As filed with the Securities and Exchange Commission on July 1, 1997
1933 Act File No. 33-14567; 1940 Act File No. 811-5188
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM N-1A
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933 _X__
Pre-Effective Amendment No.____ ____
Post-Effective Amendment No._21_ _X__
and/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 _X__
Amendment No._21_
AMERICAN CENTURY VARIABLE PORTFOLIOS, INC.
--------------------------------------------
(Exact Name of Registrant as Specified in Charter)
American Century Tower, 4500 Main Street, Kansas City, MO 64111
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(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: 816-531-5575
James E. Stowers, III
American Century Tower, 4500 Main Street, Kansas City, MO 64111
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(Name and address of Agent for service)
Approximate Date of Proposed Public Offering: September 15, 1997
It is proposed that this filing become effective:
_____ immediately upon filing pursuant to paragraph (b) of Rule 485
_____ on [date] pursuant to paragraph (b) of Rule 485
_____ 60 days after filing pursuant to paragraph (a) of Rule 485
_____ on [date] pursuant to paragraph (a)(1) of Rule 485
_____ 75 days afer filing pursuant to paragraph (a)(2) of Rule 485
__X__ on September 15, 1997 pursuant to paragraph (a)(2) of Rule 485
The Registrant has registered an indefinite number or amount of securities under
the Securities Act of 1933 pursuant to Rule 24f-2. The Rule 24f-2 notice for the
fiscal year ended December 31, 1996, was filed on February 27, 1997.
================================================================================
The VP Capital Appreciation, VP Value, VP Balanced, VP Advantage and VP
International Prospectuses dated May 1, 1997 are incorporated herein by
reference to the Registrant's filing pursuant to Rule 485(b) on April 28, 1997
(Accession # 0000814680-97-000005).
The VP Balanced Supplement to the Prospectus dated May 1, 1997 is incorporated
herein by reference to the Registrant's filing pursuant to Rule 497(e) on May 1,
1997 (Accession # 0000814680-97-000006).
The Statement of Additional Information dated May 1, 1997 is incorporated by
reference to the Registrant's filing pursuant to Rule 485(b) on on April 28,
1997 (Accession # 0000814680-97-000005).
<PAGE>
================================================================================
CROSS REFERENCE SHEET
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N-1A Item No. Location
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PART A
Item 1. Cover Page Cover Page
Item 2. Synopsis N/A
Item 3. Condensed Financial Financial Highlights
Information
Item 4. General Description Investment Policies of
of Registrant the Funds; Shareholders of Variable
Portfolios; Other Investment
Practices, Their Characteristics
and Risks; Performance
Advertising; Distribution
of Fund Shares; Further
Information About
American Century
Item 5. Management of the Management
Fund
Item 6. Capital Stock and Further Information About
Other Securities American Century
Item 7. Purchase of Securities Share Price; Distributions
Being Offered
Item 8. Redemption Share Price
Item 9. Pending Legal N/A
Proceedings
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PART B
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Item 10. Cover Page Cover Page
Item 11. Table of Contents Table of Contents
Item 12. General Information N/A
Item 13. Investment Objectives Selection of Investments;
and Policies Additional Investment Restrictions;
Futures Contracts; An Explanation of
Fixed Income Securities Ratings;
Short Sales; Portfolio Turnover;
Item 14. Management of the Officers and Directors;
Registrant Management;
Custodians
Item 15. Control Persons Capital Stock
and Principal
Holders of Securities
Item 16. Investment Advisory Management;
and Other Services Custodians
Item 17. Brokerage Allocation Brokerage;
Performance Advertising
Item 18. Capital Stock and Capital Stock
Other Securities
Item 19. Purchase, Redemption N/A
and Pricing of
Securities Being
Offered
Item 20. Tax Status N/A
Item 21. Underwriters N/A
Item 22. Calculation of Performance Advertising
Performance Data
Item 23. Financial Statements Financial Statements
<PAGE>
PROSPECTUS
[american century logo]
American
Century(sm)
SEPTEMBER 15, 1997
AMERICAN CENTURY
VARIABLE
PORTFOLIOS, INC.
VP Income & Growth
[front cover]
PROSPECTUS
SEPTEMBER 15, 1997
VP Income & Growth
AMERICAN CENTURY VARIABLE PORTFOLIOS, INC.
American Century Variable Portfolios, Inc. is a part of American Century
Investments, a family of funds that includes nearly 70 no-load mutual funds
covering a variety of investment opportunities. Variable Portfolios offers its
shares only to insurance companies to fund the benefits of variable annuity or
variable life insurance contracts. One of the funds, VP Income & Growth, is
described in this Prospectus. Its investment objective is listed on page 2 of
this Prospectus. The other funds are described in separate prospectuses. You
should consult the prospectus of the separate account of the specific insurance
product that accompanies this Prospectus to see which series of Variable
Portfolios are available for purchase for such insurance product.
Shares of the fund may be purchased only by insurance companies for the
purpose of funding variable annuity or variable life insurance contracts. This
Prospectus should be read in conjunction with the prospectus of the separate
account of the specific insurance product that accompanies this Prospectus.
This Prospectus gives you information about the fund that you should know
before investing. Please read this Prospectus carefully and retain it for future
reference.
Additional information is included in the Statement of Additional
Information dated September 15, 1997, and filed with the Securities and
Exchange Commission. It is incorporated into this Prospectus by reference. To
obtain a copy without charge, call or write:
American Century Investments
4500 Main Street o P.O. Box 419385
Kansas City, Missouri 64141-6385 o 1-800-345-3533
International calls: 816-531-5575
Telecommunications Device for the Deaf:
1-800-345-1833 o In Missouri: 816-444-3038
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Prospectus 1
INVESTMENT OBJECTIVE OF THE FUND
AMERICAN CENTURY VP INCOME & GROWTH
The investment objective of VP Income & Growth is dividend growth, current
income and capital appreciation. The fund will seek to achieve its investment
objective by investing in common stocks.
There is no assurance that the fund will achieve its investment objective.
NO PERSON IS AUTHORIZED BY THE FUND TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS OR IN OTHER PRINTED
OR WRITTEN MATERIAL ISSUED BY OR ON BEHALF OF THE FUND, AND YOU SHOULD NOT RELY
ON ANY OTHER INFORMATION OR REPRESENTATION.
2 Investment Objective American Century Investments
TABLE OF CONTENTS
Investment Objective of the Fund...............................................2
INFORMATION REGARDING THE FUND
Investment Policies of the Fund................................................4
Risk Factors and Investment Techniques.........................................4
Portfolio Optimization....................................................4
Investments in Stocks.....................................................4
Shareholders of Variable Portfolios............................................6
Other Investment Practices, Their Characteristics
and Risks....................................................................6
Portfolio Turnover........................................................6
Convertible Securities....................................................6
Interest Rate Futures Contracts
and Options Thereon....................................................6
Short-Term Instruments....................................................7
Foreign Securities........................................................7
Securities Lending........................................................7
Other Techniques..........................................................7
Performance Advertising........................................................8
ADDITIONAL INFORMATION YOU SHOULD KNOW
Share Price....................................................................9
Purchase and Redemption of Shares.........................................9
When Share Price is Determined............................................9
How Share Price is Determined.............................................9
Distributions..................................................................9
Taxes.........................................................................10
Management....................................................................10
Investment Management....................................................10
Investment Performance...................................................10
Code of Ethics...........................................................11
Transfer and Administrative Services.....................................11
Distribution of Fund Shares...................................................11
Further Information About American Century....................................11
Prospectus Table of Contents 3
INFORMATION REGARDING THE FUND
INVESTMENT POLICIES OF THE FUND
American Century Variable Portfolios, Inc. has adopted certain investment
restrictions applicable to the fund that are set forth in the Statement of
Additional Information. Those restrictions, as well as the investment objective
of the fund identified on page 2 of this Prospectus, and any other investment
policies designated as "fundamental" in this Prospectus or in the Statement of
Additional Information, cannot be changed without shareholder approval. The fund
has implemented additional investment policies and practices to guide its
activities in the pursuit of its investment objective. These policies and
practices, which are described throughout this Prospectus, are not designated as
fundamental policies and may be changed without shareholder approval.
The investment objective of VP Income & Growth is to seek divided growth,
current income and capital appreciation. The fund will seek to achieve its
investment objective by investing in common stocks.
RISK FACTORS AND INVESTMENT TECHNIQUES
PORTFOLIO OPTIMIZATION
The manager uses quantitative management strategies in pursuit of the
fund's investment objective. Quantitative management combines two investment
management approaches. The first is active management, which allows the manager
to select investments for the fund without reference to an index or investment
model. The second is indexing, in which the manager tries to match the fund's
portfolio composition to that of a particular index.
The primary management technique the manager uses is portfolio
optimization. The manager constructs the fund's portfolio to match the risk
characteristics of the S&P 500 and then optimizes each portfolio to achieve the
desired balance of risk and return potential. This includes targeting a dividend
yield that exceeds that of the S&P 500.
The fund's portfolio holdings are drawn primarily from equity securities of
the 1,500 largest companies traded in the United States (ranked by market
capitalization).
Portfolio optimization may cause the fund to be more heavily invested in
some industries than in others. However, the fund may not invest more than 25%
of its total assets in companies whose principal business activities are in the
same industry. In addition, the fund is a "diversified" investment company as
defined in the Investment Company Act of 1940. This means that investments in
any single issuer are limited to restrictions under the Investment Company Act.
The fund may invest in securities or engage in transactions involving
instruments other than equity securities, as discussed in the section titled
"Other Investment Practices, Their Characteristics and Risks," page 6.
INVESTMENTS IN STOCKS
The fund may be an appropriate component of a stock portfolio for investors
seeking total return through diversified investments in stocks, bonds, and
short-term instruments. The fund invests primarily in stocks, which may enhance
inflation-adjusted returns. The following chart illustrates how stocks have
historically outpaced inflation and produced higher returns than bonds. If you
seek a steady stream of monthly investment income, VP Income & Growth may be a
good investment for you. Of course, no single mutual fund can provide a balanced
investment plan.
4 Information Regarding the Fund American Century Investments
[line graph - data below]
CHART 1-Growth of Stocks, Bonds & Inflation
S&P 500 Index Govt. Bonds Inflation
Dec-25 1.00 1.00 1.00
Dec-26 1.12 1.08 0.99
Dec-27 1.53 1.17 0.96
Dec-28 2.20 1.18 0.96
Dec-29 2.02 1.22 0.96
Dec-30 1.52 1.27 0.90
Dec-31 0.86 1.20 0.81
Dec-32 0.79 1.41 0.73
Dec-33 1.21 1.41 0.73
Dec-34 1.20 1.55 0.75
Dec-35 1.77 1.62 0.77
Dec-36 2.37 1.75 0.78
Dec-37 1.54 1.75 0.80
Dec-38 2.02 1.85 0.78
Dec-39 2.01 1.96 0.78
Dec-40 1.81 2.08 0.79
Dec-41 1.60 2.10 0.86
Dec-42 1.93 2.16 0.94
Dec-43 2.43 2.21 0.97
Dec-44 2.91 2.27 0.99
Dec-45 3.96 2.51 1.01
Dec-46 3.64 2.51 1.20
Dec-47 3.85 2.45 1.31
Dec-48 4.06 2.53 1.34
Dec-49 4.83 2.69 1.32
Dec-50 6.36 2.69 1.39
Dec-51 7.89 2.59 1.48
Dec-52 9.34 2.62 1.49
Dec-53 9.24 2.71 1.50
Dec-54 14.11 2.91 1.49
Dec-55 18.56 2.87 1.50
Dec-56 19.78 2.71 1.54
Dec-57 17.65 2.91 1.59
Dec-58 25.30 2.73 1.61
Dec-59 28.32 2.67 1.64
Dec-60 28.45 3.04 1.66
Dec-61 36.11 3.07 1.67
Dec-62 32.95 3.28 1.69
Dec-63 40.47 3.32 1.72
Dec-64 47.14 3.44 1.74
Dec-65 53.01 3.46 1.78
Dec-66 47.67 3.59 1.84
Dec-67 59.10 3.26 1.89
Dec-68 65.64 3.25 1.98
Dec-69 60.06 3.09 2.10
Dec-70 62.47 3.46 2.22
Dec-71 71.41 3.92 2.29
Dec-72 84.96 4.14 2.37
Dec-73 72.50 4.09 2.58
Dec-74 53.31 4.27 2.89
Dec-75 73.14 4.67 3.10
Dec-76 90.58 5.45 3.24
Dec-77 84.08 5.41 3.46
Dec-78 89.59 5.35 3.78
Dec-79 106.11 5.28 4.28
Dec-80 140.51 5.07 4.81
Dec-81 133.62 5.17 5.24
Dec-82 162.22 7.25 5.44
Dec-83 198.75 7.30 5.65
Dec-84 211.20 8.43 5.87
Dec-85 279.12 11.04 6.10
Dec-86 330.67 13.74 6.16
Dec-87 347.97 13.37 6.44
Dec-88 406.46 14.67 6.72
Dec-89 534.46 17.32 7.03
Dec-90 517.50 18.39 7.46
Dec-91 675.59 21.94 7.69
Dec-92 727.41 23.71 7.91
Dec-93 800.08 28.03 8.13
Dec-94 810.54 25.86 8.35
Dec-95 1,113.92 34.04 8.56
Dec-96 1,370.90 33.73 8.85
Source: Ibbotson Associates, Stocks, Bonds, Bills and Inflation.
In contrast to bond investors, common stock investors forego the certainty
of coupon interest payments. However, they enjoy the potential for increased
dividend income if the issuing company prospers. As indicated below, Chart 2
compares the growth of dividends from S&P 500 stocks with the rate of inflation
over a 50-year period.
[line graph - data below]
CHART 2-Growth of Dividends vs. Inflation
Inflation S&P 500 Dividends
Dec-46 1.00 1.00
Dec-47 1.09 1.18
Dec-48 1.12 1.31
Dec-49 1.10 1.61
Dec-50 1.16 2.07
Dec-51 1.23 1.99
Dec-52 1.24 1.99
Dec-53 1.25 2.04
Dec-54 1.24 2.17
Dec-55 1.25 2.31
Dec-56 1.28 2.45
Dec-57 1.32 2.52
Dec-58 1.35 2.46
Dec-59 1.37 2.58
Dec-60 1.39 2.75
Dec-61 1.40 2.85
Dec-62 1.41 3.00
Dec-63 1.44 3.21
Dec-64 1.45 3.52
Dec-65 1.48 3.83
Dec-66 1.53 4.04
Dec-67 1.58 4.11
Dec-68 1.65 4.32
Dec-69 1.75 4.45
Dec-70 1.85 4.42
Dec-71 1.91 4.32
Dec-72 1.98 4.44
Dec-73 2.15 4.76
Dec-74 2.41 5.07
Dec-75 2.58 5.18
Dec-76 2.71 5.70
Dec-77 2.89 6.58
Dec-78 3.15 7.14
Dec-79 3.57 7.96
Dec-80 4.01 8.68
Dec-81 4.37 9.34
Dec-82 4.54 9.68
Dec-83 4.71 9.99
Dec-84 4.90 10.61
Dec-85 5.08 11.13
Dec-86 5.14 11.66
Dec-87 5.37 12.41
Dec-88 5.60 13.70
Dec-89 5.86 15.56
Dec-90 6.22 17.04
Dec-91 6.41 17.18
Dec-92 6.60 17.44
Dec-93 6.78 17.72
Dec-94 6.96 18.56
Dec-95 7.14 19.42
Dec-96 7.38 20.99
Sources: Ibbotson Associates, Stocks, Bonds, Bills and Inflation and Standard
and Poor's Security Price Index Record
Historical equity index returns suggest that stocks provide superior
investment returns over the long term. Over short periods of time, however, the
prices of individual stocks and the stock market as a whole can be very
volatile. The following table shows best and worst average annual total returns
for the S&P 500 over time spans of one, five, 10 and 20 years between 1926 and
1996.
VARIABILITY OF S&P 500 RETURNS
- -----------------------------------------------------------------------------
1 YR 5 YRS 10 YRS 20 YRS
Best 53.99% 23.92% 20.06% 16.86%
Worst -43.34% -12.47% -0.89% 3.11%
- -----------------------------------------------------------------------------
Source: Ibbotson Associates, Stocks, Bonds, Bills and Inflation. This analysis
is based on historical annual total return figures for the S&P 500.
Notice that the difference between the best and worst return decreases as
the measure of time increases. Stock market investing may not make sense for you
unless you are prepared to ride out the markets' ups and downs.
As indicated below, Chart 3 compares the historical risk vs. reward
characteristics of stocks (represented by the S&P 500), bonds (represented by a
20-year U.S. Treasury bond), and Treasury bills. As you can see, historically,
stocks have provided higher returns at greater risk than Treasury bonds and
bills over the long term.
[bullet graph - data below]
CHART 3-Risk vs. Reward (1926-1996)
T-Bills Govt. Bonds S&P 500
Average Annual Total Return 3.74% 5.08% 10.71%
Standard Deviation 3.26% 9.21% 20.32%
Source: Ibbotson Associates, Stocks, Bonds, Bills and Inflation.
THE HISTORICAL S&P 500 DATA PRESENTED HERE ARE NOT INTENDED TO SUGGEST THAT
AN INVESTOR WOULD HAVE ACHIEVED COMPARABLE RESULTS BY INVESTING IN ANY ONE
EQUITY SECURITY OR IN MANAGED PORTFOLIOS OF EQUITY SECURITIES, SUCH AS THE FUND,
DURING THE PERIODS SHOWN. THE S&P 500 IS AN UNMANAGED INDEX REPRESENTING THE
PERFORMANCE OF 500 MAJOR COMPANIES, MOST OF WHICH ARE LISTED ON THE NEW YORK
STOCK EXCHANGE. INVESTORS CANNOT INVEST DIRECTLY IN THE S&P 500. THE HISTORICAL
CONDITIONS THAT GAVE RISE TO THE PATTERNS ILLUSTRATED HERE MAY NOT BE REPEATED.
TRANSACTION COSTS AND OTHER EXPENSES OF MANAGING A COMMON STOCK PORTFOLIO ARE
NOT REFLECTED IN THE FIGURES SHOWN. S&P 500 IS A REGISTERED SERVICE MARK OF
STANDARD AND POOR'S CORPORATION.
Prospectus Information Regarding the Fund 5
SHAREHOLDERS OF VARIABLE PORTFOLIOS
Variable Portfolios will offer its shares only to insurance companies for
the purpose of funding variable annuity or variable life insurance contracts.
Although Variable Portfolios does not foresee any disadvantages to contract
owners due to the fact that it offers its shares as an investment medium for
both variable annuity and variable life products, the interests of various
contract owners participating in the funds of Variable Portfolios might at some
time be in conflict due to future differences in tax treatment of variable
products or other considerations. Consequently, Variable Portfolios' Board of
Directors will monitor events in order to identify any material irreconcilable
conflicts that may possibly arise and to determine what action, if any, should
be taken in response to such conflicts. If a conflict were to occur, an
insurance company separate account might be required to withdraw its investments
in the fund and the fund might be forced to sell securities at disadvantageous
prices to fund such withdrawal.
OTHER INVESTMENT PRACTICES, THEIR CHARACTERISTICS
AND RISKS
For additional information, see "Investment Restrictions" in the Statement
of Additional Information.
PORTFOLIO TURNOVER
Investment decisions to purchase and sell securities are based on the
anticipated contribution of the security in question to the fund's objectives.
The manager believes that the rate of portfolio turnover is irrelevant when it
determines a change is in order to achieve those objectives, and accordingly,
the annual portfolio turnover rate cannot be accurately predicted.
The portfolio turnover of the fund may be higher than other mutual funds
with similar investment objectives. Higher turnover would generate
correspondingly greater brokerage commissions, which is a cost that the fund
pays directly. Portfolio turnover may also affect the character of capital
gains, if any, realized and distributed by the fund since short-term capital
gains are taxable as ordinary income.
CONVERTIBLE SECURITIES
Although the fund's equity investments consist primarily of common stock,
the fund may buy securities convertible into common stock, such as convertible
bonds, convertible preferred stocks, and warrants. The manager may purchase
these securities if it believes that a company's convertible securities are
undervalued in the market.
INTEREST RATE FUTURES CONTRACTS
AND OPTIONS THEREON
The fund may buy or sell interest rate futures contracts relating to debt
securities ("debt futures," i.e., futures relating to indexes on types or groups
of bonds) and write or buy put and call options relating to interest rate
futures contracts.
For options sold, the fund will segregate cash or appropriate liquid assets
including equity securities and debt securities of any grade equal to the value
of securities underlying the option unless the option is otherwise covered.
The fund will deposit appropriate liquid assets or cash in a segregated
custodial account in an amount equal to the fluctuating market value of long
futures contracts it has purchased, less any margin deposited on its long
position. It may hold cash or acquire such debt obligations for the purpose of
making these deposits.
The fund may use futures and options transactions to maintain cash reserves
while remaining fully invested, to facilitate trading, to reduce transaction
costs, or to pursue higher investment returns when a futures contract is priced
more attractively than its underlying security or index.
Since futures contracts and options thereon can replicate movements in the
cash markets for the securities in which the fund invests without the large cash
investments required for dealing in such markets, they may subject the fund to
greater and more volatile risks than might otherwise be the case. The principal
risks related to the use of such instruments are (1) the offsetting correlation
between movements in the market price of the portfolio investments (held or
intended) being hedged and in the price of the futures contract or option may be
imperfect; (2) possible lack of a liquid secondary market for closing out
futures or option
6 Information Regarding the Fund American Century Investments
positions; (3) the need of additional portfolio management skills and
techniques; and (4) losses due to unanticipated market price movements. For a
hedge to be completely effective, the price change of the hedging instrument
should equal the price change of the securities being hedged. Such equal price
changes are not always possible because the investment underlying the hedging
instrument may not be the same investment that is being hedged.
The ordinary spreads between prices in the cash and futures markets, due to
the differences in the nature of those markets, are subject to distortion. Due
to the possibility of distortion, a correct forecast of general interest rate
trends by the manager may still not result in a successful transaction. The
manager may be incorrect in its expectations as to the extent of various
interest rate movements or the time span within which the movements take place.
See the Statement of Additional Information for further information about
these instruments and their risks.
SHORT-TERM INSTRUMENTS
For liquidity purposes, the fund may invest in high-quality money market
instruments with remaining maturities of one year or less. Such instruments may
include U.S. government securities, certificates of deposit, commercial paper,
and bankers' acceptances.
The fund may also enter into repurchase agreements, collateralized by U.S.
government securities, with banks or broker-dealers that are deemed to present
minimal credit risk. Credit risk determinations are made by the manager pursuant
to guidelines established by the Board of Directors. A repurchase agreement
involves the purchase of a security and a simultaneous agreement to sell the
security back to the seller at a higher price. Delays or losses could result if
the other party to the agreement defaults or becomes bankrupt.
The fund may invest up to 5% of its total assets in any money market fund
advised by the manager, provided that the investment is consistent with the
fund's investment policies and restrictions.
FOREIGN SECURITIES
The fund may invest in securities of foreign issuers, including
instruments that trade on domestic or foreign securities exchanges in U. S.
dollars or foreign currencies. Securities of foreign issuers may be affected
by the strength of foreign currencies relative to the U.S. dollar or by
political or economic developments in foreign countries. Foreign companies may
not be subject to accounting standards or governmental regulations comparable
to those that affect U.S. companies, and there may be less public information
about their operations.
SECURITIES LENDING
In order to realize additional income, the fund may lend its portfolio
securities to persons not affiliated with it and who are deemed to be
creditworthy. Such loans must be secured continuously by cash collateral
maintained on a current basis in an amount at least equal to the market value of
the securities loaned, or by irrevocable letters of credit. During the existence
of the loan, the fund must continue to receive the equivalent of the interest
and dividends paid by the issuer on the securities loaned and interest on the
investment of the collateral. The fund must have the right to call the loan and
obtain the securities loaned at any time on five days' notice, including the
right to call the loan to enable the fund to vote the securities. This practice
could result in a loss or a delay in recovering the fund's securities. Such
loans may not exceed one-third of the fund's total assets taken at market value.
OTHER TECHNIQUES
The manager may buy other types of securities or employ other portfolio
management techniques on behalf of the fund. When SEC guidelines require it to
do so, the fund will set aside cash or appropriate liquid assets in a segregated
account to cover its obligations. See the Statement of Additional Information
for a more detailed discussion of these investments and some of the risks
associated with them.
Prospectus Information Regarding the Fund 7
PERFORMANCE ADVERTISING
From time to time the fund (or the insurance companies that use the fund to
fund the benefits of variable annuity or variable life insurance contracts) may
advertise performance data. Fund performance may be shown by presenting one or
more performance measurements, including cumulative total return or average
annual total return, yield and effective yield.
Cumulative total return data is computed by considering all elements of
return, including reinvestment of dividends and capital gains distributions,
over a stated period of time. Average annual total return is determined by
computing the annual compound return over a stated period of time that would
have produced the fund's cumulative total return over the same period if the
fund's performance had remained constant throughout.
A quotation of yield reflects the fund's income over a stated period of
time expressed as a percentage of the fund's share price. The effective yield is
calculated in a similar manner but, when annualized, the income earned by the
investment is assumed to be reinvested. The effective yield will be slightly
higher than the yield because of the compounding effect on the assumed
reinvestment.
Yield is calculated by adding over a 30-day (or one-month) period all
interest and dividend income (net of fund expenses) calculated on each day's
market values, dividing this sum by the average number of fund shares
outstanding during the period, and expressing the result as a percentage of the
fund's share price on the last day of the 30-day (or one month) period. The
percentage is then annualized. Capital gains and losses are not included in the
calculation.
Yields are calculated according to accounting methods that are standardized
in accordance with SEC rules. The SEC yield should be regarded as an estimate of
the fund's rate of investment income, and it may not equal the fund's actual
income distribution rate, the income paid to a shareholder's account, or the
income reported in the fund's financial statements.
The fund may also include in advertisements data comparing performance with
the performance of non-related investment media, published editorial comments
and performance rankings compiled by independent organizations (such as Lipper
Analytical Services) and publications that monitor the performance of mutual
funds. Performance information may be quoted numerically or may be represented
in a table, graph or other illustration. In addition, fund performance may be
compared to well-known indices of market performance. Fund performance also may
be compared, on a relative basis, to other funds in our fund family. This
relative comparison, which may be based upon historical or expected fund
performance, volatility or other fund characteristics, may be presented
numerically, graphically or in text.
All performance information advertised by the fund is historical in nature
and is not intended to represent or guarantee future results. The value of fund
shares when redeemed may be more or less than their original cost.
Performance figures advertised by the fund should not be used for
comparative purposes because these figures will not include charges and
deductions imposed by the insurance company separate account under the variable
annuity or variable life insurance contracts.
8 Information Regarding the Fund American Century Investments
ADDITIONAL INFORMATION YOU SHOULD KNOW
SHARE PRICE
PURCHASE AND REDEMPTION OF SHARES
For instructions on how to purchase and redeem shares, read the prospectus
of your insurance company separate account.
Shares of the fund are sold and redeemed by the fund at their net asset
value next determined after receipt by the insurance company separate account of
the order from the variable annuity or variable life insurance contract owner to
purchase or to redeem. There are no sales commissions or redemption charges.
However, certain sales or deferred sales charges and other charges may apply to
the variable annuity or life insurance contracts. Those charges are disclosed in
the separate account prospectus.
WHEN SHARE PRICE IS DETERMINED
The price of VP Income & Growth shares is also referred to as their net
asset value. Net asset value is determined by calculating the total value of the
fund's assets, deducting total liabilities and dividing the result by the number
of shares outstanding. Net asset value is determined at the close of regular
trading on each day that the New York Stock Exchange is open. Investments and
requests to redeem shares received by the separate account before the close of
business of the Exchange, usually 3 p.m. Central time, are effective, and will
receive the price determined, that day as of the close of the Exchange.
Investment, redemption and exchange requests received thereafter are effective
on, and receive the price determined as of the close of the Exchange on, the
next day the Exchange is open.
HOW SHARE PRICE IS DETERMINED
The valuation of assets for determining net asset value may be summarized
as follows:
The portfolio securities of the fund, except as otherwise noted, listed or
traded on a domestic stock exchange are valued at the latest sale price on that
exchange. Portfolio securities primarily traded on foreign securities exchanges
are generally valued at the preceding closing values of such securities on the
exchange where primarily traded. If no sale is reported, or if local convention
or regulation so provides, the mean of the latest bid and asked prices is used.
Depending on local convention or regulation, securities traded over the counter
are priced at the mean of the latest bid and asked prices, or at the last sale
price. When market quotations are not readily available, securities and other
assets are valued at fair value as determined in accordance with procedures
adopted by the Board of Directors.
Debt securities not traded on a principal securities exchange are valued
through valuations obtained from a commercial pricing service or at the most
recent mean of the bid and asked prices provided by investment dealers in
accordance with procedures established by the Board of Directors.
DISTRIBUTIONS
At the close of each day including Saturdays, Sundays and holidays, net
income of the fund is determined and declared as a distribution. The
distribution will be paid monthly on the last Friday of each month, except for
year-end distributions which will be made on the last business day of the year.
You will begin to participate in the distributions the day after your
purchase is effective. See "When Share Price is Determined," this page. If you
redeem shares, you will receive the distribution declared for the day of the
redemption. If all shares are redeemed, the distribution on the redeemed shares
will be included with your redemption proceeds.
Distributions from net realized securities gains, if any, generally are
declared and paid once a year, but the fund may make distributions on a more
frequent basis to comply with the distribution requirements of the Internal
Revenue Code, in all events in a manner consistent with the provisions of the
Investment Company Act.
Prospectus Additional Information You Should Know 9
TAXES
The fund has elected to be taxed under Subchapter M of the Internal Revenue
Code, which means to the extent its income is distributed to shareholders, it
pays no income tax. For a discussion of the tax status of your variable
contract, refer to the prospectus of your insurance company separate account.
MANAGEMENT
INVESTMENT MANAGEMENT
Under the laws of the State of Maryland, the Board of Directors is
responsible for managing the business and affairs of the fund. Acting pursuant
to an investment management agreement entered into with the fund, American
Century Investment Management, Inc. serves as the manager of the fund. Its
principal place of business is American Century Tower, 4500 Main Street, Kansas
City, Missouri 64111.
The manager has been providing investment advisory services to investment
companies and institutional investors since it was founded in 1958.
The manager supervises and manages the investment portfolio of the fund and
directs the purchase and sale of its investment securities. It utilizes a team
of portfolio managers, assistant portfolio managers and analysts acting together
to manage the assets of the fund. The team meets regularly to review portfolio
holdings and to discuss purchase and sale activity. The team adjusts holdings in
the fund's portfolio as they deem appropriate in pursuit of the fund's
investment objectives. Individual portfolio manager members of the team may also
adjust portfolio holdings of the funds as necessary between team meetings.
The portfolio manager members of the VP Growth & Income team and their work
experience for the last five years are as follows:
JOHN SCHNIEDWIND, Senior Vice President and Group Head--Quantitative
Equity, joined American Century in 1982.
KURT BORGWARDT, Director of Quantitative Research, joined American Century
in 1990 and has served as the Director of Quantitative Research since then.
The activities of the manager are subject only to directions of the fund's
Board of Directors. The manager pays all the expenses of the fund except
brokerage, taxes, interest, fees, expenses of the non-interested person
directors (including counsel fees) and extraordinary expenses.
For the services provided to the fund, the manager receives an annual fee
of ___% of the average net assets of the fund. On the first business day of each
month, each series of shares pays a management fee to the manager for the
previous month at the rate specified. The fee for the previous month is
calculated by multiplying the applicable fee for such series by the aggregate
average daily closing value of the series' net assets during the previous month,
and further multiplying that product by a fraction, the numerator of which is
the number of days in the previous month and the denominator of which is 365
(366 in leap years).
INVESTMENT PERFORMANCE
The fund commenced operations on September 15, 1997, and therefore has no
performance history. The fund is substantially identical to another fund in the
American Century family of funds, American Century Income & Growth, has the same
management team and investment policies and will be managed with the same
investment objective and strategies. The Average Annual Total Return information
for American Century Income & Growth set forth below is not the performance
history of the fund, and is not an indication of future performance of the fund.
AVERAGE ANNUAL TOTAL RETURNS
For periods ended December 31, 1996
- -----------------------------------------------------------------------------
ONE THREE FIVE LIFE
YEAR YEARS YEARS OF FUND*
- -----------------------------------------------------------------------------
American Century
Income &
Growth Fund 24.15% 19.11% 15.20% 18.99%
- -----------------------------------------------------------------------------
*American Century Income & Growth Fund commenced operations on December 17,
1990.
10 Additional Information You Should Know American Century Investments
CODE OF ETHICS
The fund and the manager have adopted a Code of Ethics that restricts
personal investing practices by employees of the manager and its affiliates.
Among other provisions, the Code of Ethics requires that employees with access
to information about the purchase or sale of securities in the fund's portfolios
obtain preclearance before executing personal trades. With respect to Portfolio
Managers and other investment personnel, the Code of Ethics prohibits
acquisition of securities in an initial public offering, as well as profits
derived from the purchase and sale of the same security within 60 calendar days.
These provisions are designed to ensure that the interests of fund shareholders
come before the interests of the people who manage those funds.
TRANSFER AND ADMINISTRATIVE SERVICES
American Century Services Corporation, 4500 Main Street, Kansas City,
Missouri 64111, acts as transfer agent and dividend paying agent for the fund.
It provides facilities, equipment and personnel to the fund and is paid for such
services by the manager. Certain administrative and recordkeeping services that
would otherwise be performed by the transfer agent may be performed by the
insurance company that purchases the fund's shares, and the manager may pay the
insurance company for such services.
The manager and the transfer agent are both wholly owned by American
Century Companies, Inc. James E. Stowers Jr., chairman of the fund's Board of
Directors, controls American Century Companies, Inc. by virtue of his voting
control of a majority of its common stock.
DISTRIBUTION OF FUND SHARES
The fund's shares are distributed by American Century Investment Services,
Inc., a registered broker-dealer and an affiliate of the fund's investment
manager. The manager pays all expenses for promoting sales of, and distributing
the shares offered by this Prospectus.
FURTHER INFORMATION ABOUT AMERICAN CENTURY
American Century Variable Portfolios, Inc., the issuer of the fund, was
organized as a Maryland corporation on June 4, 1987. It is a diversified,
open-end management investment company. Its business and affairs are managed by
its officers under the direction of its Board of Directors.
The principal office of the fund is 4500 Main Street, P.O. Box 419385,
Kansas City, Missouri 64141-6385. All inquiries may be made by mail to that
address or by telephone to 816-531-5575.
American Century Variable Portfolios, Inc. issues six series of common
stock with a par value of $.01 per share. Each series is commonly known as a
fund. The assets belonging to each series of shares are held separately by the
custodian. Each share of each series, when issued, is fully paid and
non-assessable.
Each share, irrespective of series, is entitled to one vote for each dollar
of net asset value applicable to such share on all questions, except for those
matters which must be voted on separately by the series of shares affected.
Matters affecting only one series are voted upon only by that series.
Shares have non-cumulative voting rights, which means that holders of more
than 50% of the votes cast in an election of directors can elect all of the
directors if they choose to do so, and, in such event, the holders of the
remaining votes will not be able to elect any person or persons to the Board of
Directors.
An insurance company issuing a variable contract invested in shares issued
by the fund will request voting instructions from contract holders and will vote
shares in proportion to the voting instructions received.
In the event of the complete liquidation or dissolution of the fund,
shareholders of each series of shares shall be entitled to receive, pro rata,
all of the assets less the liabilities of that series.
WE RESERVE THE RIGHT TO CHANGE ANY OF OUR POLICIES, PRACTICES AND
PROCEDURES DESCRIBED IN THIS PROSPECTUS, INCLUDING THE STATEMENT OF ADDITIONAL
INFORMATION, WITHOUT SHAREHOLDER APPROVAL EXCEPT IN THOSE INSTANCES WHERE
SHAREHOLDER APPROVAL IS EXPRESSLY REQUIRED.
Prospectus Additional Information You Should Know 11
NOTES
12 Notes American Century Investments
NOTES
Notes 13
P.O. Box 419385
Kansas City, Missouri
64141-6385
Institutional Services:
1-800-345-3533 or 816-531-5575
Telecommunications Device for the Deaf:
1-800-345-1833 or 816-444-3038
Fax: 816-340-4360
Internet: www.americancentury.com
[american century logo]
American
Century(sm)
9706 [recycled logo]
SH-BKT-9020 Recycled
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
[american century logo]
American
Century(sm)
SEPTEMBER 15, 1997
AMERICAN CENTURY
VARIABLE
PORTFOLIOS, INC.
VP Income & Growth
[front cover]
STATEMENT OF ADDITIONAL INFORMATION
SEPTEMBER 15, 1997
AMERICAN CENTURY VARIABLE PORTFOLIOS, INC.
This statement is not a prospectus but should be read in conjunction with
the current Prospectus of VP Income & Growth, a series of shares of American
Century Variable Portfolios, Inc. Such prospectus is dated September 15, 1997.
Please retain this document for future reference. To obtain a copy of the VP
Income & Growth prospectus, call American Century at 1-800-345-3533 or
816-531-5575, or write to P.O. Box 419385, Kansas City, Missouri 64141-6385.
TABLE OF CONTENTS
Investment Restrictions....................................................... 2
U.S. Government Securities.................................................... 2
Repurchase Agreements......................................................... 3
When-Issued and Forward Commitment Agreements................................. 3
Convertible Securities........................................................ 4
Foreign Securities............................................................ 4
Foreign Currency Exchange Transactions........................................ 5
Depositary Receipts........................................................... 5
Restricted Securities......................................................... 6
Securities Lending............................................................ 6
Put Options on Individual Securities.......................................... 6
Futures and Options Transactions.............................................. 7
Portfolio Turnover............................................................10
Performance...................................................................11
Officers and Directors........................................................11
Management....................................................................13
Custodian.....................................................................13
Independent Auditors..........................................................13
Capital Stock.................................................................13
Brokerage.....................................................................14
Redemptions in Kind...........................................................15
Holidays......................................................................15
Statement of Additional Information 1
INVESTMENT RESTRICTIONS
In achieving its objective, the fund must conform to certain fundamental
policies. These policies, which may not be changed without shareholder approval,
provide that the fund:
(1) Shall not lend any security or make any other loan if, as a result, more
than 33 1/3% of the fund's total assets would be lent to other parties,
except (i) through the purchase of debt securities in accordance with its
investment objective, policies and limitations, or (ii) by engaging in
repurchase agreements with respect to portfolio securities.
(2) Shall not invest for purposes of exercising control over management.
(3) Shall not issue senior securities, except as permitted under the Investment
Company Act of 1940.
(4) Shall not act as an underwriter of securities by others, except to the
extent that the fund may be considered an underwriter within the meaning of
the Securities Act of 1933 in the disposition of restricted securities.
(5) Shall not borrow any money, except that the fund may borrow money for
temporary or emergency purposes (not for leveraging or investment) in an
amount not exceeding 33 1/3% of the fund's total assets (including the
amount borrowed) less liabilities (other than borrowings).
(6) Shall not purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments; provided that this policy
shall not prohibit the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed by
physical commodities.
(7) Shall not purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments. This policy shall not prevent
the fund from investment in securities or other instruments backed by real
estate or securities of companies that deal in real estate or are engaged
in the real estate business.
(8) Shall not concentrate its investments in securities of issues in a
particular industry (other than securities issued or guaranteed by the U.S.
government or any of its agencies or instrumentalities).
The Investment Company Act imposes certain additional restrictions upon
acquisition by the corporation of securities issued by insurance companies,
broker-dealers, underwriters or investment advisors, and upon transactions with
affiliated persons as therein defined. It also defines and forbids the creation
of cross and circular ownership.
The Investment Company Act also provides that the fund may not invest more
than 25% of its assets in the securities of issuers engaged in a single
industry. In determining industry groups for purposes of this standard, the
Securities and Exchange Commission ordinarily uses the Standard Industry
Classification codes developed by the United States Office of Management and
Budget. In the interest of ensuring adequate diversification, the fund monitors
industry concentration using a more restrictive list of industry groups than
that recommended by the SEC. The fund believes that these classifications are
reasonable and are not so broad that the primary economic characteristics of the
companies in a single class are materially different. The use of these more
restrictive industry classifications may, however, cause the fund to forego
investment possibilities which may otherwise be available to it under the
Investment Company Act.
Neither the SEC nor any other agency of the federal or state government
participates in or supervises the fund's management or its investment practices
or policies.
U.S. GOVERNMENT SECURITIES
The fund may invest in U.S. government securities, including bills, notes
and bonds issued by the U.S. Treasury and securities issued or guaranteed by
agencies or instrumentalities of the U.S. government. Some U.S. government
securities are supported by the direct full faith and credit pledge of the
U.S. government; others are supported by the right of the issuer to borrow
from the U.S. Treasury; others, such as securities issued by the Federal
National Mortgage Association, are supported by the discretionary authority of
the U.S. government to purchase the agencies' obligations; and others are
supported only
2 American Century Investments
by the credit of the issuing or guaranteeing instrumentality. There is no
assurance that the U.S. government will provide financial support to an
instrumentality it sponsors when it is not obligated by law to do so.
REPURCHASE AGREEMENTS
In a repurchase agreement (a "repo"), the fund buys a security at one price
and simultaneously agrees to sell it back to the seller at an agreed upon price
on a specified date (usually within seven days from the date of purchase) or on
demand. The repurchase price exceeds the purchase price by an amount that
reflects an agreed-upon rate of return and that is unrelated to the interest
rate on the underlying security. Delays or losses could result if the other
party to the agreement defaults or becomes bankrupt.
The manager attempts to minimize the risks associated with repurchase
agreements by adhering to the following criteria:
(1) Limiting the securities acquired and held by the fund under repurchase
agreement to U.S. government securities;
(2) Entering into repurchase agreements only with primary dealers in U.S.
government securities (including bank affiliates) who are deemed to be
creditworthy under guidelines established by a nationally recognized
statistical rating organization and approved by the fund's Board of
Directors;
(3) Monitoring the creditworthiness of all firms involved in repurchase
agreement transactions;
(4) Requiring the seller to establish and maintain collateral equal to 102% of
the agreed-upon resale price, provided, however, that the Board of
Directors may determine that a broker-dealer's credit standing is
sufficient to allow collateral to fall to as low as 101% of the agreed-upon
resale price before the broker-dealer deposits additional securities with
the fund's custodian;
(5) Investing no more than 5% of the fund's net assets in repurchase agreements
that mature in more than seven days (together with any other illiquid
security the fund holds); and
(6) Taking delivery of all securities subject to repurchase agreement and
holding them in an account at the fund's custodian bank.
The fund has received permission from the Securities and Exchange
Commission to participate in pooled repurchase agreements collateralized by U.S.
government securities with other mutual funds advised by the manager. Pooled
repos are expected to increase the income the fund can earn from repo
transactions without increasing the risks associated with these transactions.
WHEN-ISSUED AND FORWARD
COMMITMENT AGREEMENTS
The fund may engage in securities transactions on a when-issued or forward
commitment basis, in which the transaction price and yield are each fixed at the
time the commitment is made, but payment and delivery occur at a future date
(typically 15 to 45 days later).
When purchasing securities on a when-issued or forward commitment basis,
the fund assumes the rights and risks of ownership, including the risks of price
and yield fluctuations. While the fund will make commitments to purchase or sell
securities on a when-issued or forward commitment basis with the intention of
actually receiving or delivering them, it may nevertheless sell the securities
before the settlement date if it is deemed advisable as a matter of investment
strategy.
In purchasing securities on a when-issued or forward commitment basis, the
fund will establish and maintain until the settlement date a segregated account
consisting of cash or appropriate liquid assets including equity securities and
debt securities of any grade in an amount sufficient to meet the purchase price.
When the time comes to pay for when-issued securities, the fund will meet its
obligations with available cash, through the sale of securities, or, although it
would not normally expect to do so, through sales of the when-issued securities
themselves (which may have a market value greater or less than the fund's
payment obligation). Selling securities to meet when-issued or forward
commitment obligations may generate capital gains or losses.
As an operating policy, the fund will not commit more than 35% of its total
assets to when-issued or forward commitment agreements. If fluctuations in the
value of securities held cause more than 35% of
Statement of Additional Information 3
the fund's total assets to be committed under when-issued or forward commitment
agreements, the manager need not sell such commitments, but it will be
restricted from entering into further agreements on behalf of the fund until the
percentage of assets committed to such agreements is reduced to at least 35%. In
addition, as an operating policy, the fund will not enter into when-issued or
forward commitment transactions with settlement dates exceeding 120 days.
CONVERTIBLE SECURITIES
The fund may buy securities that are convertible into common stock. Listed
below is a brief description of the various types of convertible securities the
fund may buy.
CONVERTIBLE BONDS are issued with lower coupons than nonconvertible bonds
of the same quality and maturity, but they give holders the option to exchange
their bonds for a specific number of shares of the company's common stock at a
predetermined price. This structure allows the convertible bond holder to
participate in share price movements in the company's common stock. The actual
return on a convertible bond may exceed its stated yield if the company's common
stock appreciates in value and the option to convert to common shares becomes
more valuable.
CONVERTIBLE PREFERRED STOCKS are nonvoting equity securities that pay a
fixed dividend. These securities have a convertible feature similar to
convertible bonds; however, they do not have a maturity date. Due to their
fixed-income features, convertible issues typically are more sensitive to
interest rate changes than the underlying common stock. In the event of
liquidation, bondholders would have claims on company assets senior to those of
stockholders; preferred stockholders would have claims senior to those of common
stockholders.
WARRANTS entitle the holder to buy the issuer's stock at a specific price
for a specific period of time. The price of a warrant tends to be more volatile
than, and does not always track, the price of its underlying stock. Warrants are
issued with expiration dates. Once a warrant expires, it has no value in the
market.
FOREIGN SECURITIES
Although the fund may buy securities of foreign issuers in foreign markets,
most of their foreign securities investments are made by purchasing American
Depositary Receipts (ADRs), "ordinary shares," or "New York Shares." The fund
may invest in foreign-currency-denominated securities that trade in foreign
markets if the manager believes that such investments will be advantageous to
the fund.
ADRs are dollar-denominated receipts representing interests in the
securities of a foreign issuer. They are issued by U.S. banks and traded on
exchanges or over the counter in the United States. Ordinary shares are shares
of foreign issuers that are traded abroad and on a U.S. exchange. New York
shares are shares that a foreign issuer has allocated for trading in the United
States. ADRs, ordinary shares, and New York shares all may be purchased with and
sold for U.S. dollars, which protects the Fund from the foreign settlement risks
described below.
Investing in foreign companies may involve risks not typically associated
with investing in U.S. companies. The value of securities denominated in foreign
currencies and of dividends from such securities can change significantly when
foreign currencies strengthen or weaken relative to the U.S. dollar. Foreign
securities markets generally have less trading volume and less liquidity than
U.S. markets, and prices in some foreign markets can be very volatile.
Many foreign countries lack uniform accounting and disclosure standards
comparable to those that apply to U.S. companies, and it may be more difficult
to obtain reliable information regarding a foreign issuer's financial condition
and operations. In addition, the costs of foreign investing, including
withholding taxes, brokerage commissions, and custodial fees, are generally
higher than for U.S. investments.
Foreign markets may offer less protection to investors than U.S. markets.
Foreign issuers, brokers, and securities markets may be subject to less
governmental supervision. Foreign security trading practices, including those
involving the release of assets in advance of payment, may involve increased
risks in the event of a failed trade or the insolvency of a broker-dealer and
may involve substantial delays. It may also be difficult to enforce legal rights
in foreign countries.
4 American Century Investments
Investing abroad carries political and economic risks distinct from those
associated with investing in the United States. Foreign investments may be
affected by actions of foreign governments adverse to the interests of U.S.
investors, including the possibility of expropriation or nationalization of
assets, confiscatory taxation, restrictions on U.S. investment, or restrictions
on the ability to repatriate assets or to convert currency into U.S. dollars.
There may be a greater possibility of default by foreign governments or foreign-
government-sponsored enterprises. Investments in foreign countries also involve
a risk of local political, economic, or social instability, military action or
unrest, or adverse diplomatic developments.
FOREIGN CURRENCY EXCHANGE TRANSACTIONS
The manager may engage in foreign currency exchange transactions on behalf
of the fund in order to manage currency risk. Foreign currencies will be
purchased and sold regularly, either in the spot (i.e., cash) market or in the
forward market (through forward foreign currency exchange contracts, or "forward
contracts").
A forward foreign currency exchange contract is an obligation to purchase
or sell a specific currency at a future date, which may be any fixed number of
days agreed upon by the parties, commencing with the date of the contract, at a
price set at the time of the contract. When the fund agrees to buy or sell a
security denominated in a foreign currency, it may enter into a forward contract
to "lock in" the U.S. dollar price of the security. By entering into a forward
contract to buy or sell the amount of foreign currency involved in a security
transaction for a fixed amount of U.S. dollars, the manager can protect the fund
against possible loss resulting from adverse changes in the relationship between
the U.S. dollar and the foreign currency between the date the security is
purchased or sold and the date on which payment is made or received. This type
of transaction is sometimes referred to as a "position hedge."
However, it should be noted that using forward contracts to protect the
fund's foreign investments from currency fluctuations does not eliminate
fluctuations in the prices of the underlying securities themselves. Forward
contracts simply establish a rate of exchange that can be achieved at some
future point in time. Additionally, although forward contracts tend to minimize
the risk of loss due to a decline in the value of the hedged currency, they also
limit any gain that might result if the hedged currency's value increases.
Successful use of forward contracts depends on the manager's skill in
analyzing and predicting currency values. Although they are used for settlement
purposes, forward contracts alter the fund's exposure to currency exchange rate
activity and could result in losses to the fund if currencies do not perform as
the manager anticipates. The fund may also incur significant costs when
converting assets from one currency to another.
Foreign exchange dealers do not charge fees for currency conversions.
Instead, they realize a profit based on the difference (i.e., the spread)
between the prices at which they are buying and selling various currencies. A
dealer may offer to sell a foreign currency at one rate while simultaneously
offering a lesser rate of exchange on the purchase of that currency.
The fund uses forward contracts for currency hedging purposes only and not
for speculative purposes. The fund is not required to enter into forward
contracts with regard to their foreign holdings and will not do so unless it is
deemed appropriate by the manager.
The fund's assets are valued daily in U.S. dollars, although foreign
currency holdings are not physically converted into U.S. dollars on a daily
basis.
DEPOSITARY RECEIPTS
American Depositary Receipts and European Depositary Receipts (ADRs and
EDRs) are receipts representing ownership of shares of a foreign-based issuer
held in trust by a bank or similar financial institution. These are designed for
U.S. and European securities markets as alternatives to purchasing underlying
securities in their corresponding national markets and currencies.
ADRs and EDRs can be sponsored or unsponsored.
Sponsored ADRs and EDRs are certificates in which a bank or financial
institution participates with a custodian. Issuers of unsponsored ADRs and EDRs
are not contractually obligated to disclose material information in the United
States. Therefore, there may not be a correlation between such information and
the market value of the unsponsored ADR or EDR.
Statement of Additional Information 5
RESTRICTED SECURITIES
Restricted securities held by the fund generally can be sold in privately
negotiated transactions, pursuant to an exemption from registration under the
Securities Act of 1933, or in a registered public offering. Where registration
is required, the fund may be required to pay all or a part of the registration
expense, and a considerable period may elapse between the time it decides to
seek registration of the securities and the time it is permitted to sell them
under an effective registration statement. If, during this period, adverse
market conditions were to develop, the fund might obtain a less favorable price
than prevailed when it decided to try to register the securities.
SECURITIES LENDING
The fund may lend portfolio securities to earn additional income. If a
borrower defaulted on a securities loan, the fund could experience delays in
recovering the securities it loaned; if the value of the loaned securities
increased in the meantime, the fund could suffer a loss.
To minimize the risk of default on securities loans, the manager adheres to
the following guidelines prescribed by the Board of Directors:
(1) TYPE AND AMOUNT OF COLLATERAL. At the time a loan is made, the fund must
receive, from or on behalf of the borrower, collateral consisting of any
combination of cash and full faith and credit U.S. government securities
equal to not less than 102% of the market value of the securities loaned.
Cash collateral received by the fund in connection with loans of portfolio
securities may be commingled by the fund's custodian with other cash and
marketable securities, provided that the loan agreement expressly allows
such commingling. The loan must not reduce the risk of loss or opportunity
for gain in the securities loaned.
(2) ADDITIONS TO COLLATERAL. Collateral must be marked to market daily, and the
borrower must agree to add collateral to the extent necessary to maintain
the 102% level specified in guideline (1) above. The borrower must deposit
additional collateral no later than the business day following the business
day on which a collateral deficiency occurs or collateral appears to be
inadequate.
(3) TERMINATION OF LOAN. The fund must have the option to terminate any loan of
portfolio securities at any time. The borrower must be obligated to
redeliver the borrowed securities within the normal settlement period
following receipt of the termination notice.
(4) REASONABLE RETURN ON LOAN. The borrower must agree that the fund (a) will
receive all dividends, interest, or other distributions on loaned
securities and (b) will be paid a reasonable return on such loans either in
the form of a loan fee or premium or from the retention by the fund of part
or all of the earnings and profits realized from the investment of cash
collateral in full faith and credit U.S government securities.
(5) LIMITATIONS ON PERCENTAGE OF PORTFOLIO SECURITIES ON LOAN. The fund's loans
may not exceed 33 1/3% of its total assets.
(6) CREDIT ANALYSIS. As part of the regular monitoring procedures set forth by
the Board of Directors that the manager follows to evaluate banks and
broker-dealers in connection with, for example, repurchase agreements and
municipal securities credit issues, the manager will analyze and monitor
the creditworthiness of all borrowers with which portfolio lending
arrangements are proposed or made.
If a borrower fails financially, there may be delays in recovering loaned
securities and a loss in the value of collateral. However, loans will only be
made to parties that meet the guidelines prescribed by the Board of Directors.
PUT OPTIONS ON INDIVIDUAL SECURITIES
The fund may buy puts with respect to stocks underlying its convertible
security holdings. For example, if the manager anticipates a decline in the
price of the stock underlying a convertible security the fund holds, it may
purchase a put option on the stock. If the stock price subsequently declines, an
increase in the value of the put option could be expected to offset all or a
portion of the effect of the stock's decline on the value of the convertible
security.
6 American Century Investments
FUTURES AND OPTIONS TRANSACTIONS
FUTURES TRANSACTIONS. The fund may engage in futures transactions. Such
transactions may be used to maintain cash reserves while remaining fully
invested, to facilitate trading, to reduce transaction costs, or to pursue
higher investment returns when a futures contract is priced more attractively
than its underlying security or index.
Futures contracts provide for the sale by one party and purchase by another
party of a specific security at a specified future time and price. Futures
contracts are traded on national futures exchanges. Futures exchanges and
trading are regulated under the Commodity Exchange Act by the Commodity Futures
Trading Commission, a U.S. government agency.
Although futures contracts, by their terms, generally call for actual
delivery or acceptance of the underlying securities, in most cases the contracts
are closed out before the settlement date. Closing out a futures position is
done by taking an opposite position in an identical contract (i.e., buying a
contract that has previously been sold, or selling a contract that has
previously been bought).
To initiate and maintain open positions in futures contracts, the fund is
required to make a good faith margin deposit in cash or appropriate securities
with a broker or custodian. A margin deposit is intended to assure completion of
the contract (delivery or acceptance of the underlying security) if it is not
terminated prior to the specified delivery date. Minimum initial margin
requirements are established by the futures exchanges and may be revised. In
addition, brokers may establish deposit requirements that are higher than the
exchange minimums.
After a futures contract position is opened, the value of the contract is
marked to market daily. If the futures contract price changes to the extent that
the margin on deposit does not satisfy margin requirements, the contract holder
is required to pay an additional "variation" margin. Conversely, changes in the
contract value may reduce the required margin, resulting in a repayment of
excess margin to the contract holder. Variation margin payments are made to or
from the futures broker as long as the contract remains open and do not
constitute margin transactions for purposes of the fund's investment
restrictions.
Those who trade futures contracts may be broadly classified as either
"hedgers" or "speculators." Hedgers use the futures markets primarily to offset
unfavorable changes in the value of securities they hold or expect to acquire
for investment purposes. Speculators are less likely to own the securities
underlying the futures contracts they trade and are more likely to use futures
contracts with the expectation of realizing profits from fluctuations in the
prices of the underlying securities. The fund will not utilize futures contracts
for speculative purposes.
Although techniques other than trading futures contracts can be used to
control the fund's exposure to market fluctuations, the use of futures contracts
may be a more effective means of hedging this exposure. While the fund pays
brokerage commissions in connection with opening and closing out futures
positions, these costs are generally lower than the transaction costs incurred
in the purchase and sale of the underlying securities.
PURCHASING PUT AND CALL OPTIONS. By purchasing a put option, the fund
obtains the right (but not the obligation) to sell the option's underlying
instrument at a fixed "strike" price. In return for this right, the fund pays
the current market price for the option (known as the option premium). Options
have various types of underlying instruments, including specific securities,
indexes of securities prices, and futures contracts. The fund may terminate its
position in a put option it has purchased by allowing it to expire or by
exercising the option. If the option is allowed to expire, the fund will lose
the entire premium it paid. If the fund exercises the option, it completes the
sale of the underlying instrument at the strike price. The fund may also
terminate a put option position by closing it out in the secondary market at its
current price if a liquid secondary market exists.
The buyer of a typical put option can expect to realize a gain if security
prices fall substantially. However, if the underlying instrument's price does
not fall enough to offset the cost of purchasing the option, a put buyer can
expect to suffer a loss (limited to the amount of the premium paid, plus related
transaction costs).
The features of call options are essentially the same as those of put
options, except that the purchaser of a call option obtains the right to
purchase, rather than
Statement of Additional Information 7
sell, the underlying instrument at the option's strike price. A call buyer
typically attempts to participate in potential price increases of the underlying
instrument with risk limited to the cost of the option if security prices fall.
At the same time, the buyer can expect to suffer a loss if security prices do
not rise sufficiently to offset the cost of the option.
WRITING PUT AND CALL OPTIONS. If the fund writes a put option, it takes the
opposite side of the transaction from the option's purchaser. In return for
receipt of the premium, the fund assumes the obligation to pay the strike price
for the option's underlying instrument if the other party chooses to exercise
the option. When writing an option on a futures contract, the fund will be
required to make margin payments to a broker or custodian as described above for
futures contracts. The fund may seek to terminate its position in a put option
before it is exercised by closing out the option in the secondary market at its
current price. If the secondary market is not liquid for a put option the fund
has written, however, the fund must continue to be prepared to pay the strike
price while the option is outstanding, regardless of price changes, and must
continue to set aside assets to cover its position.
If security prices rise, a put writer would generally expect to profit,
although the gain would be limited to the amount of the premium received. If
security prices remain the same over time, it is likely that the writer will
also profit by being able to close out the option at a lower price. If security
prices fall, the put writer would expect to suffer a loss. This loss should be
less than the loss from purchasing the underlying instrument directly, however,
because the premium received for writing the option should mitigate the effects
of the decline.
Writing a call option obligates the fund to sell or deliver the option's
underlying instrument in return for the strike price upon exercise of the
option. The characteristics of writing call options are similar to those of
writing put options, except that writing calls generally is a profitable
strategy if prices remain the same or fall. Through receipt of the option
premium, a call writer mitigates the effects of a price decline. At the same
time, because a call writer must be prepared to deliver the underlying
instrument in return for the strike price even if its current value is greater,
a call writer gives up some ability to participate in security price increases.
COMBINED POSITIONS. The fund may purchase and write options in combination
with one another, or in combination with futures or forward contracts, in order
to adjust the risk and return characteristics of the overall position. For
example, the fund may purchase a put option and write a call option on the same
underlying instrument in order to construct a combined position whose risk and
return characteristics are similar to selling a futures contract. Another
possible combined position would involve writing a call option at one strike
price and buying a call option at a lower price in order to reduce the risk of
the written call option in the event of a substantial price increase. Because
combined options positions involve multiple trades, they result in higher
transaction costs and may be more difficult to open and close out.
OVER-THE-COUNTER OPTIONS. Unlike exchange-traded options, which are
standardized with respect to the underlying instrument, expiration date,
contract size, and strike price, the terms of over-the-counter ("OTC") options
(options not traded on exchanges) generally are established through negotiation
with the other party to the option contract. While this type of arrangement
allows the fund greater flexibility in tailoring an option to its needs, OTC
options generally involve greater credit risk than exchange-traded options,
which are guaranteed by the clearing organizations of the exchanges where they
are traded. The risk of illiquidity is also greater with OTC options because
these options generally can be closed out only by negotiation with the other
party to the option.
OPTIONS ON FUTURES. By purchasing an option on a futures contract, the fund
obtains the right, but not the obligation, to sell the futures contract (a put
option) or to buy the contract (a call option) at a fixed "strike" price. The
fund can terminate its position in a put option by allowing it to expire or by
exercising the option. If the option is exercised, the fund completes the sale
of the underlying security at the strike price. Purchasing an option on a
futures contract does not require the fund to make margin payments unless the
option is exercised.
CORRELATION OF PRICE CHANGES. Price changes of the fund's futures and
options positions may not be well
8 American Century Investments
correlated with price changes of its other investments. This may be because of
differences between the underlying indexes and the types of securities the fund
invests in. For example, if the fund sold a broad-based index futures contract
to hedge against a stock market decline while completing sales of specific
securities in its investment portfolio, the prices of the securities could move
in a different direction than the broad market index represented by the index
futures contract. In the case of an S&P 500 futures contract purchased by the
fund, either in anticipation of stock purchases or in an effort to be fully
invested, failure of the contract to track the Index accurately could hinder the
fund from achieving its investment objective.
Options and futures prices can also diverge from the prices of their
underlying instruments even if the underlying instruments match the fund's
investments. Options and futures prices are affected by factors such as current
and anticipated short-term interest rates, changes in volatility of the
underlying instrument, and the time remaining until expiration of the contract;
these factors may not affect security prices the same way. Imperfect correlation
may also result from differing levels of demand in the options and futures
markets and the securities markets, from structural differences in how options
and futures and securities are traded, or from the imposition of daily price
fluctuation limits or trading halts. The fund may purchase or sell options and
futures contracts with a greater or lesser value than the securities it wishes
to hedge or intends to purchase in an effort to compensate for differences in
volatility between the contract and the securities, although this strategy may
not be successful in all cases. If price changes in the fund's options or
futures positions are poorly correlated with its other investments, the
positions may fail to produce anticipated gains or result in losses that are not
offset by gains in other investments.
LIQUIDITY OF FUTURES CONTRACTS AND OPTIONS. There is no assurance a liquid
secondary market will exist for any particular futures contract or option at any
particular time. Options may have relatively low trading volume and liquidity if
their strike prices are not close to the underlying instrument's current price.
In addition, exchanges may establish daily price fluctuation limits for futures
contracts and options and may halt trading if a contract's price moves upward or
downward more than the limit in a given day. On volatile trading days when the
price fluctuation limit is reached or a trading halt is imposed, it may be
impossible for the fund to enter into new positions or close out existing
positions. If the secondary market for a contract were not liquid because of
price fluctuation limits or otherwise, prompt liquidation of unfavorable
positions could be difficult or impossible, and the fund could be required to
continue holding a position until delivery or expiration regardless of changes
in value. Under these circumstances, the fund's access to assets held to cover
its futures and options positions also could be impaired.
RESTRICTIONS ON THE USE OF FUTURES CONTRACTS AND OPTION. The fund has filed
a notice of eligibility for exclusion as a "commodity pool operator" with the
CFTC and the National Futures Association, which regulates trading in the
futures markets. The fund intends to comply with Section 4.5 of the regulations
under the Commodity Exchange Act, which limits the extent to which the fund can
commit assets to initial margin deposits and options premiums.
The fund may enter into futures contracts, options, or options on futures
contracts, provided that such obligations represent no more than 20% of the
fund's net assets. Under the Commodity Exchange Act, the fund may enter into
futures and options transactions for hedging purposes without regard to the
percentage of assets committed to initial margin and option premiums and for
other than hedging purposes provided that assets committed to initial margin and
option premiums do not exceed 5% of the fund's net assets. To the extent
required by law, the fund will set aside cash and appropriate liquid assets in a
segregated account to cover its obligations related to futures contracts and
options.
The fund intends to comply with tax rules applicable to regulated
investment companies, including a requirement that capital gains from the sale
of securities held less than three months constitute less than 30% of the fund's
gross income for each fiscal year. Gains on some futures contracts and options
are included in this 30% calculation, which may limit the fund's investments in
such instruments.
FUTURES AND OPTIONS RELATING TO FOREIGN CURRENCIES. The fund may purchase
and sell cur-
Statement of Additional Information 9
rency futures and purchase and write currency options to increase or decrease
its exposure to different foreign currencies. The fund may also purchase and
write currency options in conjunction with each other or with currency futures
or forward contracts.
Currency futures contracts are similar to forward currency exchange
contracts, except that they are traded on exchanges (and have margin
requirements) and have standard contract sizes and delivery dates. Most currency
futures contracts call for payment or delivery in U.S. dollars. The underlying
instrument of a currency option may be a foreign currency, which generally is
purchased or delivered in exchange for U.S. dollars, although it may be a
futures contract. The purchaser of a currency call obtains the right to purchase
the underlying currency, and the purchaser of a currency put obtains the right
to sell the underlying currency.
The uses and risks of currency futures and options are similar to those of
futures and options relating to securities or indexes, as described above.
Currency futures and option values can be expected to correlate with exchange
rates, but may not reflect other factors that affect the value of the fund's
investments. A currency hedge, for example, should protect a
deutsche-mark-denominated security from a decline in the deutsche mark, but it
will not protect the fund against a price decline resulting from a deterioration
in the issuer's creditworthiness. Because the value of the fund's
foreign-currency-denominated investments will change in response to many factors
other than exchange rates, it may not be possible to match the amount of
currency options and futures to the value of the fund's foreign investments over
time.
PORTFOLIO TURNOVER
With respect to each series of shares, the manager will purchase and sell
securities without regard to the length of time the security has been held.
Accordingly, the rate of portfolio turnover may be greater than other investment
companies withsimilar investment objectives.
The fund intends to purchase a given security whenever the manager believes
it will contribute to the stated objective of the fund, even if the same
security has only recently been sold. In selling a given security, the manager
keeps in mind that (1) profits from sales of securities held less than three
months must be limited in order to meet the requirements of Subchapter M of the
Internal Revenue Code, and (2) profits from sales of securities are taxed to
shareholders. Subject to those considerations, the fund will sell a given
security, no matter for how long or how short a period it has been held in the
portfolio and no matter whether the sale is at a gain or at a loss, if the
manager believes that the security is not fulfilling its purpose, either
because, among other things, it did not live up to the manager's expectations,
or because it may be replaced with another security holding greater promise, or
because it has reached its optimum potential, or because of a change in the
circumstances of a particular company or industry or in general economic
conditions, or because of some combination of such reasons.
When a general decline in securities prices is anticipated, the fund may
decrease its position and increase its cash position, and when a rise in price
levels is anticipated, the management may increase its equity position and
decrease its cash.
Since investment decisions are based on the anticipated contribution of the
security in question to a fund's objectives, the manager believes that the rate
of portfolio turnover is irrelevant when it believes a change is in order to
achieve those objectives, and a fund's annual portfolio turnover rate cannot be
anticipated and may be comparatively high. This disclosure regarding portfolio
turnover is a statement of fundamental policy and may be changed only by a vote
of the shareholders.
Since the manager does not take portfolio turnover rate into account in
making investment decisions, (1) the manager has no intention of accomplishing
any particular rate of portfolio turnover, whether high or low, and (2) the
portfolio turnover rates in the past should not be considered as a
representation of the ratio which will be attained in the future.
10 American Century Investments
PERFORMANCE
The fund may quote performance in various ways. Historical performance
information will be used in advertising and sales literature.
Yield quotations are based on the investment income per share earned during
a particular 30-day period, less expenses accrued during the period (net
investment income), and are computed by dividing a fund's net investment income
by its share price on the last day of the period, according to the following
formula:
6
YIELD = 2 [(a - b + 1) - 1]
------
cd
where a = dividends and interest earned during the period, b = expenses accrued
for the period (net of reimbursements), c = the average daily number of shares
outstanding during the period that were entitled to receive dividends, and d =
the maximum offering price per share on the last day of the period.
Total returns quoted in advertising and sales literature reflect all
aspects of the fund's return, including the effect of reinvesting dividends and
capital gain distributions and any change in the fund's net asset value during
the period.
Average annual total returns are calculated by determining the growth or
decline in value of a hypothetical historical investment in the fund over a
stated period and then calculating the annually compounded percentage rate that
would have produced the same result if the rate of growth or decline in value
had been constant throughout the period. For example, a cumulative total return
of 100% over 10 years would produce an average annual total return of 7.18%,
which is the steady annual rate that would result in 100% growth on a compounded
basis in 10 years. While average annual total returns are a convenient means of
comparing investment alternatives, investors should realize that the fund's
performance is not constant over time but changes from year-to-year, and that
average annual returns represent averaged figures as opposed to actual
year-to-year performance.
PERFORMANCE FIGURES ADVERTISED BY AMERICAN CENTURY VARIABLE PORTFOLIOS
SHOULD NOT BE USED FOR COMPARATIVE PURPOSES BECAUSE SUCH FIGURES WILL NOT
INCLUDE CHARGES AND DEDUCTIONS IMPOSED BY THE INSURANCE COMPANY SEPARATE ACCOUNT
UNDER THE VARIABLE ANNUITY OR VARIABLE LIFE INSURANCE CONTRACTS.
OFFICERS AND DIRECTORS
The principal officers and the directors of the corporation, their
principal business experience during the past five years, and their affiliations
with the funds' investment manager, American Century Investment Management, Inc.
and its transfer agent, American Century Services Corporation are listed below.
The address at which each director and officer listed below may be contacted is
American Century Tower, 4500 Main Street, Kansas City, Missouri 64111. All
persons named as officers of the Corporation also serve in similar capacities
for other funds advised by the manager. Those directors who are "interested
persons" as defined in the Investment Company Act of 1940 are indicated by an
asterisk (*).
JAMES E. STOWERS JR.,* Chairman of the Board and Director; Chairman of
the Board, Director and controlling shareholder of American Century Companies,
Inc., parent corporation of American Century Investment Management, Inc. and
American Century Services Corporation; Chairman of the Board and Director of
American Century Investment Management, Inc. and American Century Services
Corporation; father of James E. Stowers III.
JAMES E. STOWERS III,* President, Chief Executive Officer and Director;
Chief Executive Officer and Director, American Century Companies, Inc.;
President, Chief Executive Officer and Director, American Century Investment
Management, Inc. and American Century Services Corporation.
THOMAS A. BROWN, Director; Chief Executive Officer, Associated Bearings
Company, a corporation engaged in the sale of bearings and power transmission
products.
ROBERT W. DOERING, M.D., Director; retired; formerly general surgeon.
D. D. (DEL) HOCK, Director; Chairman, Public Service Company of
Colorado; Director, Serv-Tech, Inc.; Director, Hathaway Corporation.
LINSLEY L. LUNDGAARD, Vice Chairman of the Board and Director; retired;
formerly Vice President and National Sales Manager, Flour Milling Division,
Cargill, Inc.
Statement of Additional Information 11
DONALD H. PRATT, Director; President and Director, Butler Manufacturing
Company.
LLOYD T. SILVER JR., Director; President, LSC, Inc., manufacturer's
representative.
M. JEANNINE STRANDJORD, Director; Senior Vice President and Treasurer,
Sprint Corporation; Director, DST Systems, Inc.
WILLIAM M. LYONS, Executive Vice President, Chief Operating Officer and
General Counsel; President, Chief Operating Officer and General Counsel,
American Century Companies, Inc.; Executive Vice President, Chief Operating
Officer and General Counsel, American Century Investment Management, Inc. and
American Century Services Corporation.
ROBERT T. JACKSON, Executive Vice President- Finance and Principal
Financial Officer; Treasurer, American Century Companies, Inc. and American
Century Investment Management, Inc.; Executive Vice President and Treasurer,
American Century Services Corporation; formerly Executive Vice President,
Kemper Corporation.
MARYANNE ROEPKE, Vice President and Treasurer; Vice President, American
Century Services Corporation.
PATRICK A. LOOBY, Vice President and Secretary; Vice President, American
Century Services Corporation.
MERELE A. MAY, Controller.
The Board of Directors has established four standing committees: the
Executive Committee, the Audit Committee, the Compliance Committee and the
Nominating Committee.
Messrs. Stowers Jr., Stowers III and Lundgaard constitute the Executive
Committee of the Board of Directors. The committee performs the functions of the
Board of Directors between meetings of the Board, subject to the limitations on
its power set out in the Maryland General Corporation Law and except for matters
required by the Investment Company Act to be acted upon by the whole Board.
Messrs. Lundgaard (chairman), Doering and Hock and Ms. Strandjord
constitute the Audit Committee. The functions of the Audit Committee include
recommending the engagement of the corporation's independent auditors, reviewing
the arrangements for and scope of the annual audit, reviewing comments made by
the independent auditors with respect to internal controls and the
considerations given or the corrective action taken by management and reviewing
nonaudit services provided by the independent auditors.
Messrs. Brown (chairman), Pratt and Silver constitute the Compliance
Committee. The functions of the Compliance Committee include reviewing the
results of the fund's compliance testing program, reviewing quarterly reports
from the manager to the Board regarding various compliance matters and
monitoring the implementation of the fund's Code of Ethics, including any
violations thereof.
The Nominating Committee has as its principal role, the consideration and
recommendation of individuals for nomination as directors. The names of
potential director candidates are drawn from a number of sources, including
recommendations from members of the Board, management and shareholders. This
committee also reviews and makes recommendations to the Board with respect to
the composition of Board committees and other Board-related matters, including
its organization, size, composition, responsibilities, functions and
compensation. The members of the Nominating Committee are Messrs. Pratt
(chairman), Lundgaard and Stowers III.
The Directors of the corporation also serve as Directors for other funds
advised by the manager. Each Director who is not an "interested person" as
defined in the Investment Company Act receives for service as a member of the
Board of all six of such companies an annual director's fee of $44,000, a fee of
$1,000 per regular Board meeting attended and $500 per special Board meeting and
committee meeting attended. In addition, those directors who are not "interested
persons" who serve as chairman of a committee of the Board of Directors receive
an additional $2,000 for such services. These fees and expenses are divided
among the six investment companies based upon their relative net assets. Under
the terms of the management agreement with the manager, the funds are
responsible for paying such fees and expenses. Set forth below is the aggregate
compensation paid for the periods indicated by the funds and by the American
Century family of funds as a whole to each director of the corporation who is
not an "interested person" as defined in the Investment Company Act.
12 American Century Investments
Aggregate Total Compensation from
Compensation the American Century
Director from the corporation1 Family of Funds2
- -----------------------------------------------------------------------------
Thomas A. Brown $1,972 $46,333
Robert W. Doering, M.D. 1,823 42,833
Linsley L. Lundgaard 1,972 46,333
Donald H. Pratt 1,901 44,667
Lloyd T. Silver Jr. 1,887 44,333
M. Jeannine Strandjord 1,866 43,833
John M. Urie3 1,582 37,167
D. D. (Del) Hock 376 8,833
- -----------------------------------------------------------------------------
1 Includes compensation paid by the corporation for the fiscal year ended
December 31, 1996.
2 Includes compensation paid by the 15 investment company members of the
American Century family of funds for the calendar year ended December 31,
1996.
3 Mr. Hock replaced Mr. Urie as a director effective October 31, 1996.
MANAGEMENT
A description of the responsibilities and method of compensation of the
fund's manager, American Century Investment Management, Inc. appears in the
Prospectus under the caption "Management."
Because the fund did not begin operations until September 2, 1997, it has
no history of management fees.
The management agreement shall continue in effect until the earlier of the
expiration of two years from the date of its execution or until the first
meeting of shareholders following such execution and for as long thereafter as
its continuance is specifically approved at least annually by (i) the fund's
Board of Directors, or by the vote of a majority of the outstanding votes (as
defined in the Investment Company Act), and (ii) by the vote of a majority of
the Directors of the fund who are not parties to the agreement or interested
persons of the manager, cast in person at a meeting called for the purpose of
voting on such approval.
The management agreement provides that it may be terminated at any time
without payment of any penalty by the fund's Board of Directors, or by a vote of
a majority of the fund's shareholders, on 60 days' written notice to the
manager, and it shall be automatically terminated if it is assigned.
The management agreement provides that the manager shall not be liable to
the fund or its shareholders for anything other than willful misfeasance, bad
faith, gross negligence or reckless disregard of its obligations or duties.
The management agreement also provides that the manager and its officers,
directors and employees may engage in other business, devote time and attention
to any other business whether of a similar or dissimilar nature, and render
services to others.
American Century Services Corporation provides physical facilities,
including computer hardware and software and personnel, for the day-to-day
administration of the funds and of the manager. The manager pays American
Century Services Corporation, for such services.
CUSTODIAN
Chase Manhattan Bank, N.A., 770 Broadway, New York, New York 10036 and
Commerce Bank, N.A., 1000 Walnut, Kansas City, Missouri 64105, each serves as
custodian of the assets of the fund. The custodians take no part in determining
the investment policies of the funds or in deciding which securities are
purchased or sold by the funds. The fund, however, may invest in certain
obligations of the custodians and may purchase or sell certain securities from
or to the custodians.
INDEPENDENT AUDITORS
Deloitte & Touche LLP, 1010 Grand Avenue, Kansas City, Missouri 64106, are
the independent auditors of the fund, providing services including (1) audit of
the annual financial statements, (2) assistance and consultation in connection
with SEC filings and (3) review of the annual federal income tax return filed
for the fund by American Century.
CAPITAL STOCK
The fund's capital stock is described in the Prospectus under the heading
"Further Information About Variable Portfolios, Inc."
The corporation currently has six series of shares outstanding. The
corporation may in the future issue one or more additional series of shares. The
assets belonging to each series of shares are held separately by the custodian
and the shares of each series represent a beneficial interest in the principal,
earnings and
Statement of Additional Information 13
profits (or losses) of investments and other assets held for each series. Your
rights as a shareholder are the same for all other series of securities unless
otherwise stated. Within their respective series, all shares have equal
redemption rights. Each share, when issued, is fully paid and non-assessable.
Each share, irrespective of series, is entitled to one vote for each dollar of
net asset value applicable to such share on all questions.
In the event of complete liquidation or dissolution of the funds,
shareholders of each series of shares shall be entitled to receive, pro rata,
all of the assets less the liabilities of that series.
BROKERAGE
Under the terms of the management agreement between the fund and the
manager, the manager has the responsibility of selecting brokers to execute
portfolio transactions. The fund's policy is to secure the most favorable prices
and execution of orders on its portfolio transactions. So long as that policy is
met, the manager may take into consideration the factors indicated below in
selecting brokers or dealers.
Equity Investments: Transactions in securities other than those for which
an exchange is the primary market may be done with dealers acting as principal
or market maker or with brokers. Transactions will be done on a brokerage basis
when the manager believes that the facilities, expert personnel and
technological systems of a broker enable American Century Variable Portfolios to
secure as good a net price as it would have received from a market maker.
American Century Variable Portfolios places most of its over-the-counter
transactions with market makers.
Fixed Income Investments: Purchases are made directly from issuers,
underwriters, broker-dealers or banks. In many transactions, the selection of
the broker-dealer is determined by the availability of the desired security and
its offering price. In other transactions, the selection is a function of the
selection of market and the negotiation of price, as well as the broker-dealer's
general execution, operational and financial capabilities in the type of
transaction involved.
The manager receives statistical and other information and services
(brokerage and research services) without cost from broker-dealers. The manager
evaluates such information and services, together with all other information
that it may have, in supervising and managing the investment portfolios of the
fund. Because such information and services may vary in amount, quality and
reliability, their influence in selecting brokers varies from none to very
substantial. The manager proposes to continue to place some of the brokerage
business with one or more brokers who provide information and services.
The brokerage and research services received by the manager may be used
with respect to the fund and/or one or more of the other funds and accounts over
which it has investment discretion, and not all of such services may be used by
the manager in managing the portfolios of the fund. Such information and
services are in addition to and not in lieu of the services required to be
performed for the fund by the manager. The manager does not utilize brokers that
provide such information and services for the purpose of reducing the expense of
providing required services to the fund.
Evaluation of the overall reasonableness of brokerage commissions is made
by the manager and reviewed by the Board of Directors of American Century
Variable Portfolios.
The brokerage commissions paid by the fund may exceed those which another
broker might have charged for effecting the same transactions, because of the
value of the brokerage and research services provided by the broker. Factors
considered in such determinations are skill in execution of orders and the
quality of brokerage and research services received. Research services furnished
by brokers through whom the fund effect securities transactions may be used by
the manager in servicing all of its accounts, and not all such services may be
used by the manager in managing the portfolios of the fund.
The staff of the SEC has expressed the view that the best price and
execution of over-the-counter transactions in portfolio securities may be
secured by dealing directly with principal market makers, thereby avoiding the
payment of compensation to another broker. In certain situations, the officers
of the fund and the manager believe that the facilities, expert personnel and
technological systems of a broker enable the fund to secure as good a net price
by dealing with a broker instead of a principal market maker, even
14 American Century Investments
after payment of the compensation to the broker. The fund normally places its
over-the-counter transactions with principal market makers but also may deal on
a brokerage basis when utilizing electronic trading networks or as circumstances
warrant.
REDEMPTIONS IN KIND
Shares will normally be redeemed for cash, although the corporation retains
the right to redeem its shares in kind under unusual circumstances, such as an
unusually large redemption, in order to protect the investments of the remaining
shareholders.
The corporation has elected to be governed by Rule 18f-1 under the
Investment Company Act of 1940, pursuant to which the fund is obligated to
redeem shares solely in cash up to the lesser of $250,000 or 1% of its net asset
value during any 90-day period for any one shareholder. Should redemptions by
any one contract owner exceed such limitation, the corporation will have the
option of redeeming the excess in cash or in kind. If shares are redeemed in
kind, the redeeming shareholder might incur brokerage costs in converting the
assets to cash. The securities delivered will be selected at the sole discretion
of the manager, and will not necessarily be representative of the entire
portfolio, and will be securities that the manager regards as least desirable.
The method of valuing portfolio securities used to make redemptions in kind will
be the same as the method of valuing portfolio securities described in the
Prospectus under the caption "How Share Price is Determined," and such valuation
will be made as of the same time the redemption price is determined.
HOLIDAYS
The fund does not determine the net asset value of its shares on days when
the New York Stock Exchange is closed. Currently, the Exchange is closed on
Saturdays and Sundays, and on holidays, namely New Year's Day, Martin Luther
King Jr. Day, President's Day, Good Friday, Memorial Day, Independence Day,
Labor Day, Thanksgiving and Christmas.
Statement of Additional Information 15
P.O. Box 419385
Kansas City, Missouri
64141-6385
Institutional Services:
1-800-345-3533 or 816-531-5575
Telecommunications Device for the Deaf:
1-800-345-1833 or 816-444-3038
Fax: 816-340-4360
Internet: www.americancentury.com
[american century logo]
American
Century(sm)
9706 [recycled logo]
SH-BKT-9019 Recycled
<PAGE>
AMERICAN CENTURY VARIABLE PORTFOLIOS, INC.
PART C. OTHER INFORMATION.
ITEM 24. Financial Statements and Exhibits.
(a) Financial Statements (filed electronically as part of
Post-Effective Amendment No. 20 on Form N-1A, File No. 33-44567,
and incorporated herein by reference):
(i) Financial Statements filed in Part A of the Registration
Statement:
1. Financial Highlights respecting shares of VP Capital
Appreciation (formerly known as TCI Growth).
2. Financial Highlights respecting shares of VP Balanced
(formerly known as TCI Balanced).
3. Financial Highlights respecting shares of VP Advantage
(formerly known as TCI Advantage).
4. Financial Highlights respecting shares of VP International
(formerly known as TCI International).
5. Financial Highlights respecting shares of VP Value (formerly
known as TCI Value).
(ii) Financial Statements filed in Part B of the Registration
Statement respecting shares of VP Capital Appreciation (formerly
known as TCI Growth) (each of the following financial statements
is contained in the Registrant's VP Capital Appreciation
(formerly known as TCI Growth) Annual Report dated December 31,
1996, which is incorporated by reference in Part B of this
Registration Statement):
1. Statement of Assets and Liabilities at December 31, 1996.
2. Statement of Operations for the year ended December 31,
1996.
3. Statements of Changes in Net Assets for the years ended
December 31, 1996 and 1995.
4. Notes to Financial Statements as of December 31, 1996 and
1995.
5. Schedule of Investments at December 31, 1996.
6. Independent Accountants' Report dated January 21, 1997.
(iii) Financial Statements filed in Part B of the Registration
Statement respecting shares of VP Balanced (formerly known as
TCI Balanced) (each of the following financial statements is
contained in the Registrant's VP Balanced (formerly known as TCI
Balanced) Annual Report dated December 31, 1996, which is
incorporated by reference in Part B of this Registration
Statement):
1. Statement of Assets and Liabilities at December 31, 1996.
2. Statement of Operations for the year ended December 31,
1996.
3. Statements of Changes in Net Assets for the years ended
December 31, 1996 and 1995.
4. Notes to Financial Statements as of December 31, 1996 and
1995.
5. Schedule of Investments at December 31, 1996.
6. Independent Accountants' Report dated January 21, 1997.
(iv) Financial Statements filed in Part B of the Registration
Statement respecting shares of VP Advantage (formerly known as
TCI Advantage) (each of the following financial statements is
contained in the Registrant's VP Advantage (formerly known as
TCI Advantage) Annual Report dated December 31, 1996, which is
incorporated by reference in Part B of this Registration
Statement):
1. Statement of Assets and Liabilities at December 31, 1996.
2. Statement of Operations for the year ended December 31,
1996.
3. Statements of Changes in Net Assets for the years ended
December 31, 1996 and 1995.
4. Notes to Financial Statements as of December 31, 1996 and
1995.
5. Schedule of Investments at December 31, 1996.
6. Independent Accountants' Report dated January 21, 1997.
(v) Financial Statements filed in Part B of the Registration
Statement respecting shares of VP International (formerly known
as TCI International) (each of the following financial
statements is contained in the Registrant's VP International
(formerly known as TCI International) Annual Report dated
December 31, 1996, which is incorporated by reference in Part B
of this Registration Statement):
1. Statement of Assets and Liabilities at December 31, 1996.
2. Statement of Operations for the year ended December 31,
1996.
3. Statement of Changes in Net Assets for the years ended
December 31, 1996 and 1995.
4. Notes to Financial Statements as of December 31, 1996 and
1995.
5. Schedule of Investments at December 31, 1996.
6. Independent Accountants' Report dated January 21, 1997.
(vi) Financial Statements filed in Part B of the Registration
Statement respecting shares of VP Value (formerly known as TCI
Value) (each of the following financial statements is contained
in the Registrant's VP Value (formerly known as TCI Value)
Annual Report dated December 31, 1996, which is incorporated by
reference in Part B of this Registration Statement):
1. Statement of Assets and Liabilities at December 31, 1996.
2. Statement of Operations for the year ended December 31,
1996.
3. Statement of Changes in Net Assets for the year ended
December 31, 1996.
4. Notes to Financial Statements as of December 31, 1996.
5. Schedule of Investments at December 31, 1996.
6. Independent Accountants' Report dated January 21, 1997.
(b) Exhibits.
1.1 Articles of Incorporation of TCI Portfolios, Inc. dated
June 3, 1987 (filed electronically as Exhibit 1.1 to
Post-Effective Amendment No. 17 on Form N-1A, File No.
33-14567, accession #814680-96-000002, and incorporated
herein by reference).
1.2 Articles of Amendment of TCI Portfolios, Inc. dated July
22, 1988 (filed electronically as Exhibit 1.2 to
Post-Effective Amendment No. 17 on Form N-1A, File No.
33-14567, accession #814680-96-000002, and incorporated
herein by reference).
1.3 Articles of Amendment of TCI Portfolios, Inc. dated
August 11, 1993 (filed electronically as Exhibit 1.3 to
Post-Effective Amendment No. 17 on Form N-1A, File No.
33-14567, accession #814680-96-000002, and incorporated
herein by reference).
1.4 Articles Supplementary of TCI Portfolios, Inc., dated
November 30, 1992 (filed electronically as Exhibit 1.4
to Post-Effective Amendment No. 18 on Form N-1A, File
No. 33-14567, accession #814680-96-000007, and
incorporated herein by reference).
1.5 Articles Supplementary of TCI Portfolios, Inc., dated
April 24, 1995 (filed electronically as Exhibit 1.5 to
Post-Effective Amendment No. 18 on Form N-1A, File No.
33-14567, accession #814680-96-000007, and incorporated
herein by reference).
1.6 Articles Supplementary of TCI Portfolios, Inc., dated
March 11, 1996 (filed electronically as Exhibit 1.6 to
Post-Effective Amendment No. 17 on Form N-1A, File No.
33-14567, and incorporated herein by reference).
1.7 Articles of Amendment of TCI Portfolios, Inc., dated
April 1, 1997 (filed electronically as Exhibit 1.7 to
Post-Effective Amendment No. 20 to the Registration
Statement of the Registrant on Form N-1A, File No.
33-14567, and incorporated herein by reference).
1.8 Articles Supplementary of American Century Variable
Portfolios, Inc., dated May 1, 1997 (filed
electronically as Exhibit 1.8 to Post-Effective
Amendment No. 20 to the Registration Statement of the
Registrant on Form N-1A, File No. 33-14567, and
incorporated herein by reference).
2. Amended and Restated By-Laws of TCI Portfolios, Inc.
(filed as Exhibit 2 to Post-Effective Amendment No. 17
on Form N-1A, File No. 33-14567, accession
#814680-96-000002, and incorporated herein by
reference).
3. Voting Trust Agreements - None.
4. Specimen Securities - None.
5.1 Investment Management Agreement between TCI Portfolios,
Inc. and Investors Research Corporation dated August 1,
1994 (filed electronically as Exhibit 5 to
Post-Effective Amendment No. 17 on Form N-1A, File No.
33-14567, accession #814680-96-000002, and incorporated
herein by reference).
5.2 Addendum to Investment Management Agreement dated April
1, 1996, between TCI Portfolios, Inc. and Investors
Research Corporation (filed electronically as Exhibit
5.2 to Post-Effective Amendment No. 18 on Form N-1A,
File No. 33-14567, accession #814680-96-000007, and
incorporated herein by reference).
6.1 Distribution Agreement between TCI Portfolios, Inc.,
Twentieth Century Capital Portfolios, Inc., Twentieth
Century Investors, Inc., Twentieth Century Premium
Reserves, Inc., Twentieth Century Strategic Asset
Allocations, Inc., Twentieth Century World Investors,
Inc. and Twentieth Century Securities, Inc. dated
September 3, 1996 (filed herewith as EX-99.B6.1).
6.2 Amendment No. 1 to Distribution Agreement between
American Century Variable Portfolios, Inc., American
Century Capital Portfolios, Inc., American Century
Mutual Funds, Inc., American Century Premium Reserves,
Inc., American Century Strategic Asset Allocations,
Inc., American Century World Mutual Funds, Inc. and
American Century Investment Services, Inc. dated June
13, 1997 (filed herewith as EX-99.B6.2).
7. Bonus and Profit Sharing Plan, Etc. - None.
8.1 Custody Agreement with UMB Bank, N.A.(filed as Exhibit
8.2 to Post-Effective Amendment No. 17, File No.
33-14567, accession #814680-96-000002, and incorporated
herein by reference).
8.2 Amendment No. 1 to Custody Agreement with UMB Bank,
N.A., dated January 25, 1996 (filed electronically as a
part of Post-Effective Amendment No. 6 to the
Registration Statement on Form N-1A of the Registrant,
File No. 33-39242, filed March 29, 1996 and incorporated
herein by reference).
8.3 Master Agreement by and between Twentieth Century
Services, Inc. and Commerce Bank, N. A. dated January
22, 1997 (filed electronically as a part of
Post-Effective Amendment No. 76 to the Registration
Statement on Form N-1A of American Century Mutual Funds,
Inc., File No. 2-14213, filed February 28, 1997 and
incorporated herein by reference).
8.4 Global Custody Agreement between The Chase Manhattan
Bank and the Twentieth Century and Benham Funds, dated
August 9, 1996 (filed electronically as a part of
Post-Effective Amendment No. 31 to the Registration
Statement on Form N-1A of American Century Government
Income Trust, File No. 2-99222, filed February 7, 1997,
and incorporated herein by reference).
9. Transfer Agency Agreement with Twentieth Century
Services, Inc. (formerly J.E. Stowers & Company) dated
October 15, 1987 (filed as Exhibit 9 to Post-Effective
Amendment No. 19 on Form N-1A, File No. 33-14567, and
incorporated herein by reference).
10. Opinion and Consent of Janet A. Nash, Esq. (filed
herewith as EX-99.B10).
11. Consent of Baird, Kurtz & Dobson (filed electronically
as Exhibit 11 to Post-Effective Amendment No. 20 to the
Registration Statement of the Registrant on Form N-1A,
File No. 33-14567, and incorporated herein by
reference).
12.1 Annual Report of VP Capital Appreciation (formerly known
as TCI Growth) for the year ended December 31, 1996
(filed February 25, 1997, File No. 33-14567, accession
#814680-97-000001, and incorporated herein by
reference).
12.2 Annual Report of VP Balanced (formerly known as TCI
Balanced) for the year ended December 31, 1996 (filed
February 25, 1997, File No. 33-14567, accession
#814680-97-000001, and incorporated herein by
reference).
12.3 Annual Report of VP Advantage (formerly known as TCI
Advantage) for the year ended December 31, 1996 (filed
February 25, 1997, File No. 33-14567, accession
#814680-97-000001, and incorporated herein by
reference).
12.4 Annual Report of VP International (formerly known as TCI
International) for the year ended December 31, 1996
(filed February 25, 1997, File No. 33-14567, accession
#814680-97-000001, and incorporated herein by
reference).
12.5 Annual Report of VP Value (formerly known as TCI Value)
for the year ended December 31, 1996 (filed February 25,
1997, File No. 33-14567, accession #814680-97-000001,
and incorporated herein by reference).
13. Agreements for Initial Capital, Etc. - None.
14. Model Retirement Plans - None.
15. 12b-1 Plans - None.
16. Schedule of Computation for Performance Advertising
Quotations (filed electronically as Exhibit 16 to
Post-Effective Amendment No. 20 to the Registration
Statement of the Registrant on Form N-1A, File No.
33-14567, and incorporated herein by reference).
17. Power of Attorney (filed electronically as Exhibit 17 to
Post-Effective Amendment No. 20 to the Registration
Statement of the Registrant on Form N-1A, File No.
33-14567, and incorporated herein by reference).
ITEM 25. Persons Controlled by or Under Common Control with Registrant - None.
ITEM 26. Number of Holders of Securities.
Number of Record Holders
Title of Series as of March 31, 1997
--------------- -----------------------
VP Capital Appreciation (formerly known as TCI Growth) 29
VP Balanced (formerly known as TCI Balanced) 15
VP Advantage (formerly known as TCI Advantage) 3
VP International (formerly known as TCI International) 9
VP Value (formerly known as TCI Value) 6
VP Income & Growth 0
ITEM 27. Indemnification.
The Registrant is a Maryland corporation. Section 2- 418 of the
Maryland General Corporation Law allows a Maryland corporation to
indemnify its officers, directors, employees and agents to the extent
provided in such statute.
Article XIII of the Registrant's Amended Articles of Incorporation,
Exhibits 1(a) and 1(b), requires the indemnification of the
Registrant's directors and officers to the extent permitted by
Section 2-418 of the Maryland General Corporation Law, the Investment
Company Act of 1940 and all other applicable laws.
The Registrant has purchased an insurance policy insuring its
officers and directors against certain liabilities which such
officers and directors may incur while acting in such capacities and
providing reimbursement to the Registrant for sums which it may be
permitted or required to pay to its officers and directors by way of
indemnification against such liabilities, subject in either case to
clauses respecting deductibility and participation.
ITEM 28. Business and Other Connections of Investment Advisor.
American Century Investment Management, Inc., the investment advisor,
is engaged in the business of managing investments for registered
investment companies, deferred compensation plans and other
institutional investors.
ITEM 29. Principal Underwriters - None.
ITEM 30. Location of Accounts and Records.
All accounts, books and other documents required to be maintained by
Section 31(a) of the 1940 Act, and the rules promulgated thereunder,
are in the possession of Registrant, American Century Services
Corporation and American Century Investment Management, Inc., all
located at American Century Tower, 4500 Main Street, Kansas City,
Missouri 64111.
ITEM 31. Management Services - None.
ITEM 32. Undertakings.
(a) Not applicable.
(b) Not applicable.
(c) The Registrant hereby undertakes to furnish each person to
whom a prospectus is delivered with a copy of the
Registrant's latest annual report to shareholders, upon
request and without charge.
(d) The Registrant hereby undertakes that it will, if requested
to do so by the holders of at least 10% of the Registrant's
outstanding votes, call a meeting of shareholders for the
purpose of voting upon the question of the removal of a
director and to assist in communication with other
shareholders as required by Section 16(C).
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, American Century Variable Portfolios, Inc., the
Registrant, certifies that it meets all the requirements for effectiveness of
the Post-Effective Amendment No. 21 to its Registration Statement on Form N-1A
pursuant to Rule 485(b) promulgated under the Securities Act of 1933, as
amended, and has duly caused this Post-Effective Amendment No. 21 to its
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Kansas City, State of Missouri on the 1st day of
July, 1997.
American Century Variable Portfolios, Inc.
(Registrant)
By:/s/ James E. Stowers III
James E. Stowers III, President
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 21 has been signed below by the following persons
in the capacities and on the dates indicated.
Signature Title Date
*James E. Stowers, Jr. Chairman of the Board July 1, 1997
James E. Stowers, Jr. and Director
/s/ James E. Stowers III President, Principal Executive July 1, 1997
James E. Stowers III Officer and Director
*Robert T. Jackson Executive Vice President July 1, 1997
Robert T. Jackson and Principal Financial Officer
*Maryanne Roepke Vice President, Treasurer and July 1, 1997
Maryanne Roepke Principal Accounting Officer
*Thomas A. Brown Director July 1, 1997
Thomas A. Brown
*Robert W. Doering, M.D. Director July 1, 1997
Robert W. Doering, M.D.
*Linsley L. Lundgaard Director July 1, 1997
Linsley L. Lundgaard
*Donald H. Pratt Director July 1, 1997
Donald H. Pratt
*Lloyd T. Silver, Jr. Director July 1, 1997
Lloyd T. Silver, Jr.
*M. Jeannine Strandjord Director July 1, 1997
M. Jeannine Strandjord
*D. D. ("Del") Hock Director July 1, 1997
D. D. ("Del") Hock
*By/s/ James E. Stowers III
James E. Stowers III
Attorney-in-Fact
EXHIBIT INDEX
Exhibit Description of Document
Number
EX-99.B1.1 Articles of Incorporation of TCI Portfolios, Inc. dated June 3,
1987 (filed as Exhibit 1.1 to Post-Effective Amendment No. 17 to
the Registration Statement on Form N-1A of the Registrant, File
No. 33-14567, accession #814680-96-000002, and incorporated
herein by reference).
EX-99.B1.2 Articles of Amendment of TCI Portfolios, Inc. dated July 22,
1988 (filed as Exhibit 1.2 to Post-Effective Amendment No. 17 to
the Registration Statement on Form N-1A of the Registrant, File
No. 33-14567, accession #814680-96-000002, and incorporated
herein by reference).
EX-99.B1.3 Articles of Amendment of TCI Portfolios, Inc. dated August 11,
1993 (filed as Exhibit 1.3 to Post-Effective Amendment No. 17 to
the Registration Statement on Form N-1A of the Registrant, File
No. 33-14567, accession #814680-96-000002, and incorporated
herein by reference).
EX-99.B1.4 Articles Supplementary of TCI Portfolios, Inc., dated November
30, 1992 (filed as Exhibit 1.4 to Post-Effective Amendment No.
18 to the Registration Statement on Form N-1A of the Registrant,
File No. 33-14567, accession #814680-96-000007, and incorporated
herein by reference).
EX-99.B1.5 Articles Supplementary of TCI Portfolios, Inc., dated April 24,
1995 (filed as Exhibit 1.5 to Post-Effective Amendment No. 18 to
the Registration Statement on Form N-1A of the Registrant, File
No. 33-14567, accession #814680-96-000007, and incorporated
herein by reference).
EX-99.B1.6 Articles Supplementary of TCI Portfolios, Inc., dated March 11,
1996 (filed as Exhibit 1.6 to Post-Effective Amendment No. 19 to
the Registration Statement on Form N-1A of the Registrant, File
No. 33-14567, and incorporated herein by reference).
EX-99.B1.7 Articles of Amendment of TCI Portfolios, Inc., dated April 1,
1997 (filed as Exhibit 1.7 to Post-Effective Amendment No. 20 to
the Registration Statement on Form N-1A of the Registrant, File
No. 33-14567, and incorporated herein by reference).
EX-99.B1.8 Articles Supplementary of American Century Variable Portfolios,
Inc. dated May 1, 1997 (filed as Exhibit 1.8 to Post-Effective
Amendment No. 20 to the Registration Statement on Form N-1A of
the Registrant, File No. 33-14567, and incorporated herein by
reference).
EX-99.B2 Amended and Restated By-Laws of TCI Portfolios, Inc.(filed as
Exhibit 2 to Post-Effective Amendment No. 17 to the Registration
Statement on Form N-1A of the Registrant, File No. 33-14567,
accession #814680-96-000002, and incorporated herein by
reference).
EX-99.B5.1 Investment Management Agreement between TCI Portfolios, Inc. and
Investors Research Corporation dated August 1, 1994 (filed as
Exhibit 5 to Post-Effective Amendment No. 17 to the Registration
Statement on Form N-1A of the Registrant, File No. 33-14567,
accession #814680-96-000002, and incorporated herein by
reference).
EX-99.B5.2 Addendum to Investment Management Agreement dated April 1, 1996,
between TCI Portfolios, Inc. and Investors Research Corporation
(filed as Exhibit 5.2 to Post-Effective Amendment No. 18 to the
Registration Statement on Form N-1A of the Registrant, File No.
33-14567, accession #814680-96-000007, and incorporated herein
by reference).
EX-99.B6.1 Distribution Agreement between TCI Portfolios, Inc., Twentieth
Century Capital Portfolios, Inc., Twentieth Century Investors,
Inc., Twentieth Century Premium Reserves, Inc., Twentieth
Century Strategic Asset Allocations, Inc., Twentieth Century
World Investors, Inc. and Twentieth Century Securities, Inc.
dated September 3, 1996.
EX-99.B6.2 Amendment No. 1 to Distribution Agreement between American
Century Variable Portfolios, Inc., American Century Capital
Portfolios, Inc., American Century Mutual Funds, Inc., American
Century Premium Reserves, Inc., American Century Strategic Asset
Allocations, Inc., American Century World Mutual Funds, Inc. and
American Century Investment Services, Inc. dated June 13, 1997.
EX-99.B8.1 Custody Agreement dated September 12, 1995, with UMB Bank,
N.A.(filed as Exhibit 8.2 to Post-Effective Amendment No. 17,
File No. 33-14567, accession #814680-96-000002, and incorporated
herein by reference).
EX-99.B8.2 Amendment No. 1 to Custody Agreement with UMB Bank, N.A. dated
January 25, 1996 (filed as Exhibit 8b to Post-Effective
Amendment No. 6 to the Registration Statement on Form N-1A of
the Registrant, File No. 33-39242, filed March 29, 1996 and
incorporated herein by reference).
EX-99.B8.3 Master Agreement by and between Twentieth Century Services, Inc.
and Commerce Bank, N. A. dated January 22, 1997 (filed as
Exhibit B8e to Post-Effective Amendment No. 76 to the
Registration Statement on Form N-1A of American Century Mutual
Funds, Inc., File No. 2-14213, filed February 28, 1997 and
incorporated herein by reference).
EX-99.B8.4 Global Custody Agreement between The Chase Manhattan Bank and
the Twentieth Century and Benham Funds, dated August 9, 1996
(filed as Exhibit B8 to Post-Effective Amendment No. 31 to the
Registration Statement on Form N-1A of American Century
Government Income Trust, File No. 2-99222, filed February 7,
1997, and incorporated herein by reference).
EX-99.B9 Transfer Agency Agreement with Twentieth Century Services, Inc.
(formerly J. E. Stowers & Company) dated October 15, 1987 (filed
as Exhibit 9 to Post-Effective Amendment No. 19 to the
Registration Statement on Form N-1A of the Registrant, File No.
33-14567, and incorporated herein by reference).
EX-99.B10 Opinion and Consent of Janet A. Nash, Esq.
EX-99.B11 Consent of Baird, Kurtz & Dobson (filed as Exhibit 11 to
Post-Effective Amendment No. 20 to the Registration Statement of
the Registrant on Form N-1A, File No. 33-14567, and incorporated
herein by reference).
EX-99.B12.1 Annual Report of VP Capital Appreciation (formerly known as TCI
Growth) for the year ended December 31, 1996 (filed February 25,
1997, File No. 33-14567, accession #814680-97-000001, and
incorporated herein by reference).
EX-99.B12.2 Annual Report of VP Balanced (formerly known as TCI Balanced)
for the year ended December 31, 1996 (filed February 25, 1997,
File No. 33-14567, accession #814680-97-000001, and incorporated
herein by reference).
EX-99.B12.3 Annual Report of VP Advantage (formerly known as TCI Advantage)
for the year ended December 31, 1996 (filed February 25, 1997,
File No. 33-14567, accession #814680-97-000001, and incorporated
herein by reference).
EX-99.B12.4 Annual Report of VP International (formerly known as TCI
International) for the year ended December 31, 1996 (filed
February 25, 1997, File No. 33-14567, accession
#814680-97-000001, and incorporated herein by reference).
EX-99.B12.5 Annual Report of VP Value (formerly known as TCI Value) for the
year ended December 31, 1996 (filed February 25, 1997, File No.
33-14567, accession #814680-97-000001, and incorporated herein
by reference).
EX-99.B16 Schedule of Computation for Performance Advertising Quotations
(filed as Exhibit 16 to Post-Effective Amendment No. 20 to the
Registration Statement on Form N-1A of the Registrant, File No.
33-14567, and incorporated herein by reference).
EX-99.B17 Power of Attorney dated February 15, 1997 (filed as Exhibit 17
to Post-Effective Amendment No. 20 to the Registration Statement
on Form N-1A of the Registrant, File No. 33-14567, and
incorporated herein by reference).
EX-27.1.1 Financial Data Schedule for American Century VP Capital
Appreciation.
EX-27.7.2 Financial Data Schedule for American Century VP Balanced.
EX-27.7.3 Financial Data Schedule for American Century VP Advantage.
EX-27.1.4 Financial Data Schedule for American Century VP International.
EX-27.1.5 Financial Data Schedule for American Century VP Value.
DISTRIBUTION AGREEMENT
TWENTIETH CENTURY MUTUAL FUNDS
THIS DISTRIBUTION AGREEMENT is made and entered into this ____ day of
__________, 19__, by and between each of the open-end management investment
companies listed on SCHEDULE A, attached hereto, as of the dates noted on such
SCHEDULE A, together with all other open end management investment companies
subsequently established and made subject to this Agreement in accordance with
Section 11 (the "Issuers") and TWENTIETH CENTURY SECURITIES, INC.
("Distributor"), a Delaware corporation.
WHEREAS, the common stock of each of the Issuers is currently divided
into a number of separate series of shares, or funds, each corresponding to a
distinct portfolio of securities, and many of which are also divided into
multiple classes of shares; and
WHEREAS, Distributor is a registered as a broker-dealer with the
Securities and Exchange Commission ("SEC") under the Securities Exchange Act of
1934 and is a member of the National Association of Securities Dealers, Inc.;
and
WHEREAS, the Boards of Directors of the Funds (the "Board") wish to
engage the Distributor to act as the distributor of the Funds;
NOW, THEREFORE, in consideration of the mutual promises set forth
herein, the parties agree as follows:
Section 1. General Responsibilities
Each Issuer hereby engages Distributor to act as exclusive distributor of the
shares of each class of its separate series, and any other series and classes as
may be designated from time to time hereafter (the "Funds"). The Funds subject
to this Distribution Agreement are identified on SCHEDULE A, as the same may be
amended from time to time. Sales of a Fund's shares shall be made only to
investors residing in those states in which such Fund is registered. After
effectiveness of each Fund's registration statement, Distributor will hold
itself available to receive, as agent for the Funds, and will receive, by mail,
telex, telephone, and/or such other method as may be agreed upon between
Distributor and Issuers, orders for the purchase of Fund shares, and will accept
or reject such orders on behalf of the Funds in accordance with the provisions
of the applicable Fund's prospectus. Distributor will be available to transmit
such orders as are so accepted to the Fund's transfer agent as promptly as
possible for processing at the shares' net asset value next determined in
accordance with the prospectuses.
a. Offering Price. All shares sold by Distributor under this Agreement
shall be sold at the net asset value per share ("Net Asset Value")
determined in the manner described in each Fund's prospectus, as it may
be amended from time to time, next computed after the order is accepted
by Distributor or its agents or affiliates. Each Fund shall determine
and promptly furnish to Distributor a statement of the Net Asset Value
of shares of said Fund's series at least once on each day on which the
Fund is open for business, as described in its current prospectus.
b. Promotion Support. Each Fund shall furnish to Distributor for use in
connection with the sale of its shares such written information with
respect to said Fund as Distributor may reasonably request. Each Fund
represents and warrants that such information, when authenticated by
the signature of one of its officers, shall be true and correct. Each
Fund shall also furnish to Distributor copies of its reports to its
shareholders and such additional information regarding said Fund's
financial condition as Distributor may reasonably request. Any and all
representations, statements and solicitations respecting a Fund's
shares made in advertisements, sales literature and in any other manner
whatsoever shall be limited to and conform in all respects to the
information provided hereunder.
c. Regulatory Compliance. Each Fund shall furnish to Distributor copies of
its current form of prospectus, as filed with the SEC, in such quantity
as Distributor may reasonably request from time to time, and authorizes
Distributor to use the prospectus in connection with the sale of such
Fund's shares. All such sales shall be initiated by offer of, and
conducted in accordance with, such prospectus and all of the provisions
of the Securities Act of 1933, the Investment Company Act of 1940
("1940 Act") and all the rules and regulations thereunder. Distributor
shall furnish applicable federal and state regulatory authorities with
any information or reports related to its services under this Agreement
which such authorities may lawfully request in order to ascertain
whether the Funds' operations are being conducted in a manner
consistent with any applicable law or regulations.
d. Acceptance. All orders for the purchase of its shares are subject to
acceptance by each Fund.
Section 2. Compensation
a. Investor Class, Institutional Class and Single Class Shares. Except for
the promises of the Funds contained in this Agreement and their
performance thereof, Distributor shall not be entitled to compensation
for its services hereunder with respect to the Investor Class or the
Institutional Class of shares or funds that offer a single class of
shares.
b. Advisor Class and Service Class Shares. For the services provided and
expenses incurred by Distributor as described in Section 2 and Section
3 of the Master Distribution and Shareholder Services Plan adopted by
the Board with respect to the Advisor Class of such Funds, and for the
services provided and expenses incurred by Distributor as described in
Section 2 of the Shareholder Services Plan adopted by the Board with
respect to the Service Class of such Funds, Distributor shall be
compensated by IRC, not by the Funds.
Section 3. Expenses
a. Distributor or one of its affiliates shall pay all expenses incurred by
it in connection with the performance of its distribution duties
hereunder and under the Master Distribution and Shareholder Services
Plan, dated as of September 3, 1996, with respect to the Advisor Class
of the Funds' shares, including, but not limited to (A) payment of
sales commission, ongoing commissions and other payments to brokers,
dealers, financial institutions or others who sell Advisor Class shares
pursuant to Selling Agreements; (B) compensation to registered
representatives or other employees of Distributor who engage in or
support distribution of the Funds' Advisor Class shares; (C)
compensation to, and expenses (including overhead and telephone
expenses) of, Distributor; (D) the printing of prospectuses, statements
of additional information and reports for other than existing
shareholders; (E) the preparation, printing and distribution of sales
literature and advertising materials provided to the Funds'
shareholders and prospective shareholders; (F) receiving and answering
correspondence from prospective shareholders, including distributing
prospectuses, statements of additional information, and shareholder
reports; (G) the providing of facilities to answer questions from
prospective investors about Fund shares; (H) complying with federal and
state securities laws pertaining to the sale of Fund shares; (I)
assisting investors in completing application forms and selecting
dividend and other account options; (J) the providing of other
reasonable assistance in connection with the distribution of Fund
shares; (K) the organizing and conducting of sales seminars and
payments in the form of transactional compensation or promotional
incentives; (L) profit on the foregoing; (M) the payment of "service
fees", as contemplated by the Rules of Fair Practice of the National
Association of Securities Dealers , Inc.; and (N) such other
distribution and services activities as the Issuers determine may be
paid for by the Issuers pursuant to the terms of this Agreement and in
accordance with Rule 12b-1 of the 1940 Act.
b. Distributor or one of its affiliates shall pay all expenses incurred by
it in connection with the performance of its shareholder and
administrative services duties under the Shareholder Services Plan,
dated as of September 3, 1996, with respect to the Service Class of the
Funds' shares and under the Master Distribution and Shareholder
Services Plan, dated as of September 3, 1996, with respect to the
Distribution Class, including, but not limited to, (A) receiving,
aggregating and processing purchase, exchange and redemption request
from beneficial owners of Service Class shares (including contract
owners of insurance products that utilize the Funds as underlying
investment media) and placing purchase, exchange and redemption orders
with the Funds' transfer agent; (B) providing shareholders with a
service that invests the assets of their accounts in shares pursuant to
specific or pre-authorized instructions; (C) processing dividend
payments from a Fund on behalf of shareholders and assisting
shareholders in changing dividend options, account designations and
addresses; (D) providing and maintaining elective services such as
check writing and wire transfer services; (E) acting as shareholder of
record and nominee for beneficial owners; (F) maintaining account
records for shareholders and/or other beneficial owners; (G) issuing
confirmations of transactions; (H) providing subaccounting with respect
to shares beneficially owned by customers of third parties or providing
the information to a Fund as necessary for such subaccounting; (I)
preparing and forwarding shareholder communications from the Funds
(such as proxies, shareholder reports, annual and semi-annual financial
statements and dividend, distribution and tax notices) to shareholders
and/or other beneficial owners; (J) providing other similar
administrative and sub-transfer agency services; and (K) paying
"service fees," as contemplated by the Rules of Fair Practice of the
NASD. Shareholder Services do not include those activities and expenses
that are primarily intended to result in the sale of additional shares
of the Service Class of the Funds.
c. In addition to paying the above expenses with respect to the Advisor
Class and the Service Class, Distributor or an affiliate shall pay all
expenses incurred with respect to the Funds' other classes in
connection with their registration under the Securities Act of 1933 and
the 1940 Act, the qualification of such shares for sale in each
jurisdiction designated by the Funds' investment adviser, the issue and
transfer of such shares (including the expenses of confirming purchase
and redemption orders and of supplying the information, prices and
other data to be furnished by the Funds under this Agreement), the
registration of Distributor as a broker, and the registration and
qualification of its officers, directors and representatives under
applicable federal and state laws.
Section 4. Independent Contractor
Distributor shall be an independent contractor. Neither Distributor nor any of
its officers, trustees, employees or representatives is or shall be an employee
of a Fund in connection with the performance of Distributor's duties hereunder.
Distributor shall be responsible for its own conduct and the employment,
control, compensation and conduct of its agents and employees, and for any
injury to such agents or employees or to others through its agents and
employees. Any obligations of Distributor hereunder may be performed by one or
more affiliates of Distributor.
Section 5. Affiliation with the Funds
Subject to and in accordance with each Fund's formative documents, Section 10 of
the 1940 Act, it is understood: that the directors, officers, agents and
shareholders of the Funds are or may be interested in Distributor as directors,
officers, or shareholders of Distributor; that directors, officers, agents or
shareholders of Distributor are or may be interested in the Funds as directors,
officers, shareholders (directly or indirectly) or otherwise; and that the
affect of any such interest shall be governed by the 1940 Act and Section 4.
Section 6. Books and Records
It is expressly understood and agreed that all documents, reports, records,
books, files and other materials ("Fund Records") relating to this Agreement and
the services to be performed hereunder shall be the sole property of the Funds
and that such property, to the extent held by Distributor, shall be held by
Distributor as agent during the effective term of this Agreement. All Fund
Records shall be delivered to the applicable Fund upon the termination of this
Agreement, free from any claim or retention of rights by Distributor.
Section 7. Services Not Exclusive
The services of Distributor to the Funds hereunder are not to be deemed
exclusive, and Distributor shall be free to render similar services to others.
Section 8. Renewal and Termination
a. Term and Annual Renewal. The term of this Agreement shall be from the
date of its approval by the vote of a majority of the Board of each
Issuer, and it shall continue in effect from year to year thereafter
only so long as such continuance is specifically approved at least
annually by the vote of a majority of its Board, and the vote of a
majority of said directors who are neither parties to the Agreement nor
interested persons of any such party, cast at a meeting called for the
purpose of voting on such approval. "Approved at least annually" shall
mean approval occurring, with respect to the first continuance of the
Agreement, during the 90 days prior to and including the date of its
termination in the absence of such approval, and with respect to any
subsequent continuance, during the 90 days prior to and including the
first anniversary of the date upon which the most recent previous
annual continuance of the Agreement became effective. The effective
date of the Agreement with respect to each Fund is identified in the
Schedules attached to this Agreement.
b. Termination. This Agreement may be terminated at any time, without
payment of any penalty, by a Fund's Board, upon 60 days' written notice
to Distributor, and by Distributor upon 60 days' written notice to the
Fund. This Agreement shall terminate automatically in the event of its
assignment. The term "assignment" shall have the meaning set forth for
such term in Section 2(a)(4) of the 1940 Act.
Section 9. Severability
If any provision of this Agreement shall be held or made invalid by a court
decision, statute, rule or similar authority, the remainder of this Agreement
shall not be affected thereby.
Section 10. Applicable Law
This Agreement shall be construed in accordance with the laws of the State of
Missouri.
Section 11. Amendment
This Agreement and the Schedules forming a part hereof may be amended at any
time by a writing signed by each of the parties hereto. In the event that the
Board or trustees of any additional funds indicate by resolution that such funds
are to be made parties to this Agreement, whether such funds were in existence
at the time of the effective date of this Agreement or subsequently formed,
SCHEDULE A hereto shall be amended to reflect the addition of such new funds and
such new funds shall thereafter become parties hereto. In the event that such
new funds issue multiple classes of shares, SCHEDULES B, C, D, and E, as
appropriate, shall be amended to reflect the addition of such new funds'
classes. In the event that any of the Funds listed on SCHEDULE A terminates its
registration as a management investment company, or otherwise ceases operations,
SCHEDULE A (and, as appropriate, SCHEDULES B, C, D, and E) shall be amended to
reflect the deletion of such Fund and its various classes.
TWENIETH CENTURY SECURITIES, INC. Distribution Agreement
TWENTIETH CENTURY SECURITIES, INC.
By:-------------------------------
James E. Stowers III
President
TCI PORTFOLIOS, INC.
TWENTIETH CENTURY CAPITAL PORTFOLIOS, INC.
TWENTIETH CENTURY INVESTORS, INC.
TWENTIETH CENTURY PREMIUM RESERVES, INC.
TWENTIETH CENTURY STRATEGIC ASSET
ALLOCATIONS, INC.
TWENTIETH CENTURY WORLD INVESTORS, INC.
By:--------------------------------
William M. Lyons
Executive Vice President of
each of the Issuers
TWENTIETH CENTURY SECURITIES, INC. Distribution Agreement
SCHEDULE A
Companies and Funds Covered by this Distribution Agreement
Fund Date of Agreement
- ---- -----------------
TCI PORTFOLIOS, INC.
TCI Advantage September 3, 1996
TCI Balanced September 3, 1996
TCI Growth September 3, 1996
TCI International September 3, 1996
TCI Value September 3, 1996
TWENTIETH CENTURY CAPITAL PORTFOLIOS, INC.
Twentieth Century Equity Income September 3, 1996
Twentieth Century Value September 3, 1996
TWENTIETH CENTURY INVESTORS, INC.
Balanced Investors September 3, 1996
Cash Reserve September 3, 1996
Growth Investors September 3, 1996
Heritage Investors September 3, 1996
Intermediate-Term Bond September 3, 1996
Limited-Term Bond September 3, 1996
Long-Term Bond September 3, 1996
Select Investors September 3, 1996
U.S. Governments Intermediate-Term September 3, 1996
U.S. Governments Short-Term September 3, 1996
Ultra Investors September 3, 1996
Vista Investors September 3, 1996
Giftrust Investors September 3, 1996
Tax Exempt Short-Term September 3, 1996
Tax Exempt Intermediate-Term September 3, 1996
Tax Exempt Long-Term September 3, 1996
Twentieth Century New Opportunities Fund September 3, 1996
TWENTIETH CENTURY PREMIUM RESERVES, INC.
Twentieth Century Premium Government Reserve September 3, 1996
Twentieth Century Premium Capital Reserve September 3, 1996
Twentieth Century Premium Managed Bond September 3, 1996
TWENTIETH CENTURY STRATEGIC ASSET ALLOCATIONS, INC.
Strategic Allocation: Aggressive September 3, 1996
Strategic Allocation: Conservative September 3, 1996
Strategic Allocation: Moderate September 3, 1996
TWENTIETH CENTURY WORLD INVESTORS, INC.
Twentieth Century Emerging Markets Fund September 3, 1996
Twentieth Century International Equity September 3, 1996
Twentieth Century International Discovery Fund September 3, 1996
TWENTIETH CENTURY SECURITIES, INC. Distribution Agreement
SCHEDULE B
Investor Class and Single Class Funds
Fund Date of Agreement
---- -----------------
TCI PORTFOLIOS, INC.
TCI Advantage1 September 3, 1996
TCI Balanced1 September 3, 1996
TCI Growth1 September 3, 1996
TCI International1 September 3, 1996
TCI Value1 September 3, 1996
TWENTIETH CENTURY CAPITAL PORTFOLIOS, INC.
Twentieth Century Equity Income2 September 3, 1996
Twentieth Century Value2 September 3, 1996
TWENTIETH CENTURY INVESTORS, INC.
Balanced Investors2 September 3, 1996
Cash Reserve2 September 3, 1996
Growth Investors2 September 3, 1996
Heritage Investors2 September 3, 1996
Intermediate-Term Bond2 September 3, 1996
Limited-Term Bond2 September 3, 1996
Long-Term Bond2 September 3, 1996
Select Investors2 September 3, 1996
U.S. Governments Intermediate-Term2 September 3, 1996
U.S. Governments Short-Term2 September 3, 1996
Ultra Investors2 September 3, 1996
Vista Investors2 September 3, 1996
Giftrust Investors1 September 3, 1996
Tax Exempt Short-Term1 September 3, 1996
Tax Exempt Intermediate-Term1 September 3, 1996
Tax Exempt Long-Term1 September 3, 1996
Twentieth Century New Opportunities Fund1 September 3, 1996
TWENTIETH CENTURY PREMIUM RESERVES, INC.
Twentieth Century Premium Government Reserve1 September 3, 1996
Twentieth Century Premium Capital Reserve1 September 3, 1996
Twentieth Century Premium Managed Bond1 September 3, 1996
TWENTIETH CENTURY STRATEGIC ASSET ALLOCATIONS, INC.
Strategic Allocation: Aggressive2 September 3, 1996
Strategic Allocation: Conservative2 September 3, 1996
Strategic Allocation: Moderate2 September 3, 1996
TWENTIETH CENTURY WORLD INVESTORS, INC.
Twentieth Century Emerging Markets Fund2 September 3, 1996
Twentieth Century International Equity2 September 3, 1996
Twentieth Century International Discovery Fund2 September 3, 1996
- -------------------------------
1 Single Class of Shares
2 Multiple Classes of Shares
TWENTIETH CENTURY SECURITIES, INC. Distribution Agreement
SCHEDULE C
Institutional Class Funds
Fund Date of Agreement
- ---- -----------------
TWENTIETH CENTURY CAPITAL PORTFOLIOS, INC.
Twentieth Century Equity Income September 3, 1996
Twentieth Century Value September 3, 1996
TWENTIETH CENTURY INVESTORS, INC.
Balanced Investors September 3, 1996
Growth Investors September 3, 1996
Heritage Investors September 3, 1996
Select Investors September 3, 1996
Ultra Investors September 3, 1996
Vista Investors September 3, 1996
TWENTIETH CENTURY WORLD INVESTORS, INC.
Twentieth Century Emerging Markets Fund September 3, 1996
Twentieth Century International Equity September 3, 1996
Twentieth Century International Discovery Fund September 3, 1996
TWENTIETH CENTURY SECURITIES, INC. Distribution Agreement
SCHEDULE D
Service Class Funds
Fund Date of Agreement
- ---- -----------------
TWENTIETH CENTURY CAPITAL PORTFOLIOS, INC.
Twentieth Century Equity Income September 3, 1996
Twentieth Century Value September 3, 1996
TWENTIETH CENTURY INVESTORS, INC.
Balanced Investors September 3, 1996
Cash Reserve September 3, 1996
Growth Investors September 3, 1996
Heritage Investors September 3, 1996
Intermediate-Term Bond September 3, 1996
Limited-Term Bond September 3, 1996
Long-Term Bond September 3, 1996
Select Investors September 3, 1996
U.S. Governments Intermediate-Term September 3, 1996
U.S. Governments Short-Term September 3, 1996
Ultra Investors September 3, 1996
Vista Investors September 3, 1996
TWENTIETH CENTURY STRATEGIC ASSET ALLOCATIONS, INC.
Strategic Allocation: Aggressive September 3, 1996
Strategic Allocation: Conservative September 3, 1996
Strategic Allocation: Moderate September 3, 1996
TWENTIETH CENTURY WORLD INVESTORS, INC.
Twentieth Century Emerging Markets Fund September 3, 1996
Twentieth Century International Equity September 3, 1996
Twentieth Century International Discovery Fund September 3, 1996
TWENTIETH CENTURY SECURITIES, INC. Distribution Agreement
SCHEDULE E
Advisor Class Funds
Fund Date of Agreement
- ---- -----------------
TWENTIETH CENTURY CAPITAL PORTFOLIOS, INC.
Twentieth Century Equity Income September 3, 1996
Twentieth Century Value September 3, 1996
TWENTIETH CENTURY INVESTORS, INC.
Balanced Investors September 3, 1996
Cash Reserve September 3, 1996
Growth Investors September 3, 1996
Heritage Investors September 3, 1996
Intermediate-Term Bond September 3, 1996
Limited-Term Bond September 3, 1996
Long-Term Bond September 3, 1996
Select Investors September 3, 1996
U.S. Governments Intermediate-Term September 3, 1996
U.S. Governments Short-Term September 3, 1996
Ultra Investors September 3, 1996
Vista Investors September 3, 1996
TWENTIETH CENTURY STRATEGIC ASSET ALLOCATIONS, INC.
Strategic Allocation: Aggressive September 3, 1996
Strategic Allocation: Conservative September 3, 1996
Strategic Allocation: Moderate September 3, 1996
TWENTIETH CENTURY WORLD INVESTORS, INC.
Twentieth Century Emerging Markets Fund September 3, 1996
Twentieth Century International Equity September 3, 1996
Twentieth Century International Discovery Fund September 3, 1996
AMENDMENT NO. 1 TO DISTRIBUTION AGREEMENT
THIS AMENDMENT NO. 1 TO DISTRIBUTION AGREEMENT is made as of the 13th
day of June, 1997, by and between each of the open end management investment
companies listed on Schedule A, attached hereto, as of the dates noted on such
Schedule A, together with all other open end management investment companies
subsequently established and made subject to this Agreement in accordance with
Section 11 (the "Issuers") and American Century Investment Services, Inc.
("Distributor") (formerly known as Twentieth Century Securities, Inc.).
Capitalized terms not otherwise defined herein shall have the meaning ascribed
to them in the Distribution Agreement.
RECITALS
WHEREAS, the Issuers and Distributor are parties to a certain
Distribution Agreement dated September 3, 1996 (the "Distribution Agreement");
and
WHEREAS, in January 1997, the Issuers, the Funds and Distributor
changed their names; and
WHEREAS, American Century Capital Portfolios, Inc., has added a series,
American Century Real Estate Fund (the "Fund"); and
WHEREAS, the parties desire to amend the Distribution Agreement to
reflect the new names of the Issuers, the Funds and Distributor and to add the
new series.
NOW, THEREFORE, in consideration of the mutual promises set forth
herein, the parties hereto agree as follows:
1. The Fund is hereby added as a party to the Distribution Agreement.
2. Schedules A, B, C, D and E to Distribution Agreement are hereby
amended by deleting the text thereof in their entirety and inserting in lieu
therefor the Schedules A, B, C, D and E attached hereto.
3. After the date hereof, all references to the Distribution Agreement
shall be deemed to mean the Distribution Agreement, as amended by this Amendment
No. 1.
4. In the event of a conflict between the terms of this Amendment No.1
and the Distribution Agreement, it is the intention of the parties that the
terms of this Amendment No. 1 shall control and the Distribution Agreement shall
be interpreted on that basis. To the extent the provisions of the Distribution
Agreement have not been amended by this Amendment No. 1, the parties hereby
confirm and ratify the Distribution Agreement.
5. This Amendment No. 1 may be executed in two or more counterparts,
each of which shall be an original and all of which together shall constitute
one instrument.
IN WITNESS WHEREOF, the undersigned have executed this Amendment No. 1
as of the date first above written.
AMERICAN CENTURY INVESTMENT SERVICES, INC.
By: _________________________________
William M. Lyons
Executive Vice President
AMERICAN CENTURY MUTUAL FUNDS, INC.
AMERICAN CENTURY WORLD MUTUAL FUNDS, INC.
AMERICAN CENTURY CAPITAL PORTFOLIOS, INC.
AMERICAN CENTURY STRATEGIC ASSET
ALLOCATIONS, INC.
AMERICAN CENTURY VARIABLE PORTFOLIOS, INC.
AMERICAN CENTURY PREMIUM RESERVES, INC.
BY: _______________________________________
William M. Lyons
Executive Vice President of each of the Issuers
AMERICAN CENTURY INVESTMENT SERVICES, INC. Distribution Agreement
SCHEDULE A
Companies and Funds Covered by this Distribution Agreement
Fund Date of Agreement
- ---- -----------------
AMERICAN CENTURY VARIABLE PORTFOLIOS, INC.
American Century Advantage September 3, 1996
American Century Balanced September 3, 1996
American Century Capital Appreciation September 3, 1996
American Century International September 3, 1996
American Century Value September 3, 1996
AMERICAN CENTURY CAPITAL PORTFOLIOS, INC.
American Century Equity Income Fund September 3, 1996
American Century Value Fund September 3, 1996
American Century Real Estate Fund June 13, 1997
AMERICAN CENTURY MUTUAL FUNDS, INC.
American Century Balanced Fund September 3, 1996
Benham Cash Reserve Fund September 3, 1996
Twentieth Century Growth Fund September 3, 1996
Twentieth Century Heritage Fund September 3, 1996
Benham Intermediate-Term Bond Fund September 3, 1996
Benham Limited-Term Bond Fund September 3, 1996
Benham Bond Fund September 3, 1996
Twentieth Century Select Fund September 3, 1996
Benham Intermediate-Term Government Fund September 3, 1996
Benham Short-Term Government Fund September 3, 1996
Twentieth Century Ultra Fund September 3, 1996
Twentieth Century Vista Fund September 3, 1996
Twentieth Century Giftrust September 3, 1996
Benham Limited-Term Tax-Exempt Fund September 3, 1996
Benham Intermediate-Term Tax Exempt Fund September 3, 1996
Benham Long-Term Tax-Exempt Fund September 3, 1996
Twentieth Century New Opportunities Fund September 3, 1996
AMERICAN CENTURY PREMIUM RESERVES, INC.
Benham Premium Government Reserve Fund September 3, 1996
Benham Premium Capital Reserve Fund September 3, 1996
Benham Premium Bond Fund September 3, 1996
AMERICAN CENTURY STRATEGIC ASSET ALLOCATIONS, INC.
American Century Strategic Allocation: Aggressive September 3, 1996
American Century Strategic Allocation: Conservative September 3, 1996
American Century Strategic Allocation: Moderate September 3, 1996
AMERICAN CENTURY WORLD MUTUAL FUNDS, INC.
Twentieth Century Emerging Markets Fund September 3, 1996
Twentieth Century International Growth Fund September 3, 1996
Twentieth Century International Discovery Fund September 3, 1996
AMERICAN CENTURY INVESTMENT SECURITIES, INC. Distribution Agreement
SCHEDULE B
Investor Class and Single Class Funds
Fund Date of Agreement
---- -----------------
AMERICAN CENTURY VARIABLE PORTFOLIOS, INC.
American Century Advantage1 September 3, 1996
American Century Balanced1 September 3, 1996
American Century Capital Appreciation1 September 3, 1996
American Century International1 September 3, 1996
American Century Value1 September 3, 1996
AMERICAN CENTURY CAPITAL PORTFOLIOS, INC.
American Century Equity Income Fund2 September 3, 1996
American Century Value Fund2 September 3, 1996
American Century Real Estate Fund2 June 13, 1997
AMERICAN CENTURY MUTUAL FUNDS, INC.
American Century Balanced Fund2 September 3, 1996
Benham Cash Reserve Fund2 September 3, 1996
Twentieth Century Growth Fund2 September 3, 1996
Twentieth Century Heritage Fund2 September 3, 1996
Benham Intermediate-Term Bond Fund2 September 3, 1996
Benham Limited-Term Bond Fund2 September 3, 1996
Benham Bond Fund2 September 3, 1996
Twentieth Century Select Fund2 September 3, 1996
Benham Intermediate-Term Government Fund2 September 3, 1996
Benham Short-Term Government Fund2 September 3, 1996
Twentieth Century Ultra Fund2 September 3, 1996
Twentieth Century Vista Fund2 September 3, 1996
Twentieth Century Giftrust1 September 3, 1996
Benham Limited-Term Tax-Exempt Fund1 September 3, 1996
Benham Intermediate-Term Tax-Exempt Fund1 September 3, 1996
Benham Long-Term Tax-Exempt Fund1 September 3, 1996
Twentieth Century New Opportunities Fund1 September 3, 1996
AMERICAN CENTURY PREMIUM RESERVES, INC.
Benham Premium Government Reserve Fund1 September 3, 1996
Benham Premium Capital Reserve Fund1 September 3, 1996
Benham Premium Bond Bond1 September 3, 1996
AMERICAN CENTURY STRATEGIC ASSET ALLOCATIONS, INC.
American Century Strategic Allocation: Aggressive2 September 3, 1996
American Century Strategic Allocation: Conservative2 September 3, 1996
American Century Strategic Allocation: Moderate2 September 3, 1996
AMERICAN CENTURY WORLD MUTUAL FUNDS, INC.
Twentieth Century Emerging Markets Fund2 September 3, 1996
Twentieth Century International Growth Fund2 September 3, 1996
Twentieth Century International Discovery Fund2 September 3, 1996
- -----------------------------
1 Single Class of Shares
2 Multiple Classes of Shares
AMERICAN CENTURY INVESTMENT SERVICES, INC. Distribution Agreement
SCHEDULE C
Institutional Class Funds
Fund Date of Agreement
- ---- -----------------
AMERICAN CENTURY CAPITAL PORTFOLIOS, INC.
American Century Equity Income Fund September 3, 1996
American Century Value Fund September 3, 1996
American Century Real Estate Fund June 13, 1997
AMERICAN ENTURY MUTUAL FUNDS, INC.
American Century Balanced Fund September 3, 1996
Twentieth Century Growth Fund September 3, 1996
Twentieth Century Heritage Fund September 3, 1996
Twentieth Century Select Fund September 3, 1996
Twentieth Century Ultra Fund September 3, 1996
Twentieth Century Vista Fund September 3, 1996
AMERICAN CENTURY WORLD MUTUAL FUNDS, INC.
Twentieth Century Emerging Markets Fund September 3, 1996
Twentieth Century International Growth Fund September 3, 1996
Twentieth Century International Discovery Fund September 3, 1996
AMERICAN CENTURY INVESTMENT SERVICES, INC. Distribution Agreement
SCHEDULE D
Service Class Funds
Fund Date of Agreement
---- -----------------
AMERICAN CENTURY CAPITAL PORTFOLIOS, INC.
American Century Equity Income Fund September 3, 1996
American Century Value Fund September 3, 1996
AMERICAN CENTURY MUTUAL FUNDS, INC.
American Century Balanced Fund September 3, 1996
Benham Cash Reserve Fund September 3, 1996
Twentieth Century Growth Fund September 3, 1996
Twentieth Century Heritage Fund September 3, 1996
Benham Intermediate-Term Bond Fund September 3, 1996
Benham Limited-Term Bond Fund September 3, 1996
Benham Bond Fund September 3, 1996
Twentieth Century Select Fund September 3, 1996
Benham Intermediate-Term Government Fund September 3, 1996
Benham Short-Term Government Fund September 3, 1996
Twentieth Century Ultra Fund September 3, 1996
Twentieth Century Vista Fund September 3, 1996
AMERICAN CENTURY STRATEGIC ASSET ALLOCATIONS, INC.
American Century Strategic Allocation: Aggressive September 3, 1996
American Century Strategic Allocation: Conservative September 3, 1996
American Century Strategic Allocation: Moderate September 3, 1996
AMERICAN CENTURY WORLD MUTUAL FUNDS, INC.
Twentieth Century Emerging Markets Fund September 3, 1996
Twentieth Century International Growth Fund September 3, 1996
Twentieth Century International Discovery Fund September 3, 1996
AMERICAN CENTURY INVESTMENT SERVICES, INC. Distribution Agreement
SCHEDULE E
Advisor Class Funds
Fund Date of Agreement
- ---- -----------------
AMERICAN CENTURY CAPITAL PORTFOLIOS, INC.
American Century Equity Income Fund September 3, 1996
American Century Value Fund September 3, 1996
American Century Real Estate Fund June 13, 1997
AMERICAN CENTURY MUTUAL FUNDS, INC.
American Century Balanced Fund September 3, 1996
Benham Cash Reserve Fund September 3, 1996
Twentieth Century Growth Fund September 3, 1996
Twentieth Century Heritage Fund September 3, 1996
Benham Intermediate-Term Bond Fund September 3, 1996
Benham Limited-Term Bond Fund September 3, 1996
Benham Bond Fund September 3, 1996
Twentieth Century Select Fund September 3, 1996
Benham Intermediate-Term Government Fund September 3, 1996
Benham Short-Term Government Fund September 3, 1996
Twentieth Century Ultra Fund September 3, 1996
Twentieth Century Vista Fund September 3, 1996
AMERICAN CENTURY STRATEGIC ASSET ALLOCATIONS, INC.
American Century Strategic Allocation: Aggressive September 3, 1996
American Century Strategic Allocation: Conservative September 3, 1996
American Century Strategic Allocation: Moderate September 3, 1996
AMERICAN CENTURY WORLD MUTUAL FUNDS, INC.
Twentieth Century Emerging Markets Fund September 3, 1996
Twentieth Century International Growth Fund September 3, 1996
Twentieth Century International Discovery Fund September 3, 1996
Janet A. Nash
Attorney at Law
4500 Main Street * P.O. Box 418210
Kansas City, Missouri 64141-9210
July 1, 1997
American Century Variable Portfolios, Inc.
American Century Tower
4500 Main Street
Kansas City, Missouri 64111
Ladies and Gentlemen:
As counsel to American Century Variable Portfolios, Inc. (the
"Corporation"), I am generally familiar with its affairs. Based upon this
familiarity, and upon the examination of such documents as I deemed relevant, it
is my opinion that the shares of the Corporation described in Post-Effective
Amendment No. 21 to its Registration Statement on Form N-1A, to be filed with
the Securities and Exchange Commission on July 1, 1997, will, when issued, be
validly issued, fully paid and nonassessable.
For the record, it should be stated that I am an employee of American
Century Services Corporation, an affiliated corporation of American Century
Investment Management, Inc., the investment advisor of the Corporation.
I hereby consent to the use of this opinion as an exhibit to Post-
Effective Amendment No. 21.
Very truly yours,
/s/Janet A. Nash
Janet A. Nash
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE ANNUAL
REPORT OF AMERICAN CENTURY MUTUAL FUNDS, INC. AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH REPORT.
</LEGEND>
<SERIES>
<NUMBER> 1
<NAME> VP Capital Appreciation - 1996 PORTFOLIO
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 1,164,757,959
<INVESTMENTS-AT-VALUE> 1,320,758,830
<RECEIVABLES> 2,570,401
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,323,329,231
<PAYABLE-FOR-SECURITIES> 4,860,172
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 4,604,008
<TOTAL-LIABILITIES> 9,464,180
<SENIOR-EQUITY> 1,283,435
<PAID-IN-CAPITAL-COMMON> 1,133,927,736
<SHARES-COMMON-STOCK> 128,343,528
<SHARES-COMMON-PRIOR> 121,135,825
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 22,653,009
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 156,000,871
<NET-ASSETS> 1,313,865,051
<DIVIDEND-INCOME> 3,185,163
<INTEREST-INCOME> 2,715,775
<OTHER-INCOME> 0
<EXPENSES-NET> 14,414,632
<NET-INVESTMENT-INCOME> (8,513,694)
<REALIZED-GAINS-CURRENT> 32,772,249
<APPREC-INCREASE-CURRENT> (86,371,388)
<NET-CHANGE-FROM-OPS> (62,112,833)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 165,281,584
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 31,440,930
<NUMBER-OF-SHARES-REDEEMED> 41,183,203
<SHARES-REINVESTED> 16,949,976
<NET-CHANGE-IN-ASSETS> (147,258,603)
<ACCUMULATED-NII-PRIOR> (751,266)
<ACCUMULATED-GAINS-PRIOR> 163,386,583
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 14,401,981
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 14,414,632
<AVERAGE-NET-ASSETS> 1,444,414,188
<PER-SHARE-NAV-BEGIN> 12.06
<PER-SHARE-NII> (0.06)
<PER-SHARE-GAIN-APPREC> (0.40)
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 1.36
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 10.24
<EXPENSE-RATIO> 1.00
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE ANNUAL
REPORT OF AMERICAN CENTURY MUTUAL FUNDS, INC. AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH REPORT.
</LEGEND>
<SERIES>
<NUMBER> 2
<NAME> VP BALANCED - 1996 PORTFOLIO
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 186,429,636
<INVESTMENTS-AT-VALUE> 211,533,788
<RECEIVABLES> 4,728,982
<ASSETS-OTHER> 63,216
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 216,325,986
<PAYABLE-FOR-SECURITIES> 681,148
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 251,754
<TOTAL-LIABILITIES> 932,902
<SENIOR-EQUITY> 285,596
<PAID-IN-CAPITAL-COMMON> 178,994,055
<SHARES-COMMON-STOCK> 28,559,573
<SHARES-COMMON-PRIOR> 21,857,694
<ACCUMULATED-NII-CURRENT> 1,399,954
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 9,609,607
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 25,103,872
<NET-ASSETS> 215,393,084
<DIVIDEND-INCOME> 1,047,851
<INTEREST-INCOME> 5,289,821
<OTHER-INCOME> 0
<EXPENSES-NET> 1,833,753
<NET-INVESTMENT-INCOME> 4,503,919
<REALIZED-GAINS-CURRENT> 9,871,687
<APPREC-INCREASE-CURRENT> 7,482,658
<NET-CHANGE-FROM-OPS> 21,858,264
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 3,340,445
<DISTRIBUTIONS-OF-GAINS> 4,846,873
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 7,704,328
<NUMBER-OF-SHARES-REDEEMED> 2,170,655
<SHARES-REINVESTED> 1,168,206
<NET-CHANGE-IN-ASSETS> 61,569,914
<ACCUMULATED-NII-PRIOR> 62,692
<ACCUMULATED-GAINS-PRIOR> 4,758,581
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,832,133
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,833,753
<AVERAGE-NET-ASSETS> 185,726,034
<PER-SHARE-NAV-BEGIN> 7.04
<PER-SHARE-NII> 0.18
<PER-SHARE-GAIN-APPREC> 0.65
<PER-SHARE-DIVIDEND> 0.13
<PER-SHARE-DISTRIBUTIONS> 0.20
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 7.54
<EXPENSE-RATIO> 0.99
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE ANNUAL
REPORT OF AMERICAN CENTURY MUTUAL FUNDS, INC. AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH REPORT.
</LEGEND>
<SERIES>
<NUMBER> 3
<NAME> VP ADVANTAGE - 1996 PORTFOLIO
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 22,694,577
<INVESTMENTS-AT-VALUE> 24,885,464
<RECEIVABLES> 345,519
<ASSETS-OTHER> 90,620
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 25,321,603
<PAYABLE-FOR-SECURITIES> 52,756
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 38,939
<TOTAL-LIABILITIES> 91,696
<SENIOR-EQUITY> 40,117
<PAID-IN-CAPITAL-COMMON> 21,446,215
<SHARES-COMMON-STOCK> 4,011,706
<SHARES-COMMON-PRIOR> 3,883,369
<ACCUMULATED-NII-CURRENT> 211,117
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1,341,599
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2,190,860
<NET-ASSETS> 25,229,908
<DIVIDEND-INCOME> 95,355
<INTEREST-INCOME> 902,005
<OTHER-INCOME> 0
<EXPENSES-NET> 238,599
<NET-INVESTMENT-INCOME> 758,761
<REALIZED-GAINS-CURRENT> 1,368,192
<APPREC-INCREASE-CURRENT> 48,325
<NET-CHANGE-FROM-OPS> 2,175,278
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 583,561
<DISTRIBUTIONS-OF-GAINS> 1,133,859
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 238,512
<NUMBER-OF-SHARES-REDEEMED> 398,378
<SHARES-REINVESTED> 288,203
<NET-CHANGE-IN-ASSETS> 1,192,621
<ACCUMULATED-NII-PRIOR> 18,848
<ACCUMULATED-GAINS-PRIOR> 1,124,335
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 238,392
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 238,599
<AVERAGE-NET-ASSETS> 24,477,270
<PER-SHARE-NAV-BEGIN> 6.19
<PER-SHARE-NII> 0.20
<PER-SHARE-GAIN-APPREC> 0.34
<PER-SHARE-DIVIDEND> 0.15
<PER-SHARE-DISTRIBUTIONS> 0.29
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 6.29
<EXPENSE-RATIO> 0.98
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE ANNUAL
REPORT OF AMERICAN CENTURY MUTUAL FUNDS, INC. AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH REPORT.
</LEGEND>
<SERIES>
<NUMBER> 4
<NAME> VP INTERNATIONAL - 1996 PORTFOLIO
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 90,084,449
<INVESTMENTS-AT-VALUE> 100,279,982
<RECEIVABLES> 2,409,314
<ASSETS-OTHER> 228,310
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 102,917,606
<PAYABLE-FOR-SECURITIES> 1,266,472
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 315,951
<TOTAL-LIABILITIES> 1,582,423
<SENIOR-EQUITY> 170,048
<PAID-IN-CAPITAL-COMMON> 86,918,558
<SHARES-COMMON-STOCK> 17,004,837
<SHARES-COMMON-PRIOR> 9,676,421
<ACCUMULATED-NII-CURRENT> 1,422,517
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 2,674,107
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 10,149,953
<NET-ASSETS> 101,335,183
<DIVIDEND-INCOME> 1,060,086
<INTEREST-INCOME> 373,907
<OTHER-INCOME> 0
<EXPENSES-NET> 1,171,578
<NET-INVESTMENT-INCOME> 262,415
<REALIZED-GAINS-CURRENT> 4,021,576
<APPREC-INCREASE-CURRENT> 6,792,807
<NET-CHANGE-FROM-OPS> 11,076,798
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,207,965
<DISTRIBUTIONS-OF-GAINS> 402,655
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 15,365,530
<NUMBER-OF-SHARES-REDEEMED> 8,329,954
<SHARES-REINVESTED> 292,840
<NET-CHANGE-IN-ASSETS> 49,726,246
<ACCUMULATED-NII-PRIOR> 1,142,475
<ACCUMULATED-GAINS-PRIOR> 280,778
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,170,843
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,171,578
<AVERAGE-NET-ASSETS> 78,092,615
<PER-SHARE-NAV-BEGIN> 5.33
<PER-SHARE-NII> 0.02
<PER-SHARE-GAIN-APPREC> 0.74
<PER-SHARE-DIVIDEND> 0.10
<PER-SHARE-DISTRIBUTIONS> 0.03
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 5.96
<EXPENSE-RATIO> 1.50
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE ANNUAL
REPORT OF AMERICAN CENTURY MUTUAL FUNDS, INC. AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH REPORT.
</LEGEND>
<SERIES>
<NUMBER> 5
<NAME> VP VALUE - 1996 PORTFOLIO
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 22,644,588
<INVESTMENTS-AT-VALUE> 23,717,106
<RECEIVABLES> 715,438
<ASSETS-OTHER> 799,023
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 25,231,567
<PAYABLE-FOR-SECURITIES> 1,318,991
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 18,713
<TOTAL-LIABILITIES> 1,337,704
<SENIOR-EQUITY> 42,788
<PAID-IN-CAPITAL-COMMON> 22,264,517
<SHARES-COMMON-STOCK> 4,278,765
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 84,814
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 430,732
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,071,012
<NET-ASSETS> 23,893,863
<DIVIDEND-INCOME> 165,970
<INTEREST-INCOME> 19,137
<OTHER-INCOME> 0
<EXPENSES-NET> 62,235
<NET-INVESTMENT-INCOME> 122,872
<REALIZED-GAINS-CURRENT> 434,897
<APPREC-INCREASE-CURRENT> 1,071,012
<NET-CHANGE-FROM-OPS> 1,628,781
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 42,223
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 4,494,002
<NUMBER-OF-SHARES-REDEEMED> 223,494
<SHARES-REINVESTED> 8,257
<NET-CHANGE-IN-ASSETS> 23,893,863
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 62,187
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 62,235
<AVERAGE-NET-ASSETS> 9,241,069
<PER-SHARE-NAV-BEGIN> 5.00
<PER-SHARE-NII> 0.05
<PER-SHARE-GAIN-APPREC> 0.56
<PER-SHARE-DIVIDEND> 0.03
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 5.58
<EXPENSE-RATIO> 1.00
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
