICIPAL
DEBT FUNDS AVERAGE RETURNS(2)     4.62%       5.88%       4.40%           --
--------------------------------------------------------------------------------
Investor Class's Lipper
Ranking as of 5/31/06(2)         28 of 82    10 of 71     4 of 48         --
--------------------------------------------------------------------------------
Investor Class's Lipper
Ranking as of 6/30/06(2)         30 of 82    11 of 71     4 of 48         --
--------------------------------------------------------------------------------
A Class                                                                 1/31/03
  No sales charge*                4.65%         --        6.17%
  With sales charge*             -0.02%         --        4.73%
--------------------------------------------------------------------------------
B Class                                                                 1/31/03
  No sales charge*                3.87%         --        5.42%
  With sales charge*             -0.13%         --        4.62%
--------------------------------------------------------------------------------
C Class                           3.86%         --        5.41%         7/24/02
--------------------------------------------------------------------------------
*Sales charges include initial sales charges and contingent deferred sales
 charges (CDSCs), as applicable. A Class shares have a 4.50% maximum initial
 sales charge for fixed income funds and may be subject to a maximum CDSC of
 1.00%. B Class shares redeemed within six years of purchase are subject to a
 CDSC that declines from 5.00% during the first year after purchase to 0.00% the
 sixth year after purchase. C Class shares redeemed within 12 months of purchase
 are subject to a maximum CDSC of 1.00%. Please see the Share Class Information
 pages for more about the applicable sales charges for each share class. The SEC
 requires that mutual funds provide performance information net of maximum sales
 charges in all cases where charges could be applied.

(1) Investor Class returns and rankings would have been lower if management fees
    had not been waived from 3/31/98 to 4/30/99. Beginning on 5/1/99, management
    fees were phased in at a rate of 0.10% each month until 10/31/99.

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

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

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

                                                                    (continued)


------
24


High-Yield Municipal - Performance

GROWTH OF $10,000 OVER LIFE OF CLASS


$10,000 investment made March 31, 1998


ONE-YEAR RETURNS OVER LIFE OF CLASS
Periods ended May 31
----------------------------------------------------------------------------------------------------
                      1998*     1999      2000     2001     2002     2003     2004     2005    2006
----------------------------------------------------------------------------------------------------
Investor Class       1.81%**   6.18%**   -2.81%    9.13%    8.25%    9.40%    3.07%    9.84%   4.91%
----------------------------------------------------------------------------------------------------
Lehman Brothers
Long-Term Municipal
Bond Index           1.41%     4.35%     -4.45%   15.38%    6.64%   11.84%   -0.26%   13.25%   3.20%
----------------------------------------------------------------------------------------------------
* From 3/31/98 (the class's inception date) to 5/31/98. Not annualized.

**Investor Class returns would have been lower if management fees had not been
  waived from 3/31/98 to 4/30/99. Beginning on 5/1/99, management fees were
  phased in at a rate of 0.10% each month until 10/31/99.

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

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


------
25


High-Yield Municipal - Portfolio Commentary

PORTFOLIO MANAGER: STEVEN PERMUT

PERFORMANCE SUMMARY

High-Yield Municipal returned 4.91%* for the 12 months ended May 31, 2006. This
total return primarily reflected the fund's high yield. Portfolio price behavior
was essentially flat during a period that was relatively favorable for the
high-yield municipal sector but challenging for the U.S. bond market as a whole
(see page 2 and the High-Yield Municipal Market Review below).

The Lehman Brothers Long-Term Municipal Bond Index returned 3.20%, including a
1.65% price decline by the index's investment-grade municipal bonds. This was
typical of most investment-grade U.S. bonds during the period.

The average return of the fund's Lipper group (82 high-yield municipal debt
funds tracked by Lipper Inc.) was 4.62%. High-Yield Municipal outperformed the
Lipper group average for the one-year, five-year, and since-fund-inception
periods ended May 31, 2006 (see page 24).

HIGH-YIELD MUNICIPAL MARKET REVIEW

High-yield municipal bonds generally outperformed both the broad taxable U.S.
bond market and the investment-grade U.S. municipal market. The Lehman Brothers
Non-Investment-Grade (High-Yield) Municipal Bond Index returned 7.20%, and
municipal credit spreads approached eight-year lows. Much of this was
attributable to the strong relative performance of corporate municipal bonds,
particularly the airline sector.

It's common for municipal bonds to outperform taxable U.S. government bonds when
interest rates rise. That's because: 1) rising rates occur when the economy is
growing, leading to higher tax revenues and improved municipal credit quality,
2) the Treasury market is often whipsawed by mortgage-backed securities
investors who hedge their portfolios with Treasurys in falling rate periods (to
maintain duration when mortgage refinancings spike), then abruptly sell
Treasurys when the refinancing threat ends, 3) investors tend to exit the
Treasury market as economic conditions improve and invest elsewhere, including
in the municipal market, and 4) municipal issuance and refinancing tend to
decline as yields rise, reducing supply growth.

PORTFOLIO AT A GLANCE
--------------------------------------------------------------------------------
                                            AS OF                 AS OF
                                           5/31/06              11/30/05
--------------------------------------------------------------------------------
Weighted Average
Maturity                                  18.9 yrs              19.5 yrs
--------------------------------------------------------------------------------
Average Duration
(Modified)                                 5.6 yrs               6.3 yrs
--------------------------------------------------------------------------------

YIELDS AS OF MAY 31, 2006
--------------------------------------------------------------------------------
30-DAY SEC YIELD
--------------------------------------------------------------------------------
Investor Class                                         4.49%
--------------------------------------------------------------------------------
A Class                                                4.05%
--------------------------------------------------------------------------------
B Class                                                3.49%
--------------------------------------------------------------------------------
C Class                                                3.49%
--------------------------------------------------------------------------------
INVESTOR CLASS 30-DAY TAX-EQUIVALENT YIELDS(1)
--------------------------------------------------------------------------------
25.00% Tax Bracket                                     5.99%
--------------------------------------------------------------------------------
28.00% Tax Bracket                                     6.24%
--------------------------------------------------------------------------------
33.00% Tax Bracket                                     6.70%
--------------------------------------------------------------------------------
35.00% Tax Bracket                                     6.91%
--------------------------------------------------------------------------------
(1) The tax brackets indicated are for federal taxes only. Actual tax-equivalent
    yields may be lower, if alternative minimum tax is applicable.

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

                                                                    (continued)


------
26


High-Yield Municipal - Portfolio Commentary

High-yield municipal bonds often outperform their investment-grade municipal
counterparts under these conditions because: 1) their high yields help cushion
against price volatility, and 2) improving economic conditions are especially
beneficial to high-yield municipal issuers.

PORTFOLIO STRATEGY & OUTLOOK

We remained focused on the foundations of our investment approach--thorough
credit analysis, careful security selection, and diligent investment monitoring.
There have been no defaults in the portfolio since inception in 1998.
We continued to overweight two sectors: unrated bonds that met our credit
quality criteria and land-secured bonds issued where we believe housing demand
is greater than supply. Unrated bonds boosted the yield while land-secured bonds
can appreciate as the economy grows and/or projects are developed and their
credit risk diminishes.

We view these strategies as essentially "all-weather"--we continue to find
opportunities in these areas under most economic scenarios. We believe
land-secured bonds provide lower volatility over the long run than corporate
municipal bonds, such as airline and tobacco bonds. We think this holds true
even with the potential of a housing market decline; the portfolio's
land-secured bonds are backed by special assessment taxes that don't fluctuate
with property values.

Corporate municipal bonds, on the other hand, are subject to volatile corporate
profits and greater litigation risk. Our high-yield municipal portfolios do not
own airline bonds because of the sector's volatility and exposure to potential
risk factors that are not typical of most municipal investments.

HOW THE FUND FITS IN A DIVERSIFIED INVESTMENT STRATEGY

High-Yield Municipal is designed to provide high levels of federal tax-free
current income (in exchange for higher credit risk), capital appreciation
potential, and portfolio diversification benefits for high-net-worth individual
investors with portfolios subject to federal income tax. The fund is best suited
for investors who are accustomed to higher-risk securities and can tolerate
share-price fluctuation. High-yield municipal bonds typically behave differently
than equity, taxable, and investment-grade bond investments under various
economic and market scenarios. Diversification does not insure against loss,
however.

PORTFOLIO COMPOSITION BY CREDIT RATING
--------------------------------------------------------------------------------
                                          % OF FUND             % OF FUND
                                         INVESTMENTS           INVESTMENTS
                                            AS OF                 AS OF
                                           5/31/06              11/30/05
--------------------------------------------------------------------------------
AAA                                         12%                   14%
--------------------------------------------------------------------------------
AA                                           1%                    --
--------------------------------------------------------------------------------
BBB                                         12%                   14%
--------------------------------------------------------------------------------
BB                                           4%                    4%
--------------------------------------------------------------------------------
Unrated                                     71%                   68%
--------------------------------------------------------------------------------
Ratings provided by independent research companies. These ratings are listed in
Standard & Poor's format even if they were provided by other sources.

TOP FIVE SECTORS AS OF MAY 31, 2006
--------------------------------------------------------------------------------
                                                                % OF FUND
                                                               INVESTMENTS
--------------------------------------------------------------------------------
Land Secured                                                      54%
--------------------------------------------------------------------------------
Special Tax Revenue                                                7%
--------------------------------------------------------------------------------
Tax Allocation/Tax Increment                                       5%
--------------------------------------------------------------------------------
General Obligation (GO)                                            5%
--------------------------------------------------------------------------------
Hospital Revenue                                                   5%
--------------------------------------------------------------------------------


------
27


High-Yield Municipal - Schedule of Investments

MAY 31, 2006

Principal Amount                                                       Value
--------------------------------------------------------------------------------
MUNICIPAL SECURITIES -- 98.1%

ALASKA -- 0.2%
--------------------------------------------------------------------------------
       $  500,000  Anchorage Schools GO, Series
                   2000 A, 5.75%, 12/1/10,
                   Prerefunded at 100% of Par
                   (MBIA)(1)                                       $    541,391
--------------------------------------------------------------------------------
ARIZONA -- 5.5%
--------------------------------------------------------------------------------
          600,000  Centerra Community Facilities
                   District GO, 5.50%, 7/15/29                          600,174
--------------------------------------------------------------------------------
        2,000,000  Gilbert Water Resource
                   Municipal Property Corp. Rev.,
                   (Development Fee & Sub-Lien),
                   4.90%, 4/1/19                                      2,003,820
--------------------------------------------------------------------------------
        3,015,000  Pronghorn Ranch Community
                   Facilities District GO, 6.40%,
                   7/15/29                                            3,117,781
--------------------------------------------------------------------------------
        1,000,000  Quailwood Meadows
                   Community Facilities District
                   GO, 6.125%, 7/15/29                                1,017,170
--------------------------------------------------------------------------------
        1,043,000  Sundance Community
                   Facilities Assessment District
                   No. 2 Rev., 7.125%, 7/1/27                         1,156,541
--------------------------------------------------------------------------------
          928,000  Sundance Community
                   Facilities Assessment District
                   No. 3 Rev., 6.50%, 7/1/29                          1,000,709
--------------------------------------------------------------------------------
        1,000,000  Sundance Community
                   Facilities District GO, 5.00%,
                   7/15/25                                            1,003,940
--------------------------------------------------------------------------------
          395,000  Sundance Community
                   Facilities District GO, 6.25%,
                   7/15/29                                              425,008
--------------------------------------------------------------------------------
          550,000  Sundance Community
                   Facilities District GO, 5.125%,
                   7/15/30                                              552,354
--------------------------------------------------------------------------------
        1,500,000  Vistancia Community Facilities
                   District GO, 5.50%, 7/15/20                        1,500,435
--------------------------------------------------------------------------------
        1,200,000  Vistancia Community Facilities
                   District GO, 5.75%, 7/15/24                        1,212,204
--------------------------------------------------------------------------------
                                                                     13,590,136
--------------------------------------------------------------------------------
ARKANSAS -- 0.4%
--------------------------------------------------------------------------------
        1,000,000  Pulaski County Public Facilities
                   Board Rev., Series 2006 A,
                   (Philander Smith College),
                   5.60%, 6/1/36                                        995,250
--------------------------------------------------------------------------------
CALIFORNIA -- 15.6%
--------------------------------------------------------------------------------
        2,000,000  Beaumont Financing Auth.
                   Local Agency Rev., Series
                   2003 A, 6.875%, 9/1/27                             2,232,460
--------------------------------------------------------------------------------
        1,490,000  Beaumont Financing Auth.
                   Special Tax Rev., Series
                   2005 B, 5.40%, 9/1/35                              1,527,965
--------------------------------------------------------------------------------
          750,000  California Communities
                   Development Auth. Rev.,
                   (Thomas Jefferson School of
                   Law), 7.75%, 10/1/11,
                   Prerefunded at 101% of Par(1)                        883,995
--------------------------------------------------------------------------------

Principal Amount                                                       Value
--------------------------------------------------------------------------------

       $2,000,000  California Mobilehome Park
                   Financing Auth. Rev., Series
                   2003 B, (Palomar Estates
                   E&W), 7.00%, 9/15/36(2)                         $  2,172,360
--------------------------------------------------------------------------------
        4,000,000  City of Vallejo COP, (Marine
                   World Foundation), 7.00%,
                   2/1/17                                             4,132,640
--------------------------------------------------------------------------------
        4,500,000  El Dorado Special Tax Rev.,
                   (Community Facility District
                   No. 1), 5.25%, 9/1/35                              4,526,190
--------------------------------------------------------------------------------
        2,420,000  Golden State Tobacco
                   Securitization Corp. Rev.,
                   Series 2003 A-1, 6.75%,
                   6/1/39                                             2,707,665
--------------------------------------------------------------------------------
          500,000  Golden State Tobacco
                   Securitization Corp. Rev.,
                   Series 2003 A1, 6.625%,
                   6/1/40                                               554,180
--------------------------------------------------------------------------------
          910,000  Hawaiian Gardens COP, Series
                   2000 A, 8.00%, 6/1/23                                961,451
--------------------------------------------------------------------------------
        1,510,000  Hemet Unified School District
                   Special Tax Rev., (Community
                   Facilities District No. 2005-2),
                   5.25%, 9/1/35                                      1,518,109
--------------------------------------------------------------------------------
        2,235,000  Independent Cities Lease
                   Finance Auth. Rev., Series
                   2004 A, (Morgan Hill -
                   Hacienda Various Projects),
                   5.90%, 11/15/34                                    2,347,890
--------------------------------------------------------------------------------
        2,000,000  Indio Redevelopment Agency
                   Tax Allocation Rev., Series
                   2004 B, (Sub-Merged Project
                   Area), 6.50%, 8/15/34                              2,180,740
--------------------------------------------------------------------------------
        4,735,000  Moreno Valley Unified School
                   District Special Tax Rev.,
                   (Community Facilities District
                   No. 2004-6), 5.20%, 9/1/36                         4,743,901
--------------------------------------------------------------------------------
          250,000  Palm Springs Rev., (Palm
                   Springs International Airport),
                   5.45%, 7/1/20                                        250,468
--------------------------------------------------------------------------------
          530,000  Palm Springs Rev., (Palm
                   Springs International Airport),
                   5.55%, 7/1/28                                        530,822
--------------------------------------------------------------------------------
        1,390,000  Perris Community Facilities
                   District No. 3, Series 2005 A,
                   (Improvement Area No. 2),
                   5.30%, 9/1/35                                      1,404,804
--------------------------------------------------------------------------------
        3,000,000  Perris Public Financing Auth.
                   Special Tax Rev., Series
                   2003 A, 6.25%, 9/1/33                              3,249,210
--------------------------------------------------------------------------------
        1,000,000  Soledad Special Assessment,
                   (Diamond Ridge Assessment
                   District No. 02-01), 6.75%,
                   9/2/33                                             1,089,960
--------------------------------------------------------------------------------
        1,590,000  Vallejo Multifamily Housing
                   Rev., Series 1998 B, (Solano
                   Affordable Housing), 8.25%,
                   4/1/39 (Acquired 12/12/02,
                   Cost $1,721,000)(3)                                1,782,326
--------------------------------------------------------------------------------
                                                                     38,797,136
--------------------------------------------------------------------------------

See Notes to Financial Statements.                                  (continued)


------
28


High-Yield Municipal - Schedule of Investments

MAY 31, 2006

Principal Amount                                                       Value
--------------------------------------------------------------------------------
COLORADO -- 4.9%
--------------------------------------------------------------------------------
       $3,000,000  Denver Health & Hospital Auth.
                   Healthcare Rev., Series 2004 A,
                   6.25%, 12/1/33                                  $  3,273,360
--------------------------------------------------------------------------------
          640,000  Douglas County School District
                   No. Re-1 GO, Series 2002 B,
                   (Douglas & Elbert Counties),
                   5.75%, 12/15/12, Prerefunded
                   at 100% of Par (FSA/State
                   Aid Withholding)(1)                                  709,574
--------------------------------------------------------------------------------
        3,000,000  One Horse Business
                   Improvement District Rev.,
                   6.00%, 6/1/24                                      3,105,660
--------------------------------------------------------------------------------
        1,500,000  Plaza Metropolitan District
                   No. 1 Rev., 8.00%, 12/1/25                         1,649,115
--------------------------------------------------------------------------------
        2,000,000  Todd Creek Farms
                   Metropolitan District No. 1
                   Rev., 5.60%, 12/1/14                               1,991,320
--------------------------------------------------------------------------------
        1,500,000  Todd Creek Farms
                   Metropolitan District No. 1
                   Rev., 6.125%, 12/1/19                              1,517,820
--------------------------------------------------------------------------------
                                                                     12,246,849
--------------------------------------------------------------------------------
CONNECTICUT -- 0.4%
--------------------------------------------------------------------------------
        1,000,000  Connecticut Development Auth.
                   Industrial Rev., (Afco Cargo
                   BDL-LLC), 8.00%, 4/1/30                            1,081,330
--------------------------------------------------------------------------------
DISTRICT OF COLUMBIA -- 0.8%
--------------------------------------------------------------------------------
        1,000,000  District of Columbia COP,
                   (Public Safety & Emergency),
                   5.50%, 1/1/19 (Ambac)                              1,074,570
--------------------------------------------------------------------------------
          750,000  Metropolitan Washington D.C.
                   Airports Auth. General Rev.,
                   Series 2001 A, 5.50%,
                   10/1/18 (MBIA)                                       797,753
--------------------------------------------------------------------------------
                                                                      1,872,323
--------------------------------------------------------------------------------
FLORIDA -- 20.5%
--------------------------------------------------------------------------------
        2,800,000  Anthem Park Community
                   Development District Rev.,
                   5.80%, 5/1/36                                      2,877,392
--------------------------------------------------------------------------------
        5,000,000  Arborwood Community
                   Development District Special
                   Assessment, 5.25%, 5/1/16                          5,003,200
--------------------------------------------------------------------------------
        1,500,000  Bartam Park Community
                   Development Special
                   Assessment, 5.30%, 5/1/35                          1,505,100
--------------------------------------------------------------------------------
        1,400,000  Baywinds Community
                   Development District Special
                   Assessment, Series 2006 B,
                   4.90%, 5/1/12                                      1,408,302
--------------------------------------------------------------------------------
        2,800,000  Belmont Community
                   Development District Special
                   Assessment, Series 2006 B,
                   5.125%, 11/1/14(4)                                 2,799,888
--------------------------------------------------------------------------------
        1,120,000  Cascades Groveland
                   Community Development
                   District Special Assessment,
                   5.30%, 5/1/36                                      1,124,659
--------------------------------------------------------------------------------

Principal Amount                                                       Value
--------------------------------------------------------------------------------

       $2,725,000  Concorde Estates Community
                   Development District Rev.,
                   Series 2004 B, 5.00%, 5/1/11                    $  2,738,434
--------------------------------------------------------------------------------
          190,000  Covington Park Community
                   Development District Rev.,
                   Series 2004 B, (Capital
                   Improvement), 5.30%, 11/1/09                         190,220
--------------------------------------------------------------------------------
          980,000  Double Branch Community
                   Development District Special
                   Assessment, Series 2002 A,
                   6.70%, 5/1/34                                      1,063,280
--------------------------------------------------------------------------------
          310,000  Double Branch Community
                   Development District Special
                   Assessment, Series 2003 C,
                   5.125%, 5/1/08                                       310,288
--------------------------------------------------------------------------------
        4,535,000  Dupree Lakes Community
                   Development District Rev.,
                   5.00%, 11/1/10                                     4,544,614
--------------------------------------------------------------------------------
        1,000,000  East Homestead Community
                   Development District Special
                   Assessment, Series 2006 B,
                   5.00%, 5/1/11(4)                                   1,004,930
--------------------------------------------------------------------------------
        1,000,000  East Homestead Community
                   Development District Special
                   Assessment, 5.375%, 5/1/36                         1,006,290
--------------------------------------------------------------------------------
          520,000  Fleming Island Plantation
                   Community Development
                   District Special Assessment,
                   Series 2000 B, 7.375%, 5/1/31                        559,915
--------------------------------------------------------------------------------
          690,000  Gateway Services Community
                   Development District Special
                   Assessment, Series 2003 B,
                   (Sun City Center - Fort
                   Meyers), 5.50%, 5/1/10                               694,257
--------------------------------------------------------------------------------
           55,000  Heritage Harbor South
                   Community Development
                   District Rev., Series 2002 B,
                   5.40%, 11/1/08                                        55,118
--------------------------------------------------------------------------------
        2,000,000  Lake Ashton II Community
                   Development District Rev.,
                   Series 2005 B, 4.875%,
                   11/1/10                                            1,999,600
--------------------------------------------------------------------------------
          495,000  Middle Village Community
                   Development District Special
                   Assessment, Series 2004 B,
                   5.00%, 5/1/09                                        497,322
--------------------------------------------------------------------------------
        1,500,000  Midtown Miami Community
                   Development District Special
                   Assessment, Series 2004 A,
                   6.25%, 5/1/37                                      1,628,925
--------------------------------------------------------------------------------
        1,000,000  Orange County School Board
                   COP, Series 2002 A, 5.50%,
                   8/1/12, Prerefunded at 100%
                   of Par (MBIA)(1)                                   1,090,440
--------------------------------------------------------------------------------
        1,300,000  Palm Glades Community
                   Development District Special
                   Assessment, Series 2006 A,
                   5.30%, 5/1/36                                      1,307,514
--------------------------------------------------------------------------------
          100,000  Reunion East Community
                   Development District Special
                   Assessment Rev., Series
                   2002 B, 5.90%, 11/1/07                               100,392
--------------------------------------------------------------------------------

See Notes to Financial Statements.                                  (continued)


------
29


High-Yield Municipal - Schedule of Investments

MAY 31, 2006

Principal Amount                                                       Value
--------------------------------------------------------------------------------

       $1,245,000  South-Dade Venture
                   Community Development
                   District Rev., 6.125%, 5/1/34                   $  1,317,621
--------------------------------------------------------------------------------
        1,820,000  Sterling Hill Community
                   Development District Special
                   Assessment, Series 2003 B,
                   5.50%, 11/1/10                                     1,836,926
--------------------------------------------------------------------------------
          380,000  Stoneybrook West Community
                   Development District Special
                   Assessment, Series 2000 A,
                   7.00%, 5/1/32                                        405,445
--------------------------------------------------------------------------------
        5,500,000  Tisons Landing Community
                   Development District Rev.,
                   Series 2005 B, 5.00%, 11/1/11                      5,530,361
--------------------------------------------------------------------------------
          950,000  Waterchase Community
                   Development District Rev.,
                   Series 2001 A, 6.70%, 5/1/32                       1,013,565
--------------------------------------------------------------------------------
        3,500,000  Watergrass Community
                   Development District Special
                   Assessment, Series 2005 B,
                   4.875%, 11/1/10                                    3,490,235
--------------------------------------------------------------------------------
        1,710,000  Waters Edge Community
                   Development District Rev.,
                   5.30%, 5/1/36                                      1,708,649
--------------------------------------------------------------------------------
        2,000,000  Westchester Community
                   Development District No. 1
                   Special Assessment,
                   (Infrastructure), 6.125%,
                   5/1/35                                             2,100,300
--------------------------------------------------------------------------------
                                                                     50,913,182
--------------------------------------------------------------------------------
GEORGIA -- 1.0%
--------------------------------------------------------------------------------
        1,235,000  City of Atlanta Tax Allocation
                   Rev., (Princeton Lakes Project),
                   5.50%, 1/1/31                                      1,241,793
--------------------------------------------------------------------------------
        1,300,000  Gwinnett County Water &
                   Sewer Auth. Rev., 4.00%,
                   8/1/14                                             1,302,821
--------------------------------------------------------------------------------
                                                                      2,544,614
--------------------------------------------------------------------------------
GUAM -- 1.1%
--------------------------------------------------------------------------------
        1,500,000  Guam Government Waterworks
                   Auth. Rev., 6.00%, 7/1/25                          1,597,650
--------------------------------------------------------------------------------
          390,000  Guam International Airport
                   Auth. Rev., Series 2003 A,
                   4.00%, 10/1/10 (MBIA)                                393,849
--------------------------------------------------------------------------------
          690,000  Guam International Airport
                   Auth. Rev., Series 2003 A,
                   4.00%, 10/1/11 (MBIA)                                696,410
--------------------------------------------------------------------------------
                                                                      2,687,909
--------------------------------------------------------------------------------
ILLINOIS -- 7.1%
--------------------------------------------------------------------------------
        1,325,000  Bedford Park Tax Allocation
                   Rev., 5.125%, 12/30/18                             1,306,225
--------------------------------------------------------------------------------
        3,000,000  Chicago Park District GO,
                   Series 2006 C, 5.00%,
                   1/1/12 (FGIC)(2)                                   3,170,970
--------------------------------------------------------------------------------
        3,000,000  Chicago Tax Increment
                   Allocation Rev., Series 2004 B,
                   (Pilsen Redevelopment),
                   (Junior Lien), 6.75%, 6/1/22                       3,122,970
--------------------------------------------------------------------------------

Principal Amount                                                       Value
--------------------------------------------------------------------------------

       $6,000,000  City of Yorkville Special Tax,
                   Series 2006-105, (Bristol
                   Bay), 5.875%, 3/1/36                            $  5,875,499
--------------------------------------------------------------------------------
        3,350,000  Pingree Grove Special Service
                   Area No. 7 Special Tax Rev.,
                   Series 2006-1, (Cambridge
                   Lakes), 6.00%, 3/1/36                              3,370,670
--------------------------------------------------------------------------------
        1,000,000  Village of Bolingbrook Rev.,
                   6.25%, 1/1/08(5)                                     921,660
--------------------------------------------------------------------------------
                                                                     17,767,994
--------------------------------------------------------------------------------
IOWA -- 0.8%
--------------------------------------------------------------------------------
        2,000,000  Tobacco Settlement Auth. Rev.,
                   Series 2005 C, 5.50%, 6/1/42                       2,017,660
--------------------------------------------------------------------------------
KENTUCKY -- 1.2%
--------------------------------------------------------------------------------
        3,000,000  Kentucky Asset Liability
                   Commission Tax and Rev.
                   Anticipation Notes, Series
                   2005 A, 4.00%, 6/28/06                             3,000,810
--------------------------------------------------------------------------------
MARYLAND -- 3.1%
--------------------------------------------------------------------------------
        1,250,000  Anne Arundel County Special
                   Obligation Rev., (Arundel Mills),
                   7.10%, 7/1/09, Prerefunded
                   at 102% of Par(1)                                  1,393,338
--------------------------------------------------------------------------------
        1,000,000  Anne Arundel County Special
                   Obligation Rev., (National
                   Business Park), 7.375%,  7/1/10,
                   Prerefunded at 102%
                   of Par(1)                                          1,151,560
--------------------------------------------------------------------------------
        1,000,000  Baltimore Rev., (North Locust
                   Point), 5.50%, 9/1/34                              1,008,880
--------------------------------------------------------------------------------
        1,000,000  Maryland Industrial
                   Development Financing Auth.
                   Rev., Series 2005 A, (Our Lady
                   of Good Counsel High School),
                   6.00%, 5/1/35                                      1,059,010
--------------------------------------------------------------------------------
        1,224,000  Prince Georges County Rev.,
                   (Woodview Village Phase II -
                   Subdistrict), 7.00%, 7/1/32                        1,306,657
--------------------------------------------------------------------------------
        1,810,000  Prince Georges County Special
                   Obligation Rev., (National
                   Harbor), 5.20%, 7/1/34                             1,800,642
--------------------------------------------------------------------------------
                                                                      7,720,087
--------------------------------------------------------------------------------
MISSOURI -- 0.5%
--------------------------------------------------------------------------------
          860,000  Missouri Bottom Transportation
                   Development District
                   Hazelwood Rev., 7.20%, 5/1/33                        943,996
--------------------------------------------------------------------------------
          360,000  Missouri Housing Development
                   Commission Mortgage Rev.,
                   Series 1998 B2, (Single
                   Family), 6.40%, 9/1/29                               366,739
--------------------------------------------------------------------------------
                                                                      1,310,735
--------------------------------------------------------------------------------
NEVADA -- 12.0%
--------------------------------------------------------------------------------
        1,085,000  Clark County Improvement
                   District No. 121 Special
                   Assessment, (Southern
                   Highlands Area), 7.50%,
                   12/1/09, Prerefunded at
                   102% of Par(1)                                     1,223,923
--------------------------------------------------------------------------------

See Notes to Financial Statements.                                  (continued)


------
30


High-Yield Municipal - Schedule of Investments

MAY 31, 2006

Principal Amount                                                       Value
--------------------------------------------------------------------------------

       $3,000,000  Clark County Improvement
                   District No. 142 Special
                   Assessment, 5.50%, 8/1/12                       $  3,095,100
--------------------------------------------------------------------------------
        2,405,000  Clark County Improvement
                   District No. 151 Special
                   Assessment, (Summerlin),
                   5.00%, 8/1/25                                      2,405,673
--------------------------------------------------------------------------------
          685,000  Clark County Improvement
                   Districts No. 108 & 124
                   Special Assessment, Series
                   2003 B, 5.25%, 2/1/12                                706,434
--------------------------------------------------------------------------------
          725,000  Clark County Improvement
                   Districts No. 108 & 124
                   Special Assessment, Series
                   2003 B, 5.375%, 2/1/13                               747,925
--------------------------------------------------------------------------------
          695,000  Clark County Improvement
                   Districts No. 108 & 124
                   Special Assessment, Series
                   2003 B, 5.40%, 2/1/14                                717,018
--------------------------------------------------------------------------------
        1,490,000  Henderson Local Improvement
                   District No. T-14 Special
                   Assessment, 5.25%, 3/1/13                          1,537,918
--------------------------------------------------------------------------------
        1,550,000  Henderson Local Improvement
                   District No. T-15 Special
                   Assessment, 6.10%, 3/1/24                          1,602,561
--------------------------------------------------------------------------------
        1,000,000  Henderson Local Improvement
                   District No. T-16 Special
                   Assessment, (The Falls at Lake
                   Las Vegas), 5.00%, 3/1/20                          1,001,710
--------------------------------------------------------------------------------
          250,000  Henderson Local Improvement
                   District No. T-17 Special
                   Assessment, 5.00%, 9/1/18                            248,285
--------------------------------------------------------------------------------
        2,800,000  Henderson Local Improvement
                   District No. T-17 Special
                   Assessment, 5.00%, 9/1/25                          2,801,008
--------------------------------------------------------------------------------
        6,600,000  Henderson Local Improvement
                   District No. T-18 Special
                   Assessment, 5.30%, 9/1/35                          6,624,617
--------------------------------------------------------------------------------
        1,105,000  Henderson Redevelopment
                   Agency Tax Allocation Rev.,
                   Series 2002 B, 7.10%,
                   10/1/22                                            1,193,533
--------------------------------------------------------------------------------
          350,000  Henderson Redevelopment
                   Agency Tax Allocation Rev.,
                   Series 2002 B, 7.20%,
                   10/1/25                                              379,435
--------------------------------------------------------------------------------
        1,275,000  Las Vegas Improvement
                   District No. 607 Special
                   Assessment, 5.50%, 6/1/13                          1,320,288
--------------------------------------------------------------------------------
          490,000  Las Vegas Improvement
                   District No. 808-Summerlin
                   Area Special Assessment,
                   5.40%, 6/1/06                                        490,000
--------------------------------------------------------------------------------
          495,000  Las Vegas Improvement
                   District No. 808-Summerlin
                   Area Special Assessment,
                   5.70%, 6/1/08                                        506,915
--------------------------------------------------------------------------------
        1,155,000  North Las Vegas Improvement
                   District No. 60-Aliante Special
                   Assessment, 5.25%, 12/1/10                         1,189,650
--------------------------------------------------------------------------------

Principal Amount                                                       Value
--------------------------------------------------------------------------------

       $  490,000  North Las Vegas Improvement
                   District No. 60-Aliante Special
                   Assessment, 5.60%, 12/1/12                      $    504,700
--------------------------------------------------------------------------------
          740,000  Reno Special Assessment
                   District No. 4 Rev., (Somersett
                   Parkway), 5.20%, 12/1/10                             762,651
--------------------------------------------------------------------------------
          780,000  Reno Special Assessment
                   District No. 4 Rev., (Somersett
                   Parkway), 5.45%, 12/1/11                             804,032
--------------------------------------------------------------------------------
                                                                     29,863,376
--------------------------------------------------------------------------------
NEW JERSEY -- 3.8%
--------------------------------------------------------------------------------
        1,000,000  New Jersey Economic
                   Development Auth. COP, Series
                   1999 A, (Transportation
                   Sublease), 6.00%, 5/1/09,
                   Prerefunded at 100% of Par
                   (FSA)(1)                                           1,064,000
--------------------------------------------------------------------------------
        4,000,000  Tobacco Settlement Financing
                   Corp. Rev., 6.00%, 6/1/37                          4,197,760
--------------------------------------------------------------------------------
        3,835,000  Tobacco Settlement Financing
                   Corp. Rev., 6.125%, 6/1/42                         4,049,185
--------------------------------------------------------------------------------
                                                                      9,310,945
--------------------------------------------------------------------------------
NEW MEXICO -- 1.0%
--------------------------------------------------------------------------------
        1,490,000  Cabezon Public Improvement
                   District Special Tax Rev.,
                   6.30%, 9/1/34                                      1,513,214
--------------------------------------------------------------------------------
        1,000,000  Ventana West Public
                   Improvement District Special
                   Levy Rev., 6.875%, 8/1/33                          1,053,430
--------------------------------------------------------------------------------
                                                                      2,566,644
--------------------------------------------------------------------------------
NEW YORK -- 0.5%
--------------------------------------------------------------------------------
        1,000,000  Onondaga County Industrial
                   Development Auth. Rev., (Air
                   Cargo), 7.25%, 1/1/32                              1,082,470
--------------------------------------------------------------------------------
NORTHERN MARIANA ISLANDS -- 0.9%
--------------------------------------------------------------------------------
        2,000,000  Northern Mariana Islands
                   Commonwealth GO, Series
                   2003 A, 6.75%, 10/1/33                             2,230,020
--------------------------------------------------------------------------------
OHIO -- 2.2%
--------------------------------------------------------------------------------
        1,150,000  Hebron Waterworks Rev.,
                   5.875%, 12/1/25                                    1,183,304
--------------------------------------------------------------------------------
          745,000  Hebron Waterworks Rev.,
                   6.125%, 12/1/29                                      775,545
--------------------------------------------------------------------------------
          215,000  New Albany Plain Local School
                   District GO, 5.50%, 6/1/12,
                   Prerefunded at 100% of Par
                   (FGIC)(1)                                            234,062
--------------------------------------------------------------------------------
          285,000  New Albany Plain Local School
                   District GO, 5.50%, 12/1/19
                   (FGIC)                                               307,526
--------------------------------------------------------------------------------
        1,800,000  Pinnacle Community
                   Infrastructure Financing
                   Facilities Auth. Rev., Series
                   2004 A, 6.25%, 12/1/36                             1,836,666
--------------------------------------------------------------------------------

See Notes to Financial Statements.                                  (continued)


------
31


High-Yield Municipal - Schedule of Investments

MAY 31, 2006

Principal Amount                                                       Value
--------------------------------------------------------------------------------

       $1,100,000  Port of Greater Cincinnati
                   Development Auth. Special
                   Assessment, (Cooperative  Public
                   Parking Infrastructure),
                   6.40%, 2/15/34                                  $  1,183,435
--------------------------------------------------------------------------------
                                                                      5,520,538
--------------------------------------------------------------------------------
OKLAHOMA -- 1.3%
--------------------------------------------------------------------------------
        2,500,000  Norman Regional Hospital
                   Auth. Rev., 5.375%, 9/1/36                         2,534,200
--------------------------------------------------------------------------------
          750,000  Oklahoma City Industrial &
                   Cultural Facilities Trust Rev.,
                   6.75%, 1/1/23                                        798,638
--------------------------------------------------------------------------------
                                                                      3,332,838
--------------------------------------------------------------------------------
PENNSYLVANIA -- 3.4%
--------------------------------------------------------------------------------
        4,375,000  Allegheny County
                   Redevelopment Auth. Tax
                   Allocation, (Pittsburgh Mills),
                   5.10%, 7/1/14                                      4,492,293
--------------------------------------------------------------------------------
        1,000,000  Allegheny County
                   Redevelopment Auth. Tax
                   Allocation, (Pittsburgh Mills),
                   5.60%, 7/1/23                                      1,048,230
--------------------------------------------------------------------------------
        1,325,000  Chartiers Valley School District
                   GO, Series 2004 A, 5.00%,
                   10/15/20 (FSA/State Aid
                   Withholding)                                       1,387,196
--------------------------------------------------------------------------------
        1,000,000  Langhorne Manor Boro Higher
                   Education Auth. Rev.,
                   (Philadelphia Biblical
                   University), 5.50%, 4/1/25                         1,001,650
--------------------------------------------------------------------------------
          530,000  New Morgan Municipal Auth.
                   Office Rev., Series 1999 A,
                   (Commonwealth Office),
                   5.375%, 6/1/08                                       526,126
--------------------------------------------------------------------------------
                                                                      8,455,495
--------------------------------------------------------------------------------
PUERTO RICO -- 0.7%
--------------------------------------------------------------------------------
        1,800,000  Government Development
                   Bank of Puerto Rico Rev.,
                   4.75%, 8/7/06 (Acquired
                   5/11/06, Cost $1,800,000)(3)                       1,800,576
--------------------------------------------------------------------------------
RHODE ISLAND -- 0.2%
--------------------------------------------------------------------------------
          500,000  Cranston GO, 6.375%,
                   11/15/09, Prerefunded at
                   101% of Par (FGIC)(1)                                547,835
--------------------------------------------------------------------------------
SOUTH CAROLINA -- 0.5%
--------------------------------------------------------------------------------
        1,250,000  Lancaster County Special
                   Assessment, (Sun City Lakes
                   Improvement), 5.45%, 12/1/37                       1,252,938
--------------------------------------------------------------------------------
TENNESSEE -- 2.1%
--------------------------------------------------------------------------------
        1,475,000  Chattanooga Health
                   Educational & Housing Facility
                   Board Rev., Series 2005 B,
                   (Campus Development
                   Foundation, Inc. Phase I LLC),
                   5.50%, 10/1/20                                     1,475,605
--------------------------------------------------------------------------------

Principal Amount                                                       Value
--------------------------------------------------------------------------------

       $3,565,000  Chattanooga Health
                   Educational & Housing Facility
                   Board Rev., Series 2005 B,
                   (Campus Development
                   Foundation, Inc. Phase I LLC),
                   6.00%, 10/1/35                                  $  3,624,500
--------------------------------------------------------------------------------
                                                                      5,100,105
--------------------------------------------------------------------------------
TEXAS -- 1.7%
--------------------------------------------------------------------------------
          610,000  Abia Development Corp.
                   Airport Facilities Rev., (Aero
                   Austin L.P.), 6.75%, 1/1/11                          615,722
--------------------------------------------------------------------------------
          400,000  Bexar County Health Facilities
                   Development Corp. Rev.,
                   (Army Retirement Residence),
                   6.125%, 7/1/22                                       423,976
--------------------------------------------------------------------------------
        1,000,000  Bexar County Health Facilities
                   Development Corp. Rev.,
                   (Army Retirement Residence),
                   6.30%, 7/1/32                                      1,060,720
--------------------------------------------------------------------------------
        2,000,000  Pearland Development Auth.
                   Tax Allocation Rev., 5.50%,
                   9/1/28 (RADIAN-IBC)                                2,106,400
--------------------------------------------------------------------------------
                                                                      4,206,818
--------------------------------------------------------------------------------
UTAH -- 0.5%
--------------------------------------------------------------------------------
        1,235,000  West Valley City Rev., Series
                   2001 A, 5.50%, 7/15/15
                   (MBIA)                                             1,328,205
--------------------------------------------------------------------------------
VIRGINIA -- 0.8%
--------------------------------------------------------------------------------
        2,000,000  Tobacco Settlement Financing
                   Corp. Rev., 5.625%, 6/1/37                         2,049,640
--------------------------------------------------------------------------------
WASHINGTON -- 0.5%
--------------------------------------------------------------------------------
          860,000  Cowlitz County Kelso School
                   District No. 458 GO, 5.75%,
                   12/1/18 (FSA)                                        939,816
--------------------------------------------------------------------------------
          250,000  Port of Seattle Rev., Series
                   2000 B, 6.00%, 2/1/15 (MBIA)                         279,368
--------------------------------------------------------------------------------
                                                                      1,219,184
--------------------------------------------------------------------------------
WISCONSIN -- 2.9%
--------------------------------------------------------------------------------
        3,200,000  Wisconsin GO, Series 2006-1,
                   5.00%, 5/1/10 (MBIA)(2)                            3,347,328
--------------------------------------------------------------------------------
        2,000,000  Wisconsin Health &
                   Educational Facilities Auth.
                   Rev., Series 2004 A,
                   (Southwest Health Center),
                   6.25%, 4/1/34                                      2,033,180
--------------------------------------------------------------------------------
        1,750,000  Wisconsin Health &
                   Educational Facilities Auth.
                   Rev., Series 2006 A,
                   (Marshfield Clinic), 5.375%,
                   2/15/34                                            1,809,220
--------------------------------------------------------------------------------
                                                                      7,189,728
--------------------------------------------------------------------------------
TOTAL MUNICIPAL SECURITIES
(Cost $237,443,122)                                                 244,144,761
--------------------------------------------------------------------------------

See Notes to Financial Statements.                                  (continued)


------
32


High-Yield Municipal - Schedule of Investments

MAY 31, 2006

Principal Amount                                                       Value
--------------------------------------------------------------------------------
SHORT-TERM MUNICIPAL SECURITIES -- 1.5%

ARIZONA -- 0.4%
--------------------------------------------------------------------------------
       $1,000,000  Phoenix Industrial
                   Development Auth. Rev.,
                   (Southwest Human  Development),
                   VRDN, 3.48%,
                   6/1/06 (LOC: Wells Fargo
                   Bank N.A)                                       $  1,000,000
--------------------------------------------------------------------------------
          100,000  Pima County Industrial
                   Development Auth. Lease Rev.
                   COP, VRDN, 3.48%, 6/1/06
                   (SBBPA: Societe Generale)                            100,000
--------------------------------------------------------------------------------
                                                                      1,100,000
--------------------------------------------------------------------------------
FLORIDA -- 0.5%
--------------------------------------------------------------------------------
          650,000  Brevard County Health
                   Facilities Auth. Rev., (Health
                   First Inc.), VRDN, 3.59%,
                   6/1/06 (LOC: Suntrust Bank)                          650,000
--------------------------------------------------------------------------------
          200,000  Pinellas County Health
                   Facilities Auth. Rev., (Hospital
                   Facilities-Bayfront), VRDN,
                   3.59%, 6/1/06                                        200,000
--------------------------------------------------------------------------------
          350,000  Pinellas County Health Facility
                   Auth. Rev., (Pooled Hospital
                   Loan Program), VRDN, 3.60%,
                   6/1/06 (Ambac)                                       350,000
--------------------------------------------------------------------------------
                                                                      1,200,000
--------------------------------------------------------------------------------

Principal Amount                                                       Value
--------------------------------------------------------------------------------
TENNESSEE -- 0.6%
--------------------------------------------------------------------------------
       $  450,000  Clarksville Public Building
                   Authority Rev., VRDN,
                   (Tennessee Municipal Bond
                   Fund), 3.58%, 6/1/06 (LOC:
                   Bank of America N.A.)                           $    450,000
--------------------------------------------------------------------------------
        1,050,000  Clarksville Public Building
                   Authority Rev., VRDN,
                   (Tennessee Municipal Bond
                   Fund), 3.58%, 6/1/06 (LOC:
                   Bank of America N.A.)                              1,050,000
--------------------------------------------------------------------------------
                                                                      1,500,000
--------------------------------------------------------------------------------
TOTAL SHORT-TERM MUNICIPAL
SECURITIES
(Cost $3,800,000)                                                     3,800,000
--------------------------------------------------------------------------------
TOTAL INVESTMENT
SECURITIES -- 99.6%
(Cost $241,243,122)                                                 247,944,761
--------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES -- 0.4%                                    962,011
--------------------------------------------------------------------------------
TOTAL NET ASSETS -- 100.0%                                         $248,906,772
================================================================================

FUTURES CONTRACTS

                              Expiration        Underlying Face      Unrealized
  Contracts Purchased            Date           Amount at Value      Gain (Loss)
--------------------------------------------------------------------------------
  35   U.S. Treasury
       10-Year Notes        September 2006        $3,672,266           $19,062
                                                ================================

NOTES TO SCHEDULE OF INVESTMENTS

Ambac = Ambac Assurance Corporation

COP = Certificates of Participation

FGIC = Financial Guaranty Insurance Co.

FSA = Financial Security Assurance, Inc.

GO = General Obligation

LOC = Letter of Credit

MBIA = MBIA Insurance Corporation

RADIAN-IBC = Radian Asset Assurance, Inc. -- Insured Bond Certificates

SBBPA = Standby Bond Purchase Agreement

VRDN = Variable Rate Demand Note. Interest reset date is indicated. Rate shown
       is effective May 31, 2006.

(1) Escrowed to maturity in U.S. government securities or state and local
    government securities.

(2) Security, or a portion thereof, has been segregated for when-issued
    securities and/or futures contracts.

(3) Security was purchased under Rule 144A of the Securities Act of 1933 or is a
    private placement and, unless registered under the Act or exempted from
    registration, may only be sold to qualified institutional investors. The
    aggregate value of restricted securities at May 31, 2006 was $3,582,902,
    which represented 1.4% of total net assets.

(4) When-issued security.

(5) Step-coupon security. These securities are issued with a zero-coupon and
    become interest bearing at a predetermined rate and date and are issued at a
    substantial discount from their value at maturity. Rate shown is effective
    May 31, 2006.

See Notes to Financial Statements.


------
33


Shareholder Fee Examples (Unaudited)

Fund shareholders may incur two types of costs: (1) transaction costs, including
sales charges (loads) on purchase payments and redemption/exchange fees; and (2)
ongoing costs, including management fees; distribution and service (12b-1) fees;
and other fund expenses. This example is intended to help you understand your
ongoing costs (in dollars) of investing in your fund and to compare these costs
with the ongoing cost of investing in other mutual funds.

The example is based on an investment of $1,000 made at the beginning of the
period and held for the entire period from December 1, 2005 to May 31, 2006
(except as noted).

ACTUAL EXPENSES

The table provides information about actual account values and actual expenses
for each class. You may use the information, together with the amount you
invested, to estimate the expenses that you paid over the period. First,
identify the share class you own. Then simply divide your account value by
$1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then
multiply the result by the number under the heading "Expenses Paid During
Period" to estimate the expenses you paid on your account during this period.

If you hold Investor Class shares of any American Century fund, or Institutional
Class shares of the American Century Diversified Bond Fund, in an American
Century account (i.e., not a financial intermediary or retirement plan account),
American Century may charge you a $12.50 semiannual account maintenance fee if
the value of those shares is less than $10,000. We will redeem shares
automatically in one of your accounts to pay the $12.50 fee. In determining your
total eligible investment amount, we will include your investments in all
PERSONAL ACCOUNTS (including American Century Brokerage accounts) registered
under your Social Security number. PERSONAL ACCOUNTS include individual
accounts, joint accounts, UGMA/UTMA accounts, personal trusts, Coverdell
Education Savings Accounts and IRAs (including traditional, Roth, Rollover,
SEP-, SARSEP- and SIMPLE-IRAs), and certain other retirement accounts. If you
have only business, business retirement, employer-sponsored or American Century
Brokerage accounts, you are currently not subject to this fee. We will not
charge the fee as long as you choose to manage your accounts exclusively online.
If you are subject to the Account Maintenance Fee, your account value could be
reduced by the fee amount.

HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES

The table also provides information about hypothetical account values and
hypothetical expenses based on the actual expense ratio of each class of your
fund and an assumed rate of return of 5% per year before expenses, which is not
the actual return of a fund's share class. The hypothetical account values and
expenses may not be used to estimate the actual ending account balance or
expenses you paid for the period. You may use this information to compare the
ongoing costs of investing in your fund and other funds. To do so, compare this
5% hypothetical example with the 5% hypothetical examples that appear in the
shareholder reports of the other funds.

                                                                    (continued)


------
34


Shareholder Fee Examples (Unaudited)

Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads) or redemption/exchange fees. Therefore, the table is useful in
comparing ongoing costs only, and will not help you determine the relative total
costs of owning different funds. In addition, if these transactional costs were
included, your costs would have been higher.

--------------------------------------------------------------------------------
                                                     EXPENSES PAID
                       BEGINNING        ENDING       DURING PERIOD*   ANNUALIZED
                      ACCOUNT VALUE  ACCOUNT VALUE     12/1/05 -       EXPENSE
                         12/1/05        5/31/06         5/31/06         RATIO*
--------------------------------------------------------------------------------
ARIZONA MUNICIPAL BOND SHAREHOLDER FEE EXAMPLE
--------------------------------------------------------------------------------
ACTUAL
--------------------------------------------------------------------------------
Investor Class           $1,000        $1,011.70          $2.46         0.49%
--------------------------------------------------------------------------------
A Class                  $1,000        $1,010.40          $3.71         0.74%
--------------------------------------------------------------------------------
B Class                  $1,000        $1,006.70          $7.45         1.49%
--------------------------------------------------------------------------------
C Class                  $1,000        $1,006.70          $7.45         1.49%
--------------------------------------------------------------------------------
HYPOTHETICAL
--------------------------------------------------------------------------------
Investor Class           $1,000        $1,022.49          $2.47         0.49%
--------------------------------------------------------------------------------
A Class                  $1,000        $1,021.24          $3.73         0.74%
--------------------------------------------------------------------------------
B Class                  $1,000        $1,017.50          $7.49         1.49%
--------------------------------------------------------------------------------
C Class                  $1,000        $1,017.50          $7.49         1.49%
--------------------------------------------------------------------------------
FLORIDA MUNICIPAL BOND SHAREHOLDER FEE EXAMPLE
--------------------------------------------------------------------------------
ACTUAL
--------------------------------------------------------------------------------
Investor Class           $1,000        $1,011.40          $2.46         0.49%
--------------------------------------------------------------------------------
A Class                  $1,000        $1,010.10          $3.71         0.74%
--------------------------------------------------------------------------------
B Class                  $1,000        $1,006.40          $7.45         1.49%
--------------------------------------------------------------------------------
C Class                  $1,000        $1,006.30          $7.45         1.49%
--------------------------------------------------------------------------------
HYPOTHETICAL
--------------------------------------------------------------------------------
Investor Class           $1,000        $1,022.49          $2.47         0.49%
--------------------------------------------------------------------------------
A Class                  $1,000        $1,021.24          $3.73         0.74%
--------------------------------------------------------------------------------
B Class                  $1,000        $1,017.50          $7.49         1.49%
--------------------------------------------------------------------------------
C Class                  $1,000        $1,017.50          $7.49         1.49%
--------------------------------------------------------------------------------

*Expenses are equal to the class's annualized expense ratio listed in the table
 above, multiplied by the average account value over the period, multiplied by
 182, the number of days in the most recent fiscal half-year, divided by 365, to
 reflect the one-half year period.

                                                                    (continued)


------
35


Shareholder Fee Examples (Unaudited)

--------------------------------------------------------------------------------
                                                     EXPENSES PAID
                       BEGINNING        ENDING      DURING PERIOD(1)  ANNUALIZED
                      ACCOUNT VALUE  ACCOUNT VALUE     12/1/05 -       EXPENSE
                         12/1/05        5/31/06         5/31/06         RATIO*
--------------------------------------------------------------------------------
LONG-TERM TAX-FREE SHAREHOLDER FEE EXAMPLE
--------------------------------------------------------------------------------
ACTUAL
--------------------------------------------------------------------------------
Investor Class           $1,000      $1,004.20(2)       $0.78(4)        0.49%
--------------------------------------------------------------------------------
Institutional Class      $1,000      $1,004.50(2)       $0.46(4)        0.29%
--------------------------------------------------------------------------------
A Class                  $1,000      $1,003.10(3)       $1.24(5)        0.74%
--------------------------------------------------------------------------------
B Class                  $1,000      $1,001.80(3)       $2.49(5)        1.49%
--------------------------------------------------------------------------------
C Class                  $1,000      $1,002.60(2)       $2.37(4)        1.49%
--------------------------------------------------------------------------------
HYPOTHETICAL
--------------------------------------------------------------------------------
Investor Class           $1,000      $1,022.49(6)       $2.47(6)        0.49%
--------------------------------------------------------------------------------
Institutional Class      $1,000      $1,023.49(6)       $1.46(6)        0.29%
--------------------------------------------------------------------------------
A Class                  $1,000      $1,021.24          $3.73           0.74%
--------------------------------------------------------------------------------
B Class                  $1,000      $1,017.50          $7.49           1.49%
--------------------------------------------------------------------------------
C Class                  $1,000      $1,017.50(6)       $7.49(6)        1.49%
--------------------------------------------------------------------------------
HIGH-YIELD MUNICIPAL SHAREHOLDER FEE EXAMPLE
--------------------------------------------------------------------------------
ACTUAL
--------------------------------------------------------------------------------
Investor Class           $1,000      $1,028.00          $3.13           0.62%
--------------------------------------------------------------------------------
A Class                  $1,000      $1,026.70          $4.40           0.87%
--------------------------------------------------------------------------------
B Class                  $1,000      $1,022.90          $8.17           1.62%
--------------------------------------------------------------------------------
C Class                  $1,000      $1,022.80          $8.17           1.62%
--------------------------------------------------------------------------------
HYPOTHETICAL
--------------------------------------------------------------------------------
Investor Class           $1,000      $1,021.84          $3.13           0.62%
--------------------------------------------------------------------------------
A Class                  $1,000      $1,020.59          $4.38           0.87%
--------------------------------------------------------------------------------
B Class                  $1,000      $1,016.85          $8.15           1.62%
--------------------------------------------------------------------------------
C Class                  $1,000      $1,016.85          $8.15           1.62%
--------------------------------------------------------------------------------

(1) Expenses are equal to the class's annualized expense ratio listed in the
    table above, multiplied by the average account value over the period,
    multiplied by 182, the number of days in the most recent fiscal half-year,
    divided by 365, to reflect the one-half year period.

(2) Ending account value based on actual return from April 3, 2006 (commencement
    of sale) through May 31, 2006.

(3) Ending account value based on actual return from April 1, 2006 through May
    31, 2006. Long-Term Tax-Free's fiscal year end was changed from March 31 to
    May 31, resulting in a two-month annual reporting period (see Note 8).

(4) Expenses are equal to the class's annualized expense ratio listed in the
    table above, multiplied by the average account value over the period,
    multiplied by 58, the number of days in the period from April 3, 2006
    (commencement of sale), through May 31, 2006, divided by 365, to reflect the
    period. Had the class been available for the full period, the expenses paid
    during the period would have been higher.

(5) Expenses are equal to the class's annualized expense ratio listed in the
    table above, multiplied by the average account value over the period,
    multiplied by 61, the number of days in the period from April 1, 2006
    through May 31, 2006, divided by 365, to reflect the period. Had the class
    been available for a full fiscal half-year period, the expenses paid during
    the period would have been higher.

(6) Ending account value and expenses paid during period assumes the class had
    been available throughout the entire fiscal half-year period and are
    calculated using the class's annualized expense ratio listed in the table
    above.


------
36


Statement of Assets and Liabilities

MAY 31, 2006
----------------------------------------------------------------------------------------------------
                                        ARIZONA           FLORIDA        LONG-TERM      HIGH-YIELD
                                     MUNICIPAL BOND   MUNICIPAL BOND      TAX-FREE       MUNICIPAL
----------------------------------------------------------------------------------------------------
ASSETS
----------------------------------------------------------------------------------------------------
Investment securities, at value
(cost of $56,195,763, $41,919,639,
$37,968,412, and $241,243,122
respectively)                          $57,653,078     $43,189,615      $38,323,594    $247,944,761
-----------------------------------
Cash                                            --              --        2,126,881              --
-----------------------------------
Receivable for investments sold                 --              --          341,936              --
-----------------------------------
Receivable for capital shares sold           5,593             990            1,400       1,520,942
-----------------------------------
Receivable for variation margin
on futures contracts                            --              --            8,016          10,391
-----------------------------------
Unrealized appreciation
on swap agreements                             622              --               --              --
-----------------------------------
Interest receivable                        932,872         480,618          326,615       3,756,210
----------------------------------------------------------------------------------------------------
                                        58,592,165      43,671,223       41,128,442     253,232,304
----------------------------------------------------------------------------------------------------
LIABILITIES
----------------------------------------------------------------------------------------------------
Disbursements in excess
of demand deposit cash                      16,879          37,538               --          41,997
-----------------------------------
Payable for investments purchased        1,935,626              --        3,155,995       3,797,520
-----------------------------------
Payable for capital shares redeemed             --              --           96,927          31,065
-----------------------------------
Payable for variation margin
on futures contracts                            --           1,484               --              --
-----------------------------------
Accrued management fees                     23,260          18,005           12,881         128,126
-----------------------------------
Distribution fees payable                      270           1,034            1,327          21,588
-----------------------------------
Service fees (and distribution
fees -- A Class) payable                       881             640            4,588          34,208
-----------------------------------
Dividends payable                           45,668          43,595           16,817         271,028
----------------------------------------------------------------------------------------------------
                                         2,022,584         102,296        3,288,535       4,325,532
----------------------------------------------------------------------------------------------------
NET ASSETS                             $56,569,581     $43,568,927      $37,839,907    $248,906,772
====================================================================================================

See Notes to Financial Statements.                                  (continued)


------
37


Statement of Assets and Liabilities

MAY 31, 2006
----------------------------------------------------------------------------------------------------
                                        ARIZONA           FLORIDA        LONG-TERM      HIGH-YIELD
                                     MUNICIPAL BOND   MUNICIPAL BOND      TAX-FREE       MUNICIPAL
----------------------------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
----------------------------------------------------------------------------------------------------
Capital paid in                        $55,266,081     $42,676,051      $38,339,367    $244,675,909
-----------------------------------
Undistributed net
investment income                               --              --           27,578              --
-----------------------------------
Accumulated net realized loss
on investment transactions                (154,439)       (372,743)        (905,685)     (2,489,838)
-----------------------------------
Net unrealized appreciation
on investments                           1,457,939       1,265,619          378,647       6,720,701
----------------------------------------------------------------------------------------------------
                                       $56,569,581     $43,568,927      $37,839,907    $248,906,772
====================================================================================================
INVESTOR CLASS
----------------------------------------------------------------------------------------------------
Net assets                             $52,404,475     $40,604,339          $25,104     $84,896,115
-----------------------------------
Shares outstanding                       4,907,911       3,847,490            2,346       8,084,493
-----------------------------------
Net asset value per share                   $10.68          $10.55           $10.70          $10.50
----------------------------------------------------------------------------------------------------
INSTITUTIONAL CLASS
----------------------------------------------------------------------------------------------------
Net assets                                     N/A             N/A      $16,456,283             N/A
-----------------------------------
Shares outstanding                             N/A             N/A        1,537,936             N/A
-----------------------------------
Net asset value per share                      N/A             N/A           $10.70             N/A
----------------------------------------------------------------------------------------------------
A CLASS
----------------------------------------------------------------------------------------------------
Net assets                              $3,740,788      $1,380,175      $19,287,830    $129,680,884
-----------------------------------
Shares outstanding                         350,341         130,779        1,802,562      12,349,264
-----------------------------------
Net asset value per share                   $10.68          $10.55           $10.70          $10.50
-----------------------------------
Maximum offering price
(net asset value
divided by 0.955)                           $11.18          $11.05           $11.20          $10.99
----------------------------------------------------------------------------------------------------
B CLASS
----------------------------------------------------------------------------------------------------
Net assets                                 $42,022         $14,654       $2,045,625      $4,467,666
-----------------------------------
Shares outstanding                           3,936           1,389          191,196         425,447
-----------------------------------
Net asset value per share                   $10.68          $10.55           $10.70          $10.50
----------------------------------------------------------------------------------------------------
C CLASS
----------------------------------------------------------------------------------------------------
Net assets                                $382,296      $1,569,759          $25,065     $29,862,107
-----------------------------------
Shares outstanding                          35,804         148,743            2,342       2,843,708
-----------------------------------
Net asset value per share                   $10.68          $10.55           $10.70          $10.50
----------------------------------------------------------------------------------------------------

See Notes to Financial Statements.


------
38


Statement of Operations

YEAR ENDED MAY 31, 2006
--------------------------------------------------------------------------------
                                                    ARIZONA           FLORIDA
                                                 MUNICIPAL BOND   MUNICIPAL BOND
--------------------------------------------------------------------------------
INVESTMENT INCOME
--------------------------------------------------------------------------------
INCOME:
-------------------------------------------
Interest                                          $ 2,539,864       $ 2,128,674
--------------------------------------------------------------------------------

EXPENSES:
-------------------------------------------
Management fees                                       281,477           235,615
-------------------------------------------
Distribution Fees:
-------------------------------------------
  B Class                                                 136               182
-------------------------------------------
  C Class                                               4,191            13,265
-------------------------------------------
Service Fees:
-------------------------------------------
  B Class                                                  46                60
-------------------------------------------
  C Class                                               1,397             4,421
-------------------------------------------
Service and distribution fees -- A Class               10,067             4,663
-------------------------------------------
Trustees' fees and expenses                             3,536             3,011
-------------------------------------------
Other expenses                                            157               102
--------------------------------------------------------------------------------
                                                      301,007           261,319
--------------------------------------------------------------------------------

NET INVESTMENT INCOME                               2,238,857         1,867,355
--------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
--------------------------------------------------------------------------------
NET REALIZED GAIN (LOSS) ON:
-------------------------------------------
Investment transactions                              (165,264)          (24,461)
-------------------------------------------
Futures and swaps transactions                        142,564           152,592
--------------------------------------------------------------------------------
                                                      (22,700)          128,131
--------------------------------------------------------------------------------

CHANGE IN UNREALIZED APPRECIATION
(DEPRECIATION) ON:
-------------------------------------------
Investments                                        (1,317,941)       (1,338,632)
-------------------------------------------
Futures and swaps                                      10,942            21,453
--------------------------------------------------------------------------------
                                                   (1,306,999)       (1,317,179)
--------------------------------------------------------------------------------

NET REALIZED AND UNREALIZED GAIN (LOSS)            (1,329,699)       (1,189,048)
--------------------------------------------------------------------------------

NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS                         $   909,158       $   678,307
================================================================================

See Notes to Financial Statements.                                  (continued)


------
39


Statement of Operations

YEAR ENDED MAY 31, 2006 (EXCEPT AS NOTED)
--------------------------------------------------------------------------------
                                                                     HIGH-YIELD
                                      LONG-TERM TAX-FREE              MUNICIPAL
--------------------------------------------------------------------------------
                              MAY 31, 2006(1)   MARCH 31, 2006(2)   MAY 31, 2006
--------------------------------------------------------------------------------
INVESTMENT INCOME
--------------------------------------------------------------------------------
INCOME:
----------------------------
Interest                         $ 273,260        $ 4,045,250       $11,395,057
--------------------------------------------------------------------------------

EXPENSES:
----------------------------
Management fees                     25,793            302,114         1,296,080
----------------------------
Distribution Fees:
----------------------------
  B Class                            2,589             17,599            30,471
----------------------------
  C Class                               30                 --           178,282
----------------------------
Service Fees:
----------------------------
  B Class                              863                 --            10,157
----------------------------
  C Class                               10                 --            59,427
----------------------------
Service and distribution
fees -- A Class                      8,721             26,584           271,915
----------------------------
Shareholder servicing fees
(A Class and B Class)                   --            251,261                --
----------------------------
Trustees' fees and expenses            174            235,958            12,385
----------------------------
Other expenses                          --              5,032             1,456
--------------------------------------------------------------------------------
                                    38,180            838,548         1,860,173
--------------------------------------------------------------------------------
Amounts waived                          --             (4,529)               --
--------------------------------------------------------------------------------
                                    38,180            834,019         1,860,173
--------------------------------------------------------------------------------

NET INVESTMENT INCOME              235,080          3,211,231         9,534,884
--------------------------------------------------------------------------------
REALIZED AND UNREALIZED
GAIN (LOSS)
--------------------------------------------------------------------------------
NET REALIZED GAIN (LOSS) ON:
----------------------------
Investment transactions            240,366          1,488,652          (260,700)
----------------------------
Futures and
swaps transactions                 (24,343)            46,106           396,618
--------------------------------------------------------------------------------
                                   216,023          1,534,758           135,918
--------------------------------------------------------------------------------

CHANGE IN UNREALIZED
APPRECIATION
(DEPRECIATION) ON:
----------------------------
Investments                       (322,473)        (1,553,272)         (189,863)
----------------------------
Futures and swaps                   23,353            (80,391)           50,022
--------------------------------------------------------------------------------
                                  (299,120)        (1,633,663)         (139,841)
--------------------------------------------------------------------------------

NET REALIZED AND UNREALIZED
GAIN (LOSS)                        (83,097)           (98,905)           (3,923)
--------------------------------------------------------------------------------

NET INCREASE (DECREASE)
IN NET ASSETS RESULTING
FROM OPERATIONS                  $ 151,983        $ 3,112,326       $ 9,530,961
================================================================================

(1) Long-Term Tax-Free's fiscal year end was changed from March 31 to May 31,
    resulting in a two-month annual reporting period (see Note 8).

(2) Year ended March 31, 2006.

See Notes to Financial Statements.


------
40


Statement of Changes in Net Assets

YEARS ENDED MAY 31, 2006 AND MAY 31, 2005
----------------------------------------------------------------------------------------------------
                                           ARIZONA MUNICIPAL BOND          FLORIDA MUNICIPAL BOND
----------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS           2006            2005            2006            2005
----------------------------------------------------------------------------------------------------
OPERATIONS
----------------------------------------------------------------------------------------------------
Net investment income                   $ 2,238,857     $ 2,278,480     $ 1,867,355     $ 2,157,343
-------------------------------------
Net realized gain (loss)                    (22,700)         99,571         128,131        (205,313)
-------------------------------------
Change in net unrealized
appreciation (depreciation)              (1,306,999)        603,330      (1,317,179)        977,499
----------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations                   909,158       2,981,381         678,307       2,929,529
----------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
----------------------------------------------------------------------------------------------------
From net investment income:
-------------------------------------
  Investor Class                         (2,116,841)     (2,147,979)     (1,747,251)     (2,068,408)
-------------------------------------
  A Class                                  (149,814)       (118,487)        (68,050)        (50,159)
-------------------------------------
  B Class                                      (564)            (72)           (702)           (423)
-------------------------------------
  C Class                                   (16,490)        (11,942)        (51,352)        (38,353)
-------------------------------------
From net realized gains:
-------------------------------------
  Investor Class                           (107,409)        (12,600)             --              --
-------------------------------------
  A Class                                    (8,242)           (792)             --              --
-------------------------------------
  B Class                                        (5)             (1)             --              --
-------------------------------------
  C Class                                    (1,271)           (102)             --              --
----------------------------------------------------------------------------------------------------
Decrease in net assets
from distributions                       (2,400,636)     (2,291,975)     (1,867,355)     (2,157,343)
----------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
----------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
from capital share transactions            (133,483)     (4,235,455)     (8,645,069)    (12,320,526)
----------------------------------------------------------------------------------------------------

NET INCREASE (DECREASE) IN NET ASSETS    (1,624,961)     (3,546,049)     (9,834,117)    (11,548,340)

NET ASSETS
----------------------------------------------------------------------------------------------------
Beginning of period                      58,194,542      61,740,591      53,403,044      64,951,384
----------------------------------------------------------------------------------------------------
End of period                           $56,569,581     $58,194,542     $43,568,927    $ 53,403,044
====================================================================================================

See Notes to Financial Statements.                                  (continued)


------
41


Statement of Changes in Net Assets

TWO MONTHS ENDED MAY 31, 2006 AND YEARS ENDED MARCH 31, 2006 AND MARCH 31, 2005 (AS NOTED)
-----------------------------------------------------------------------------------------------
                                                         LONG-TERM TAX-FREE
-----------------------------------------------------------------------------------------------
                                        MAY 31, 2006(1)   MARCH 31, 2006(2)   MARCH 31, 2005(2)
-----------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
-----------------------------------------------------------------------------------------------
OPERATIONS
-----------------------------------------------------------------------------------------------
Net investment income                     $   235,080       $  3,211,231        $  3,660,128
-------------------------------------
Net realized gain (loss)                      216,023          1,534,758              15,539
-------------------------------------
Change in net unrealized
appreciation (depreciation)                  (299,120)        (1,633,663)         (1,887,014)
-----------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations                     151,983          3,112,326           1,788,653
-----------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
-----------------------------------------------------------------------------------------------
From net investment income:
-------------------------------------
  Investor Class                                 (150)                --                  --
-------------------------------------
  Institutional Class                        (101,957)                --                  --
-------------------------------------
  A Class                                    (123,267)        (3,153,287)         (3,598,718)
-------------------------------------
  B Class                                      (9,596)           (58,352)            (61,410)
-------------------------------------
  C Class                                        (111)                --                  --
-------------------------------------
From net realized gains:
-------------------------------------
  A Class                                          --                 --          (1,833,757)
-------------------------------------
  B Class                                          --                 --             (40,890)
-----------------------------------------------------------------------------------------------
Decrease in net assets
from distributions                           (235,081)        (3,211,639)         (5,534,775)
-----------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
-----------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
from capital share transactions              (991,372)       (86,867,934)          6,347,393
-----------------------------------------------------------------------------------------------

NET INCREASE (DECREASE) IN NET ASSETS      (1,074,470)       (86,967,247)          2,601,271

NET ASSETS
-----------------------------------------------------------------------------------------------
Beginning of period                        38,914,377        125,881,624         123,280,353
-----------------------------------------------------------------------------------------------
End of period                             $37,839,907       $ 38,914,377        $125,881,624
===============================================================================================

Undistributed net
investment income                             $27,578            $33,650             $34,250
===============================================================================================

(1) Long-Term Tax-Free's fiscal year end was changed from March 31 to May 31,
    resulting in a two-month annual reporting period (see Note 8).

(2) Years ended March 31, 2006 and March 31, 2005.

See Notes to Financial Statements.                                  (continued)


------
42


Statement of Changes in Net Assets

YEARS ENDED MAY 31, 2006 AND MAY 31, 2005
--------------------------------------------------------------------------------
                                                        HIGH-YIELD MUNICIPAL
--------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS                       2006            2005
--------------------------------------------------------------------------------
OPERATIONS
--------------------------------------------------------------------------------
Net investment income                              $  9,534,884    $  5,964,223
---------------------------------------------
Net realized gain (loss)                                135,918         190,926
---------------------------------------------
Change in net unrealized
appreciation (depreciation)                            (139,841)      5,362,877
--------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations                             9,530,961      11,518,026
--------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
--------------------------------------------------------------------------------
From net investment income:
---------------------------------------------
  Investor Class                                     (3,542,920)     (2,901,842)
---------------------------------------------
  A Class                                            (4,950,399)     (2,459,571)
---------------------------------------------
  B Class                                              (154,146)       (121,581)
---------------------------------------------
  C Class                                              (898,478)       (481,229)
--------------------------------------------------------------------------------
Decrease in net assets from distributions            (9,545,943)     (5,964,223)
--------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
--------------------------------------------------------------------------------
Net increase (decrease) in net assets
from capital share transactions                      86,282,597      58,412,524
--------------------------------------------------------------------------------

NET INCREASE (DECREASE) IN NET ASSETS                86,267,615      63,966,327

NET ASSETS
--------------------------------------------------------------------------------
Beginning of period                                 162,639,157      98,672,830
--------------------------------------------------------------------------------
End of period                                      $248,906,772    $162,639,157
================================================================================

Undistributed net investment income                          --         $11,059
================================================================================

See Notes to Financial Statements.


------
43


Notes to Financial Statements

MAY 31, 2006

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION -- American Century Municipal Trust (the trust) is registered under
the Investment Company Act of 1940 (the 1940 Act) as an open-end management
investment company. Arizona Municipal Bond Fund (Arizona Municipal), Florida
Municipal Bond Fund (Florida Municipal), Long-Term Tax-Free Fund (Long-Term
Tax-Free) and High-Yield Municipal Fund (High-Yield Municipal) (collectively,
the funds) are four funds in a series issued by the trust (see Note 8). The
funds are non-diversified under the 1940 Act. Arizona Municipal's investment
objective is to seek safety of principal and high current income that is exempt
from federal income tax and taxes imposed by the state of Arizona. Florida
Municipal's investment objective is to seek safety of principal and high current
income that is exempt from federal income tax and taxes imposed by the state of
Florida. Arizona Municipal and Florida Municipal invest primarily in Arizona and
Florida municipal obligations, respectively. Long-Term Tax-Free's investment
objective is to seek high current income that is exempt from federal income
taxes consistent with preservation of capital. Long-Term Tax-Free invests
primarily in long-term investment-grade municipal obligations. High-Yield
Municipal's investment objective is to seek high current income that is exempt
from federal income taxes. Capital appreciation is a secondary objective.
High-Yield Municipal invests primarily in long-term and intermediate-term
municipal obligations. The following is a summary of the funds' significant
accounting policies.

MULTIPLE CLASS -- Arizona Municipal, Florida Municipal and High-Yield Municipal
are authorized to issue the Investor Class, the A Class, the B Class and the C
Class. Long-Term Tax-Free is authorized to issue the Investor Class, the
Institutional Class, the A Class, the B Class and the C Class. The A Class may
incur an initial sales charge. The A Class, B Class and C Class may be subject
to a contingent deferred sales charge. The share classes differ principally in
their respective sales charges and shareholder servicing and distribution
expenses and arrangements. All shares of the fund represent an equal pro rata
interest in the assets of the class to which such shares belong, and have
identical voting, dividend, liquidation and other rights and the same terms and
conditions, except for class specific expenses and exclusive rights to vote on
matters affecting only individual classes. Income, non-class specific expenses,
and realized and unrealized capital gains and losses of the fund are allocated
to each class of shares based on their relative net assets. Sale of Long-Term
Tax-Free's Investor Class, Institutional Class and C Class commenced on April 3,
2006.

SECURITY VALUATIONS -- Debt securities maturing in greater than 60 days are
valued at current market value as provided by a commercial pricing service or at
the mean of the most recent bid and asked prices. Debt securities maturing
within 60 days may be valued at cost, plus or minus any amortized discount or
premium. If the funds determine that the market price of a portfolio security is
not readily available, or that the valuation methods mentioned above do not
reflect the security's fair value, such security is valued at its fair value as
determined by, or in accordance with procedures adopted by, the Board of
Trustees or its designee if such fair value determination would materially
impact a fund's net asset value. Circumstances that may cause the funds to fair
value a security include: an event occurred after the close of the exchange on
which a portfolio security principally trades (but before the close of the New
York Stock Exchange) that was likely to have changed the value of the security;
a security has been declared in default; or trading in a security has been
halted during the trading day.

SECURITY TRANSACTIONS -- Security transactions are accounted for as of the trade
date. Net realized gains and losses are determined on the identified cost basis,
which is also used for federal income tax purposes.

INVESTMENT INCOME -- Interest income is recorded on the accrual basis and
includes accretion of discounts and amortization of premiums.

WHEN-ISSUED AND FORWARD COMMITMENTS -- The funds may engage in securities
transactions on a when-issued or forward commitment basis. Under these
arrangements, the securities' prices and yields are fixed on the date of the
commitment, but payment and delivery are scheduled for a future date. During
this period, securities are subject to market fluctuations. The funds will
segregate cash, cash equivalents or other appropriate liquid securities on their
records in amounts sufficient to meet the purchase price.

FUTURES CONTRACTS -- The funds may enter into futures contracts in order to
manage the funds exposure to changes in market conditions. One of the risks of
entering into futures contracts is the possibility that the change in value of
the contract may not correlate with the changes in value of the underlying
securities. Upon entering into a futures contract, the funds are required to
deposit either cash or securities in an amount equal to a certain percentage of
the contract value (initial margin). Subsequent payments (variation margin) are
made or received daily, in cash, by the funds. The variation margin is equal to
the daily change in the contract value and is recorded

                                                                    (continued)


------
44


Notes to Financial Statements

MAY 31, 2006

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

as unrealized gains and losses. The funds recognize a realized gain or loss when
the contract is closed or expires. Net realized and unrealized gains or losses
occurring during the holding period of futures contracts are a component of
realized gain (loss) on futures and swap transactions and unrealized
appreciation (depreciation) on futures and swaps, respectively.

SWAP AGREEMENTS -- The funds may enter into a swap agreement in order to attempt
to obtain or preserve a particular return or spread at a lower cost than
obtaining a return or spread through purchases and/or sales of instruments in
other markets; protect against currency fluctuations; attempt to manage duration
to protect against any increase in the price of securities the funds anticipate
purchasing at a later date; or gain exposure to certain markets in the most
economical way possible. A basic swap agreement is a contract in which two
parties agree to exchange the returns earned or realized on predetermined
investments or instruments. Credit default swaps enable an investor to buy/sell
protection against a credit event of a specific issuer. The seller of credit
protection against a security or basket of securities receives an up-front or
periodic payment to compensate against potential default events. The funds may
enhance returns by selling protection or attempt to mitigate credit risk by
buying protection. The funds will segregate cash, cash equivalents or other
appropriate liquid securities on their records in amounts sufficient to meet
requirements. Unrealized gains are reported as an asset and unrealized losses
are reported as a liability on the Statement of Assets and Liabilities. Swap
agreements are valued daily and changes in value, including the periodic amounts
of interest to be paid or received on swaps, are recorded as unrealized
appreciation (depreciation) on futures and swaps. Realized gain or loss is
recorded upon receipt or payment of a periodic settlement or termination of swap
agreements. The risks of entering into swap agreements include the possible lack
of liquidity, failure of the counterparty to meet its obligations, and that
there may be unfavorable changes in the underlying investments and instruments.

INCOME TAX STATUS -- It is each fund's policy to distribute substantially all
net investment income and net realized gains to shareholders and to otherwise
qualify as a regulated investment company under provisions of the Internal
Revenue Code. Accordingly, no provision has been made for federal or state
income taxes.

DISTRIBUTIONS TO SHAREHOLDERS -- Distributions from net investment income are
declared daily and paid monthly. Distributions from net realized gains, if any,
are generally declared and paid annually.

INDEMNIFICATIONS -- Under the trust's organizational documents, its officers and
trustees are indemnified against certain liabilities arising out of the
performance of their duties to the funds. In addition, in the normal course of
business, the funds enter into contracts that provide general indemnifications.
The funds maximum exposure under these arrangements is unknown as this would
involve future claims that may be made against the funds. The risk of material
loss from such claims is considered by management to be remote.

USE OF ESTIMATES -- The financial statements are prepared in conformity with
accounting principles generally accepted in the United States of America, which
may require management to make certain estimates and assumptions at the date of
the financial statements. Actual results could differ from these estimates.

2. FEES AND TRANSACTIONS WITH RELATED PARTIES

MANAGEMENT FEES -- The trust has entered into a Management Agreement with

American Century Investment Management, Inc. (ACIM) (the investment advisor),
under which ACIM provides the funds with investment advisory and management
services in exchange for a single, unified management fee (the fee) per class.
The Agreement provides that all expenses of the funds, except brokerage
commissions, taxes, interest, fees and expenses of those trustees who are not
considered "interested persons" as defined in the 1940 Act (including counsel
fees) and extraordinary expenses, will be paid by ACIM. The fee is computed and
accrued daily based on the daily net assets of each specific class of shares of
each fund and paid monthly in arrears. The fee consists of (1) an Investment
Category Fee based on the daily net assets of the funds and certain other
accounts managed by the investment advisor that are in the same broad investment
category as each fund and (2) a Complex Fee based on the assets of all the funds
in the American Century family of funds. The rates for the Investment Category
Fee range from 0.1625% to 0.2800% for Arizona Municipal Bond, Florida Municipal
Bond and Long-Term Tax-Free, and from 0.2925% to 0.4100% for High-Yield
Municipal. The rates for the Complex Fee range from 0.2500% to 0.3100%.

                                                                    (continued)


------
45


Notes to Financial Statements

MAY 31, 2006

2. FEES AND TRANSACTIONS WITH RELATED PARTIES (CONTINUED)

The Institutional Class is 0.2000% less at each point within the Complex Fee
range. For the year ended May 31, 2006, the effective annual management fees for
the Investor Class, A Class, B Class and C Class of Arizona Municipal Bond,
Florida Municipal Bond and High-Yield Municipal were 0.48%, 0.48% and 0.61%,
respectively. The effective annual management fee for the two months ended May
31, 2006 for the Investor Class, A Class, B Class and C Class of Long-Term
Tax-Free was 0.49%. The effective annual management fee for the two months ended
May 31, 2006 for the Institutional Class of Long-Term Tax-Free was 0.29%.

DISTRIBUTION AND SERVICE FEES -- The Board of Trustees has adopted a separate
Master Distribution and Individual Shareholder Services Plan for each of the A
Class, B Class and C Class (collectively, the plans), pursuant to Rule 12b-1 of
the 1940 Act. The plans provide that the B Class and C Class will pay American
Century Investment Services, Inc. (ACIS) the following annual distribution and
service fees:
----------------------------------------
                             B & C
----------------------------------------
Distribution Fee             0.75%
----------------------------------------
Service Fee                  0.25%
----------------------------------------

The plans provide that the A Class will pay ACIS an annual distribution and
service fee of 0.25%. The fees are computed and accrued daily based on each
class's daily net assets and paid monthly in arrears. The distribution fee
provides compensation for expenses incurred in connection with distributing
shares of the classes including, but not limited to, payments to brokers,
dealers, and financial institutions that have entered into sales agreements with
respect to shares of the funds. The service fee provides compensation for
individual shareholder services rendered by broker/dealers or other independent
financial intermediaries. Fees incurred under the plans during the year ended
May 31, 2006, are detailed in the Statement of Operations.

RELATED PARTIES -- Certain officers and trustees of the trust are also officers
and/or directors, and, as a group, controlling stockholders of American Century
Companies, Inc. (ACC), the parent of the trust's investment advisor, ACIM, the
distributor of the trust, ACIS, and the trust's transfer agent, American Century
Services, LLC.

Arizona Municipal, Florida Municipal, and High-Yield Municipal have a bank line
of credit agreement with JPMorgan Chase Bank (JPMCB). JPMCB is a custodian of
the funds and a wholly owned subsidiary of J.P. Morgan Chase & Co. (JPM). JPM is
an equity investor in ACC.

3. INVESTMENT TRANSACTIONS

Investment transactions, excluding short-term investments, for the year ended
May 31, 2006 (except as noted), were as follows:

--------------------------------------------------------------------------------
                          ARIZONA         FLORIDA      LONG-TERM    HIGH-YIELD
                      MUNICIPAL BOND  MUNICIPAL BOND  TAX-FREE(1)    MUNICIPAL
--------------------------------------------------------------------------------
Purchases               $22,295,020    $12,644,014    $21,574,888  $115,020,070
--------------------------------------------------------------------------------
Proceeds from sales     $24,745,660    $21,603,540    $22,750,266   $32,390,122
--------------------------------------------------------------------------------

(1) Long-Term Tax-Free's fiscal year end was changed from March 31 to May 31,
    resulting in a two-month annual reporting period (see Note 8).

                                                                    (continued)


------
46


Notes to Financial Statements

MAY 31, 2006

4. CAPITAL SHARE TRANSACTIONS

Transactions in shares of the funds were as follows (shares allocated at
300,000,000):

------------------------------------------------------------------------------------------
                                    ARIZONA MUNICIPAL BOND        FLORIDA MUNICIPAL BOND
------------------------------------------------------------------------------------------
                                    SHARES         AMOUNT         SHARES         AMOUNT
------------------------------------------------------------------------------------------
INVESTOR CLASS
------------------------------------------------------------------------------------------
YEAR ENDED MAY 31, 2006
--------------------------
Sold                                613,514     $ 6,636,684       246,633    $  2,652,581
--------------------------
Issued in reinvestment
of distributions                    163,985       1,772,268       117,890       1,258,818
--------------------------
Redeemed                           (725,455)     (7,834,221)   (1,090,319)    (11,653,420)
------------------------------------------------------------------------------------------
Net increase (decrease)              52,044     $   574,731      (725,796)   $ (7,742,021)
==========================================================================================
YEAR ENDED MAY 31, 2005
------------------------------------------------------------------------------------------
Sold                                497,128    $  5,453,127       606,561    $  6,566,886
--------------------------
Issued in reinvestment
of distributions                    154,557       1,693,720       120,932       1,308,172
--------------------------
Redeemed                         (1,354,587)    (14,829,390)   (2,066,559)    (22,321,798)
------------------------------------------------------------------------------------------
Net increase (decrease)            (702,902)   $ (7,682,543)   (1,339,066)   $(14,446,740)
==========================================================================================
A CLASS
------------------------------------------------------------------------------------------
YEAR ENDED MAY 31, 2006
--------------------------
Sold                                 47,873     $   518,217       126,790     $ 1,355,237
--------------------------
Issued in reinvestment
of distributions                      7,329          79,253         4,548          48,563
--------------------------
Redeemed                            (94,635)     (1,024,647)     (195,259)     (2,087,562)
------------------------------------------------------------------------------------------
Net increase (decrease)             (39,433)    $  (427,177)      (63,921)    $  (683,762)
==========================================================================================
YEAR ENDED MAY 31, 2005
--------------------------
Sold                                372,585     $ 4,093,428       195,189      $2,118,110
--------------------------
Issued in reinvestment
of distributions                      9,356         102,522         3,574          38,654
--------------------------
Redeemed                           (132,782)     (1,455,838)      (75,286)       (817,082)
------------------------------------------------------------------------------------------
Net increase (decrease)             249,159     $ 2,740,112       123,477      $1,339,682
==========================================================================================
B CLASS
------------------------------------------------------------------------------------------
YEAR ENDED MAY 31, 2006
--------------------------
Sold                                  3,705         $40,065           930        $ 10,068
--------------------------
Issued in reinvestment
of distributions                          7              81            64             682
--------------------------
Redeemed                                 (6)            (69)       (1,398)        (14,902)
------------------------------------------------------------------------------------------
Net increase (decrease)               3,706         $40,077          (404)       $ (4,152)
==========================================================================================
YEAR ENDED MAY 31, 2005
--------------------------
Sold                                     --              --         1,294        $ 13,963
--------------------------
Issued in reinvestment
of distributions                          6             $72            29             316
--------------------------
Redeemed                                 --              --        (1,152)        (12,511)
------------------------------------------------------------------------------------------
Net increase (decrease)                   6             $72           171        $  1,768
==========================================================================================

                                                                    (continued)


------
47


Notes to Financial Statements

MAY 31, 2006

4. CAPITAL SHARE TRANSACTIONS (CONTINUED)

------------------------------------------------------------------------------------------
                                    ARIZONA MUNICIPAL BOND        FLORIDA MUNICIPAL BOND
------------------------------------------------------------------------------------------
                                    SHARES         AMOUNT         SHARES         AMOUNT
------------------------------------------------------------------------------------------
C CLASS
------------------------------------------------------------------------------------------
YEAR ENDED MAY 31, 2006
--------------------------
Sold                                  6,550       $  71,351        37,288       $ 398,765
--------------------------
Issued in reinvestment
of distributions                        408           4,415           731           7,805
--------------------------
Redeemed                            (36,753)       (396,880)      (58,234)       (621,704)
------------------------------------------------------------------------------------------
Net increase (decrease)             (29,795)      $(321,114)      (20,215)      $(215,134)
==========================================================================================
YEAR ENDED MAY 31, 2005
--------------------------
Sold                                 64,215        $704,230       119,292      $1,291,031
--------------------------
Issued in reinvestment
of distributions                        244           2,674           667           7,218
--------------------------
Redeemed                                 --              --       (47,607)       (513,485)
------------------------------------------------------------------------------------------
Net increase (decrease)              64,459        $706,904        72,352      $  784,764
==========================================================================================

------------------------------------------------------------------------------------------
                                     LONG-TERM TAX-FREE            HIGH-YIELD MUNICIPAL
------------------------------------------------------------------------------------------
                                    SHARES         AMOUNT         SHARES         AMOUNT
------------------------------------------------------------------------------------------
INVESTOR CLASS
------------------------------------------------------------------------------------------
YEAR ENDED MAY 31, 2006(1)
--------------------------
Sold                                  2,332         $25,011     3,090,565    $ 32,478,010
--------------------------
Issued in reinvestment
of distributions                         14             150       203,441       2,138,238
--------------------------
Redeemed                                 --              --    (1,206,280)    (12,677,908)
------------------------------------------------------------------------------------------
Net increase (decrease)               2,346         $25,161     2,087,726    $ 21,938,340
==========================================================================================
YEAR ENDED MAY 31, 2005
--------------------------
Sold                                    N/A                     1,643,141    $ 16,916,130
--------------------------
Issued in reinvestment
of distributions                                                  166,485       1,714,843
--------------------------
Redeemed                                                       (1,225,232)    (12,610,602)
------------------------------------------------------------------------------------------
Net increase (decrease)                                           584,394    $  6,020,371
==========================================================================================
INSTITUTIONAL CLASS
------------------------------------------------------------------------------------------
YEAR ENDED MAY 31, 2006(1)
--------------------------
Sold                              1,528,405     $16,397,564           N/A
--------------------------
Issued in reinvestment
of distributions                      9,531         101,943
--------------------------
Redeemed                                 --              --
------------------------------------------------------------------------------------------
Net increase (decrease)           1,537,936     $16,499,507
==========================================================================================

(1) April 3, 2006 (commencement of sale) through May 31, 2006 for Long-Term
    Tax-Free.

                                                                    (continued)


------
48


Notes to Financial Statements

MAY 31, 2006

4. CAPITAL SHARE TRANSACTIONS (CONTINUED)

------------------------------------------------------------------------------------------
                                     LONG-TERM TAX-FREE            HIGH-YIELD MUNICIPAL
------------------------------------------------------------------------------------------
                                    SHARES         AMOUNT         SHARES         AMOUNT
------------------------------------------------------------------------------------------
A CLASS
------------------------------------------------------------------------------------------
YEAR ENDED MAY 31, 2006(1)
--------------------------
Sold                                 12,548    $    136,284     7,491,063    $ 78,741,071
--------------------------
Issued in reinvestment
of distributions                      8,047          86,066       393,167       4,132,250
--------------------------
Redeemed                         (1,653,051)    (17,732,706)   (3,075,940)    (32,326,114)
------------------------------------------------------------------------------------------
Net increase (decrease)          (1,632,456)   $(17,510,356)    4,808,290    $ 50,547,207
==========================================================================================
YEAR ENDED MAY 31, 2005
--------------------------
Sold                                    N/A                     5,239,532    $ 54,036,738
--------------------------
Issued in reinvestment
of distributions                                                  197,779       2,042,149
--------------------------
Redeemed                                                       (1,216,527)    (12,559,763)
------------------------------------------------------------------------------------------
Net increase (decrease)                                         4,220,784    $ 43,519,124
==========================================================================================
YEAR ENDED MARCH 31, 2006
--------------------------
Sold                                477,920    $  5,222,488           N/A
--------------------------
Issued in reinvestment
of distributions                    267,697       2,902,942
--------------------------
Redeemed                         (8,803,698)    (94,593,140)
------------------------------------------------------------------------------------------
Net increase (decrease)          (8,058,081)   $(86,467,710)
==========================================================================================
YEAR ENDED MARCH 31, 2005
--------------------------
Sold                                933,825     $10,196,270           N/A
--------------------------
Issued in reinvestment
of distributions                    472,842       5,132,916
--------------------------
Redeemed                           (816,638)     (8,868,046)
------------------------------------------------------------------------------------------
Net increase (decrease)             590,029     $ 6,461,140
==========================================================================================

(1) April 1, 2006 through May 31, 2006. Long-Term Tax-Free's fiscal year end
    was changed from March 31 to May 31, resulting in a two-month annual
    reporting period (see Note 8).

                                                                    (continued)


------
49


Notes to Financial Statements

MAY 31, 2006

4. CAPITAL SHARE TRANSACTIONS (CONTINUED)

------------------------------------------------------------------------------------------
                                     LONG-TERM TAX-FREE            HIGH-YIELD MUNICIPAL
------------------------------------------------------------------------------------------
                                    SHARES         AMOUNT         SHARES         AMOUNT
------------------------------------------------------------------------------------------
B CLASS
------------------------------------------------------------------------------------------
YEAR ENDED MAY 31, 2006(1)
--------------------------
Sold                                    196        $  2,093       123,399      $1,296,933
--------------------------
Issued in reinvestment
of distributions                        762           8,145         4,831          50,768
--------------------------
Redeemed                             (3,837)        (41,044)      (43,215)       (454,221)
------------------------------------------------------------------------------------------
Net increase (decrease)              (2,879)       $(30,806)       85,015      $  893,480
==========================================================================================
YEAR ENDED MAY 31, 2005
--------------------------
Sold                                    N/A                       127,879      $1,316,273
--------------------------
Issued in reinvestment
of distributions                                                    3,482          35,901
--------------------------
Redeemed                                                          (44,038)       (455,285)
------------------------------------------------------------------------------------------
Net increase (decrease)                                            87,323      $  896,889
==========================================================================================
YEAR ENDED MARCH 31, 2006
--------------------------
Sold                                 11,759       $ 128,146           N/A
--------------------------
Issued in reinvestment
of distributions                      4,486          48,607
--------------------------
Redeemed                            (53,456)       (576,977)
------------------------------------------------------------------------------------------
Net increase (decrease)             (37,211)      $(400,224)
==========================================================================================
YEAR ENDED MARCH 31, 2005
--------------------------
Sold                                 14,180       $ 155,044           N/A
--------------------------
Issued in reinvestment
of distributions                      7,998          86,790
--------------------------
Redeemed                            (32,686)       (355,581)
------------------------------------------------------------------------------------------
Net increase (decrease)             (10,508)      $(113,747)
==========================================================================================
C CLASS
------------------------------------------------------------------------------------------
YEAR ENDED MAY 31, 2006(2)
--------------------------
Sold                                  2,332         $25,011     1,499,384     $15,763,095
--------------------------
Issued in reinvestment
of distributions                         10             111        28,473         299,249
--------------------------
Redeemed                                 --              --      (300,586)     (3,158,774)
------------------------------------------------------------------------------------------
Net increase (decrease)               2,342         $25,122     1,227,271     $12,903,570
==========================================================================================
YEAR ENDED MAY 31, 2005
--------------------------
Sold                                    N/A                       893,109     $ 9,203,406
--------------------------
Issued in reinvestment
of distributions                                                   12,105         125,038
--------------------------
Redeemed                                                         (131,081)     (1,352,304)
------------------------------------------------------------------------------------------
Net increase (decrease)                                           774,133     $ 7,976,140
==========================================================================================

(1) April 1, 2006 through May 31, 2006. Long-Term Tax-Free's fiscal year end
    was changed from March 31 to May 31, resulting in a two-month annual
    reporting period (see Note 8).

(2) April 3, 2006 (commencement of sale) through May 31, 2006 for Long-Term
    Tax-Free.

                                                                    (continued)


------
50


Notes to Financial Statements

MAY 31, 2006

5. BANK LINE OF CREDIT

Arizona Municipal, Florida Municipal, and High-Yield Municipal, along with
certain other funds managed by ACIM or American Century Global Investment
Management, Inc. (ACGIM), have a $500,000,000 unsecured bank line of credit
agreement with JPMCB. The funds may borrow money for temporary or emergency
purposes to fund shareholder redemptions. Borrowings under the agreement bear
interest at the Federal Funds rate plus 0.50%. The funds did not borrow from the
line during the year ended May 31, 2006.

6. RISK FACTORS

Arizona Municipal Bond and Florida Municipal Bond concentrate their investments
in a single state and therefore may have more exposure to credit risk related to
the states of Arizona and Florida, respectively, than a fund with a broader
geographical diversification. Income may be subject to state and local taxes
and, if applicable, the alternative minimum tax.

High-Yield Municipal may concentrate its investments in a certain states and
therefore may have more exposure to credit risk related to those states of than
a fund with a broader geographical diversification. High-Yield Municipal invests
primarily in lower-rated debt securities, which are subject to substantial risks
including price volatility, liquidity risk, and default risk. Income may be
subject to state and local taxes and, if applicable, the alternative minimum
tax.

7. FEDERAL TAX INFORMATION

The tax character of distributions paid during the years ended May 31, 2006 and
May 31, 2005 (except as noted) were as follows:

--------------------------------------------------------------------------------------------
                               ARIZONA MUNICIPAL BOND              FLORIDA MUNICIPAL BOND
--------------------------------------------------------------------------------------------
                              2006               2005              2006             2005
--------------------------------------------------------------------------------------------
DISTRIBUTIONS PAID FROM
--------------------------------------------------------------------------------------------
Ordinary income            $2,283,709         $2,278,480        $1,867,355       $2,157,343
--------------------------------------------------------------------------------------------
Long-term capital gains      $116,927            $13,495                --               --
--------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------
                                         LONG-TERM TAX-FREE                       HIGH-YIELD MUNICIPAL
---------------------------------------------------------------------------------------------------------
                         MAY 31, 2006(1)  MARCH 31, 2006(2)  MARCH 31, 2005(2)      2006        2005
---------------------------------------------------------------------------------------------------------
DISTRIBUTIONS PAID FROM
---------------------------------------------------------------------------------------------------------
Ordinary income              $235,081         $3,211,639        $5,470,612       $9,545,943   $5,964,223
---------------------------------------------------------------------------------------------------------
Long-term capital gains            --                 --           $64,163               --           --
---------------------------------------------------------------------------------------------------------

(1) Long-Term Tax-Free's fiscal year end was changed from March 31 to May 31,
    resulting in a two-month annual reporting period (see Note 8).

(2) Years ended March 31, 2006 and March 31, 2005.

The book-basis character of distributions made during the year from net
investment income or net realized gains may differ from their ultimate
characterization for federal income tax purposes. These differences reflect the
differing character of certain income items and net realized gains and losses
for financial statement and tax purposes, and may result in reclassification
among certain capital accounts on the financial statements.

                                                                    (continued)


------
51


Notes to Financial Statements

MAY 31, 2006

7. FEDERAL TAX INFORMATION (CONTINUED)

As of May 31, 2006, the components of investments for federal income tax
purposes were as follows:

----------------------------------------------------------------------------------------------------
                                       ARIZONA         FLORIDA           LONG-TERM      HIGH-YIELD
                                   MUNICIPAL BOND   MUNICIPAL BOND       TAX-FREE        MUNICIPAL
----------------------------------------------------------------------------------------------------
Federal tax cost of investments      $56,195,763      $41,919,649      $37,968,412     $241,243,122
====================================================================================================
Gross tax appreciation
of investments                        $1,557,983       $1,299,305        $ 412,928       $7,031,998
-------------------------------
Gross tax depreciation
of investments                          (100,668)         (29,339)         (57,746)        (330,359)
----------------------------------------------------------------------------------------------------
Net tax appreciation
(depreciation)
of investments                        $1,457,315       $1,269,966        $ 355,182       $6,701,639
====================================================================================================
Net tax appreciation
(depreciation)
on derivatives                               624               --         (191,366)             --
----------------------------------------------------------------------------------------------------
Net tax appreciation
(depreciation)                        $1,457,939       $1,269,966        $ 163,816       $6,701,639
====================================================================================================
Undistributed exempt income                   --               --          $27,578               --
-------------------------------
Accumulated capital losses                    --        $(295,636)       $(690,854)     $(2,437,926)
-------------------------------
Capital loss deferrals                 $(154,439)        $(81,454)              --         $(32,850)
----------------------------------------------------------------------------------------------------

The cost of investments for federal income tax purposes was the same as the cost
for financial reporting purposes.

The accumulated capital losses listed above represent net capital loss
carryovers that may be used to offset future realized capital gains for federal
income tax purposes.

The capital loss carryovers expire as follows:

----------------------------------------------------------------------------------------------------
                       2008         2009         2010      2011       2012       2013       2014
----------------------------------------------------------------------------------------------------
Florida
Municipal Bond             --           --          --      --           --   $(295,636)         --
----------------------------------------------------------------------------------------------------
Long-Term Tax-Free         --           --          --      --    $(158,880)  $(142,310)  $(389,664)
----------------------------------------------------------------------------------------------------
High-Yield
Municipal           $(178,014)  $(1,090,034)  $(323,643)    --    $(145,918)  $(700,317)         --
----------------------------------------------------------------------------------------------------

The capital loss deferrals represent net capital losses incurred in the
seven-month period ended May 31, 2006. The funds have elected to treat such
losses as having been incurred in the following fiscal year for federal income
tax purposes.

8. REORGANIZATION PLAN

As of the close of business on March 31, 2006, Long-Term Tax-Free acquired all
of the net assets of the Mason Street Municipal Bond Fund (Municipal Bond), one
fund in a series issued by Mason Street Funds, Inc., pursuant to a plan of
reorganization approved by the acquired funds' shareholders on March 15, 2006.
In the post-reorganization, Long-Term Tax-Free is maintaining the financial
statements and performance history of Municipal Bond. Long-Term Tax-Free's
fiscal year end was changed from March 31 to May 31.

Prior to the reorganization, Municipal Bond had A Class and B Class shares. At
the close of business and as a result of the reorganization, A Class shares and
B Class shares of the acquired fund were converted to A Class shares and B Class
shares, respectively, of Long-Term Tax-Free.

A Class and B Class net assets of Municipal Bond before the reorganization were
$36,833,546 and $2,080,831, respectively. Immediately after the reorganization,
A Class and B Class net assets of Long-Term Tax-Free were $36,833,546 and
$2,080,831, respectively.

                                                                    (continued)


------
52


Notes to Financial Statements

MAY 31, 2006

9. OTHER TAX INFORMATION (UNAUDITED)

The following information is provided pursuant to provisions of the Internal
Revenue Code.

The funds designate exempt interest and capital gain distributions for the
fiscal year ended May 31, 2006 (except as noted), as follows:

--------------------------------------------------------------------------------
                          ARIZONA         FLORIDA       LONG-TERM    HIGH-YIELD
                      MUNICIPAL BOND  MUNICIPAL BOND   TAX-FREE(1)    MUNICIPAL
--------------------------------------------------------------------------------
Exempt interest
dividends               $2,193,188      $1,876,709      $218,259     $9,464,800
--------------------------------------------------------------------------------
Long-term
capital gains             $135,581              --            --             --
--------------------------------------------------------------------------------

(1) Long-Term Tax-Free's fiscal year end was changed from March 31 to May 31,
    resulting in a two-month annual reporting period (see Note 8).

Arizona Municipal Bond hereby designates $67,552 of qualified short-term capital
gains distributions for purposes of Internal Revenue Code Section 871 for the
fiscal year ended May 31, 2006.


------
53


Arizona Municipal Bond - Financial Highlights

FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED MAY 31
----------------------------------------------------------------------------------------
                                                    INVESTOR CLASS
----------------------------------------------------------------------------------------
                                 2006        2005        2004        2003        2002
----------------------------------------------------------------------------------------
PER-SHARE DATA
----------------------------------------------------------------------------------------
Net Asset Value,
Beginning of Period             $10.96      $10.83      $11.40      $10.89      $10.69
----------------------------------------------------------------------------------------
Income From
Investment Operations
----------------------------
  Net Investment Income          0.42(1)      0.42        0.41        0.41        0.44
----------------------------
  Net Realized and
  Unrealized Gain (Loss)         (0.25)       0.13       (0.53)       0.59        0.27
----------------------------------------------------------------------------------------
  Total From
  Investment Operations           0.17        0.55       (0.12)       1.00        0.71
----------------------------------------------------------------------------------------
Distributions
----------------------------
  From Net
  Investment Income              (0.43)      (0.42)      (0.41)      (0.41)      (0.44)
----------------------------
  From Net Realized Gains        (0.02)       --(2)      (0.04)      (0.08)      (0.07)
----------------------------------------------------------------------------------------
  Total Distributions            (0.45)      (0.42)      (0.45)      (0.49)      (0.51)
----------------------------------------------------------------------------------------
Net Asset Value,
End of Period                   $10.68      $10.96      $10.83      $11.40      $10.89
========================================================================================
  TOTAL RETURN(3)                 1.59%       5.21%      (1.06)%      9.36%       6.74%

RATIOS/SUPPLEMENTAL DATA
----------------------------------------------------------------------------------------
Ratio of Operating
Expenses to Average
Net Assets                        0.49%       0.50%      0.51%        0.51%       0.51%
----------------------------
Ratio of Net Investment
Income to Average
Net Assets                        3.89%       3.86%      3.70%        3.70%       4.04%
----------------------------
Portfolio Turnover Rate             44%         48%        26%          50%         77%
----------------------------
Net Assets, End of Period
(in thousands)                  $52,404     $53,203    $60,203      $75,787     $66,327
----------------------------------------------------------------------------------------

(1) Computed using average shares outstanding throughout the period.

(2) Per-share amount is less than $0.005.

(3) Total return assumes reinvestment of net investment income and capital gains
    distributions, if any. The total return of the classes may not precisely
    reflect the class expense differences because of the impact of calculating
    the net asset values to two decimal places. If net asset values were
    calculated to three decimal places, the total return differences would more
    closely reflect the class expense differences. The calculation of net asset
    values to two decimal places is made in accordance with SEC guidelines and
    does not result in any gain or loss of value between one class and another.

See Notes to Financial Statements.


------
54


Arizona Municipal Bond - Financial Highlights

FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED MAY 31 (EXCEPT AS NOTED)
--------------------------------------------------------------------------------
                                                           A CLASS
--------------------------------------------------------------------------------
                                                 2006        2005       2004(1)
--------------------------------------------------------------------------------
PER-SHARE DATA
--------------------------------------------------------------------------------
Net Asset Value, Beginning of Period            $10.96      $10.83      $11.25
--------------------------------------------------------------------------------
Income From Investment Operations
------------------------------------------
  Net Investment Income                          0.39(2)      0.40        0.10
------------------------------------------
  Net Realized and Unrealized Gain (Loss)        (0.25)       0.13       (0.42)
--------------------------------------------------------------------------------
  Total From Investment Operations                0.14        0.53       (0.32)
--------------------------------------------------------------------------------
Distributions
------------------------------------------
  From Net Investment Income                     (0.40)      (0.40)      (0.10)
------------------------------------------
  From Net Realized Gains                        (0.02)       --(3)         --
--------------------------------------------------------------------------------
  Total Distributions                            (0.42)      (0.40)      (0.10)
--------------------------------------------------------------------------------
Net Asset Value, End of Period                  $10.68      $10.96      $10.83
================================================================================
  TOTAL RETURN(4)                                 1.34%       4.94%      (2.87)%

RATIOS/SUPPLEMENTAL DATA
--------------------------------------------------------------------------------
Ratio of Operating Expenses
to Average Net Assets                             0.74%       0.75%    0.76%(5)
------------------------------------------
Ratio of Net Investment Income
to Average Net Assets                             3.64%       3.61%    3.63%(5)
------------------------------------------
Portfolio Turnover Rate                             44%         48%      26%(6)
------------------------------------------
Net Assets, End of Period (in thousands)         $3,741      $4,271      $1,523
--------------------------------------------------------------------------------

(1) February 27, 2004 (commencement of sale) through May 31, 2004.

(2) Computed using average shares outstanding throughout the period.

(3) Per-share amount is less than $0.005.

(4) Total return assumes reinvestment of net investment income and capital gains
    distributions, if any, and does not include any applicable sales charges.
    Total returns for periods less than one year are not annualized. The total
    return of the classes may not precisely reflect the class expense
    differences because of the impact of calculating the net asset values to two
    decimal places. If net asset values were calculated to three decimal places,
    the total return differences would more closely reflect the class expense
    differences. The calculation of net asset values to two decimal places is
    made in accordance with SEC guidelines and does not result in any gain or
    loss of value between one class and another.

(5) Annualized.

(6) Portfolio turnover is calculated at the fund level. Percentage indicated was
    calculated for the year ended May 31, 2004.

See Notes to Financial Statements.


------
55


Arizona Municipal Bond - Financial High lights

FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED MAY 31 (EXCEPT AS NOTED)
--------------------------------------------------------------------------------
                                                           B CLASS
--------------------------------------------------------------------------------
                                                 2006        2005       2004(1)
--------------------------------------------------------------------------------
PER-SHARE DATA
--------------------------------------------------------------------------------
Net Asset Value, Beginning of Period            $10.96      $10.83      $11.25
--------------------------------------------------------------------------------
Income From Investment Operations
------------------------------------------
  Net Investment Income                          0.36(2)      0.32        0.08
------------------------------------------
  Net Realized and Unrealized Gain (Loss)        (0.30)       0.13       (0.42)
--------------------------------------------------------------------------------
  Total From Investment Operations                0.06        0.45       (0.34)
--------------------------------------------------------------------------------
Distributions
------------------------------------------
  From Net Investment Income                     (0.32)      (0.32)      (0.08)
------------------------------------------
  From Net Realized Gains                        (0.02)       --(3)         --
--------------------------------------------------------------------------------
  Total Distributions                            (0.34)      (0.32)      (0.08)
--------------------------------------------------------------------------------
Net Asset Value, End of Period                  $10.68      $10.96      $10.83
================================================================================
  TOTAL RETURN(4)                                 0.61%       4.19%      (3.06)%

RATIOS/SUPPLEMENTAL DATA
--------------------------------------------------------------------------------
Ratio of Operating Expenses
to Average Net Assets                             1.49%       1.50%    1.51%(5)
------------------------------------------
Ratio of Net Investment Income
to Average Net Assets                             2.89%       2.86%    2.88%(5)
------------------------------------------
Portfolio Turnover Rate                             44%         48%      26%(6)
------------------------------------------
Net Assets, End of Period (in thousands)            $42          $3          $2
--------------------------------------------------------------------------------

(1) February 27, 2004 (commencement of sale) through May 31, 2004.

(2) Computed using average shares outstanding throughout the period.

(3) Per-share amount is less than $0.005.

(4) Total return assumes reinvestment of net investment income and capital gains
    distributions, if any, and does not include any applicable sales charges.
    Total returns for periods less than one year are not annualized. The total
    return of the classes may not precisely reflect the class expense
    differences because of the impact of calculating the net asset values to two
    decimal places. If net asset values were calculated to three decimal places,
    the total return differences would more closely reflect the class expense
    differences. The calculation of net asset values to two decimal places is
    made in accordance with SEC guidelines and does not result in any gain or
    loss of value between one class and another.

(5) Annualized.

(6) Portfolio turnover is calculated at the fund level. Percentage indicated was
    calculated for the year ended May 31, 2004.

See Notes to Financial Statements.


------
56


Arizona Municipal Bond - Financial Highlights

FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED MAY 31 (EXCEPT AS NOTED)
--------------------------------------------------------------------------------
                                                           C CLASS
--------------------------------------------------------------------------------
                                                 2006        2005       2004(1)
--------------------------------------------------------------------------------
PER-SHARE DATA
--------------------------------------------------------------------------------
Net Asset Value, Beginning of Period            $10.96      $10.83      $11.25
--------------------------------------------------------------------------------
Income From Investment Operations
------------------------------------------
  Net Investment Income                          0.30(2)      0.31        0.08
------------------------------------------
  Net Realized and Unrealized Gain (Loss)        (0.24)       0.13       (0.42)
--------------------------------------------------------------------------------
  Total From Investment Operations                0.06        0.44       (0.34)
--------------------------------------------------------------------------------
Distributions
------------------------------------------
  From Net Investment Income                     (0.32)      (0.31)      (0.08)
------------------------------------------
  From Net Realized Gains                        (0.02)       --(3)         --
--------------------------------------------------------------------------------
  Total Distributions                            (0.34)      (0.31)      (0.08)
--------------------------------------------------------------------------------
Net Asset Value, End of Period                  $10.68      $10.96      $10.83
================================================================================
  TOTAL RETURN(4)                                 0.58%       4.15%      (3.06)%

RATIOS/SUPPLEMENTAL DATA
--------------------------------------------------------------------------------
Ratio of Operating Expenses
to Average Net Assets                             1.49%       1.50%    1.51%(5)
------------------------------------------
Ratio of Net Investment Income
to Average Net Assets                             2.89%       2.86%    2.88%(5)
------------------------------------------
Portfolio Turnover Rate                             44%         48%      26%(6)
------------------------------------------
Net Assets, End of Period (in thousands)           $382        $719         $12
--------------------------------------------------------------------------------

(1) February 27, 2004 (commencement of sale) through May 31, 2004.

(2) Computed using average shares outstanding throughout the period.

(3) Per-share amount is less than $0.005.

(4) Total return assumes reinvestment of net investment income and capital gains
    distributions, if any, and does not include any applicable sales charges.
    Total returns for periods less than one year are not annualized. The total
    return of the classes may not precisely reflect the class expense
    differences because of the impact of calculating the net asset values to two
    decimal places. If net asset values were calculated to three decimal places,
    the total return differences would more closely reflect the class expense
    differences. The calculation of net asset values to two decimal places is
    made in accordance with SEC guidelines and does not result in any gain or
    loss of value between one class and another.

(5) Annualized.

(6) Portfolio turnover is calculated at the fund level. Percentage indicated was
    calculated for the year ended May 31, 2004.

See Notes to Financial Statements.


------
57


Florida Municipal Bond - Financial Highlights

FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED MAY 31
----------------------------------------------------------------------------------------
                                                   INVESTOR CLASS
----------------------------------------------------------------------------------------
                                 2006        2005        2004        2003        2002
----------------------------------------------------------------------------------------
PER-SHARE DATA
----------------------------------------------------------------------------------------
Net Asset Value,
Beginning of Period             $10.81      $10.68      $11.29      $10.73      $10.67
----------------------------------------------------------------------------------------
Income From
Investment Operations
----------------------------
  Net Investment Income           0.42        0.39        0.42        0.42        0.44
----------------------------
  Net Realized and
  Unrealized Gain (Loss)         (0.26)       0.13       (0.56)       0.62        0.19
----------------------------------------------------------------------------------------
  Total From
  Investment Operations           0.16        0.52       (0.14)       1.04        0.63
----------------------------------------------------------------------------------------
Distributions
----------------------------
  From Net
  Investment Income              (0.42)      (0.39)      (0.42)      (0.42)      (0.44)
----------------------------
  From Net Realized Gains           --          --       (0.05)      (0.06)      (0.13)
----------------------------------------------------------------------------------------
  Total Distributions            (0.42)      (0.39)      (0.47)      (0.48)      (0.57)
----------------------------------------------------------------------------------------
Net Asset Value,
End of Period                    $10.55      $10.81      $10.68      $11.29      $10.73
========================================================================================
  TOTAL RETURN(1)                 1.48%       4.88%      (1.30)%      9.90%       5.98%

RATIOS/SUPPLEMENTAL DATA
----------------------------------------------------------------------------------------
Ratio of Operating
Expenses to Average
Net Assets                        0.49%       0.50%       0.51%       0.51%       0.51%
----------------------------
Ratio of Net Investment
Income to Average
Net Assets                        3.90%       3.56%       3.82%       3.78%       4.03%
----------------------------
Portfolio Turnover Rate             28%         44%         59%         45%         75%
----------------------------
Net Assets, End of Period
(in thousands)                  $40,604     $49,451     $63,142     $70,078     $54,565
----------------------------------------------------------------------------------------

(1) Total return assumes reinvestment of net investment income and capital gains
    distributions, if any. The total return of the classes may not precisely
    reflect the class expense differences because of the impact of calculating
    the net asset values to two decimal places. If net asset values were
    calculated to three decimal places, the total return differences would more
    closely reflect the class expense differences. The calculation of net asset
    values to two decimal places is made in accordance with SEC guidelines and
    does not result in any gain or loss of value between one class and another.

See Notes to Financial Statements.


------
58


Florida Municipal Bond - Financial Highlights

FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED MAY 31 (EXCEPT AS NOTED)
--------------------------------------------------------------------------------
                                                            A CLASS
--------------------------------------------------------------------------------
                                                 2006        2005       2004(1)
--------------------------------------------------------------------------------
PER-SHARE DATA
--------------------------------------------------------------------------------
Net Asset Value, Beginning of Period            $10.81      $10.68      $11.11
--------------------------------------------------------------------------------
Income From Investment Operations
------------------------------------------
  Net Investment Income                           0.39        0.36        0.09
------------------------------------------
  Net Realized and Unrealized Gain (Loss)        (0.26)       0.13       (0.43)
--------------------------------------------------------------------------------
  Total From Investment Operations                0.13        0.49       (0.34)
--------------------------------------------------------------------------------
Distributions
------------------------------------------
  From Net Investment Income                     (0.39)      (0.36)      (0.09)
--------------------------------------------------------------------------------
Net Asset Value, End of Period                  $10.55      $10.81      $10.68
================================================================================
  TOTAL RETURN(2)                                 1.23%       4.62%      (3.10)%

RATIOS/SUPPLEMENTAL DATA
--------------------------------------------------------------------------------
Ratio of Operating Expenses
to Average Net Assets                             0.74%       0.75%    0.76%(3)
------------------------------------------
Ratio of Net Investment Income
to Average Net Assets                             3.65%       3.31%    3.34%(3)
------------------------------------------
Portfolio Turnover Rate                             28%         44%      59%(4)
------------------------------------------
Net Assets, End of Period (in thousands)         $1,380      $2,105        $761
--------------------------------------------------------------------------------

(1) February 27, 2004 (commencement of sale) through May 31, 2004.

(2) Total return assumes reinvestment of net investment income and capital gains
    distributions, if any, and does not include any applicable sales charges.
    Total returns for periods less than one year are not annualized. The total
    return of the classes may not precisely reflect the class expense
    differences because of the impact of calculating the net asset values to two
    decimal places. If net asset values were calculated to three decimal places,
    the total return differences would more closely reflect the class expense
    differences. The calculation of net asset values to two decimal places is
    made in accordance with SEC guidelines and does not result in any gain or
    loss of value between one class and another.

(3) Annualized.

(4) Portfolio turnover is calculated at the fund level. Percentage indicated was
    calculated for the year ended May 31, 2004.

See Notes to Financial Statements.


------
59


Florida Municipal Bond - Financial Highlights

FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED MAY 31 (EXCEPT AS NOTED)
--------------------------------------------------------------------------------
                                                            B CLASS
--------------------------------------------------------------------------------
                                                 2006        2005       2004(1)
--------------------------------------------------------------------------------
PER-SHARE DATA
--------------------------------------------------------------------------------
Net Asset Value, Beginning of Period            $10.81      $10.68      $11.11
--------------------------------------------------------------------------------
Income From Investment Operations
------------------------------------------
  Net Investment Income                           0.31        0.28        0.07
------------------------------------------
  Net Realized and Unrealized Gain (Loss)        (0.26)       0.13       (0.43)
--------------------------------------------------------------------------------
  Total From Investment Operations                0.05        0.41       (0.36)
--------------------------------------------------------------------------------
Distributions
------------------------------------------
  From Net Investment Income                     (0.31)      (0.28)      (0.07)
--------------------------------------------------------------------------------
Net Asset Value, End of Period                  $10.55      $10.81      $10.68
================================================================================
  TOTAL RETURN(2)                                 0.47%       3.83%      (3.28)%

RATIOS/SUPPLEMENTAL DATA
--------------------------------------------------------------------------------
Ratio of Operating Expenses
to Average Net Assets                             1.49%       1.50%    1.51%(3)
------------------------------------------
Ratio of Net Investment Income
to Average Net Assets                             2.90%       2.56%    2.59%(3)
------------------------------------------
Portfolio Turnover Rate                             28%         44%      59%(4)
------------------------------------------
Net Assets, End of Period (in thousands)            $15         $19         $17
--------------------------------------------------------------------------------

(1) February 27, 2004 (commencement of sale) through May 31, 2004.

(2) Total return assumes reinvestment of net investment income and capital gains
    distributions, if any, and does not include any applicable sales charges.
    Total returns for periods less than one year are not annualized. The total
    return of the classes may not precisely reflect the class expense
    differences because of the impact of calculating the net asset values to two
    decimal places. If net asset values were calculated to three decimal places,
    the total return differences would more closely reflect the class expense
    differences. The calculation of net asset values to two decimal places is
    made in accordance with SEC guidelines and does not result in any gain or
    loss of value between one class and another.

(3) Annualized.

(4) Portfolio turnover is calculated at the fund level. Percentage indicated was
    calculated for the year ended May 31, 2004.

See Notes to Financial Statements.


------
60


Florida Municipal Bond - Financial Highlights

FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED MAY 31 (EXCEPT AS NOTED)
--------------------------------------------------------------------------------
                                                           C CLASS
--------------------------------------------------------------------------------
                                                 2006        2005       2004(1)
--------------------------------------------------------------------------------
PER-SHARE DATA
--------------------------------------------------------------------------------
Net Asset Value, Beginning of Period            $10.81      $10.68      $11.11
--------------------------------------------------------------------------------
Income From Investment Operations
------------------------------------------
  Net Investment Income                           0.31        0.28        0.07
------------------------------------------
  Net Realized and Unrealized Gain (Loss)        (0.26)       0.13       (0.43)
--------------------------------------------------------------------------------
  Total From Investment Operations                0.05        0.41       (0.36)
--------------------------------------------------------------------------------
Distributions
------------------------------------------
  From Net Investment Income                     (0.31)      (0.28)      (0.07)
--------------------------------------------------------------------------------
Net Asset Value, End of Period                  $10.55      $10.81      $10.68
================================================================================
  TOTAL RETURN(2)                                 0.47%       3.84%      (3.28)%

RATIOS/SUPPLEMENTAL DATA
--------------------------------------------------------------------------------
Ratio of Operating Expenses
to Average Net Assets                             1.49%       1.50%    1.51%(3)
------------------------------------------
Ratio of Net Investment Income
to Average Net Assets                             2.90%       2.56%    2.59%(3)
------------------------------------------
Portfolio Turnover Rate                             28%         44%      59%(4)
------------------------------------------
Net Assets, End of Period (in thousands)         $1,570      $1,827      $1,032
--------------------------------------------------------------------------------

(1) February 27, 2004 (commencement of sale) through May 31, 2004.

(2) Total return assumes reinvestment of net investment income and capital gains
    distributions, if any, and does not include any applicable sales charges.
    Total returns for periods less than one year are not annualized. The total
    return of the classes may not precisely reflect the class expense
    differences because of the impact of calculating the net asset values to two
    decimal places. If net asset values were calculated to three decimal places,
    the total return differences would more closely reflect the class expense
    differences. The calculation of net asset values to two decimal places is
    made in accordance with SEC guidelines and does not result in any gain or
    loss of value between one class and another.

(3) Annualized.

(4) Portfolio turnover is calculated at the fund level. Percentage indicated was
    calculated for the year ended May 31, 2004.

See Notes to Financial Statements.


------
61


Long-Term Tax-Free - Financial Highlights

FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD INDICATED
--------------------------------------------------------------------------------
                                                                      INVESTOR
                                                                        CLASS
--------------------------------------------------------------------------------
                                                                       2006(1)
--------------------------------------------------------------------------------
PER-SHARE DATA
--------------------------------------------------------------------------------
Net Asset Value, Beginning of Period                                   $10.72
--------------------------------------------------------------------------------
Income From Investment Operations
-----------------------------------------------------------
  Net Investment Income                                                  0.06
-----------------------------------------------------------
  Net Realized and Unrealized Gain (Loss)                               (0.02)
--------------------------------------------------------------------------------
  Total From Investment Operations                                       0.04
--------------------------------------------------------------------------------
Distributions
-----------------------------------------------------------
  From Net Investment Income                                            (0.06)
--------------------------------------------------------------------------------
Net Asset Value, End of Period                                         $10.70
================================================================================
  TOTAL RETURN(2)                                                        0.42%

RATIOS/SUPPLEMENTAL DATA
--------------------------------------------------------------------------------
Ratio of Operating Expenses to Average Net Assets                     0.49%(3)
-----------------------------------------------------------
Ratio of Net Investment Income to Average Net Assets                  3.85%(3)
-----------------------------------------------------------
Portfolio Turnover Rate                                                    62%
-----------------------------------------------------------
Net Assets, End of Period (in thousands)                                   $25
--------------------------------------------------------------------------------

(1) April 3, 2006 (commencement of sale) through May 31, 2006.

(2) Total return assumes reinvestment of net investment income and capital gains
    distributions, if any. Total returns for periods less than one year are not
    annualized. The total return of the classes may not precisely reflect the
    class expense differences because of the impact of calculating the net asset
    values to two decimal places. If net asset values were calculated to three
    decimal places, the total return differences would more closely reflect the
    class expense differences. The calculation of net asset values to two
    decimal places is made in accordance with SEC guidelines and does not result
    in any gain or loss of value between one class and another.

(3) Annualized.

See Notes to Financial Statements.


------
62


Long-Term Tax-Free - Financial Highlights

FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD INDICATED
--------------------------------------------------------------------------------
                                                                   INSTITUTIONAL
                                                                       CLASS
--------------------------------------------------------------------------------
                                                                       2006(1)
--------------------------------------------------------------------------------
PER-SHARE DATA
--------------------------------------------------------------------------------
Net Asset Value, Beginning of Period                                   $10.72
--------------------------------------------------------------------------------
Income From Investment Operations
-----------------------------------------------------------
  Net Investment Income                                                  0.07
-----------------------------------------------------------
  Net Realized and Unrealized Gain (Loss)                               (0.02)
--------------------------------------------------------------------------------
  Total From Investment Operations                                       0.05
--------------------------------------------------------------------------------
Distributions
-----------------------------------------------------------
  From Net Investment Income                                            (0.07)
--------------------------------------------------------------------------------
Net Asset Value, End of Period                                         $10.70
================================================================================
  TOTAL RETURN(2)                                                        0.45%

RATIOS/SUPPLEMENTAL DATA
--------------------------------------------------------------------------------
Ratio of Operating Expenses to Average Net Assets                     0.29%(3)
-----------------------------------------------------------
Ratio of Net Investment Income to Average Net Assets                  4.05%(3)
-----------------------------------------------------------
Portfolio Turnover Rate                                                    62%
-----------------------------------------------------------
Net Assets, End of Period (in thousands)                               $16,456
--------------------------------------------------------------------------------

(1) April 3, 2006 (commencement of sale) through May 31, 2006.

(2) Total return assumes reinvestment of net investment income and capital gains
    distributions, if any. Total returns for periods less than one year are not
    annualized. The total return of the classes may not precisely reflect the
    class expense differences because of the impact of calculating the net asset
    values to two decimal places. If net asset values were calculated to three
    decimal places, the total return differences would more closely reflect the
    class expense differences. The calculation of net asset values to two
    decimal places is made in accordance with SEC guidelines and does not result
    in any gain or loss of value between one class and another.

(3) Annualized.

See Notes to Financial Statements.


------
63


Long-Term Tax-Free - Financial Highlights

FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED MAY 31 (EXCEPT AS NOTED)
----------------------------------------------------------------------------------------------------
                                                             A CLASS
----------------------------------------------------------------------------------------------------
                                2006(1)      2006        2005        2004        2003        2002
----------------------------------------------------------------------------------------------------
PER-SHARE DATA
----------------------------------------------------------------------------------------------------
Net Asset Value,
Beginning of Period             $10.72      $10.74      $11.06      $10.98      $10.50      $10.70
----------------------------------------------------------------------------------------------------
Income From
Investment Operations
--------------------------
  Net Investment Income           0.06       0.35(2)      0.33(2)     0.33(2)     0.41(2)     0.44
--------------------------
  Net Realized and
  Unrealized Gain (Loss)         (0.02)      (0.03)      (0.15)       0.24        0.61        0.01
----------------------------------------------------------------------------------------------------
  Total From
  Investment Operations           0.04        0.32        0.18        0.57        1.02        0.45
----------------------------------------------------------------------------------------------------
Distributions
--------------------------
  From Net
  Investment Income              (0.06)      (0.34)      (0.33)      (0.33)      (0.42)      (0.45)
--------------------------
  From Net
  Realized Gains                    --          --       (0.17)      (0.16)      (0.12)      (0.20)
----------------------------------------------------------------------------------------------------
  Total Distributions            (0.06)      (0.34)      (0.50)      (0.49)      (0.54)      (0.65)
----------------------------------------------------------------------------------------------------
Net Asset Value,
End of Period                   $10.70      $10.72      $10.74      $11.06      $10.98      $10.50
====================================================================================================
  TOTAL RETURN(3)                 0.40%       3.01%       1.63%       5.31%       9.88%       4.26%

RATIOS/SUPPLEMENTAL DATA
----------------------------------------------------------------------------------------------------
Ratio of Operating
Expenses to Average
Net Assets                     0.74%(4)       0.82%       0.84%       0.85%       0.85%       0.85%
--------------------------
Ratio of Operating
Expenses to Average
Net Assets (Before
Expense Waiver)                0.74%(4)       0.82%       0.84%       0.89%       0.93%       1.00%
--------------------------
Ratio of Net Investment
Income to Average
Net Assets                     3.60%(4)       3.21%       3.01%       3.01%       3.78%       4.14%
--------------------------
Ratio of Net Investment
Income to Average
Net Assets (Before
Expense Waiver)                3.60%(4)       3.21%       3.01%       2.97%       3.70%       3.99%
--------------------------
Portfolio Turnover Rate             62%         27%         43%     815%(5)         48%        173%
--------------------------
Net Assets, End of Period
(in thousands)                  $19,288     $36,834   $123,399     $120,606    $107,770     $57,373
----------------------------------------------------------------------------------------------------

(1) April 1, 2006 through May 31, 2006. Long-Term Tax-Free's fiscal year end was
    changed from March 31 to May 31, resulting in a two-month annual reporting
    period. For the years before May 31, 2006, Long-Term Tax-Free's fiscal year
    was March 31 (see Note 8).

(2) Computed using average shares outstanding throughout the period.

(3) Total return assumes reinvestment of net investment income and capital gains
    distributions, if any, and does not include any applicable sales charges.
    Total returns for periods less than one year are not annualized. The total
    return of the classes may not precisely reflect the class expense
    differences because of the impact of calculating the net asset values to two
    decimal places. If net asset values were calculated to three decimal places,
    the total return differences would more closely reflect the class expense
    differences. The calculation of net asset values to two decimal places is
    made in accordance with SEC guidelines and does not result in any gain or
    loss of value between one class and another.

(4) Annualized.

(5) Portfolio turnover rate includes the effect of using U.S. Treasuries in same
    day trades to manage interest rate risk. The rate would be 238% if this
    trading activity was excluded from the calculation. Long-Term Tax-Free's
    advisor intends to manage interest rate risk in the future through the use
    of futures contracts and other derivatives-related hedging strategies, many
    of which would not impact the portfolio turnover rate.

See Notes to Financial Statements.


------
64


Long-Term Tax-Free - Financial Highlights

FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED MAY 31 (EXCEPT AS NOTED)
----------------------------------------------------------------------------------------------------
                                                             B CLASS
----------------------------------------------------------------------------------------------------
                                2006(1)      2006        2005        2004        2003        2002
----------------------------------------------------------------------------------------------------
PER-SHARE DATA
----------------------------------------------------------------------------------------------------
Net Asset Value,
Beginning of Period             $10.72      $10.73      $11.06      $10.98      $10.50      $10.70
----------------------------------------------------------------------------------------------------
Income From
Investment Operations
--------------------------
  Net Investment Income           0.05        0.27(2)     0.26(2)     0.26(2)     0.34(2)     0.37
--------------------------
  Net Realized and
  Unrealized Gain (Loss)         (0.02)      (0.01)      (0.16)       0.24        0.61        --(3)
----------------------------------------------------------------------------------------------------
  Total From
  Investment Operations           0.03        0.26        0.10        0.50        0.95        0.37
----------------------------------------------------------------------------------------------------
Distributions
--------------------------
  From Net
  Investment Income              (0.05)      (0.27)      (0.26)      (0.26)      (0.35)      (0.37)
--------------------------
  From Net
  Realized Gains                    --          --       (0.17)      (0.16)      (0.12)      (0.20)
----------------------------------------------------------------------------------------------------
  Total Distributions            (0.05)      (0.27)      (0.43)      (0.42)      (0.47)      (0.57)
----------------------------------------------------------------------------------------------------
Net Asset Value,
End of Period                   $10.70      $10.72      $10.73      $11.06      $10.98      $10.50
====================================================================================================
  TOTAL RETURN(4)                 0.28%       2.42%       0.89%       4.62%       9.16%       3.58%

RATIOS/SUPPLEMENTAL DATA
----------------------------------------------------------------------------------------------------
Ratio of Operating
Expenses to Average
Net Assets                     1.49%(5)       1.50%       1.50%       1.50%       1.50%       1.50%
--------------------------
Ratio of Operating
Expenses to Average
Net Assets (Before
Expense Waiver)                1.49%(5)       1.54%       1.52%       1.54%       1.58%       1.65%
--------------------------
Ratio of Net Investment
Income to Average
Net Assets                     2.85%(5)       2.49%       2.36%       2.39%       3.11%       3.49%
--------------------------
Ratio of Net Investment
Income to Average
Net Assets (Before
Expense Waiver)                2.85%(5)       2.45%       2.34%       2.35%       3.03%       3.34%
--------------------------
Portfolio Turnover Rate             62%         27%         43%     815%(6)         48%        173%
--------------------------
Net Assets, End of Period
(in thousands)                   $2,046      $2,081      $2,483     $2,674      $3,533      $1,429
----------------------------------------------------------------------------------------------------

(1) April 1, 2006 through May 31, 2006. Long-Term Tax-Free's fiscal year end was
    changed from March 31 to May 31, resulting in a two-month annual reporting
    period. For the years before May 31, 2006, Long-Term Tax-Free's fiscal year
    was March 31 (see Note 8).

(2) Computed using average shares outstanding throughout the period.

(3) Per-share amount is less than $0.005.

(4) Total return assumes reinvestment of net investment income and capital gains
    distributions, if any, and does not include any applicable sales charges.
    Total returns for periods less than one year are not annualized. The total
    return of the classes may not precisely reflect the class expense
    differences because of the impact of calculating the net asset values to two
    decimal places. If net asset values were calculated to three decimal places,
    the total return differences would more closely reflect the class expense
    differences. The calculation of net asset values to two decimal places is
    made in accordance with SEC guidelines and does not result in any gain or
    loss of value between one class and another.

(5) Annualized.

(6) Portfolio turnover rate includes the effect of using U.S. Treasuries in same
    day trades to manage interest rate risk. The rate would be 238% if this
    trading activity was excluded from the calculation. Long-Term Tax-Free's
    advisor intends to manage interest rate risk in the future through the use
    of futures contracts and other derivatives-related hedging strategies, many
    of which would not impact the portfolio turnover rate.

See Notes to Financial Statements.


------
65


Long-Term Tax-Free - Financial Highlights

FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD INDICATED
--------------------------------------------------------------------------------
                                                                       C CLASS
--------------------------------------------------------------------------------
                                                                       2006(1)
--------------------------------------------------------------------------------
PER-SHARE DATA
--------------------------------------------------------------------------------
Net Asset Value, Beginning of Period                                   $10.72
--------------------------------------------------------------------------------
Income From Investment Operations
-----------------------------------------------------------
  Net Investment Income                                                  0.05
-----------------------------------------------------------
  Net Realized and Unrealized Gain (Loss)                               (0.02)
--------------------------------------------------------------------------------
  Total From Investment Operations                                       0.03
--------------------------------------------------------------------------------
Distributions
-----------------------------------------------------------
  From Net Investment Income                                            (0.05)
--------------------------------------------------------------------------------
Net Asset Value, End of Period                                         $10.70
================================================================================
  TOTAL RETURN(2)                                                       0.26%

RATIOS/SUPPLEMENTAL DATA
--------------------------------------------------------------------------------
Ratio of Operating Expenses to Average Net Assets                    1.49%(3)
-----------------------------------------------------------
Ratio of Net Investment Income to Average Net Assets                 2.85%(3)
-----------------------------------------------------------
Portfolio Turnover Rate                                                   62%
-----------------------------------------------------------
Net Assets, End of Period (in thousands)                                  $25
--------------------------------------------------------------------------------

(1) April 3, 2006 (commencement of sale) through May 31, 2006.

(2) Total return assumes reinvestment of net investment income and capital gains
    distributions, if any, and does not include any applicable sales charges.
    Total returns for periods less than one year are not annualized. The total
    return of the classes may not precisely reflect the class expense
    differences because of the impact of calculating the net asset values to two
    decimal places. If net asset values were calculated to three decimal places,
    the total return differences would more closely reflect the class expense
    differences. The calculation of net asset values to two decimal places is
    made in accordance with SEC guidelines and does not result in any gain or
    loss of value between one class and another.

(3) Annualized.

See Notes to Financial Statements.


------
66


High-Yield Municipal - Financial Highlights

FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED MAY 31
----------------------------------------------------------------------------------------
                                                   INVESTOR CLASS
----------------------------------------------------------------------------------------
                                 2006        2005        2004        2003        2002
----------------------------------------------------------------------------------------
PER-SHARE DATA
----------------------------------------------------------------------------------------
Net Asset Value,
Beginning of Period             $10.50      $10.04      $10.25       $9.87       $9.62
----------------------------------------------------------------------------------------
Income From
Investment Operations
---------------------------
  Net Investment Income           0.50        0.51        0.52        0.53        0.53
---------------------------
  Net Realized and
  Unrealized Gain (Loss)         --(1)        0.46       (0.21)       0.38        0.25
----------------------------------------------------------------------------------------
  Total From
  Investment Operations           0.50        0.97        0.31        0.91        0.78
----------------------------------------------------------------------------------------
Distributions
---------------------------
  From Net
  Investment Income              (0.50)      (0.51)      (0.52)      (0.53)      (0.53)
----------------------------------------------------------------------------------------
Net Asset Value,
End of Period                   $10.50      $10.50      $10.04      $10.25       $9.87
========================================================================================
  TOTAL RETURN(2)                 4.91%       9.84%       3.07%       9.40%       8.25%

RATIOS/SUPPLEMENTAL DATA
----------------------------------------------------------------------------------------
Ratio of Operating
Expenses to Average
Net Assets                        0.62%       0.63%       0.64%       0.64%       0.64%
---------------------------
Ratio of Net Investment
Income to Average
Net Assets                        4.80%       4.92%       5.06%       5.22%       5.39%
---------------------------
Portfolio Turnover Rate             16%         30%         27%         43%         28%
---------------------------
Net Assets, End of Period
(in thousands)                  $84,896     $62,945     $54,340     $53,621     $36,162
----------------------------------------------------------------------------------------

(1) Per-share amount is less than $0.005.

(2) Total return assumes reinvestment of net investment income and capital gains
    distributions, if any. The total return of the classes may not precisely
    reflect the class expense differences because of the impact of calculating
    the net asset values to two decimal places. If net asset values were
    calculated to three decimal places, the total return differences would more
    closely reflect the class expense differences. The calculation of net asset
    values to two decimal places is made in accordance with SEC guidelines and
    does not result in any gain or loss of value between one class and another.

See Notes to Financial Statements.


------
67


High-Yield Municipal - Financial Highlights

FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED MAY 31 (EXCEPT AS NOTED)
--------------------------------------------------------------------------------
                                                      A CLASS
--------------------------------------------------------------------------------
                                     2006        2005        2004       2003(1)
--------------------------------------------------------------------------------
PER-SHARE DATA
--------------------------------------------------------------------------------
Net Asset Value,
Beginning of Period                 $10.50      $10.04      $10.25      $10.06
--------------------------------------------------------------------------------
Income From
Investment Operations
------------------------------
  Net Investment Income               0.48        0.48        0.49        0.17
------------------------------
  Net Realized and
  Unrealized Gain (Loss)             --(2)        0.46       (0.21)       0.19
--------------------------------------------------------------------------------
  Total From
  Investment Operations               0.48        0.94        0.28        0.36
--------------------------------------------------------------------------------
Distributions
------------------------------
  From Net
  Investment Income                  (0.48)      (0.48)      (0.49)      (0.17)
--------------------------------------------------------------------------------
Net Asset Value,
End of Period                       $10.50      $10.50      $10.04      $10.25
================================================================================
  TOTAL RETURN(3)                     4.65%       9.56%       2.81%       3.57%

RATIOS/SUPPLEMENTAL DATA
--------------------------------------------------------------------------------
Ratio of Operating
Expenses to Average
Net Assets                            0.87%       0.88%       0.89%    0.88%(4)
------------------------------
Ratio of Net Investment
Income to Average
Net Assets                            4.55%       4.67%       4.81%    5.03%(4)
------------------------------
Portfolio Turnover Rate                 16%         30%         27%      43%(5)
------------------------------
Net Assets, End of Period
(in thousands)                     $129,681     $79,154     $33,335      $2,117
--------------------------------------------------------------------------------

(1) January 31, 2003 (commencement of sale) through May 31, 2003.

(2) Per-share amount is less than $0.005.

(3) Total return assumes reinvestment of net investment income and capital gains
    distributions, if any, and does not include any applicable sales charges.
    Total returns for periods less than one year are not annualized. The total
    return of the classes may not precisely reflect the class expense
    differences because of the impact of calculating the net asset values to two
    decimal places. If net asset values were calculated to three decimal places,
    the total return differences would more closely reflect the class expense
    differences. The calculation of net asset values to two decimal places is
    made in accordance with SEC guidelines and does not result in any gain or
    loss of value between one class and another.

(4) Annualized.

(5) Portfolio turnover is calculated at the fund level. Percentage indicated was
    calculated for the year ended May 31, 2003.

See Notes to Financial Statements.


------
68


High-Yield Municipal - Financial Highlights

FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED MAY 31 (EXCEPT AS NOTED)
--------------------------------------------------------------------------------
                                                      B CLASS
--------------------------------------------------------------------------------
                                     2006        2005        2004       2003(1)
--------------------------------------------------------------------------------
PER-SHARE DATA
--------------------------------------------------------------------------------
Net Asset Value,
Beginning of Period                 $10.50      $10.04      $10.25      $10.06
--------------------------------------------------------------------------------
Income From
Investment Operations
------------------------------
  Net Investment Income               0.40        0.40        0.42        0.15
------------------------------
  Net Realized and
  Unrealized Gain (Loss)             --(2)        0.46       (0.21)       0.19
--------------------------------------------------------------------------------
  Total From
  Investment Operations               0.40        0.86        0.21        0.34
--------------------------------------------------------------------------------
Distributions
------------------------------
  From Net
  Investment Income                  (0.40)      (0.40)      (0.42)      (0.15)
--------------------------------------------------------------------------------
Net Asset Value,
End of Period                       $10.50      $10.50      $10.04      $10.25
================================================================================
  TOTAL RETURN(3)                     3.87%       8.75%       2.05%       3.44%

RATIOS/SUPPLEMENTAL DATA
--------------------------------------------------------------------------------
Ratio of Operating
Expenses to Average
Net Assets                            1.62%       1.63%       1.64%    1.63%(4)
------------------------------
Ratio of Net Investment
Income to Average
Net Assets                            3.80%       3.92%       4.06%    4.35%(4)
------------------------------
Portfolio Turnover Rate                 16%         30%         27%      43%(5)
------------------------------
Net Assets, End of Period
(in thousands)                       $4,468      $3,573      $2,541       $708
--------------------------------------------------------------------------------

(1) January 31, 2003 (commencement of sale) through May 31, 2003.

(2) Per-share amount is less than $0.005.

(3) Total return assumes reinvestment of net investment income and capital gains
    distributions, if any, and does not include any applicable sales charges.
    Total returns for periods less than one year are not annualized. The total
    return of the classes may not precisely reflect the class expense
    differences because of the impact of calculating the net asset values to two
    decimal places. If net asset values were calculated to three decimal places,
    the total return differences would more closely reflect the class expense
    differences. The calculation of net asset values to two decimal places is
    made in accordance with SEC guidelines and does not result in any gain or
    loss of value between one class and another.

(4)  Annualized.

(5) Portfolio turnover is calculated at the fund level. Percentage indicated was
    calculated for the year ended May 31, 2004.

See Notes to Financial Statements.


------
69


High-Yield Municipal - Financial Highlights

FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED MAY 31 (EXCEPT AS NOTED)
--------------------------------------------------------------------------------
                                                      C CLASS
--------------------------------------------------------------------------------
                                     2006        2005        2004       2003(1)
--------------------------------------------------------------------------------
PER-SHARE DATA
--------------------------------------------------------------------------------
Net Asset Value,
Beginning of Period                 $10.50      $10.04      $10.25      $10.03
--------------------------------------------------------------------------------
Income From
Investment Operations
------------------------------
  Net Investment Income               0.40        0.40        0.43        0.39
------------------------------
  Net Realized and
  Unrealized Gain (Loss)             --(2)        0.46       (0.21)       0.22
--------------------------------------------------------------------------------
  Total From
   Investment Operations              0.40        0.86        0.22        0.61
--------------------------------------------------------------------------------
Distributions
------------------------------
  From Net
  Investment Income                  (0.40)      (0.40)      (0.43)      (0.39)
--------------------------------------------------------------------------------
Net Asset Value,
End of Period                       $10.50      $10.50      $10.04      $10.25
================================================================================
  TOTAL RETURN(3)                     3.86%       8.74%       2.20%       6.15%

RATIOS/SUPPLEMENTAL DATA
--------------------------------------------------------------------------------
Ratio of Operating
Expenses to Average
Net Assets                            1.62%       1.63%       1.54%    1.39%(4)
------------------------------
Ratio of Net Investment
Income to Average
Net Assets                            3.80%       3.92%       4.16%    4.55%(4)
------------------------------
Portfolio Turnover Rate                 16%         30%         27%      43%(5)
------------------------------
Net Assets, End of Period
(in thousands)                      $29,862     $16,967      $8,457     $1,454
--------------------------------------------------------------------------------

(1) July 24, 2002 (commencement of sale) through May 31, 2003.

(2) Per-share amount is less than $0.005.

(3) Total return assumes reinvestment of net investment income and capital gains
    distributions, if any, and does not include any applicable sales charges.
    Total returns for periods less than one year are not annualized. The total
    return of the classes may not precisely reflect the class expense
    differences because of the impact of calculating the net asset values to two
    decimal places. If net asset values were calculated to three decimal places,
    the total return differences would more closely reflect the class expense
    differences. The calculation of net asset values to two decimal places is
    made in accordance with SEC guidelines and does not result in any gain or
    loss of value between one class and another.

(4) Annualized.

(5) Portfolio turnover is calculated at the fund level. Percentage indicated was
    calculated for the year ended May 31, 2003.

See Notes to Financial Statements.


------
70


Report of Independent Registered Public Accounting Firm

To the Trustees of the American Century Municipal Trust and Shareholders of the
Arizona Municipal Bond Fund, Florida Municipal Bond Fund, Long-Term Tax-Free
Fund and High-Yield Municipal Fund:

In our opinion, the accompanying statements of assets and liabilities, including
the schedules of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of the Arizona Municipal Bond Fund,
Florida Municipal Bond Fund, Long-Term Tax-Free Fund and High-Yield Municipal
Fund (four of the six funds in the American Century Municipal Trust hereafter
referred to as the "Funds") at May 31, 2006, the results of each of their
operations, the changes in each of their net assets and the financial highlights
for each of the periods presented, in conformity with accounting principles
generally accepted in the United States of America. These financial statements
and financial highlights (hereafter referred to as "financial statements") are
the responsibility of the Funds' management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at May 31, 2006 by correspondence with the custodian
and brokers, provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP
Kansas City, Missouri
July 18, 2006


------
71


Management

The individuals listed below serve as trustees or officers of the funds. Each
trustee serves until his or her successor is duly elected and qualified or until
he or she retires. Effective March 2004, mandatory retirement age for
independent trustees is 73. However, the mandatory retirement age may be
extended for a period not to exceed two years with the approval of the remaining
independent trustees. Those listed as interested trustees are "interested"
primarily by virtue of their engagement as officers of American Century
Companies, Inc. (ACC) or its wholly owned, direct or indirect, subsidiaries,
including the funds' investment advisor, American Century Investment Management,
Inc. (ACIM); the funds' principal underwriter, American Century Investment
Services, Inc. (ACIS); and the funds' transfer agent, American Century Services,
LLC (ACS).

The other trustees (more than three-fourths of the total number) are
independent; that is, they have never been employees or officers of, and have no
financial interest in, ACC or any of its wholly owned, direct or indirect,
subsidiaries, including ACIM, ACIS, and ACS. The trustees serve in this capacity
for eight registered investment companies in the American Century family of
funds.

All persons named as officers of the funds also serve in similar capacities for
the other 14 investment companies advised by ACIM or American Century Global
Investment Management, Inc. (ACGIM), a wholly owned subsidiary of ACIM, unless
otherwise noted. 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 and are appointed or
re-appointed on an annual basis.

INDEPENDENT TRUSTEES
--------------------------------------------------------------------------------
JOHN FREIDENRICH, 1665 Charleston Road, Mountain View, CA 94043
YEAR OF BIRTH: 1937
POSITION(S) HELD WITH FUND: Trustee
FIRST YEAR OF SERVICE: 2005
PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Member and Manager, Regis
Management Company, LLC (April 2004 to present); Partner and Founder, Bay
Partners (Venture capital firm, 1976 to present); Partner and Founder, Ware &
Freidenrich (1968 to present)
NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY TRUSTEE: 40
OTHER DIRECTORSHIPS HELD BY TRUSTEE: None
--------------------------------------------------------------------------------
RONALD J. GILSON, 1665 Charleston Road, Mountain View, CA 94043
YEAR OF BIRTH: 1946
POSITION(S) HELD WITH FUND: Trustee, Chairman of the Board
FIRST YEAR OF SERVICE: 1995
PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Charles J. Meyers Professor of Law
and Business, Stanford Law School (1979 to present); Marc and Eva Stern
Professor of Law and Business, Columbia University School of Law (1992 to
present)
NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY TRUSTEE: 40
OTHER DIRECTORSHIPS HELD BY TRUSTEE: None
--------------------------------------------------------------------------------

                                                                    (continued)


------
72


Management

INDEPENDENT TRUSTEES (CONTINUED)
--------------------------------------------------------------------------------
KATHRYN A. HALL, 1665 Charleston Road, Mountain View, CA 94043
YEAR OF BIRTH: 1957
POSITION(S) HELD WITH FUND: Trustee
FIRST YEAR OF SERVICE: 2001
PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Co-Chief Executive Officer and
Chief Investment Officer, Offit Hall Capital Management, LLC (April 2002 to
present); President and Managing Director, Laurel Management Company, LLC (1996
to April 2002)
NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY TRUSTEE: 40
OTHER DIRECTORSHIPS HELD BY TRUSTEE: None
--------------------------------------------------------------------------------
MYRON S. SCHOLES, 1665 Charleston Road, Mountain View, CA 94043
YEAR OF BIRTH: 1941
POSITION(S) HELD WITH FUND: Trustee
FIRST YEAR OF SERVICE: 1980
PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Chairman, Oak Hill Platinum
Partners, and a Partner, Oak Hill Capital Management (1999 to present); Frank E.
Buck Professor of Finance-Emeritus, Stanford Graduate School of Business (1981
to present)
NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY TRUSTEE: 40
OTHER DIRECTORSHIPS HELD BY TRUSTEE: Director, Dimensional Fund Advisors
(investment advisor, 1982 to present); Director, Chicago Mercantile Exchange
(2000 to present)
--------------------------------------------------------------------------------
JOHN B. SHOVEN, 1665 Charleston Road, Mountain View, CA 94043
YEAR OF BIRTH: 1947
POSITION(S) HELD WITH FUND: Trustee
FIRST YEAR OF SERVICE: 2002
PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Professor of Economics, Stanford
University (1977 to present)
NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY TRUSTEE: 40
OTHER DIRECTORSHIPS HELD BY TRUSTEE: Director, Cadence Design Systems (1992 to
present); Director, Watson Wyatt Worldwide (2002 to present); Director,
Palmsource Inc. (2002 to present)
--------------------------------------------------------------------------------
JEANNE D. WOHLERS, 1665 Charleston Road, Mountain View, CA 94043
YEAR OF BIRTH: 1945
POSITION(S) HELD WITH FUND: Trustee
FIRST YEAR OF SERVICE: 1984
PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Retired, Director and Partner,
Windy Hill Productions, LP (educational software)
NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY TRUSTEE: 40
OTHER DIRECTORSHIPS HELD BY TRUSTEE: Director, Quintus Corporation (automation
solutions, 1995 to present)
--------------------------------------------------------------------------------

INTERESTED TRUSTEE
--------------------------------------------------------------------------------
WILLIAM M. LYONS, 4500 Main Street, Kansas City, MO 64111
YEAR OF BIRTH: 1955
POSITION(S) HELD WITH FUND: Trustee, President
FIRST YEAR OF SERVICE: 1997
PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Chief Executive Officer, ACC
(September 2000 to present); President, ACC (June 1997 to present). Also serves
as: Chief Executive Officer and President, ACIM, ACGIM, ACIS and other ACC
subsidiaries; Executive Vice President, ACS; Director, ACC, ACIM, ACGIM, ACS,
ACIS and other ACC subsidiaries
NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY TRUSTEE: 40
OTHER DIRECTORSHIPS HELD BY TRUSTEE: None
--------------------------------------------------------------------------------

                                                                    (continued)


------
73


Management

OFFICERS
--------------------------------------------------------------------------------
JONATHAN THOMAS, 4500 Main Street, Kansas City, MO 64111
YEAR OF BIRTH: 1963
POSITION(S) HELD WITH FUND: Executive Vice President
FIRST YEAR OF SERVICE: 2005
PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Executive Vice President, ACC
(November 2005 to present); Chief Administrative Officer, ACC (February 2006 to
present). Also serves as: President, ACS; Chief Executive Officer, Chief
Financial Officer and Chief Accounting Officer, ACIM, ACGIM, ACS, ACIS and other
ACC subsidiaries; Managing Director, Morgan Stanley (March 2000 to November
2005)
--------------------------------------------------------------------------------
MARYANNE ROEPKE, 4500 Main Street, Kansas City, MO 64111
YEAR OF BIRTH: 1956
POSITION(S) HELD WITH FUND: Senior Vice President, Treasurer and Chief Financial
Officer
FIRST YEAR OF SERVICE: 2000
PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Assistant Treasurer, ACC (January
1995 to present). Also serves as: Senior Vice President, ACS; Assistant
Treasurer, ACIM, ACGIM, ACS, ACIS and other ACC subsidiaries
--------------------------------------------------------------------------------
DAVID C. TUCKER, 4500 Main Street, Kansas City, MO 64111
YEAR OF BIRTH: 1958
POSITION(S) HELD WITH FUND: Senior Vice President and General Counsel
FIRST YEAR OF SERVICE: 1998
PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Vice President, ACC (February 2001
to present); General Counsel, ACC (June 1998 to present). Also serves as: Senior
Vice President and General Counsel, ACIM, ACGIM, ACS, ACIS and other ACC
subsidiaries
--------------------------------------------------------------------------------
CHARLES C.S. PARK, 4500 Main Street, Kansas City, MO 64111
YEAR OF BIRTH: 1967
POSITION(S) HELD WITH FUND: Vice President and Chief Compliance Officer
FIRST YEAR OF SERVICE: 2000
PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Chief Compliance Officer, ACIM,
ACGIM and ACS (March 2005 to present); Vice President, ACS (February 2000 to
present); Assistant General Counsel, ACS (January 1998 to March 2005)
--------------------------------------------------------------------------------
ROBERT LEACH, 4500 Main Street, Kansas City, MO 64111
YEAR OF BIRTH: 1966
POSITION(S) HELD WITH FUND: Controller
FIRST YEAR OF SERVICE: 1996
PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Vice President, ACS (February 2000
to present); Controller-Fund Accounting, ACS (June 1997 to present)
--------------------------------------------------------------------------------
C. JEAN WADE, 4500 Main Street, Kansas City, MO 64111
YEAR OF BIRTH: 1964
POSITION(S) HELD WITH FUND: Controller(1)
FIRST YEAR OF SERVICE: 1996
PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Vice President, ACS (February 2000
to present); Controller-Fund Accounting, ACS (June 1997 to present)
--------------------------------------------------------------------------------
JON ZINDEL, 4500 Main Street, Kansas City, MO 64111
YEAR OF BIRTH: 1967
POSITION(S) HELD WITH FUND: Tax Officer
FIRST YEAR OF SERVICE: 1997
PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Vice President, ACC (October 2001
to present); Vice President, Corporate Tax, ACS (April 1998 to present). Also
serves as: Vice President, ACIM, ACGIM, ACIS and other ACC subsidiaries
--------------------------------------------------------------------------------

(1) Ms. Wade serves in a similar capacity for seven other investment companies
    advised by ACIM.

The SAI has additional information about the funds' trustees and is available
without charge, upon request, by calling 1-800-345-2021.

                                                                    (continued)


------
74


Approval of Management Agreements for Arizona Municipal Bond, Florida Municipal
Bond, and High-Yield Municipal

Under Section 15(c) of the Investment Company Act, contracts for investment
advisory services are required to be reviewed, evaluated and approved by a
majority of a fund's independent directors or trustees (the "Directors") each
year. At American Century, this process is referred to as the "15(c) Process."
As a part of this process, the board reviews fund performance, shareholder
services, audit and compliance information, and a variety of other reports from
the advisor concerning fund operations. In addition to this annual review, the
board of directors oversees and evaluates on a continuous basis at its quarterly
meetings the nature and quality of significant services performed by the
advisor, fund performance, audit and compliance information, and a variety of
other reports relating to fund operations. The board, or committees of the
board, also holds special meetings as needed.

Under a Securities and Exchange Commission rule, each fund is required to
disclose in its annual or semiannual report, as appropriate, the material
factors and conclusions that formed the basis for the board's approval or
renewal of any advisory agreements within the fund's most recently completed
fiscal half-year period.

ANNUAL CONTRACT REVIEW PROCESS

As part of the annual 15(c) Process undertaken during the most recent fiscal
half-year period, the Directors reviewed extensive data and information compiled
by the advisor and certain independent providers of evaluative data (the "15(c)
Providers") concerning Arizona Municipal Bond, Florida Municipal Bond and
High-Yield Municipal Bond (the "funds") and the services provided to the funds
under the management agreement. The information considered and the discussions
held at the meetings included, but were not limited to:

* the nature, extent and quality of investment management, shareholder services
  and other services provided to the funds under the management agreement;

* reports on the advisor's activities relating to the wide range of programs
  and services the advisor provides to the funds and its shareholders on a
  routine and non-routine basis;

* data comparing the cost of owning the funds to the cost of owning a similar
  funds;

* data comparing the funds' performance to appropriate benchmarks and/or a peer
  group of other mutual funds with similar investment objectives and strategies;

* financial data showing the profitability of the funds to the advisor and the
  overall profitability of the advisor; and

* data comparing services provided and charges to other investment management
  clients of the advisor.

In keeping with its practice, the funds' board of directors held two regularly
scheduled meetings and one special meeting to review and discuss the information
provided by the advisor and to complete its negotiations with the advisor
regarding the renewal of the management agreement, including the setting of the
applicable advisory fee. The board also had the benefit of the advice of its
independent counsel throughout the period.

                                                                    (continued)


------
75


Approval of Management Agreements for Arizona Municipal Bond, Florida Municipal
Bond, and High-Yield Municipal

FACTORS CONSIDERED

The Directors considered all of the information provided by the advisor, the
15(c) Providers, and the board's independent counsel, and evaluated such
information for each fund for which the board has responsibility. The Directors
did not identify any single factor as being all-important or controlling, and
each Director may have attributed different levels of importance to different
factors. In deciding to renew the agreement under the terms ultimately
determined by the board to be appropriate, the Directors' decision was based on
the following factors.

NATURE, EXTENT AND QUALITY OF SERVICES--GENERALLY. Under the management
agreement, the advisor is responsible for providing or arranging for all
services necessary for the operation of the funds. The board noted that under
the management agreement, the advisor provides or arranges at its own expense a
wide variety of services including:

* fund construction and design

* portfolio security selection

* initial capitalization/funding

* securities trading

* custody of fund assets

* daily valuation of the funds' portfolio

* shareholder servicing and transfer agency, including shareholder
  confirmations, recordkeeping and communications

* legal services

* regulatory and portfolio compliance

* financial reporting

* marketing and distribution

The Directors noted that many of these services have expanded over time both in
terms of quantity and complexity in response to shareholder demands, competition
in the industry and the changing regulatory environment. In performing their
evaluation, the Directors considered information received in connection with the
annual review, as well as information provided on an ongoing basis at their
regularly scheduled board and committee meetings.

INVESTMENT MANAGEMENT SERVICES. The nature of the investment management services
provided is quite complex and allows fund shareholders access to professional
money management, instant diversification of their investments within an asset
class, the opportunity to easily diversify among asset classes, and liquidity.
In evaluating investment performance, the board expects the advisor to manage
the funds in accordance with its investment objectives and approved strategies.
In providing these services, the advisor utilizes teams of investment
professionals (portfolio managers, analysts, research assistants, and securities
traders) who require extensive information technology, research, training,
compliance and other systems to conduct their business. At each quarterly
meeting the Directors review investment performance information for the funds,
together with comparative information for appropriate benchmarks and peer groups
of funds managed similarly to the funds. The Directors also review detailed
performance information during the 15(c) Process comparing the funds'
performance with that of similar funds not managed by the advisor.

                                                                    (continued)


------
76


Approval of Management Agreements for Arizona Municipal Bond, Florida Municipal
Bond, and High-Yield Municipal

If performance concerns are identified, the Directors discuss with the advisor
the reasons for such results (e.g., market conditions, security selection) and
any efforts being undertaken to improve performance. Arizona Municipal Bond's
performance was above the median of its peer group for the one year period and
near the median for the three year period. Florida Municipal Bond's performance
was above the median for the one year period and near the median for the three
year period. High-Yield Municipal Bond's performance was above the median for
the one year period and near the median for the three year period. The board
discussed Arizona Municipal Bond's and High-Yield Municipal Bond's performance
with the advisor and was satisfied with the efforts being undertaken by the
advisor.

SHAREHOLDER AND OTHER SERVICES. The advisor provides the funds with a
comprehensive package of transfer agency, shareholder, and other services. The
Directors review reports and evaluations of such services at their regular
quarterly meetings, including the annual meeting concerning contract review, and
reports to the board. These reports include, but are not limited to, information
regarding the operational efficiency and accuracy of the shareholder and
transfer agency services provided, staffing levels, shareholder satisfaction (as
measured by external as well as internal sources), technology support, new
products and services offered to fund shareholders, securities trading
activities, portfolio valuation services, auditing services, and legal and
operational compliance activities. Certain aspects of shareholder and transfer
agency service level efficiency and the quality of securities trading activities
are measured by independent third party providers and are presented in
comparison to other fund groups not managed by the advisor.

COSTS OF SERVICES PROVIDED AND PROFITABILITY TO THE ADVISOR. The advisor
provides detailed information concerning its cost of providing various services
to the funds, its profitability in managing the funds, its overall
profitability, and its financial condition. The Directors have reviewed with the
advisor the methodology used to prepare this financial information. This
financial information regarding the advisor is considered in order to evaluate
the advisor's financial condition, its ability to continue to provide services
under the management agreement, and the reasonableness of the current management
fee.

ETHICS OF THE ADVISOR. The Directors generally consider the advisor's commitment
to providing quality services to shareholders and to conducting its business
ethically. They noted that the advisor's practices generally meet or exceed
industry best practices and that the advisor was not implicated in the industry
scandals of 2003 and 2004.

ECONOMIES OF SCALE. The Directors review reports provided by the advisor on
economies of scale for the complex as a whole and the year-over-year changes in
revenue, costs, and profitability. The Directors concluded that economies of
scale are difficult to measure and predict with precision, especially on a
fund-by-fund basis. This analysis is also complicated by the additional services
and content provided by the advisor and its rein-

                                                                    (continued)


------
77


Approval of Management Agreements for Arizona Municipal Bond, Florida Municipal
Bond, and High-Yield Municipal

vestment in its ability to provide and expand those services. Accordingly, the
Directors also seek to evaluate economies of scale by reviewing other
information, such as year-over-year profitability of the advisor generally, the
profitability of its management of the funds specifically, the expenses incurred
by the advisor in providing various functions to the funds, and the breakpoint
fees of competitive funds not managed by the advisor. The Directors believe the
advisor is appropriately sharing economies of scale through its competitive fee
structure, fee breakpoints as the fund complex and the funds increases in size,
and through reinvestment in its business to provide shareholders additional
content and services. In particular, separate breakpoint schedules based on the
size of the entire fund complex and on the size of the funds reflect the
complexity of assessing economies of scale.

COMPARISON TO OTHER FUNDS' FEES. The funds pay the advisor a single,
all-inclusive (or unified) management fee for providing all services necessary
for the management and operation of the funds, other than brokerage expenses,
taxes, interest, extraordinary expenses, and the fees and expenses of the funds'
independent directors (including their independent legal counsel). Under the
unified fee structure, the advisor is responsible for providing all investment
advisory, custody, audit, administrative, compliance, recordkeeping, marketing
and shareholder services, or arranging and supervising third parties to provide
such services. By contrast, most other funds are charged a variety of fees,
including an investment advisory fee, a transfer agency fee, an administrative
fee, distribution charges and other expenses. Other than their investment
advisory fees and Rule 12b-1 distribution fees, all other components of the
total fees charged by these other funds may be increased without shareholder
approval. The board believes the unified fee structure is a benefit to fund
shareholders because it clearly discloses to shareholders the cost of owning
fund shares, and, since the unified fee cannot be increased without a vote of
fund shareholders, it shifts to the advisor the risk of increased costs of
operating the funds and provides a direct incentive to minimize administrative
inefficiencies. Part of the Directors' analysis of fee levels involves reviewing
certain evaluative data compiled by an independent provider and comparing the
funds' unified fee to the total expense ratio of other funds in the funds' peer
group. The unified fee charged to shareholders of the funds was in the lowest
quartile of the total expense ratios of their peer groups.

COMPARISON TO FEES AND SERVICES PROVIDED TO OTHER CLIENTS OF THE ADVISOR. The
Directors also requested and received information from the advisor concerning
the nature of the services, fees, and profitability of its advisory services to
advisory clients other than the funds. They observed that these varying types of
client accounts require different services and involve different regulatory and
entrepreneurial risks than the management of the funds. The Directors analyzed
this information and concluded that the fees charged and services provided to
the funds were reasonable by comparison.

                                                                    (continued)


------
78


Approval of Management Agreements for Arizona Municipal Bond, Florida Municipal
Bond, and High-Yield Municipal

COLLATERAL BENEFITS DERIVED BY THE ADVISOR. The Directors reviewed information
from the advisor concerning collateral benefits it receives as a result of its
relationship with the funds. They concluded that the advisor's primary business
is managing mutual funds and it generally does not use the fund or shareholder
information to generate profits in other lines of business, and therefore does
not derive any significant collateral benefits from them. The Directors noted
that the advisor receives proprietary research from broker dealers that execute
fund portfolio transactions and concluded that this research is likely to
benefit fund shareholders. The Directors also determined that the advisor is
able to provide investment management services to certain clients other than the
funds, at least in part, due to its existing infrastructure built to serve the
fund complex. The Directors concluded, however, that the assets of those other
clients are not material to the analysis and, in any event, are included with
the assets of the funds to determine breakpoints in the funds' fee schedule,
provided they are managed using the same investment team and strategy.

CONCLUSIONS OF THE DIRECTORS

As a result of this process, the independent directors, in the absence of
particular circumstances and assisted by the advice of legal counsel that is
independent of the advisor, taking into account all of the factors discussed
above and the information provided by the advisor concluded that the investment
management agreement between the funds and the advisor is fair and reasonable in
light of the services provided and should be renewed.


------
79


Approval of Management Agreement for Long-Term Tax-Free

Under Section 15(c) of the Investment Company Act, contracts for investment
advisory services are required to be reviewed, evaluated, and approved by  a
majority of a fund's independent directors each year. Under a Securities and
Exchange Commission rule, each fund is required to disclose in its annual or
semiannual report, as appropriate, the material factors and conclusions that
formed the basis for its board's approval or renewal of any advisory agreements
within the fund's most recently completed fiscal half-year period.

At a meeting held December 2, 2005, the board of directors unanimously approved
the initial management agreement for Long-Term Tax-Free (the "fund"). In advance
of the board's consideration, American Century Investment Management, Inc. (the
"Advisor") provided information concerning the proposed fund. The information
considered and the discussions held at the meeting included, but were not
limited to:

* the nature, extent, and quality of investment management, shareholder
  services, and other services to be provided to the fund under the management
  agreement;

* the wide range of programs and services to be provided by the Advisor to the
  fund and its shareholders on a routine and non-routine basis; and

* data comparing the cost of owning the Investor Class of the fund to the cost
  of owning similar funds.

Consistent with the Advisor's business strategy for all of its funds, the
Advisor proposed a unified management fee. Under the unified fee structure, the
Advisor charges a single, all-inclusive fee for providing all services for the
management and operation of the fund, except brokerage expenses, taxes,
interest, the fees and expenses of the fund's independent directors (including
their independent legal counsel), and extraordinary costs. Under the unified fee
structure, the Advisor is responsible for providing all investment advisory,
custody, audit, administrative, compliance, record keeping, marketing, and
shareholder services, or arranging and supervising third parties who provide
such services. By contrast, most other fund groups are charged a variety of
fees, including an investment advisory fee, a transfer agency fee, an
administrative fee, distribution charges, and other expenses. Other than their
investment advisory fees and Rule 12b-1 distribution fees, all other components
of the total fees other advisors charge to their shareholders may be increased
without shareholder approval. The Advisor and the board believe that the unified
fee structure is a benefit to fund shareholders because it clearly discloses the
cost of owning fund shares, and, since the unified fee cannot be increased
without a vote of fund shareholders,  it shifts to the Advisor the risk of
increased costs of operating the fund and provides a direct incentive to
minimize administrative inefficiencies.

                                                                    (continued)


------
80


Approval of Management Agreement for Long-Term Tax-Free

The Advisor proposed to place the fund in a category fee schedule that, when
combined with the fund's complex fee schedule, would result in an initial
unified management fee for the fund of 0.49%. In evaluating the proposed fee,
the board reviewed data comparing the total expense ratio of the fund's Investor
Class to the total expense ratios of other funds in its applicable fund
universe. The proposed fee level is in the lowest quartile of the total expense
ratios of its peer group. The proposed fee also contains breakpoints that reduce
fees as the overall fund complex and the fund increase in size.

When considering the proposed fee, the board considered the entrepreneurial risk
that the Advisor assumes in launching a new fund. In particular, they considered
the effect of the unified management fee structure and the fact that the total
expense ratio of the fund would require the Advisor to assume a substantial part
of the start-up costs of the fund and imposes on the Advisor the risk that the
fund will grow to a level that will become profitable at the proposed fee level.
The board is aware that the Advisor is likely to lose money on the fund
initially and the board will receive information in connection with the annual
contract renewal process that will enable it to determine when, if ever,
adjustments to one or more breakpoints may be appropriate. Finally, the board
considered the position that the new fund would take in the line up of the
American Century family of funds and benefits to shareholders of existing funds
of the broadened product offering.

Not specifically discussed, but important in the decision to approve the
management agreement, is the directors' familiarity with the Advisor. The board
of directors oversees and evaluates on a continuous basis the nature and quality
of all services the Advisor performs for other funds within the American Century
complex. As such, the directors have confidence in the Advisor's integrity and
competence in providing services to funds.

In their deliberations, the directors did not identify any single factor as
being all important or controlling, and each director attributed different
weights to various factors. However, based on their evaluation of all material
factors and assisted by the advice of independent legal counsel, the board,
including the independent directors, concluded that the overall arrangements
between the fund and the Advisor, as provided in the management agreement, were
fair and reasonable in light of the services to be performed and should be
approved.


------
81


Share Class Information

Four classes of shares are authorized for sale by Arizona Municipal Bond,
Florida Municipal Bond and High-Yield Municipal: Investor Class, A Class, B
Class, and C Class. Five classes of shares are authorized for sale by Long-Term
Tax-Free: Investor Class, Institutional Class, A Class, B Class, and C Class.
The total expense ratio of Institutional Class shares is lower than that of
Investor Class shares. The total expense ratios of A Class, B Class, and C Class
shares are higher than that of Investor Class.

INVESTOR CLASS shares are available for purchase in two ways: 1) directly from
American Century without any commissions or other fees; or 2) through certain
financial intermediaries (such as banks, broker-dealers, insurance companies and
investment advisors), which may require payment of a transaction fee to the
financial intermediary.

INSTITUTIONAL CLASS shares are available to large investors such as endowments,
foundations, and retirement plans, and to financial intermediaries serving these
investors. This class recognizes the relatively lower cost of serving
institutional customers and others who invest at least $5 million ($3 million
for endowments and foundations) in an American Century fund or at least $10
million in multiple funds. In recognition of the larger investments and account
balances and comparatively lower transaction costs, the unified management fee
of Institutional Class shares is 0.20% less than the unified management fee of
Investor Class shares.

A CLASS shares are sold primarily through institutions such as investment
advisors, banks, broker-dealers, and insurance companies. A Class shares are
sold at their offering price, which is net asset value plus an initial sales
charge that ranges from 4.50% to 0.00% for fixed-income funds, depending on the
amount invested. The initial sales charge is deducted from the purchase amount
before it is invested. A Class shares may be subject to a contingent deferred
sales charge (CDSC). There is no CDSC on shares acquired through reinvestment of
dividends or capital gains. The prospectus contains information regarding
reductions and waivers of sales charges for A Class shares. The unified
management fee for A Class shares is the same as for Investor Class shares. A
Class shares also are subject to a 0.25% annual Rule 12b-1 distribution and
service fee.

B CLASS shares are sold primarily through institutions such as investment
advisors, banks, broker-dealers, and insurance companies. B Class shares
redeemed within six years of purchase are subject to a CDSC that declines from
5.00% during the first year after purchase to 0.00% after the sixth year. There
is no CDSC on shares acquired through reinvestment of dividends or capital
gains. The unified management fee for B Class shares is the same as for Investor
Class shares. B Class shares also are subject to a 1.00% annual Rule 12b-1
distribution and service fee. B Class shares automatically convert to A Class
shares (with lower expenses) eight years after their purchase date.

                                                                    (continued)


------
82


Share Class Information

C CLASS shares are sold primarily through institutions such as investment
advisors, banks, broker-dealers, and insurance companies. C Class shares
redeemed within 12 months of purchase are subject to a CDSC of 1.00%. There is
no CDSC on shares acquired through reinvestment of dividends or capital gains.
The unified management fee for C Class shares is the same as for Investor Class
shares. C Class shares also are subject to a Rule 12b-1 distribution and service
fee of 1.00%.

All classes of shares represent a pro rata interest in the fund and generally
have the same rights and preferences.


------
83


Additional Information

RETIREMENT ACCOUNT INFORMATION

As required by law, any distributions you receive from an IRA or certain 403(b),
457 and qualified plans [those not eligible for rollover to an IRA or to another
qualified plan] are subject to federal income tax withholding, unless you elect
not to have withholding apply. Tax will be withheld on the total amount
withdrawn even though you may be receiving amounts that are not subject to
withholding, such as nondeductible contributions. In such case, excess amounts
of withholding could occur. You may adjust your withholding election so that a
greater or lesser amount will be withheld.

If you don't want us to withhold on this amount, you must notify us to not
withhold the federal income tax. Even if you plan to roll over the amount you
withdraw to another tax-deferred account, the withholding rate still applies to
the withdrawn amount unless we have received notice not to withhold federal
income tax prior to the withdrawal. You may notify us in writing or in certain
situations by telephone or through other electronic means. You have the right to
revoke your withholding election at any time and any election you make may
remain in effect until revoked by filing a new election.

Remember, even if you elect not to have income tax withheld, you are liable for
paying income tax on the taxable portion of your withdrawal. If you elect not to
have income tax withheld or you don't have enough income tax withheld, you may
be responsible for payment of estimated tax. You may incur penalties under the
estimated tax rules if your withholding and estimated tax payments are not
sufficient.

State tax will be withheld if, at the time of your distribution, your address is
within one of the mandatory withholding states and you have federal income tax
withheld. State taxes will be withheld from your distribution in accordance with
the respective state rules.

PROXY VOTING GUIDELINES

American Century Investment Management, Inc., the funds investment advisor, is
responsible for exercising the voting rights associated with the securities
purchased and/or held by the funds. A description of the policies and procedures
the advisor uses in fulfilling this responsibility is available without charge,
upon request, by calling 1-800-345-2021. It is also available on American
Century's Web site at americancentury.com and on the Securities and Exchange
Commission's Web site at sec.gov. Information regarding how the investment
advisor voted proxies relating to portfolio securities during the most recent
12-month period ended June 30 is available on the "About Us" page at
americancentury.com. It is also available at sec.gov.

QUARTERLY PORTFOLIO DISCLOSURE

The funds file their complete schedule of portfolio holdings with the Securities
and Exchange Commission (SEC) for the first and third quarters of each fiscal
year on Form N-Q. The funds Forms N-Q are available on the SEC's Web site at
sec.gov, and may be reviewed and copied at the SEC's Public Reference Room in
Washington, DC. Information on the operation of the Public Reference Room may be
obtained by calling 1-800-SEC-0330. The funds also make their complete schedule
of portfolio holdings for the most recent quarter of their fiscal year available
on their Web site at americancentury.com and, upon request, by calling
1-800-345-2021.


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84


Index Definitions

The following indices are used to illustrate investment market, sector, or style
performance or to serve as a fund performance comparison. They are not
investment products available for purchase.

The LEHMAN BROTHERS 3-YEAR MUNICIPAL BOND INDEX is composed of those securities
included in the Lehman Brothers Municipal Bond Index that have maturities of 2-4
years.

The LEHMAN BROTHERS MUNICIPAL BOND INDEX is a market-value-weighted index
designed for the long-term tax-exempt bond market. The LEHMAN BROTHERS LONG-TERM
MUNICIPAL BOND INDEX is composed of those securities included in the Lehman
Brothers Municipal Bond Index that have maturities greater than 22 years.

The LEHMAN BROTHERS MUNICIPAL 5-YEAR GENERAL OBLIGATION (GO) INDEX is composed
of investment-grade U.S. municipal securities, with maturities of four to six
years, that are general obligations of a state or local government.

The LEHMAN BROTHERS NON-INVESTMENT-GRADE MUNICIPAL BOND INDEX is composed of
non-investment-grade U.S. municipal securities with a remaining maturity of one
year or more.

The LEHMAN BROTHERS U.S. AGGREGATE INDEX represents securities that are taxable,
registered with the Securities and Exchange Commission, and U.S.
dollar-denominated. The index covers the U.S. investment-grade fixed-rate bond
market, with index components for government and corporate securities, mortgage
pass-through securities, and asset-backed securities.

The LEHMAN BROTHERS U.S. TREASURY INDEX is composed of those securities included
in the Lehman Brothers U.S. Aggregate Index that are public obligations of the
U.S. Treasury with a remaining maturity of one year or more.


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Notes


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86


Notes


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Notes


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[back cover]

CONTACT US

AMERICANCENTURY.COM

AUTOMATED INFORMATION LINE:
1-800-345-8765

INVESTOR SERVICES REPRESENTATIVE:
1-800-345-2021 or 816-531-5575

INVESTORS USING ADVISORS:
1-800-378-9878

BUSINESS, NOT-FOR-PROFIT,
EMPLOYER-SPONSORED RETIREMENT PLANS:
1-800-345-3533

BANKS AND TRUST COMPANIES, BROKER-DEALERS,
FINANCIAL PROFESSIONALS, INSURANCE COMPANIES:
1-800-345-6488

TELECOMMUNICATIONS DEVICE FOR THE DEAF:
1-800-634-4113 or 816-444-3485

AMERICAN CENTURY MUNICIPAL TRUST
INVESTMENT ADVISOR:
American Century Investment Management, Inc.
Kansas City, Missouri

THIS REPORT AND THE STATEMENTS IT CONTAINS ARE SUBMITTED FOR THE GENERAL
INFORMATION OF OUR SHAREHOLDERS. THE REPORT IS NOT AUTHORIZED FOR DISTRIBUTION
TO PROSPECTIVE INVESTORS UNLESS PRECEDED OR ACCOMPANIED BY AN EFFECTIVE
PROSPECTUS.

The American Century Investments logo, American Century and American Century
Investments are service marks of American Century Proprietary Holdings, Inc.

                         American Century Investment Services, Inc., Distributor

0607                     (c)2006 American Century Proprietary Holdings, Inc.
SH-ANN-50107N            All rights reserved.




ITEM 2.  CODE OF ETHICS.

a.   The registrant has adopted a Code of Ethics for Senior  Financial  Officers
     that applies to the registrant's  principal  executive  officer,  principal
     financial officer,  principal  accounting  officer,  and persons performing
     similar functions.

b.   No response required.

c.   None.

d.   None.

e.   Not applicable.

f.   The registrant's Code of Ethics for Senior Financial  Officers was filed as
     Exhibit 12 (a)(1) to American Century Asset Allocation  Portfolios,  Inc.'s
     Annual Certified  Shareholder Report on Form N-CSR, File No. 811-21591,  on
     September 29, 2005, and is incorporated herein by reference.


ITEM 3.  AUDIT COMMITTEE FINANCIAL EXPERT.

(a)(1)    The registrant's board has determined that the registrant has at least
          one audit committee financial expert serving on its audit committee.

(a)(2)    Jeanne D. Wohlers and Ronald J. Gilson are the registrant's designated
          audit committee  financial experts.  They are "independent" as defined
          in Item 3 of Form N-CSR.

(a)(3)    Not applicable.

(b)       No response required.

(c)       No response required.

(d)       No response required.


ITEM 4.  PRINCIPAL ACCOUNTANT FEES AND SERVICES.

(a) Audit Fees.

The aggregate fees billed for each of the last two fiscal years for professional
services rendered by the principal accountant for the audit of the registrant's
annual financial statements or services that are normally provided by the
accountant in connection with statutory and regulatory filings or engagements
for those fiscal years were as follows:

         FY 2005:  $69,555
         FY 2006:  $118,626

(b) Audit-Related Fees.

The aggregate fees billed in each of the last two fiscal years for assurance and
related services by the principal accountant that are reasonably related to the
performance of the audit of the registrant's financial statements and are not
reported under paragraph (a) of this Item were as follows:

         For services rendered to the registrant:

         FY 2005:  $0
         FY 2006:  $0

         Fees required to be approved pursuant to paragraph (c)(7)(ii) of Rule
         2-01 of Regulation S-X (relating to certain engagements for non-audit
         services with the registrant's investment adviser and its affiliates):

         FY 2005:  $0
         FY 2006:  $0

(c) Tax Fees.

The aggregate fees billed in each of the last two fiscal years for professional
services rendered by the principal accountant for tax compliance, tax advice,
and tax planning were as follows:

         For services rendered to the registrant:

         FY 2005:  $15,677
         FY 2006:  $20,431

         These services  included  review of federal and state income tax forms
         and federal excise tax forms.

         Fees required to be approved pursuant to paragraph (c)(7)(ii) of Rule
         2-01 of Regulation S-X (relating to certain engagements for non-audit
         services with the registrant's investment adviser and its affiliates):

         FY 2005:  $0
         FY 2006:  $0

(d) All Other Fees.

The aggregate fees billed in each of the last two fiscal years for products and
services provided by the principal accountant, other than the services reported
in paragraphs (a) through (c) of this Item were as follows:

         For services rendered to the registrant:

         FY 2005:  $0
         FY 2006:  $0

         Fees required to be approved pursuant to paragraph (c)(7)(ii) of Rule
         2-01 of Regulation S-X (relating to certain engagements for non-audit
         services with the registrant's investment adviser and its affiliates):

         FY 2005:  $0
         FY 2006:  $0

(e)(1)   In accordance with paragraph (c)(7)(i)(A) of Rule 2-01 of Regulation
         S-X, before the accountant is engaged by the registrant to render audit
         or non-audit services, the engagement is approved by the registrant's
         audit committee. Pursuant to paragraph (c)(7)(ii) of Rule 2-01 of
         Regulation S-X, the registrant's audit committee also pre-approves its
         accountant's engagements for non-audit services with the registrant's
         investment adviser, its parent company, and any entity controlled by,
         or under common control with the investment adviser that provides
         ongoing services to the registrant, if the engagement relates directly
         to the operations and financial reporting of the registrant.

(e)(2)   All services described in each of paragraphs (b) through (d) of this
         Item were pre-approved before the engagement by the registrant's audit
         committee pursuant to paragraph (c)(7)(i)(A) of Rule 2-01 of Regulation
         S-X. Consequently, none of such services were required to be approved
         by the audit committee pursuant to paragraph (c)(7)(i)(C).

 (f)     The percentage of hours expended on the principal accountant's
         engagement to audit the registrant's financial statements for the most
         recent fiscal year that were attributed to work performed by persons
         other than the principal accountant's full-time, permanent employees
         was less than 50%.

(g)      The aggregate non-audit fees billed by the registrant's accountant for
         services rendered to the registrant, and rendered to the registrant's
         investment adviser (not including any sub-adviser whose role is
         primarily portfolio management and is subcontracted with or overseen by
         another investment adviser), and any entity controlling, controlled by,
         or under common control with the adviser that provides ongoing services
         to the registrant for each of the last two fiscal years of the
         registrant were as follows:

         FY 2005:  $170,677
         FY 2006:  $249,764

(h)      The registrant's investment adviser and accountant have notified the
         registrant's audit committee of all non-audit services that were
         rendered by the registrant's accountant to the registrant's investment
         adviser, its parent company, and any entity controlled by, or under
         common control with the investment adviser that provides services to
         the registrant, which services were not required to be pre-approved
         pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X. The
         notification provided to the registrant's audit committee included
         sufficient details regarding such services to allow the registrant's
         audit committee to consider the continuing independence of its
         principal accountant.


ITEM 5.  AUDIT COMMITTEE OF LISTED REGISTRANTS.

Not applicable.


ITEM 6.  SCHEDULE OF INVESTMENTS.

The schedule of  investments  is included as part of the report to  stockholders
filed under Item 1 of this Form.


ITEM 7.  DISCLOSURE  OF PROXY VOTING  POLICIES  AND  PROCEDURES  FOR  CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.

Not applicable.


ITEM 8.  PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.

Not applicable.


ITEM 9.  PURCHASES OF EQUITY  SECURITIES  BY  CLOSED-END  MANAGEMENT  INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.

Not applicable.


ITEM 10.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

During the reporting period, there were no material changes to the procedures by
which shareholders may recommend nominees to the registrant's board.


ITEM 11.  CONTROLS AND PROCEDURES.

(a)  The  registrant's  principal  executive  officer  and  principal  financial
     officer  have  concluded  that the  registrant's  disclosure  controls  and
     procedures (as defined in Rule 30a-3(c) under the Investment Company Act of
     1940)  are  effective  based on their  evaluation  of  these  controls  and
     procedures as of a date within 90 days of the filing date of this report.

(b)  There were no changes in the  registrant's  internal control over financial
     reporting (as defined in Rule 30a-3(d) under the Investment  Company Act of
     1940) that occurred  during the  registrant's  second fiscal quarter of the
     period  covered  by this  report  that  have  materially  affected,  or are
     reasonably likely to materially affect,  the registrant's  internal control
     over financial reporting.


ITEM 12.  EXHIBITS.

(a)(1)    Registrant's  Code of Ethics for Senior Financial  Officers,  which is
          the subject of the  disclosure  required by Item 2 of Form N-CSR,  was
          filed  as  Exhibit  12(a)(1)  to  American  Century  Asset  Allocation
          Portfolios,  Inc.'s Certified  Shareholder  Report on Form N-CSR, File
          No. 811-21591, on September 29, 2005.

(a)(2)    Separate   certifications  by  the  registrant's  principal  executive
          officer and principal  financial  officer,  pursuant to Section 302 of
          the  Sarbanes-Oxley Act of 2002 and Rule 30a-2(a) under the Investment
          Company  Act of  1940,  are  filed  and  attached  hereto  as  Exhibit
          99.302CERT.

(a)(3)    Not applicable.

(b)       A certification by the registrant's  chief executive officer and chief
          financial  officer,  pursuant to Section 906 of the Sarbanes-Oxley Act
          of 2002, is furnished and attached hereto as Exhibit 99.906CERT.






                                   SIGNATURES


     Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.


Registrant:   AMERICAN CENTURY MUNICIPAL TRUST


     /s/ William M. Lyons
By:  ------------------------------------
     Name:  William M. Lyons
     Title: President


Date:  July 28, 2006



     Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment  Company  Act of  1940,  this  report  has been  signed  below by the
following  persons on behalf of the  registrant and in the capacities and on the
dates indicated.



By:  /s/ William M. Lyons
     ------------------------------------
     Name:  William M. Lyons
     Title: President
            (principal executive officer)


Date:  July 28, 2006




By:  /s/ Maryanne L. Roepke
     ------------------------------------
     Name:  Maryanne L. Roepke
     Title: Sr. Vice President, Treasurer, and
            Chief Financial Officer
           (principal financial officer)


Date:  July 28, 2006