AMERICAN CENTURY VARIABLE PORTFOLIOS, INC.
PROSPECTUS SUPPLEMENT
VP Advantage * VP Capital Appreciation * VP Income & Growth
VP International * VP Value
SUPPLEMENT DATED SEPTEMBER 4, 1998
Prospectus dated May 1, 1998
SPECIAL MEETING OF SHAREHOLDERS
The Board of Directors has requested that a Special Meeting of Shareholders
be held on November 16, 1998, for the following purposes:
1. To elect a Board of Directors of nine members;
2. To vote on the approval of a Management Agreement with American Century
Investment Management, Inc. ("ACIM");
3. To ratify the selection of Deloitte & Touche LLP as independent
auditors;
4. To approve the adoption of standardized fundamental investment
limitations (all funds except VP Income & Growth); and
5. To transact such other business as may come before the meeting, although
we are not aware of any other items to be considered.
The record date for the meeting is September 4, 1998. Shareholders of the
funds as of the close of business on that date will be entitled to vote at the
meeting. All of the outstanding shares of the funds are owned by insurance
companies that use such shares as funding options for variable life insurance
policies and variable annuity contracts sold by those insurance companies.
Accordingly, those insurance companies are the only shareholders entitled to
attend, either in person or by proxy, and vote shares at the Special Meeting.
Proxy materials containing more information about these proposals are expected
to be sent to shareholders on September 24, 1998. Although owners of the
policies/contracts issued by the insurance companies are not entitled to attend
or vote shares at the Special Meeting, the insurance companies are using these
proxy materials to solicit voting instructions from those policy/contract
holders entitled under the terms of their policies/contracts to instruct the
insurance companies how to vote at the Special Meeting. If approved by
shareholders, all proposals will become effective immediately upon approval.
Further Information About Proposal 2
The proposed Management Agreement is only slightly different from the
current Management Agreement. First, the proposed Management Agreement will
change the fee schedule for VP Capital Appreciation, VP International and VP
Value to reflect voluntary fee waivers by ACIM that will take effect on October
1, 1998. The proposed Management Agreement does not change fees payable by VP
Advantage or VP Income & Growth. The proposed Management Agreement also will
formalize an agreement between the funds and ACIM with respect to the funds'
names, and will permit ACIM to contract with third parties for services it
provides to the funds.
Further Information About Proposal 4
Because VP Income & Growth was created after the adoption of standard
fundamental investment policies by American Century's retail funds, its
shareholders do not need to adopt new policies. The other four funds have
fundamental investment restrictions that vary from each other, from those of VP
Income & Growth and from the other funds in the American Century family. Those
four funds also have investment restrictions that reflect legal and other
requirements that are no longer applicable. In the interests of efficiency in
fund management and compliance, the manager has formulated a standard set of
policies for all funds that reflect current industry practice and will allow the
funds to respond to changes in regulatory and industry practice without the
expense and delay of a shareholder vote. It should be noted that the adoption of
the proposed changes is not expected to substantially affect the way the funds
are managed.
The following new section is added after the section "Transfer and
Administrative Services" on page 14 of the VP Advantage and VP International
Prospectuses, page 12 of the VP Capital Appreciation and VP Income & Growth
Prospectuses, and page 13 of the VP Value Prospectus.
YEAR 2000 ISSUES
Many of the world's computer systems currently cannot properly recognize or
process date-sensitive information relating to the Year 2000 and beyond. Because
this may impact the computer systems of various American Century-affiliated and
external service providers for the fund, American Century formally initiated a
Year 2000 readiness project in July 1997. It involves a team of information
technology professionals assisted by outside consultants and guided by a
senior-level steering committee. The team's goal is to assess the impact of the
Year 2000 on American Century's systems, renovate or replace noncompliant
critical systems and test those systems. In addition, the team has been working
to gather information about the Year 2000 efforts of the fund's other major
service providers. Although American Century believes its critical systems will
function properly in the Year 2000, this is not guaranteed. If the efforts of
American Century or its external service providers are not successful, the
fund's business, particularly its ability to provide shareholder services, may
be hampered.
In addition, the issuers of securities the fund owns could have Year 2000
computer problems. These problems could negatively affect the value of their
securities, which, in turn, could impact the fund's performance. The manager has
established a process to gather publicly available information about the Year
2000 readiness of these issuers. However, this process may not uncover all
relevant information, and the information gathered may not be complete and
accurate. Moreover, an issuer's Year 2000 readiness is only one of many factors
the manager may consider when making investment decisions, and other factors may
receive greater weight.
The following disclosure replaces the fourth paragraph under the heading
"Investment Management" found on page 12 of the VP Value Prospectus.
R. TODD VINGERS, Portfolio Manager, joined American Century in August 1994
as an Investment Analyst, a position he held until February 1998. At that time
he was promoted to Portfolio Manager. Prior to joining American Century, Mr.
Vingers attended the University of Chicago Graduate School of Business from
October 1991 to June 1994, where he obtained his MBA degree.
SH-SPL-13849 9808
P.O. Box 419385 [american century logo(reg.sm)]
Kansas City, Missouri American
64141-6385 Century(reg.sm)
1-800-345-3533 or 816-531-5575
<PAGE>
AMERICAN CENTURY VARIABLE PORTFOLIOS, INC.
PROSPECTUS SUPPLEMENT
VP Balanced
SUPPLEMENT DATED SEPTEMBER 4, 1998
Prospectus dated May 1, 1998
SPECIAL MEETING OF SHAREHOLDERS
The Board of Directors has requested that a Special Meeting of Shareholders
be held on November 16, 1998, for the following purposes:
1. To elect a Board of Directors of nine members;
2. To vote on the approval of a Management Agreement with American Century
Investment Management, Inc. ("ACIM");
3. To ratify the selection of Deloitte & Touche LLP as independent
auditors;
4. To approve the adoption of standardized fundamental investment
limitations; and
5. To transact such other business as may come before the meeting, although
we are not aware of any other items to be considered.
The record date for the meeting is September 4, 1998. Shareholders of the
fund as of the close of business on that date will be entitled to vote at the
meeting. All of the outstanding shares of the fund are owned by insurance
companies that use such shares as funding options for variable life insurance
policies and variable annuity contracts sold by those insurance companies.
Accordingly, those insurance companies are the only shareholders entitled to
attend, either in person or by proxy, and vote shares at the Special Meeting.
Proxy materials containing more information about these proposals are expected
to be sent to shareholders on September 24, 1998. Although owners of the
policies/contracts issued by the insurance companies are not entitled to attend
or vote shares at the Special Meeting, the insurance companies are using these
proxy materials to solicit voting instructions from those policy/contract
holders entitled under the terms of their policies/contracts to instruct the
insurance companies how to vote at the Special Meeting. If approved by
shareholders, all proposals will become effective immediately upon approval.
Further Information About Proposal 2
The proposed Management Agreement is only slightly different from the
current Management Agreement. First, the proposed Management Agreement will
change the fund's fee schedule to reflect a voluntary fee waiver by ACIM that
will take effect on October 1, 1998. The proposed Management Agreement also will
formalize an agreement between the fund and ACIM with respect to the fund's
name, and will permit ACIM to contract with third parties for services it
provides to the fund.
Further Information About Proposal 4
Currently, the fund's fundamental investment restrictions vary from those of
other funds in the American Century family. The fund also has investment
restrictions that reflect legal and other requirements that are no longer
applicable to the fund. In the interests of efficiency in fund management and
compliance, the manager has formulated a standard set of policies that reflect
current industry practice and will allow the fund to respond to changes in
regulatory and industry practice without the expense and delay of a shareholder
vote. It should be noted that the adoption of the proposed changes is not
expected to substantially affect the way the fund is managed.
MODIFICATION OF INVESTMENT STRATEGY
Effective November 1, 1998, the fund will modify the way its equity portion is
managed. Historically, investments for the equity part of the fund, which
comprise about 60% of the fund's assets, have been guided by a growth investment
strategy developed by American Century. This has led the fund's equity assets to
be invested in companies with earnings and revenues that are growing at an
accelerating pace.
In order to decrease the volatility potential of its equity portfolio, effective
November 1, 1998, equity investments will be guided by our quantitative equity
management style. Accordingly, as of November 1, 1998, the disclosure set forth
below will replace the second and third paragraphs under the heading "Investment
Policies of the Fund" on page 5 of the Prospectus.
With the equity portion of the VP Balanced portfolio, which management
intends to be approximately 60% of the fund's assets, the manager utilizes
quantitative management techniques in a two-step process that draws heavily on
computer technology. In the first step, the manager ranks stocks, primarily the
1,500 largest publicly traded companies in the United States (measured by the
value of their stock). These rankings are determined by using a computer model
that combines measures of a stock's value, as well as measures of its growth
potential. To measure value, the manager uses ratios of stock price to book
value and stock price to cash flow, among others. To measure growth, the manager
uses, among others, the rate of growth of a company's earnings and changes in
the earnings estimates for a company.
In the second step, the manager uses a technique called portfolio
optimization. In portfolio optimization, the manager uses a computer to build a
portfolio of stocks from the ranking described earlier that it thinks will
provide the optimal balance between risk and expected return. The goal is to
create an equity portfolio that provides better returns than the S&P 500 without
taking on significant additional risk.
In this change of guiding style, the portfolio management team responsible for
the equity portion of Balanced will change. The team managing the fixed income
portion will not change. To reflect the management team changes, as of November
1, 1998, the following disclosure will replace paragraphs 4, 7 and 8 under the
heading "Investment Manager" on page 13 of the Prospectus.
JOHN SCHNIEDWIND, Senior Vice President and Group Leader - Quantitative
Equity, joined American Century in 1982. He is a member of the team that manages
the equity portion of Balanced.
JEFFREY R. TYLER, Senior Vice President and Portfolio Manager, joined
American Century in January 1988. He is a member of the team that manages the
equity portion of Balanced.
The following new section is added after the section "Transfer and
Administrative Services" found on page 14 of the Prospectus.
YEAR 2000 ISSUES
Many of the world's computer systems currently cannot properly recognize or
process date-sensitive information relating to the Year 2000 and beyond. Because
this may impact the computer systems of various American Century-affiliated and
external service providers for the fund, American Century formally initiated a
Year 2000 readiness project in July 1997. It involves a team of information
technology professionals assisted by outside consultants and guided by a
senior-level steering committee. The team's goal is to assess the impact of the
Year 2000 on American Century's systems, renovate or replace noncompliant
critical systems and test those systems. In addition, the team has been working
to gather information about the Year 2000 efforts of the fund's other major
service providers. Although American Century believes its critical systems will
function properly in the Year 2000, this is not guaranteed. If the efforts of
American Century or its external service providers are not successful, the
fund's business, particularly its ability to provide shareholder services, may
be hampered.
In addition, the issuers of securities the fund owns could have Year 2000
computer problems. These problems could negatively affect the value of their
securities, which, in turn, could impact the fund's performance. The manager has
established a process to gather publicly available information about the Year
2000 readiness of these issuers. However, this process may not uncover all
relevant information, and the information gathered may not be complete and
accurate. Moreover, an issuer's Year 2000 readiness is only one of many factors
the manager may consider when making investment decisions, and other factors may
receive greater weight.
SH-SPL-13848 9808
P.O. Box 419385 [american century logo(reg.sm)]
Kansas City, Missouri American
64141-6385 Century(reg.sm)
1-800-345-3533 or 816-531-5575
