Document two

485BPOS 1 doc-2.htm PEA 2 Document two

485B POS
Post-Effective Amendment

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]

*File No. 333-46922

Pre-Effective Amendment No. [ ]

Post-Effective Amendment No.2 [X]

and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]

File No. 811-10155

Amendment No. 2 [X]

(Check appropriate box or boxes.)

AMERICAN CENTURY VARIABLE PORTFOLIOS II, INC.
_________________________________________________________________
(Exact Name of Registrant as Specified in Charter)

4500 Main Street, Kansas City, MO 64141-6200
_________________________________________________________________
(Address of Principal Executive Offices) (Zip Code)

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

David C. Tucker, Esq., 4500 Main Street, Kansas City, MO 64141-6200
_________________________________________________________________
(Name and Address of Agent for Service)

Approximate Date of Proposed Public Offering: May 1, 2002

It is proposed that this filing will become effective (check
appropriate box)

[ ] immediately upon filing pursuant to paragraph (b)
[X] on May 1, 2002 pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] on (date) pursuant to paragraph (a)(1)
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] on (date) pursuant to paragraph (a)(2) of rule 485.

If appropriate, check the following box:

[ ] This post-effective amendment designates a new effective date
for a previously filed post-effective amendment.

[front cover]

Your
American Century
prospectus

May 1, 2002

VP Prime Money Market Fund

THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES OR DETERMINED IF THIS PROSPECTUS IS ACCURATE OR COMPLETE. ANYONE WHO
TELLS YOU OTHERWISE IS COMMITTING A CRIME.

American Century Investment Services, Inc.

[american century logo and text logo (reg. sm)]

Table of Contents

AN OVERVIEW OF THE FUND ................................................... 2
OBJECTIVES, STRATEGIES AND RISKS .......................................... 3
BASICS OF FIXED-INCOME INVESTING .......................................... 4
MANAGEMENT ................................................................ 6
SHARE PRICE, DISTRIBUTIONS AND TAXES ...................................... 8
FINANCIAL HIGHLIGHTS ...................................................... 10

[right margin]

Throughout this book you'll find definitions of key investment terms and
phrases. When you see a word printed in GREEN ITALICS, look for its definition
in the margin.

[graphic of triangle]

This symbol highlights special information and helpful tips.

AN OVERVIEW OF THE FUND

WHAT IS THE FUND'S INVESTMENT OBJECTIVE?

VP Prime Money Market seeks to earn the highest level of current income while
preserving the value of your investment.

WHAT ARE THE FUND'S PRIMARY INVESTMENT STRATEGIES AND PRINCIPAL RISKS?

The fund invests most of its assets in high-quality, very short-term DEBT
SECURITIES issued by corporations, banks and governments.

The interest paid by the high-quality debt securities in which the fund invests
is among the lowest for income-paying securities. Accordingly, the yield on this
fund will likely be lower than funds that invest in longer-term or lower-quality
securities.

Investments in debt securities also involve interest rate risk. However, the
fund's investments in very short-term debt securities are designed to minimize
this risk.

WHO MAY WANT TO INVEST IN THE FUND?

The fund may be a good investment if you are

* more concerned with preservation of capital than long-term investment
performance

* more seeking some current income

* more seeking diversification by investing in a fixed-income mutual fund

WHO MAY NOT WANT TO INVEST IN THE FUND?

The fund may not be a good investment if you are

* more investing for long-term growth

* more looking for the added security of FDIC insurance

Fund Performance History

As a new fund, the fund's performance history is not available as of the date of
this Prospectus. When the fund has investment results for a full calendar year,
this section will feature charts that show annual total returns, highest and
lowest quarterly returns and average annual total returns.

[left margin]

DEBT SECURITIES include fixed-income investments such as notes, bonds,
commercial paper and U.S. Treasury securities.

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

[graphic of triangle]

For current performance information, please call us at 1-800-345-6488 or visit
us at www.americancentury.com.

OBJECTIVES, STRATEGIES AND RISKS

WHAT IS THE FUND'S INVESTMENT OBJECTIVE?

VP Prime Money Market seeks to earn the highest level of current income while
preserving the value of your investment.

HOW DOES THE FUND PURSUE ITS INVESTMENT OBJECTIVES?

The fund buys HIGH-QUALITY, very short-term debt securities. These securities
are short-term obligations of banks, governments and corporations that are
payable in U.S. dollars.

For more information about the fund's credit quality standards and about credit
risk, please see Basics of Fixed-Income Investing beginning on page 4.

WHAT ARE THE PRINCIPAL RISKS OF INVESTING IN THE FUND?

Because high-quality, very short-term debt securities are among the safest
securities available, the interest they pay is among the lowest for
income-paying securities. Accordingly, the yield on this fund will likely be
lower than the yield on funds that invest in longer-term or lower-quality
securities.

The fund is offered only to insurance companies for the purpose of offering the
fund as an investment option under variable annuity or variable life insurance
contracts. Although the fund 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 fund might, at some time, be in conflict
due to future differences in tax treatment of variable products or other
considerations. Consequently, the fund's 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 redeem such investments.

[right margin]

A HIGH-QUALITY debt security is one that has been determined to be in the top
two credit quality categories. This can be established in a number of ways. For
example, independent rating agencies may rate the security in their higher
rating categories. The fund's advisor also can analyze an unrated security to
determine if its credit quality is high enough for investment. Details of the
fund's credit quality standards are described in the Statement of Additional
Information.

BASICS OF FIXED-INCOME INVESTING

DEBT SECURITIES

When a fund buys a debt security, also called a fixed-income security, it is
essentially lending money to the security's issuer. Notes, bonds, commercial
paper and U. S. Treasury securities are examples of debt securities. After the
debt security is first sold by the issuer, it may be bought and sold by other
investors. The price of the debt security may rise or fall based on many
factors, including changes in interest rates, liquidity and credit quality.

The fund managers decide which debt securities to buy and sell by

* determining which debt securities help a fund meet its maturity requirements

* identifying debt securities that satisfy a fund's credit quality standards

* evaluating current economic conditions and assessing the risk of inflation

* evaluating special features of the debt securities that may make them more or
less attractive

WEIGHTED AVERAGE MATURITY

Like most loans, debt securities eventually must be repaid or refinanced at some
date. This date is called the maturity date. The number of days left to a debt
security's maturity date is called the remaining maturity. The longer a debt
security's remaining maturity, generally the more sensitive its price is to
changes in interest rates.

Because a bond fund will own many debt securities, the fund managers calculate
the average of the remaining maturities of all the debt securities the fund owns
to evaluate the interest rate sensitivity of the entire portfolio. This average
is weighted according to the size of the fund's individual holdings and is
called the WEIGHTED AVERAGE MATURITY. The following chart shows how fund
managers would calculate the weighted average maturity for a fund that owned
only two debt securities.

Amount of Percent of Remaining Weighted
Security Owned Portfolio Maturity Maturity
---------------------------------------------------------------------------------------------------------
Debt Security A $100,000 25% 4 years 1 year
---------------------------------------------------------------------------------------------------------
Debt Security B $300,000 75% 12 years 9 years
---------------------------------------------------------------------------------------------------------
Weighted Average Maturity 10 years

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[graphic of triangle]

The longer a fund's weighted average maturity, the more sensitive it is to
interest rate changes.

WEIGHTED AVERAGE MATURITY is a tool the fund managers use to approximate the
remaining term to maturity of a fund's investment portfolio.

TYPES OF RISK

The basic types of risk the fund faces are described below.

Interest Rate Risk

Generally, interest rates and the prices of debt securities move in opposite
directions. When interest rates fall, the prices of most debt securities rise;
when interest rates rise, prices fall. Because the fund invests primarily in
debt securities, changes in interest rates will affect the fund's performance.
This sensitivity to interest rate changes is called interest rate risk.

The degree to which interest rate changes affect a fund's performance varies and
is related to the weighted average maturity of a particular fund. For example,
when interest rates rise, you can expect the share value of a long-term bond
fund to fall more than that of a short-term bond fund. When rates fall, the
opposite is true.

The following table shows the likely effect of a 1% (100 basis points) increase
in interest rates on the price of 7% coupon bonds of differing maturities:

Remaining Maturity Current Price Price After 1% Increase Change in Price
------------------------------------------------------------------------------------------------------
1 year $100.00 $99.06 -0.94%
------------------------------------------------------------------------------------------------------
3 years $100.00 $97.38 -2.62%
------------------------------------------------------------------------------------------------------
10 years $100.00 $93.20 -6.80%
------------------------------------------------------------------------------------------------------
30 years $100.00 $88.69 -11.31%

Credit Risk

Credit risk is the risk that an obligation won't be paid and a loss will result.
A high credit rating indicates a high degree of confidence by the rating
organization that the issuer will be able to withstand adverse business,
financial or economic conditions and make principal payments on time. Generally,
a lower credit rating indicates a greater risk of non-payment. A lower rating
also may indicate that the issuer has a more senior series of debt securities,
which means that if the issuer has difficulties making its payments, the more
senior series of debt is first in line for payment.

The fund managers do not invest solely on the basis of a debt security's credit
rating; they also consider other factors, including potential returns. Higher
credit ratings usually mean lower interest rate payments, so investors often
purchase debt securities that aren't the highest rated to increase return. If a
fund purchases lower-rated debt securities, it assumes additional credit risk.

Liquidity Risk

Debt securities can become difficult to sell, or less liquid, for a variety of
reasons, such as lack of an active trading market. The chance that a fund will
have difficulty selling its debt securities is called liquidity risk.

The fund engages in a variety of investment techniques as it pursues its
investment objective. Each technique has its own characteristics, and may pose
some level of risk to the fund. To learn more about these techniques, you should
review the Statement of Additional Information before making an investment.

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Credit quality may be lower when the issuer has any of the following

* a high debt level

* a short operating history

* a senior level of debt

* a difficult, competitive environment

* a less stable cash flow

MANAGEMENT

WHO MANAGES THE FUND?

The Board of Directors, investment advisor and fund management team play key
roles in the management of the fund.

THE BOARD OF DIRECTORS

The Board of Directors oversees the management of the fund and meets at least
quarterly to review reports about fund operations. Although the Board of
Directors does not manage the fund, it has hired an investment advisor to do so.
More than two-thirds of the directors are independent of the fund's advisor;
that is, they are not employed by and have no financial interest in the advisor.

THE INVESTMENT ADVISOR

The fund's investment advisor is American Century Investment Management, Inc.
The advisor has been managing mutual funds since 1958 and is headquartered at
4500 Main Street, Kansas City, Missouri 64111.

The advisor is responsible for managing the investment portfolios of the fund
and directing the purchase and sale of its investment securities. The advisor
also arranges for transfer agency, custody and all other services necessary for
the fund to operate.

For the services it provides to the fund, the advisor receives a unified
management fee based on a percentage of the average net assets of the fund. The
amount of the management fee for a fund is determined monthly using a two-step
formula that takes into account the fund's strategy (money market, bond or
equity) and the total amount of mutual fund assets the advisor manages. The
management fee is paid monthly in arrears.

The fund was not in operation for the full fiscal year ended December 31, 2001.
The fund will pay the advisor a unified management fee calculated by adding the
appropriate Investment Category and Complex Fees from the schedules below:

Investment Category Fee Schedule for VP Prime Money Market
--------------------------------------------------------------------------------
Category Assets Fee Rate
--------------------------------------------------------------------------------
First $1 billion 0.3700%
Next $1 billion 0.3270%
Next $3 billion 0.2860%
Next $5 billion 0.2690%
Next $15 billion 0.2580%
Next $25 billion 0.2575%
Thereafter 0.2570%

The Complex Fee is determined according to the schedules below.

Complex Fee Schedule
--------------------------------------------------------------------------------
Complex Assets Fee Rate
-------------------------------------------------------------------------------
First $2.5 billion 0.3100%
Next $7.5 billion 0.3000%
Next $15.0 billion 0.2985%
Next $25.0 billion 0.2970%
Next $50.0 billion 0.2960%
Next $100.0 billion 0.2950%
Next $100.0 billion 0.2940%
Next $200.0 billion 0.2930%
Next $250.0 billion 0.2920%
Next $500.0 billion 0.2910%
Thereafter 0.2900%

The Statement of Additional Information contains detailed information about
thecalculation of the management fee. Out of that fee, the advisor pays all
expenses of managing and operating the fund except brokerage expenses, taxes,
interest, fees and expenses of the independent directors (including legal
counsel fees), and extraordinary expenses. A portion of the management fee may
be paid by the fund's advisor to unaffiliated third parties who provide
recordkeeping and administrative services that would otherwise be performed by
an affiliate of the advisor.

THE FUND MANAGEMENT TEAM

The advisor uses a team of portfolio managers, assistant portfolio managers and
analysts to manage the fund. The team meets regularly to review portfolio
holdings and discuss purchase and sale activity. Team members buy and sell
securities for the fund as they see fit, guided by the fund's investment
objective and strategy.

The portfolio manager who leads the team is identified below:

DENISE TABACCO

Ms. Tabacco, Vice President and Portfolio Manager, has been a member of the team
that manages VP Prime Money Market since its inception. She joined American
Century in 1988, becoming a member of its portfolio department in 1991. She has
a bachelor's degree in accounting from San Diego State University and an MBA in
finance from Golden Gate University.

FUND PERFORMANCE

VP Prime Money Market has the same management team and investment policies as
another fund in the American Century family of funds. The fees and expenses of
the funds are expected to be similar, and they will be managed with
substantially the same investment objective and strategies. Notwithstanding
these general similarities, this fund and the retail fund are separate mutual
funds that will have different investment performance. Differences in cash flows
into the two funds, the size of their portfolios and specific investments held
by the two funds, as well as the additional expenses of the insurance product,
will cause performance to differ.

Please consult the separate account prospectus for a description of the
insurance product through which the fund is offered and its associated fees.

FUNDAMENTAL INVESTMENT POLICIES

Fundamental investment policies contained in the Statement of Additional
Information and the investment objective of the fund may not be changed without
shareholder approval. The Board of Directors may change any other policies and
investment strategies.

[right margin]

CODE OF ETHICS

American Century has a Code of Ethics designed to ensure that the interests of
fund shareholders come before the interests of the people who manage the fund.
Among other provisions, the Code of Ethics prohibits portfolio managers and
other investment personnel from buying securities in an initial public offering
or profiting from the purchase and sale of the same security within 60 calendar
days. In addition, the Code of Ethics requires portfolio managers and other
employees with access to information about the purchase or sale of securities by
the fund to obtain approval before executing permitted personal trades.

SHARE PRICE, DISTRIBUTIONS AND TAXES

PURCHASE AND REDEMPTION OF SHARES

For instructions on how to purchase and redeem shares, read the prospectus of
your insurance company separate account. Your order will be priced at the net
asset value next determined after your request is received in the form required
by the insurance company separate account. 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.

ABUSIVE TRADING PRACTICES

We do not permit market timing or other abusive trading practices in our funds.

Excessive, short-term (market timing) or other abusive trading practices may
disrupt portfolio management strategies and harm fund performance. To minimize
harm to the fund and its shareholders, we reserve the right to reject any
purchase order (including exchanges) from any investor we believe has a history
of abusive trading or whose trading, in our judgment, has been or may be
disruptive to a fund. In making this judgment, we may consider trading done in
multiple accounts under common ownership or control.

We also reserve the right to delay delivery of redemption proceeds up to seven
days.

MODIFYING OR CANCELING AN INVESTMENT

Investment instructions are irrevocable. That means that once you have mailed or
otherwise transmitted your investment instruction, you may not modify or cancel
it. The fund reserves the right to suspend the offering of shares for a period
of time, and to reject any specific investment (including a purchase by
exchange). Additionally, we may refuse a purchase if, in our judgment, it is of
a size that would disrupt the management of the fund.

SHARE PRICE

American Century determines the net asset value (NAV) of the fund as of the
close of regular trading on the New York Stock Exchange (usually 4 p.m. Eastern
time) on each day the Exchange is open. On days when the Exchange is closed
(including certain U.S. holidays), we do not calculate the NAV. A fund share's
NAV is the current value of the fund's assets, minus any liabilities, divided by
the number of fund shares outstanding.

The fund's portfolio securities are valued at amortized cost. This means the
securities are initially valued at their cost when purchased. After the initial
purchase, the difference between the purchase price and the known value at
maturity will be reduced at a constant rate until maturity. This valuation will
be used regardless of the impact of interest rates on the market value of the
security. The Board has adopted procedures to ensure that this type of pricing
is fair to the fund's investors.

We will price your purchase, exchange or redemption at the NAV next determined
after the insurance company separate account receives your transaction request
in good order.

DISTRIBUTIONS

Federal tax laws require the fund to make distributions to its shareholders in
order to qualify as a "regulated investment company." Qualification as a
regulated investment company means the fund will not be subject to state or
federal income tax on amounts distributed. The distributions generally consist
of dividends and interest received by a fund. The fund's dividends are declared
and available for redemption daily. The fund does not expect to have CAPITAL
GAINS. If it does, it will distribute them to shareholders when realized.

You will begin to participate in fund distributions on the day your instructions
to purchase are received if you

* notify us of your purchase prior to 11 a.m. Central time AND

* pay for your purchase by bank wire transfer prior to 3 p.m. Central time on
the same day.

Also, we will wire your redemption proceeds to you by the end of the business
day if you request your redemption before 11 a.m. Central time.

Provided that all shareholders agree, the fund may utilize the consent dividend
provision of Internal Revenue Code section 565 which treats the income earned by
the fund as distributed to the shareholders as of the end of the taxable year.

TAXES

Consult the prospectus of your insurance company separate account for a
discussion of the tax status of your variable contract.

[right margin]

CAPITAL GAINS are increases in the values of capital assets, such as stock, from
the time the assets are purchased.

FINANCIAL HIGHLIGHTS

UNDERSTANDING THE FINANCIAL HIGHLIGHTS

The table on the next page itemizes what contributed to the changes in share
price during the most recently ended fiscal year. It also shows the changes in
share price for this period in comparison to changes over the last five fiscal
years.

On a per-share basis, the table includes as appropriate

* share price at the beginning of the period

* investment income and capital gains or losses

* distributions of income and capital gains paid to investors

* share price at the end of the period

The table also includes some key statistics for the period as appropriate

* TOTAL RETURN - the overall percentage of return of the fund, assuming the
reinvestment of all distributions

* EXPENSE RATIO - the operating expenses of the fund as a percentage of average
net assets

* NET INCOME RATIO - the net investment income of the fund as a percentage of
average net assets

* PORTFOLIO TURNOVER - the percentage of the fund's buying and selling activity

The Financial Highlights have been audited by PricewaterhouseCoopers LLP,
independent auditors. Their Independent Auditors' Report and the financial
statements are included in the fund's Annual Report, which is available upon
request.

VP PRIME--FINANCIAL HIGHLIGHTS

FOR A SHARE OUTSTANDING THROUGHOUT THE YEAR ENDED DECEMBER 31, 2001

Per-Share Data

2001
--------------------------------------------------------------------
Net Asset Value, Beginning of Period $1.00

Income From Investment Operations
Net Investment Income 0.03

Distributions
From Net Investment Income (0.03)

Net Asset Value, End of Period $1.00

Total Return(1) 3.45%
Ratios/Supplemental Data
2001
--------------------------------------------------------------------
Ratio of Operating Expenses to Average Net Assets 0.00%(2)
Ratio of Net Investment Income to Average Net Assets 3.45%(2)
Net Assets, End of Period (in thousands) $100

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

(2) ACIM voluntarily waived the management fee of the fund through December 31,
2001. Had the fees not been waived, the annualized ratio of operating expenses
to average net assets would have been 0.59% and the annualized ratio of net
investment income to average net assets would have been 2.86%.

NOTES

MORE INFORMATION ABOUT THE FUND IS CONTAINED IN THESE DOCUMENTS

Annual and Semiannual Reports

Annual and semiannual reports contain more information about the fund's
investments and the market conditions and investment strategies that
significantly affected the fund's performance during the most recent fiscal
period.

Statement of Additional Information (SAI)

The SAI contains a more detailed, legal description of the fund's operations,
investment restrictions, policies and practices. The SAI is incorporated by
reference into this Prospectus. This means that it is legally part of this
Prospectus, even if you don't request a copy.

You may obtain a free copy of the SAI or annual and semiannual reports, and ask
questions about the fund or your accounts, by contacting the insurance company
from which you purchased the fund or American Century at the address or
telephone numbers listed below.

You also can get information about the fund (including the SAI) from the
Securities and Exchange Commission (SEC). The SEC charges a duplicating fee to
provide copies of this information.

In person SEC Public Reference Room
Washington, D.C.
Call 202-942-8090 for location and hours.

On the Internet * EDGAR database at www.sec.gov
* By email request at publicinfo@sec.gov

By mail SEC Public Reference Section
Washington, D.C. 20549-0102

Investment Company Act File No. 811-10155

[american century logo and text logo (reg. sm)]

American Century Investments
P.O. Box 419385
Kansas City, Missouri 64141-6385
1-800-345-6488 or 816-531-5575

www.americancentury.com

0205
SH-PRS-28997

[front cover]

American Century
statement of
additional information

MAY 1, 2002

American Century Variable Portfolios II, Inc.

VP Prime Money Market Fund

This Statement of Additional Information adds to the discussion in the fund's
Prospectus, dated May 1, 2002, but is not a prospectus. The Statement of
Additional Information should be read in conjunction with the fund's current
Prospectus. If you would like a copy of the Prospectus, please contact the
insurance company from which you purchased the fund or contact us at one of the
addresses or telephone numbers listed on the back cover.

This Statement of Additional Information incorporates by reference certain
information that appears in the fund's annual and semiannual reports, which are
delivered to all shareholders. You may obtain a free copy of the fund's annual
or semiannual report by calling 1-800-345-6488.

American Century Investment Services, Inc.

[american century logo and text logo (reg. sm)]

Table of Contents

The Fund's History ........................................................ 2
Fund Investment Guidelines ................................................ 2
Portfolio Composition ..................................................... 3
Fund Investments and Risks ................................................ 4
Investment Strategies and Risks ...................................... 4
Investment Policies .................................................. 8
Temporary Defensive Measures ......................................... 10
Management ................................................................ 11
The Board of Directors ............................................... 15
Ownership of Fund Shares ............................................. 17
Code of Ethics ....................................................... 17
Service Providers ......................................................... 18
Investment Advisor ................................................... 18
Transfer Agent and Administrator ..................................... 20
Distributor .......................................................... 20
Other Service Providers ................................................... 20
Custodian Banks ...................................................... 20
Independent Accountants .............................................. 20
Brokerage Allocation ...................................................... 20
Information about Fund Shares ............................................. 21
Valuation of a Fund's Securities ..................................... 21
Taxes ..................................................................... 22
Federal Income Tax ................................................... 22
How Fund Performance Information Is Calculated ............................ 23
Performance Comparisons .............................................. 23
Permissible Advertising Information .................................. 24
Financial Statements ...................................................... 24
Explanation of Fixed-Income Securities Ratings ............................ 25

THE FUND'S HISTORY

American Century Variable Portfolios II, Inc. is a registered open-end
management investment company that was organized as a Maryland Corporation on
September 19, 2000. Throughout this Statement of Additional Information, we
refer to American Century Variable Portfolios II, Inc. as the Corporation.

The fund described in this Statement of Additional Information is a separate
series of the Corporation. The Corporation may issue other series; the fund
would operate for many purposes as if it were an independent company from any
such future series.

Inception Date
--------------------------------------------------------------------------------
VP Prime Money Market Fund N/A

FUND INVESTMENT GUIDELINES

This section explains the extent to which the fund's advisor, American Century
Investment Management, Inc., can use various investment vehicles and strategies
in managing the fund's assets. Descriptions of the investment techniques and
risks associated with each appear in the section, Investment Strategies and
Risks, which begins on page 4. In the case of the fund's principal investment
strategies, these descriptions elaborate upon discussion contained in the
Prospectus.

The fund operates pursuant to Rule 2a-7 under the Investment Company Act of 1940
(the Investment Company Act), which permits the valuation of portfolio
securities on the basis of amortized cost. To rely on the rule, the fund must be
diversified with regard to 100% of its assets other than securities issued or
guaranteed by the U.S. government. For purposes of Rule 2a-7, diversified means
that the fund must not invest more than 5% of its total assets in securities of
a single issuer, or, with respect to 75% of assets, more than 10% of assets in
securities guaranteed by a single guarantor, other than the U.S. government,
although it may invest up to 25% of its total assets in securities of a single
issuer that are rated in the highest credit quality category for a period of up
to three business days after purchase. The fund also must not invest more than
(a) the greater of 1% of its total assets or $1 million in securities issued by
a single issuer that are rated in the second highest credit quality category;
and (b) 5% of its total assets in securities rated in the second highest credit
quality category. The fund is considered diversified under the Investment
Company Act provided that it complies with the definition of diversified under
Rule 2a-7.

To meet federal tax requirements for qualification as a regulated investment
company, the fund must limit its investments so that at the close of each
quarter of its taxable year (1) no more than 25% of its total assets are
invested in the securities of a single issuer (other than the U.S. government or
a regulated investment company), and (2) with respect to at least 50% of its
total assets, no more than 5% of its total assets are invested in the securities
of a single issuer.

PORTFOLIO COMPOSITION

Eligible Investments

The fund buys high-quality (first-tier), U.S. dollar-denominated money market
instruments and other short-term obligations of banks, governments and
corporations. Some of the fund's possible investments are listed in the
following table. The obligations referenced in the table and the risks
associated with investing in them are described in the section titled Investment
Strategies and Risks, which begins on page 4

Issuers Types of Obligations
-------------------------------------------------------------------------------------------------------
Domestic and foreign financial institutions Negotiable certificates of deposit, bankers'
(e.g., banks, broker-dealers, insurance acceptances, bank notes and commercial
companies, leasing and financing corporations) paper (including floating-rate securities)
------------------------------------------------------------------------------------------------------
Domestic and foreign Commercial paper and short-term
nonfinancial corporations corporate debt obligations (including
fixed- and variable-rate notes and bonds)
------------------------------------------------------------------------------------------------------
U.S. government and its agencies U.S. Treasury bills, notes, bonds and
and instrumentalities U.S. government agency obligations
(including floating-rate agency securities)
------------------------------------------------------------------------------------------------------
Foreign governments and their Commercial paper and discount notes
agencies and instrumentalities (including floating-rate agency securities)
------------------------------------------------------------------------------------------------------

Portfolio Investment Quality and Maturity Criteria

The fund managers follow regulatory guidelines on quality and maturity for the
fund's investments, which are designed to help maintain a stable $1.00 share
price. In particular, the fund:

(1) buys only U.S. dollar-denominated obligations with remaining maturities of
13 months or less (and variable- and floating-rate obligations with demand
features that effectively shorten their maturities to 13 months or less); (2)
maintains a dollar-weighted average portfolio maturity of 90 days or less; (3)
restricts its investments to high-quality obligations determined by the advisor
to present minimal credit risks, pursuant to guidelines established by the Board
of Directors.

To be considered high-quality, an obligation must be one of the following: (1) a
U.S. government obligation; (2) rated (or issued by an issuer rated with respect
to a class of short-term debt obligations) within the two highest rating
categories for short-term debt obligations by at least two nationally recognized
statistical rating organizations (rating agencies) (or one if only one has rated
the obligation); (3) an unrated obligation judged by the advisor, pursuant to
guidelines established by the Board of Directors, to be of comparable quality.

The fund managers intend to buy only obligations designated as first-tier
securities as defined by the SEC; that is, securities with the highest rating or
unrated securities of comparable quality.

The fund has obtained private insurance that partially protects it against
default of principal or interest payments on the instruments it holds, and
against bankruptcy by issuers and credit enhancers of these instruments.
Although the fund will be charged premiums by an insurance company for coverage
of specified types of losses related to default or bankruptcy on certain
securities, the fund may incur losses regardless of the insurance. The
insurance does not guarantee or insure that the funds will be able to maintain a
stable net asset value of $1.00 per share.

Industry Concentration

Under normal market conditions, 25% or more of the fund's total assets are
invested in obligations of issuers in the financial services industry.

FUND INVESTMENTS AND RISKS

INVESTMENT STRATEGIES AND RISKS

This section describes various investment vehicles and techniques the fund
managers can use in managing the fund's assets. It also details the risks
associated with each, because each investment vehicle and technique contributes
to a fund's overall risk profile.

Commercial Paper

Commercial paper (CP) is issued by utility, financial, and industrial companies
and supranational organizations and foreign governments and their agencies and
instrumentalities. Rating agencies assign ratings to CP issuers indicating the
agencies' assessment of credit risk. Investment-grade CP ratings assigned by
four rating agencies are provided in the following table.

Moody's Investors Standard Duff & Fitch Investors
Service, Inc. & Poor's Phelps, Inc. Service, Inc.
-------------------------------------------------------------------------------------------------------
Highest Ratings Prime-1 A-1/A-1+ D-1/D-1+ F-1/F-1+
-------------------------------------------------------------------------------------------------------
Prime-2 A-2 D-2 F-2
-------------------------------------------------------------------------------------------------------
Prime-3 A-3 D-3 F-3

If an obligation has been assigned different ratings by multiple rating
agencies, at least two rating agencies must have assigned their highest rating
as indicated above in order for the advisor to determine that the obligation is
eligible for purchase by the fund or, if unrated, the obligation must be
determined to be of comparable quality by the advisor.

Some examples of CP and CP issuers are provided in the following paragraphs.

Domestic CP is issued by U.S. industrial and finance companies, utility
companies, thrifts and bank holding companies. Foreign CP is issued by non-U.S.
industrial and finance companies and financial institutions. Domestic and
foreign corporate issuers occasionally have the underlying support of a
well-known, highly rated commercial bank or insurance company. Bank support is
provided in the form of a letter of credit (an LOC) or irrevocable revolving
credit commitment (an IRC). Insurance support is provided in the form of a
surety bond.

Bank holding company CP is issued by the holding companies of many well-known
domestic banks, including Citicorp, J.P. Morgan Chase Bank and First Union
National Bank. Bank holding company CP may be issued by the parent of a money
center or regional bank.

Thrift CP is issued by major federal or state-chartered savings and loan
associations and savings banks.

Schedule B Bank CP is short-term, U.S. dollar-denominated CP issued by Canadian
subsidiaries of non-Canadian banks (Schedule B banks). Whether issued as
commercial paper, a certificate of deposit or a promissory note, each instrument
issued by a Schedule B bank ranks equally with any other deposit obligation. CP
issued by Schedule B banks provides an investor with the comfort and reduced
risk of a direct and unconditional parental bank guarantee. Schedule B
instruments generally offer higher rates than the short-term instruments of the
parent bank or holding company.

Bank Obligations

Negotiable certificates of deposit (CDs) evidence a bank's obligation to repay
money deposited with it for a specified period of time. The following table
identifies the types of CDs the fund may buy.

CD Type Issuer
--------------------------------------------------------------------------------
Domestic Domestic offices of U.S. banks
--------------------------------------------------------------------------------
Yankee U.S. branches of foreign banks
--------------------------------------------------------------------------------
Eurodollar Issued in London by U.S., Canadian, European and Japanese banks
--------------------------------------------------------------------------------
Schedule B Canadian subsidiaries of non-Canadian banks
--------------------------------------------------------------------------------

Bankers' acceptances are used to finance foreign commercial trade. Issued by a
bank with an importer's name on them, these instruments allow the importer to
back up its own pledge to pay for imported goods with a bank's obligation to
cover the transaction if the importer fails to do so.

Bank notes are senior unsecured promissory notes issued in the United States by
domestic commercial banks.

Time deposits are non-negotiable bank deposits maintained for up to seven days
at a stated interest rate. These instruments may be withdrawn on demand,
although early withdrawals may be subject to penalties.

The bank obligations the fund managers may buy generally are not insured by the
FDIC or any other insurer.

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 (FNMA), are supported by the discretionary authority of the
U.S. government to purchase the agencies' obligations; and others are supported
only 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.

U.S. Dollar-Denominated Foreign Securities

The fund invests exclusively in U.S. dollar-denominated instruments, some of
which may be issued by foreign entities as described in the table on this page.
Consequently, the fund may be subject to risks different than those incurred by
a fund that invests only in debt obligations of domestic issuers.

Currently, the only securities held outside the United States in which the fund
expects to invest are EuroCDs, which are held in England. As a result, the
fund's exposure to these foreign investment risks is expected to be lower than
funds that invest more broadly in securities held outside the United States.
Regulatory limits specified in the section titled Portfolio Investment Quality
and Maturity Criteria on page 3 apply equally to securities of foreign and
domestic issuers.

Variable- and Floating-Rate Instruments

Variable- and floating-rate instruments are issued by corporations, financial
institutions and government agencies and instrumentalities.

Floating-rate instruments have interest rates that change whenever there is a
change in a designated base rate, whereas variable-rate instruments provide for
specified periodic interest rate adjustments. The interest rate on variable- and
floating-rate instruments is ordinarily determined by reference to (or as a
percentage of) an objective standard, such as the Federal Funds effective rate,
the 90-day U.S. Treasury bill rate or the London Interbank Offered Rate (LIBOR).

Although the fund typically limits its investments to securities with remaining
maturities of 13 months or less, it may invest in variable- and floating-rate
instruments that have nominal (or stated) maturities in excess of 13 months,
provided that such instruments (1) have demand features consistent with
regulatory requirements for money market funds, or (2) are securities issued by
the U.S. government or a U.S. government agency that meet certain regulatory
requirements for money market funds.

Loan Participations

The fund may purchase loan participations, which represent interests in the cash
flow generated by commercial loans. Each loan participation requires three
parties: a participant (or investor), a lending bank and a borrower. The
investor purchases a share in a loan originated by a lending bank, and this
participation entitles the investor to a percentage of the principal and
interest payments made by the borrower.

Loan participations are attractive because they typically offer higher yields
than other money market instruments. However, along with these higher yields
come certain risks, not least of which is the risk that the borrower will be
unable to repay the loan. Generally, because the lending bank does not guarantee
payment, the investor is directly exposed to risk of default by the borrower.
Second, the investor is not a direct creditor of the borrower. The participation
represents an interest in assets owned by the lending bank. If the lending bank
becomes insolvent, the investor could be considered an unsecured creditor of the
bank instead of the holder of a participating interest in a loan. Because of
these risks, the manager must carefully consider the creditworthiness of both
the borrower and the lender.

Another concern is liquidity. Because there is no established secondary market
for loan participations, the fund's ability to sell them for cash is limited.
Some participation agreements place limitations on the investor's right to
resell the loan participation, even when a buyer can be found.

Repurchase Agreements

The fund may invest in repurchase agreements when they present an attractive
short-term return on cash that is not otherwise committed to the purchase of
securities pursuant to the investment policies of the fund.

A repurchase agreement occurs when, at the time the fund purchases an
interest-bearing obligation, the seller (a bank or a broker-dealer registered
under the Securities Exchange Act of 1934) agrees to purchase it on a specified
date in the future at an agreed-upon price. The repurchase price reflects an
agreed-upon interest rate during the time the fund's money is invested in the
security.

Because the security purchased constitutes collateral for the repurchase
obligation, a repurchase agreement can be considered a loan collateralized by
the security purchased. The fund's risk is the seller's ability to pay the
agreed-upon repurchase price on the repurchase date. If the seller defaults, the
fund may incur costs in disposing of the collateral, which would reduce the
amount realized thereon. If the seller seeks relief under

the bankruptcy laws, the disposition of the collateral may be delayed or
limited. To the extent the value of the security decreases, the fund could
experience a loss.

The fund managers will limit repurchase agreement transactions to securities
issued by the U.S. government, and its agencies and instrumentalities, and will
enter into such transactions with those banks and securities dealers who are
deemed creditworthy by the fund's advisor.

Repurchase agreements maturing in more than seven days would count toward the
fund's 10% limit on illiquid securities.

Reverse Repurchase Agreements

In a reverse repurchase agreement, the fund managers transfer possession of (or
sell) securities to another party, such as a bank or broker-dealer, for cash and
agree to later repay cash plus interest for the return (or repurchase) of the
same securities. To collateralize the transaction, the value of the securities
transferred is slightly greater than the amount of cash the fund receives in
exchange for the securities.

If the purchaser reneged on the agreement and failed to return the securities,
the fund might suffer a loss. The fund's loss could be even greater if the
market value of the securities transferred increased in the meantime. To protect
against these risks, the fund will enter into reverse repurchase agreements only
with parties whose creditworthiness is determined to be satisfactory by the
advisor. While a reverse repurchase agreement is outstanding, the fund will
segregate appropriate securities to cover its obligation under the agreement.

Taxable Municipal Obligations

Taxable municipal obligations are state and local obligations whose interest
payments are subject to federal income tax because of the degree of
non-government involvement in the transaction or because federal tax code
limitations on the issuance of tax-exempt bonds that benefit private entities
have been exceeded. Some typical examples of taxable municipal obligations
include industrial revenue bonds and economic development bonds issued by state
or local governments to aid private enterprise. The interest on a taxable
municipal bond is often exempt from state taxation in the issuing state.

Portfolio Lending

In order to realize additional income, the fund managers may lend portfolio
securities. Such loans may not exceed one-third of the fund's net assets valued
at market except

* through the purchase of debt securities in accordance with its investment
objective, policies and limitations, or

* by engaging in repurchase agreements with respect to portfolio securities.

When-Issued and Forward Commitment Agreements

The fund managers may sometimes purchase new issues of securities 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, but not more than 120 days,
later).

For example, a fund may sell a security and at the same time make a commitment
to purchase the same or a comparable security at a future date and specified
price. Conversely, a fund may purchase a security and at the same time make a
commitment to sell the same or a comparable security at a future date and
specified price. These types of transactions are executed simultaneously in what
are known as dollar-rolls, cash and carry, or financing transactions. For
example, a broker-dealer may seek to purchase a particular

security that a fund owns. The fund will sell that security to the broker-dealer
and simultaneously enter into a forward commitment agreement to buy it back at a
future date. This type of transaction generates income for the fund if the
dealer is willing to execute the transaction at a favorable price in order to
acquire a specific security.

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. Market rates of interest on debt securities at the time of
delivery may be higher or lower than those contracted for on the when-issued
security. Accordingly, the value of the security may decline prior to delivery,
which could result in a loss to the fund. While the fund will make commitments
to purchase or sell securities with the intention of actually receiving or
delivering them, it may sell the securities before the settlement date if doing
so 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, cash-equivalents or other appropriate liquid securities in
an amount sufficient to meet the purchase price. When the time comes to pay for
the 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, by selling 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
taxable capital gains or losses.

Restricted and Illiquid Securities

The fund may, from time to time, purchase restricted or illiquid securities,
including Rule 144A securities, when they present attractive investment
opportunities that otherwise meet the fund's criteria for selection. Rule 144A
securities are securities that are privately placed with and traded among
qualified institutional investors rather than the general public. Although Rule
144A securities are considered "restricted securities," they are not necessarily
illiquid.

With respect to securities eligible for resale under Rule 144A, the staff of the
Securities and Exchange Commission (SEC) has taken the position that the
liquidity of such securities in the portfolio of a fund offering redeemable
securities is a question of fact for the Board of Directors to determine, such
determination to be based upon a consideration of the readily available trading
markets and the review of any contractual restrictions. Accordingly, the Board
of Directors is responsible for developing and establishing the guidelines and
procedures for determining the liquidity of Rule 144A securities. As allowed by
Rule 144A, the Board of Directors has delegated the day-to-day function of
determining the liquidity of Rule 144A securities to the fund managers. The
board retains the responsibility to monitor the implementation of the guidelines
and procedures it has adopted.

Because the secondary market for such securities is limited to certain qualified
institutional investors, the liquidity of such securities may be limited
accordingly and a fund may, from time to time, hold a Rule 144A or other
security that is illiquid. The fund will not acquire illiquid securities if, as
a result, illiquid securities would comprise more than 10% of the value of the
fund's net assets.

INVESTMENT POLICIES

Unless otherwise indicated, with the exception of the percentage limitations on
borrowing, the policies described below apply at the time a fund enters into a
transaction. Accordingly, any later increase or decrease beyond the specified
limitation resulting from a change in a fund's net assets will not be considered
in determining whether it has complied with its investment policies.

For purposes of the fund's investment policies, the party identified as the
"issuer" of a municipal security depends on the form and conditions of the
security. When the assets and revenues of a political subdivision are separate
from those of the government that created the subdivision and the security is
backed only by the assets and revenues of the subdivision, the subdivision is
deemed the sole issuer. Similarly, in the case of an Industrial Development
Bond, if the bond were backed only by the assets and revenues of a
non-governmental user, the non-governmental user would be deemed the sole
issuer. If, in either case, the creating government or some other entity were to
guarantee the security, the guarantee would be considered a separate security
and treated as an issue of the guaranteeing entity.

Fundamental Investment Policies

The fund's fundamental investment policies are set forth below. These investment
policies may not be changed without approval of a majority of the outstanding
votes of the fund's investors, as determined in accordance with the Investment
Company Act.

Subject Policy
--------------------------------------------------------------------------------
Senior Securities The fund may not issue senior securities, except as permitted
under the Investment Company Act.
--------------------------------------------------------------------------------
Borrowing The fund may not borrow money, except for temporary or
emergency purposes (not for leveraging or investment)
in an amount exceeding 33 1/3% of the fund's total assets
(including the amount borrowed) less liabilities
(other than borrowings).
--------------------------------------------------------------------------------
Lending The fund may 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.
--------------------------------------------------------------------------------
Real Estate The fund may 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 investing 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.
--------------------------------------------------------------------------------
Concentration The fund may not concentrate its investments in securities of
issuers in a particular industry (other than securities issued
or guaranteed by the U.S. government or any of its agencies or
instrumentalities), except that the fund may invest more than
25% of its total assets in the financial services industry.
--------------------------------------------------------------------------------
Underwriting The fund may not act as an underwriter of securities issued 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.
--------------------------------------------------------------------------------
Commodities The fund may not purchase or sell physical commodities unless
acquired as a result of ownership of securities or other
instruments, provided that this limitation 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.
--------------------------------------------------------------------------------
Control The fund may not invest for purposes of exercising control
over management.
--------------------------------------------------------------------------------

For purposes of the investment restrictions relating to lending and borrowing,
the fund has received an exemptive order from the SEC regarding an interfund
lending program. Under the terms of the exemptive order, the fund may borrow
money from or lend money to other ACIM-advised funds that permit such
transactions. All such transactions will be subject to the limits for borrowing
and lending set forth above. The fund will borrow money through the program only
when the costs are equal to or lower than the costs of short-term bank loans.
Interfund loans and borrowing normally extend only overnight, but can have a
maximum duration of seven days. The fund will lend through the program only when
the returns are higher than those available from other short-term instruments
(such as repurchase agreements). The fund may have to borrow from a bank at a
higher interest rate if an interfund loan is called or not renewed. Any delay in
repayment to a lending fund could result in a lost investment opportunity or
additional borrowing costs.

For purposes of the investment restriction relating to concentration, the fund
shall not purchase any securities that would cause 25% or more of the value of
the fund's total assets at the time of purchase to be invested in the securities
of one or more issuers conducting their principal business activities in the
same industry (except financial industries), provided that

(a) there is no limitation with respect to obligations issued or guaranteed by
the U.S. government, any state, territory or possession of the United
States, the District of Columbia or any of their authorities, agencies,
instrumentalities or political subdivisions and repurchase agreements
secured by such obligations,

(b) wholly owned finance companies will be considered to be in the industries of
their parents if their activities are primarily related to financing the
activities of the parents,

(c) utilities will be divided according to their services, for example, gas, gas
transmission, electric and gas, and electric and telephone will each be
considered a separate industry, and

(d) personal credit and business credit businesses will be considered separate
industries.

Nonfundamental Investment Policies

In addition, the fund is subject to the following investment policies that are
not fundamental and may be changed by the Board of Directors.

Subject Policy
--------------------------------------------------------------------------------
Leveraging The fund may not purchase additional investment securities at
any time during which outstanding borrowings exceed 5% of the
total assets of the fund.
--------------------------------------------------------------------------------
Futures and The fund may not purchase or sell futures contracts or call
options options. This limitation does not apply to options attached
to, or acquired or traded together with, their underlying
securities, and does not apply to securities that incorporate
features similar to options or futures contracts.
--------------------------------------------------------------------------------
Liquidity The fund may not purchase any security or enter into a
repurchase agreement if, as a result, more than 10% of its
net assets would be invested in repurchase agreements not
entitling the holder to payment of principal and interest
within seven days and in securities that are illiquid by
virtue of legal or contractual restrictions on resale or the
absence of a readily available market.
--------------------------------------------------------------------------------
Short Sales The fund may not sell securities short, unless it owns or has
the right to obtain securities equivalent in kind and amount
to the securities sold short, and provided that transactions
in futures contracts and options are not deemed to
constitute selling securities short.
--------------------------------------------------------------------------------
Margin The fund may not purchase securities on margin, except to
obtain such short-term credits as are necessary for the
clearance of transactions, and provided that margin payments
in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on
margin.
--------------------------------------------------------------------------------

Temporary Defensive Measures

For temporary defensive purposes, the fund may invest in securities that may not
fit its investment objective or its stated market. During a temporary defensive
period, the fund may direct its assets to the following investment vehicles:

* interest-bearing bank accounts or certificates of deposit

* U.S. government securities and repurchase agreements collateralized by U.S.
government securities

* other money market funds

MANAGEMENT

The individuals listed in the table below serve as directors or officers of the
fund. Directors listed as interested persons of the funds (as defined in the
Investment Company Act) are "interested" primarily by virtue of their engagement
as officers of American Century Companies, Inc. (ACC) or its wholly-owned
subsidiaries, including the fund's investment advisor, American Century
Investment Management, Inc. (ACIM), and the funds' principal underwriter,
American Century Investment Services, Inc. (ACIS).

The remaining directors, because they are not "interested" persons of the fund,
are viewed as independent directors under the Investment Company Act provisions
and SEC rules referencing such directors. More than two-thirds of the directors
are independent; that is, they are not employees or officers of, and have no
financial interest in, ACC or any of its wholly-owned subsidiaries, including
ACIM and ACIS.

All persons named as officers of the fund also serve in similar capacities for
the investment companies advised by ACIM. Not all officers of the fund are
listed; only those officers with policy-making functions for the fund are
listed. No officer is compensated for his or her service as an officer of the
fund. The officers listed in the following table are interested persons of the
fund as described above.

Number of
Portfolios
in Fund
Length Complex Other
Position(s) of Time Overseen Directorships
Held with Served Principal Occupation(s) by Held by
Name, Address (Age) Fund (years) During Past 5 Years Director Director
------------------------------------------------------------------------------------------------------------------------
Interested Directors
------------------------------------------------------------------------------------------------------------------------
James E. Stowers III Director, 6 Co-Chairman, ACC 76 Director, ACC, ACIM, ACSC
4500 Main Street Chairman (September 2000 to present) and other ACC subsidiaries
Kansas City, MO 64111 of Co-Chief Investment Officer,
(43) the Board U.S. Equities (September 2000
to February 2001)
Chief Executive Officer, ACC
ACIM, ACSC and
other ACC subsidiaries
(June 1996 to September 2000)
President, ACC (January 1995
to June 1997)
President, ACIM and ACSC
(April 1993 to August 1997)
------------------------------------------------------------------------------------------------------------------------
William M. Lyons Director 4 Chief Executive Officer, ACC 38 Director, ACIM, ACSC and other
4500 Main Street and other ACC subsidiaries ACC subsidiaries Kansas City, MO 64111 (September 2000 to present)
(46) President, ACC
(June 1997 to present)
Chief Operating Officer,
ACC (June 1996 to
September 2000)
General Counsel, ACC, ACIM,
ACIS, ACSC and other
ACC subsidiaries
(June 1989 to June 1998)
Executive Vice President,
ACC (January 1995
to June 1997)
Also serves as: Executive
Vice President and Chief
Operating Officer, ACIM,
ACSC and other ACC
subsidiaries, and
Executive Vice President
of other ACC subsidiaries
------------------------------------------------------------------------------------------------------------------------
Independent Directors
------------------------------------------------------------------------------------------------------------------------
Albert Eisenstat Director 6 General Partner, 38 Independent Director,
1665 Charleston Road Discovery Ventures Sungard Data Systems
Mountain View, CA 94043 (Venture capital firm, (1991 to present)
(71) 1996 to 1998) Independent Director,
Business Objects S/A
(1994 to present)
------------------------------------------------------------------------------------------------------------------------
Ronald J. Gilson Director 6 Charles J. Meyers Professor 38 None
1665 Charleston Road of Law and Business,
Mountain View, CA 94043 Stanford Law School
(55) (1979 to present)
Mark and Eva Stern
Professor of Law and
Business, Columbia
University School of Law
(1992 to present)
Counsel, Marron, Reid &
Sheehy (a San Francisco
law firm, 1984 to present)
------------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------
Jeanne D. Wohlers Director 17 Director and Partner, 38 Director, Indus International
1665 Charleston Road Windy Hill Productions, LP (software solutions,
Mountain View, CA 94043 (educational software, January 1999 to present)
(57) 1994 to 1998) Director, Quintus Corporation
(automation solutions,
1995 to present)
---------------------------------------------------------------------------------------------------------------------
Officers
----------------------------------------------------------------------------------------------------------------------
William M. Lyons President 1 See entry above under 38 See entry above under
4500 Main Street "Interested Directors". "Interested Directors".
Kansas City, MO 64111
(46)
------------------------------------------------------------------------------------------------------------
Robert T. Jackson Executive 1 Chief Administrative Officer Not Not applicable
4500 Main St. Vice and Chief Financial Officer, applicable
Kansas City, MO 64111 President ACC (August 1997 to present)
(56) and President, ACSC
Chief (January 1999 to present)
Financial Executive Vice President, ACC
Officer (May 1995 to present)
Also serves as: Executive Vice
President and Chief Financial Officer,
ACIM, ACIS and other ACC subsidiaries
--------------------------------------------------------------------------------------------------------------
Maryanne Roepke, CPA Senior Vice 1 Senior Vice President and Not Not applicable
4500 Main St. President, Assistant Treasurer, ACSC applicable
Kansas City, MO 64111 Treasurer
(46) and Chief
Accounting
Officer
---------------------------------------------------------------------------------------------------------------

THE BOARD OF DIRECTORS

The Directors and member of the Advisory Board are listed above. The Board of
Directors and the Advisory Board oversee the management of the fund and meets at
least quarterly to review reports about fund operations. Although the Board of
Directors does not manage the fund, it has hired the advisor to do so. The
directors, in carrying out their fiduciary duty under the Investment Company Act
of 1940, are responsible for approving new and existing management contracts
with the fund's advisor. In carrying out these responsibilities, the Directors
and the Advisory Board review material factors to evaluate such contracts,
including (but not limited to) assessment of information related to the
advisor's performance and expense ratios, estimates of income and indirect
benefits (if any) accruing to the advisor, the advisor's overall management and
projected profitability, and services provided to the fund and their investors.

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

COMMITTEES

The board has four standing committees to oversee specific functions of the
fund's operations. Information about these committees appears in the table
below. The director first named serves as chairman of the committee.

Meetings Held
During Last
Committee Members Function Fiscal Year
-----------------------------------------------------------------------------------------------------------------------

Audit Jeanne D. Wohlers The Audit Committee recommends the engagement of the 4
Albert Eisenstat fund's independent auditors and oversees its activities.
Kenneth E. Scott The committee receives reports from the advisor's Internal
Audit Department, which is accountable to the committee.
The committee also receives reporting about compliance
matters affecting the Corporation.
-----------------------------------------------------------------------------------------------------------------------

Nominating Kenneth E. Scott The Nominating Committee primarily considers and 4
Ronald J. Gilson recommends individuals for nomination as directors. The
Albert Eisenstat names of potential director candidates are drawn from a
Myron S. Scholes number of sources, including recommendations from members
Jeanne D. Wohlers of the board, management and shareholders. This committee
also reviews and makes recommendations to the board with
respect to the composition of board committees and other
board-related matters, including its organization, size,
composition, responsibilities, functions and compensation.
-----------------------------------------------------------------------------------------------------------------------

Portfolio Myron S. Scholes The Portfolio Committee reviews quarterly the investment 4
Ronald J. Gilson activities and strategies used to manage fund assets. The
committee regularly receives reports from portfolio managers,
credit analysts and other investment personnel concerning
the fund's investments.
-----------------------------------------------------------------------------------------------------------------------

Quality Ronald J. Gilson The Quality of Service Committee reviews the level and quality 4
of Myron S. Scholes of transfer agent and administrative services provided to the
Service William M. Lyons fund and their shareholders. It receives and reviews reports
comparing those services to those of fund competitors and
seeks to improve such services where feasible and appropriate.
-----------------------------------------------------------------------------------------------------------------------

COMPENSATION OF DIRECTORS

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

The following table shows the aggregate compensation paid by the fund for the
periods indicated and by the eight investment companies served by the board to
each director who is not an interested person as defined in the Investment
Company Act.

AGGREGATE DIRECTOR COMPENSATION FOR FISCAL YEAR ENDED DECEMBER 31, 2001
--------------------------------------------------------------------------------
Total Compensation Total Compensation from the
Name of Director from the Funds(1) American Century Family of Funds(2)
--------------------------------------------------------------------------------
Albert Eisenstat $0 $79,250
--------------------------------------------------------------------------------
Ronald J. Gilson $0 $87,250
--------------------------------------------------------------------------------
Kathryn Hall $0 $3,250
--------------------------------------------------------------------------------
Myron S. Scholes $0 $70,250
--------------------------------------------------------------------------------
Kenneth E. Scott $0 $81,500
--------------------------------------------------------------------------------
Jeanne D. Wohlers $0 $75,500
--------------------------------------------------------------------------------

(1) Includes compensation paid to the directors during the fiscal year ended
December 31, 2001, and also includes amounts deferred at the election of the
directors under the American Century Mutual Funds' Independent Directors'
Deferred Compensation Plan. The total amount of deferred compensation included
in the preceding table is as follows: Mr. Gilson, $87,250; Mr. Scholes,
$70,250; Mr. Scott, $40,750 and Ms. Wohlers, $49,830.

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

The funds have adopted the American Century Mutual Funds' Independent Directors'
Deferred Compensation Plan. Under the plan, the independent directors may defer
receipt of all or any part of the fees to be paid to them for serving as
directors of the funds.

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

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

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

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

OWNERSHIP OF FUND SHARES

The directors owned shares in the fund as of December 31, 2001, as shown in the
table below:

Name of Directors
-------------------------------------------------
James E. William M. Albert Ronald J.
Stowers III Lyons Eisenstat Gilson
------------------------------------------------------------------------------------------------------------------------
Dollar Range of Equity Securities in the Funds:
VP Prime Money Market A A A A
----------------------------------------------------------------------------------------------------------------------
Aggregate Dollar Range of Equity
Securities in all Registered Investment
Companies Overseen by Directors in
Family of Investment Companies E E E E
----------------------------------------------------------------------------------------------------------------------
Name of Directors
-------------------------------------------------
Myron S. Scholes Kenneth E. Scott Jeanne D. Wohlers
----------------------------------------------------------------------------------------------------------------------
Dollar Range of Equity Securities in the Funds
VP Prime Money Market A A A
-----------------------------------------------------------------------------------------------------------------------
Aggregate Dollar Range of Equity
Securities in all Registered Investment
Companies Overseen by Directors in
Family of Investment Companies E E E
-----------------------------------------------------------------------------------------------------------------------

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

CODE OF ETHICS

The fund, its investment advisor and principal underwriter have adopted a code
of ethics under Rule 17j-1 of the Investment Company Act and the code of ethics
permit personnel subject to the code to invest in securities, including
securities that may be purchased or held by the fund, provided that they first
obtain approval from the compliance department before making such investments.

THE FUND'S PRINCIPAL SHAREHOLDERS

As of April 1, 2002, the following company was the record owner of more than 5%
of the fund's outstanding shares:

Fund Shareholder Percentage of Outstanding Shares Owned
--------------------------------------------------------------------------------
VP Prime American Century Companies 100%
Kansas City, MO

These shares represent American Century Companies' seed capital pursuant to
section 14(a)(1) of the Investment Company Act of 1940.

As of May 1, 2002, the fund has not commenced operations.

The fund is unaware of any other outstanding shareholders, beneficial or of
record, who own more than 5% of the fund's outstanding shares. The fund is
unaware of any other shareholder, beneficial or of record, who owns more than
25% of the voting securities of American Century Variable Portfolios II, Inc. As
of April 1, 2002, the officers and directors of the fund, as a group, own less
than 1% of the fund's outstanding shares.

SERVICE PROVIDERS

The fund has no employees. To conduct its day-to-day activities, the fund has
hired a number of service providers. Each service provider has a specific
function to fill on behalf of the fund that is described below.

ACIM, ACSC and ACIS are wholly owned by ACC. James E. Stowers Jr., Chairman of
ACC, controls ACC by virtue of his ownership of a majority of its voting stock.

INVESTMENT ADVISOR

American Century Investment Management, Inc. (ACIM) serves as the investment
advisor for the fund. A description of the responsibilities of the advisor
appears in the Prospectus under the heading Management.

For services provided to the fund, the advisor receives a monthly fee based on a
percentage of the average net assets of the fund. The annual rate at which this
fee is assessed is determined monthly in a two-step process. First, a fee rate
schedule is applied to the assets of all the funds of its investment category
managed by the advisor (the Investment Category Fee). The three investment
categories are money market funds, bond funds and equity funds. When calculating
the fee for a money market fund, for example, all of the assets of the money
market funds managed by the advisor are aggregated and the fee rate is applied
to the total. Second, a separate fee rate schedule is applied to the assets of
all the funds managed by the advisor (the Complex Fee). The amounts calculated
using the Investment Category Fee and the Complex Fee are then added to
determine the unified management fee payable by a fund to the advisor. The
schedules by which the unified management fee is determined are shown in the
following tables. The Investment Category Fees are determined according to the
schedule below.

INVESTMENT CATEGORY FEE SCHEDULE FOR VP PRIME MONEY MARKET
---------------------------------------
Category Assets Fee Rate
---------------------------------------
First $1 billion 0.3700%
---------------------------------------
Next $1 billion 0.3270%
---------------------------------------
Next $3 billion 0.2860%
---------------------------------------
Next $5 billion 0.2690%
---------------------------------------
Next $15 billion 0.2580%
---------------------------------------
Next $25 billion 0.2575%
---------------------------------------
Thereafter 0.2570%
---------------------------------------

The Complex Fee is determined according to the schedules below.

COMPLEX FEE SCHEDULE
---------------------------------------
Complex Assets Fee Rate
---------------------------------------
First $2.5 billion 0.3100%
---------------------------------------
Next $7.5 billion 0.3000%
---------------------------------------
Next $15.0 billion 0.2985%
---------------------------------------
Next $25.0 billion 0.2970%
---------------------------------------
Next $50.0 billion 0.2960%
---------------------------------------
Next $100.0 billion 0.2950%
---------------------------------------
Next $100.0 billion 0.2940%
---------------------------------------
Next $200.0 billion 0.2930%
---------------------------------------
Next $250.0 billion 0.2920%
---------------------------------------
Next $500.0 billion 0.2910%
---------------------------------------
Thereafter 0.2900%
---------------------------------------

On the first business day of each month, the fund pays a management fee to the
advisor for the previous month at the specified rate. The fee for the previous
month is calculated by multiplying the applicable fee for the fund by the
aggregate average daily closing value of a fund's net assets during the previous
month. This number is then multiplied 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).

The management agreement between the corporation and the advisor 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 fund shareholders following such
execution and for as long thereafter as its continuance is specifically approved
at least annually by

(1) the fund's Board of Directors, or a majority of outstanding shareholder
votes (as defined in the Investment Company Act) and

(2) by the vote of a majority of the directors of the fund who are not parties
to the agreement or interested persons of the advisor, cast in person at a
meeting called for the purpose of voting on such approval.

The management agreement states that the fund's Board of Directors or a majority
of outstanding shareholder votes may terminate the management agreement at any
time without payment of any penalty on 60 days written notice to the advisor.
The management agreement shall be automatically terminated if it is assigned.

The management agreement states the advisor 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 and duties.

The management agreement also provides that the advisor and its officers,
directors and employees may engage in other business, render services to others,
and devote time and attention to any other business whether of a similar or
dissimilar nature.

Certain investments may be appropriate for the fund and also for other clients
advised by the advisor. Investment decisions for the fund and other clients are
made with a view to achieving their respective investment objectives after
consideration of such factors as their current holdings, availability of cash
for investment and the size of their investment generally. A particular security
may be bought or sold for only one client or fund, or in different amounts and
at different times for more than one but less than all clients or funds. In
addition, purchases or sales of the same security may be made for two or more
clients or funds on the same date. Such transactions will be allocated among
clients in a manner believed by the advisor to be equitable to each. In some
cases this procedure could have an adverse effect on the price or amount of the
securities purchased or sold by a fund.

The advisor may aggregate purchase and sale orders of the fund with purchase and
sale orders of its other clients when the advisor believes that such aggregation
provides the best execution for the fund. The Board of Directors has approved
the policy of the advisor with respect to the aggregation of portfolio
transactions. Where portfolio transactions have been aggregated, the fund
participates at the average share price for all transactions in that security on
a given day and allocates transaction costs on a pro rata basis. The advisor
will not aggregate portfolio transactions of the fund unless it believes such
aggregation is consistent with its duty to seek best execution on behalf of the
fund and the terms of the management agreement. The advisor receives no
additional compensation or remuneration as a result of such aggregation.

TRANSFER AGENT AND ADMINISTRATOR

American Century Services Corporation, 4500 Main Street, Kansas City, Missouri
64111, acts as transfer agent and dividend-paying agent for the fund. It
provides physical facilities, computer hardware and software, and personnel for
the day-to-day administration of the fund and the advisor. The advisor pays ACSC
for these services.

From time to time, special services may be offered to shareholders who maintain
higher share balances in our family of funds. These services may include the
waiver of minimum investment requirements, expedited confirmation of shareholder
transactions, newsletters and a team of personal representatives. Any expenses
associated with these special services will be paid by the advisor.

DISTRIBUTOR

The fund's shares are distributed by ACIS, a registered broker-dealer. ACIS is a
wholly owned subsidiary of ACC, and is located at 4500 Main Street, Kansas City,
Missouri 64111.

The distributor is the principal underwriter of the fund's shares. The
distributor makes a continuous, best-efforts underwriting of the fund's shares.
This means the distributor has no liability for unsold shares.

OTHER SERVICE PROVIDERS

CUSTODIAN BANKS

J.P. Morgan Chase Bank, 770 Broadway, 10th Floor, New York, New York 10003-9598,
and Commerce Bank, N.A., 1000 Walnut, Kansas City, Missouri 64105, each serves
as custodian of the fund's assets. The custodians take no part in determining
the investment policies of the fund or in deciding which securities are
purchased or sold by the fund. The fund, however, may invest in certain
obligations of the custodians and may purchase or sell certain securities from
or to the custodians.

INDEPENDENT ACCOUNTANTS

PricewaterhouseCoopers LLP are the independent accountants of the fund. The
address of PricewaterhouseCoopers LLP is 1055 Broadway, 10th Floor, Kansas City,
Missouri 64105. As the independent accountants of the fund,
PricewaterhouseCoopers provides services including

(1) auditing the annual financial statements for the fund,

(2) assisting and consulting in connection with SEC filings, and

(3) reviewing the annual federal income tax return filed for the fund.

BROKERAGE ALLOCATION

The fund generally purchases and sells debt securities through principal
transactions, meaning the fund normally purchases securities on a net basis
directly from the issuer or a primary market-maker acting as principal for the
securities. The fund does not pay brokerage commissions on these transactions,
although the purchase price for debt securities usually includes an undisclosed
compensation. Purchases of securities from underwriters typically include a
commission or concession paid by the issuer to the underwriter, and purchases
from dealers serving as market-makers typically include a dealer's mark-up
(i.e., a spread between the bid and asked prices). During fiscal year ended
December 31, 2001 the fund did not pay any brokerage commission.

INFORMATION ABOUT FUND SHARES

VP Prime Money Market Fund is a series of shares issued by the Corporation, and
shares of the fund have equal voting rights.

Each fund votes separately on matters affecting that fund exclusively. Voting
rights are not cumulative, so that investors holding more than 50% of the
corporation's outstanding shares may be able to elect a Board of Directors. The
corporation undertakes dollar-based voting, meaning that the number of votes a
shareholder is entitled to is based upon the dollar amount of the shareholder's
investment. The election of directors is determined by the votes received from
all the corporation's shareholders without regard to whether a majority of
shares of any one fund voted in favor of a particular nominee or all nominees as
a group.

The assets belonging to each series of shares are held separately by the
custodian and each series represents a beneficial interest in the principal,
earnings and profit (or losses) of investments and other assets held for each
series. Within their respective fund, all shares have equal redemption rights.
Each share, when issued, is fully paid and non-assessable.

In the event of 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.

Each shareholder has rights to dividends and distributions declared by the fund
he or she owns and to the net assets of such fund upon its liquidation or
dissolution proportionate to his or her share ownership interest in the fund.

VALUATION OF A FUND'S SECURITIES

The fund's net asset value per share (NAV) is calculated as of the close of
business of the New York Stock Exchange (the Exchange) each day the Exchange is
open for business. The Exchange usually closes at 4 p.m. Eastern time. The
Exchange typically observes the following holidays: New Year's Day, Martin
Luther King Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence
Day, Labor Day, Thanksgiving Day and Christmas Day. Although the fund expects
the same holidays to be observed in the future, the Exchange may modify its
holiday schedule at any time.

The advisor typically completes its trading on behalf of the fund in various
markets before the Exchange closes for the day. Foreign currency exchange rates
also are determined prior to the close of the Exchange. However, if
extraordinary events occur that are expected to affect the value of a portfolio
security after the close of the primary exchange on which it is traded, the
security will be valued at fair market value as determined in good faith under
the direction of the Board of Directors. The fund's share price is calculated by
adding the value of all portfolio securities and other assets, deducting
liabilities, and dividing the result by the number of shares outstanding.
Expenses and interest earned on portfolio securities are accrued daily.

The fund operates pursuant to Investment Company Act Rule 2a-7, which permits
valuation of portfolio securities on the basis of amortized cost. This method
involves valuing an instrument at its cost and thereafter assuming a constant
amortization to maturity of any discount or premium paid at the time of
purchase. Although this method provides certainty in valuation, it generally
disregards the effect of fluctuating interest rates on an instrument's market
value. Consequently, the instrument's amortized cost value may be higher or
lower than its market value, and this discrepancy may be reflected in the fund's
yields. During periods of declining interest rates, for example, the daily yield
on fund shares computed as described above may be higher than that of a fund
with identical investments priced at market value. The converse would apply in a
period of rising interest rates.

As required by Rule 2a-7, the Board of Directors has adopted procedures designed
to stabilize, to the extent reasonably possible, a money market fund's price per
share as computed for the purposes of sales and redemptions at $1.00. While the
day-to-day operation of the fund has been delegated to the advisor, the quality
requirements established by the procedures limit investments to certain
instruments that the Board of Directors has determined present minimal credit
risks and that have been rated in one of the two highest rating categories as
determined by a rating agency or, in the case of unrated securities, of
comparable quality. The procedures require review of the fund's portfolio
holdings at such intervals as are reasonable in light of current market
conditions to determine whether the money market fund's net asset value
calculated by using available market quotations deviates from the per-share
value based on amortized cost. The procedures also prescribe the action to be
taken by the advisor if such deviation should exceed 0.25%.

Actions the advisor and Board of Directors may consider under these
circumstances include i) selling portfolio securities prior to maturity, (ii)
withholding dividends or distributions from capital, (iii) authorizing a
one-time dividend adjustment, (iv) discounting share purchases and initiating
redemptions in kind, or (v) valuing portfolio securities at market price for
purposes of calculating NAV.

TAXES

FEDERAL INCOME TAX

The fund is held as an investment through a variable annuity contract. Please
consult the prospectus of your insurance company separate account for a
discussion of the tax status of your variable annuity contract.

The fund intends to qualify annually as a regulated investment company under
Subchapter M of the Internal Revenue Code of 1986, as amended (the Code). By so
qualifying, a fund will be exempt from federal and state income taxes to the
extent that it distributes substantially all of its net investment income and
net realized capital gains (if any) to investors. If the fund fails to qualify
as a regulated investment company, it will be liable for taxes, significantly
reducing its distributions to investors and its net asset value. Each fund may
utilize the consent dividend provisions of Internal Revenue Code section 565 to
make distributions. Provided that all shareholders agree in a consent filed
with the return of each fund to treat as a dividend the amount specified in the
consent, the amount will be considered a distribution just as any other
distribution paid in money and reinvested back into each fund.

HOW FUND PERFORMANCE INFORMATION IS CALCULATED

The fund may quote performance in various ways. Fund performance may be shown by
presenting one or more performance measurements, including cumulative total
return, average annual total return or yield.

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.

Yield quotations are based on the change in the value of a hypothetical
investment (excluding realized gains and losses from the sale of securities and
unrealized appreciation and depreciation of securities) over a seven-day period
(base period) and stated as a percentage of the investment at the start of the
base period (base-period return). The base-period return is then annualized by
multiplying by 365/7 with the resulting yield figure carried to at least the
nearest hundredth of one percent.

Calculations of effective yield begin with the same base-period return used to
calculate yield, but the return is then annualized to reflect weekly compounding
according to the following formula:

Effective Yield = [(Base Period Return +1)(365/7)] - 1

Total returns quoted in advertising and sales literature reflect all aspects of
a fund's return, including the effect of reinvesting dividends and capital gains
distributions (if any) and any change in the fund's NAV per share during the
period.

Average annual total returns are calculated by determining the growth or decline
in value of a hypothetical historical investment in a fund during 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 return of 7.18%, which is the
steady annual rate that would equal 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
total returns represent averaged figures as opposed to actual year-to-year
performance.

In addition to average annual total returns, the fund may quote unaveraged or
cumulative total returns reflecting the simple change in value of an investment
over a stated period. Average annual and cumulative total returns may be quoted
as percentages or as dollar amounts and may be calculated for a single
investment, a series of investments, or a series of redemptions over any time
period. Total returns may be broken down into their components of income and
capital (including capital gains and changes in share price) to illustrate the
relationship of these factors and their contributions to total return.

As a new fund, performance information is not available as of the date of this
Statement of Additional Information.

PERFORMANCE COMPARISONS

The fund's performance may be compared with the performance of other mutual
funds tracked by mutual fund rating services or with other indices of market
performance. This may include comparisons with funds that are sold with a sales
charge or deferred sales charge. Sources of economic data that may be used for
such comparisons may include, but are not limited to: U.S. Treasury bill, note
and bond yields, money market fund yields, U.S. government debt and percentage
held by foreigners, the U.S. money supply, net free reserves, and yields on
current-coupon GNMAs (source: Board of Governors of the

Federal Reserve System); the federal funds and discount rates (source: Federal
Reserve Bank of New York); yield curves for U.S. Treasury securities and
AA/AAA-rated corporate securities (source: Bloomberg Financial Markets); yield
curves for AAA-rated tax-free municipal securities (source: Telerate); yield
curves for foreign government securities (sources: Bloomberg Financial Markets
and Data Resources, Inc.); total returns on foreign bonds (source: J.P. Morgan
Securities Inc.); various U.S. and foreign government reports; the junk bond
market (source: Data Resources, Inc.); the CRB Futures Index (source: Commodity
Index Report); the price of gold (sources: London a.m./p.m. fixing and New York
Comex Spot Price); rankings of any mutual fund or mutual fund category tracked
by Lipper, Inc. or Morningstar, Inc.; mutual fund rankings published in major,
nationally distributed periodicals; data provided by the Investment Company
Institute; Ibbotson Associates, Stocks, Bonds, Bills and Inflation; major
indices of stock market performance; and indices and historical data supplied by
major securities brokerage or investment advisory firms. The fund also may
utilize reprints from newspapers and magazines furnished by third parties to
illustrate historical performance or to provide general information about the
fund.

Permissible Advertising Information

From time to time, the fund may, in addition to any other permissible
information, include the following types of information in advertisements,
supplemental sales literature and reports to investors:

(1) discussions of general economic or financial principles (such as the effects
of compounding and the benefits of dollar-cost averaging);

(2) discussions of general economic trends;

(3) presentations of statistical data to supplement such discussions;

(4) descriptions of the fund's past or anticipated portfolio holdings;

(5) descriptions of the fund's investment strategies;

(6) descriptions or comparisons of various savings and investment products
(including, but not limited to, qualified retirement plans and individual
stocks and bonds), which may or may not include the fund;

(7) comparisons of investment products (including the fund) with relevant market
or industry indices or other appropriate benchmarks;

(8) discussions of fund rankings or ratings by recognized rating organizations;
and

(9) testimonials describing the experience of persons who have invested in the
fund. The fund also may include calculations, such as hypothetical
compounding examples, which describe hypothetical investment results. Such
performance examples will be based on an express set of assumptions and are
not indicative of the performance of the fund.

FINANCIAL STATEMENTS

The financial statements for the fiscal year ended December 31, 2001 have been
audited by PricewaterhouseCoopers LLP, independent accountants. Their
Independent Accountants' Report and the financial statements included in the
funds' Annual Report for the fiscal year ended December 31, 2001 are
incorporated herein by reference.

EXPLANATION OF FIXED-INCOME SECURITIES RATINGS

As described in the Prospectus, the fund invests in fixed-income securities.
Those investments, however, are subject to certain credit quality restrictions,
as noted in the Prospectus and in this Statement of Additional Information. The
following is a summary of the rating categories referenced in the prospectus
disclosure.

RATINGS OF CORPORATE DEBT SECURITIES
--------------------------------------------------------------------------------

Standard & Poor's
--------------------------------------------------------------------------------
AAA This is the highest rating assigned by S&P to a debt obligation. It
indicates an extremely strong capacity to pay interest and repay
principal.
--------------------------------------------------------------------------------
AA Debt rated in this category is considered to have a very strong capacity
to pay interest and repay principal. It differs from the highest-rated
obligations only in small degree.
--------------------------------------------------------------------------------

A Debt rated A has a strong capacity to pay interest and repay principal,
although it is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than debt in
higher-rated categories.
--------------------------------------------------------------------------------
BBB Debt rated in this category is regarded as having an adequate capacity
to pay interest and repay principal. While it normally exhibits
adequate protection parameters, adverse economic conditions or
changing circumstances are more likely to lead to a weakened capacity
to pay interest and repay principal for debt in this category than in
higher-rated categories. Debt rated below BBB is regarded as having
significant speculative characteristics.
--------------------------------------------------------------------------------
BB Debt rated in this category has less near-term vulnerability to default
than other speculative issues. However, it faces major ongoing
uncertainties or exposure to adverse business, financial, or economic
conditions that could lead to inadequate capacity to meet timely interest
and principal payments. The BB rating also is used for debt subordinated
to senior debt that is assigned an actual or implied BBB rating.
--------------------------------------------------------------------------------
B Debt rated in this category is more vulnerable to nonpayment than
obligations rated 'BB', but currently has the capacity to pay interest
and repay principal. Adverse business, financial, or economic conditions
will likely impair the obligor's capacity or willingness to pay interest
and repay principal.
--------------------------------------------------------------------------------
CCC Debt rated in this category is currently vulnerable to nonpayment and is
dependent upon favorable business, financial, and economic conditions
to meet timely payment of interest and repayment of principal. In the
event of adverse business, financial, or economic conditions, it is
not likely to have the capacity to pay interest and repay principal.
The CCC rating category is also used for debt subordinated to senior
debt that is assigned an actual or implied B or B- rating.
--------------------------------------------------------------------------------
CC Debt rated in this category is currently highly vulnerable to
nonpayment. This rating category is also applied to debt subordinated
to senior debt that is assigned an actual or implied CCC rating.
--------------------------------------------------------------------------------
C The rating C typically is applied to debt subordinated to senior debt,
and is currently highly vulnerable to nonpayment of interest and
principal. This rating may be used to cover a situation where a
bankruptcy petition has been filed or similar action taken, but
debt service payments are being continued.
--------------------------------------------------------------------------------
D Debt rated in this category is in default. This rating is used when
interest payments or principal repayments are not made on the date
due even if the applicable grace period has not expired, unless S&P
believes that such payments will be made during such grace period.
It also will be used upon the filing of a bankruptcy petition for
the taking of a similar action if debt service payments are jeopardized.
--------------------------------------------------------------------------------

MOODY'S INVESTORS SERVICE, INC.
--------------------------------------------------------------------------------
Aaa This is the highest rating assigned by Moody's to a debt obligation. It
indicates an extremely strong capacity to pay interest and repay
principal.
--------------------------------------------------------------------------------
Aa Debt rated in this category is considered to have a very strong capacity
to pay interest and repay principal and differs from Aaa issues only in
a small degree. Together with Aaa debt, it comprises what are generally
known as high-grade bonds.
--------------------------------------------------------------------------------
A Debt rated in this category possesses many favorable investment
attributes and is to be considered as upper-medium-grade debt. Although
capacity to pay interest and repay principal are considered adequate,
it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher-rated
categories.
--------------------------------------------------------------------------------
Baa Debt rated in this category is considered as medium-grade debt having an
adequate capacity to pay interest and repay principal. While it normally
exhibits adequate protection parameters, adverse economic conditions or
changing circumstances are more likely to lead to a weakened capacity to
pay interest and repay principal for debt in this category than in
higher-rated categories. Debt rated below Baa is regarded as having
significant speculative characteristics.
--------------------------------------------------------------------------------
Ba Debt rated Ba has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or
exposure to adverse business, financial or economic conditions that
could lead to inadequate capacity to meet timely interest and principal
payments. Often the protection of interest and principal payments
may be very moderate.
--------------------------------------------------------------------------------
B Debt rated B has a greater vulnerability to default, but currently has
the capacity to meet financial commitments. Assurance of interest and
principal payments or of maintenance of other terms of the contract
over any long period of time may be small. The B rating category
is also used for debt subordinated to senior debt that is assigned
an actual or implied Ba or Ba3 rating.
--------------------------------------------------------------------------------
Caa Debt rated Caa is of poor standing, has a currently identifiable
vulnerability to default, and is dependent upon favorable business,
financial and economic conditions to meet timely payment of interest
and repayment of principal. In the event of adverse business, financial
or economic conditions, it is not likely to have the capacity to pay
interest and repay principal. Such issues may be in default or there
may be present elements of danger with respect to principal or interest.
The Caa rating is also used for debt subordinated to senior debt that
is assigned an actual or implies B or B3 rating.
--------------------------------------------------------------------------------
Ca Debt rated in this category represent obligations that are speculative
in a high degree. Such debt is often in default or has other
marked shortcomings.
--------------------------------------------------------------------------------
C This is the lowest rating assigned by Moody's, and debt rated C
can be regarded as having extremely poor prospects of attaining
investment standing.
--------------------------------------------------------------------------------

FITCH, INC.
--------------------------------------------------------------------------------
AAA Debt rated in this category has the lowest expectation of
credit risk. Capacity for timely payment of financial commitments
is exceptionally strong and highly unlikely to be adversely
affected by foreseeable events.
--------------------------------------------------------------------------------
AA Debt rated in this category has a very low expectation of credit
risk. Capacity for timely payment of financial commitments
is very strong and not significantly vulnerable to foreseeable
events.
--------------------------------------------------------------------------------
A Debt rated in this category has a low expectation of credit risk.
Capacity for timely payment of financial commitments is strong,
but may be more vulnerable to changes in circumstances or in
economic conditions than debt rated in higher categories.
--------------------------------------------------------------------------------
BBB Debt rated in this category currently has a low expectation of
credit risk and an adequate capacity for timely payment of
financial commitments. However, adverse changes in circumstances
and in economic conditions are more likely to impair this capacity.
This is the lowest investment grade category.
--------------------------------------------------------------------------------
BB Debt rated in this category has a possibility of developing credit
risk, particularly as the result of adverse economic change over
time. However, business or financial alternatives may be available
to allow financial commitments to be met. Securities rated in
this category are not investment grade.
--------------------------------------------------------------------------------
B Debt rated in this category has significant credit risk, but a
limited margin of safety remains. Financial commitments currently
are being met, but capacity for continued debt service payments
is contingent upon a sustained, favorable business and economic
environment.
--------------------------------------------------------------------------------
CCC, CC, C Debt rated in these categories has a real possibility for default.
Capacity for meeting financial commitments depends solely upon
sustained, favorable business or economic developments. A CC rating
indicates that default of some kind appears probable; a C rating
signals imminent default.
--------------------------------------------------------------------------------
DDD, DD, D The ratings of obligations in this category are based on their
prospects for achieving partial or full recovery in a
reorganization or liquidation of the obligor. While expected
recovery values are highly speculative and cannot be estimated
with any precision, the following serve as general guidelines.
'DDD' obligations have the highest potential for recovery,
around 90%- 100% of outstanding amounts and accrued interest.
'DD' indicates potential recoveries in the range of 50%-90%
and 'D' the lowest recovery potential, i.e., below 50%. Entities
rated in this category have defaulted on some or all of their
obligations. Entities rated 'DDD' have the highest prospect
for resumption of performance or continued operation with or
without a formal reorganization process. Entities rated 'DD'
and 'D' are generally undergoing a formal reorganization or
liquidation process; those rated 'DD' are likely to satisfy a
higher portion of their outstanding obligations, while entities
rated 'D' have a poor prospect of repaying all obligations.
--------------------------------------------------------------------------------
To provide more detailed indications of credit quality, the Standard & Poor's
ratings from AA to CCC may be modified by the addition of a plus or minus sign
to show relative standing within these major rating categories. Similarly,
Moody's adds numerical modifiers (1,2,3) to designate relative standing within
its major bond rating categories.

COMMERCIAL PAPER RATINGS
--------------------------------------------------------------------------------------------------------------
S&P Moody's Description
--------------------------------------------------------------------------------------------------------------
A-1 Prime-1 This indicates that the degree of safety regarding timely payment
(P-1) is strong. Standard & Poor's rates those issues determined to
possess extremely strong safety characteristics as A-1+.
--------------------------------------------------------------------------------------------------------------
A-2 Prime-2 Capacity for timely payment on commercial paper is satisfactory,
(P-2) but the relative degree of safety is not as high as for issues
designated A-1. Earnings trends and coverage ratios, while
sound, will be more subject to variation. Capitalization
characteristics, while still appropriated, may be more affected by
external conditions. Ample alternate liquidity is maintained.
--------------------------------------------------------------------------------------------------------------
A-3 Prime-3 Satisfactory capacity for timely repayment. Issues that carry this
(P-3) rating are somewhat more vulnerable to the adverse changes in
circumstances than obligations carrying the higher designations.
--------------------------------------------------------------------------------------------------------------
NOTE RATINGS
--------------------------------------------------------------------------------------------------------------
S&P Moody's Description
--------------------------------------------------------------------------------------------------------------
SP-1 MIG-1; VMIG-1 Notes are of the highest quality enjoying strong protection from
established cash flows of funds for their servicing or from
established and broad-based access to the market for
refinancing, or both.
--------------------------------------------------------------------------------------------------------------
SP-2 MIG-2; VMIG-2 Notes are of high quality, with margins of protection ample,
although not so large as in the preceding group
--------------------------------------------------------------------------------------------------------------
SP-3 MIG-3; VMIG-3 Notes are of favorable quality, with all security elements
accounted for, but lacking the undeniable strength of the
preceding grades. Market access for refinancing, in particular, is
likely to be less well established.
--------------------------------------------------------------------------------------------------------------
SP-4 MIG-4; VMIG-4 Notes are of adequate quality, carrying specific risk but having
protection and not distinctly or predominantly speculative.
--------------------------------------------------------------------------------------------------------------

NOTES

MORE INFORMATION ABOUT THE FUND IS CONTAINED THESE DOCUMENTS

Annual and Semiannual Reports

You can receive a free copy of the annual and semiannual reports, and ask any
questions about the fund or your accounts, by contacting the insurance company
from which you purchased the fund or American Century at the address or
telephone numbers listed below.

If you own or are considering purchasing fund shares through

* an employer-sponsored retirement plan
* a bank
* a broker-dealer
* an insurance company
* another financial intermediary

you can receive the annual and semiannual reports directly from them.

You also can get information about the fund from the Securities and Exchange
Commission (SEC). The SEC charges a duplicating fee to provide copies of this
information.

In person SEC Public Reference Room
Washington, D.C.
Call 202-942-8090 for location and hours.

On the Internet * EDGAR database at www.sec.gov

* By email request at publicinfo@sec.gov

By mail SEC Public Reference Section
Washington, D.C. 20549-0102

Investment Company Act File No. 811-10155

[american century logo and text logo (reg. sm)]

AMERICAN CENTURY INVESTMENTS
P.O. Box 419385
Kansas City, Missouri 64141-6385

INVESTMENT PROFESSIONAL SERVICE REPRESENTATIVE
1-800-345-6488 or 816-531-5575

FAX
816-340-4360

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

SH-SAI-29003 0205

AMERICAN CENTURY VARIABLE PORTFOLIOS II, INC.

PART C OTHER INFORMATION

ITEM 23 EXHIBITS (all exhibits not filed herewith are being incorporated herein by reference).

(a) (1) Articles of Incorporation of American Century Variable Portfolios
II, Inc. dated September 15,2000, (filed electronically as Exhibit a1
to the Initial Registration Statement on September 29, 2000, File No.
333-46922).

(2) Articles Supplementary of American Century Variable Portfolios II,
Inc. dated January 4, 2001 (filed electronically as Exhibit a2 to
Pre-Effective Amendment No. 2 to the Registration Statement of the
Registrant, File No. 333-46922, filed on January 9, 2001).

(b) By-Laws of American Century Variable Portfolios II, Inc. (filed
electronically as Exhibit b to Pre-Effective Amendment No. 2 to the
Registration Statement of the Registrant, File No. 333-46922, filed on
January 9, 2001).

(c) Registrant hereby incorporates by reference, as though set forth fully
herein, Article Fifth, Article Seventh and Article Eighth of
Registrant's Articles of Incorporation, appearing as Exhibit a1 to
Initial Registration Statement on Form N-1A of the Registrant, and
Sections 3, 4, 5, 6, 7, 8, 9, 10, 11, 22, 24, 25, 30, 31, 32, 35, 41,
42, 47, 48, 49, and 50 of Registrant's By-Laws appearing as Exhibit b1
to Post-Effective Amendment No. 1 on Form N-1A of the Registrant.

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

(2) Amendment to the Investor Class Management Agreement between
American Century Variable Portfolios II, Inc. and American Century
Investment Management, Inc. dated March 31, 1998 (filed electronically
as Exhibit 5b to Post-effective Amendment No. 23 on Form N-1A of
American Century Municipal Trust, on March 26, 1998, File No.
2-91229).

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

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

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

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

(e) (1) Distribution Agreement between American Century Variable
Portfolios II, Inc. and American Century Investment Services, Inc.
dated March 13, 2000 (filed electronically as Exhibit e7 to
Post-Effective Amendment No. 17 to the Registration Statement of
American Century World Mutual Funds, Inc. on March 30, 2000, File No
33-39242).

(2) Amendment No. 1 to the Distribution Agreement between American
Century Variable Portfolios II, Inc. and American Century Investment
Services, Inc. dated June 1, 2000 (filed electronically as Exhibit e9
to Post-Effective Amendment No. 19 to the Registration Statement of
American Century World Mutual Funds, Inc. on May 25, 2000, File No.
33-39242).

(3) Amendment No. 2 to the Distribution Agreement between American
Century Variable Portfolios II, Inc. and American Century Investment
Services, Inc. dated November 20, 2000 (filed electronically as
Exhibit e9 to Post-Effective Amendment No. 29 to the Registration
Statement of American Century Variable Portfolios, Inc. on December 1,
2000, File No. 33-14567).

(4) Amendment No. 3 to the Distribution Agreement between American
Century Variable Portfolios II, Inc. and American Century Investment
Services, Inc., dated March 1, 2001 (filed electronically as Exhibit
e4 to Post-Effective Amendment No. 36 to the Registration Statement of
American Century Target Maturities Trust on April 17, 2001, File No.
2-94608).

(5) Amendment No. 4 to the Distribution Agreement between American
Century Variable Portfolios II, Inc. and American Century Investment
Services, Inc., dated April 30, 2001 (filed electronically as Exhibit
e5 to Post-Effective Amendment No. 36 to the Registration Statement of
American Century Target Maturities Trust on April 17, 2001, File No.
2-94608).

(6) Amendment No. 5 to the Distribution Agreement between American
Century Variable Portfolios II, Inc. and American Century Investment
Services, Inc., dated May 24, 2001 (filed electronically as Exhibit e6
to Post-Effective Amendment No. 21 to the Registration Statement of
American Century Capital Portfolios, Inc. on July 30, 2001, File No.
33-64872).

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

(8) Amendment No. 7 to the Distribution Agreement between American
Century Variable Portfolios II, Inc. and American Century Investment
Services, Inc., dated December 3, 2001 (filed electronically as
Exhibit e8 to Post-Effective Amendment No. 16 to the Registration
Statement of American Century Investment Trust on November 30, 2001,
File No. 33-65170).

(9) Amendment No. 8 to the Distribution Agreement between American
Century Variable Portfolios II, Inc. and American Century Investment
Services, Inc., dated March 1, 2002, (filed electronically as Exhibit
e9 to the Registration Statement of American Century Mutual Funds on
February 28, 2002, File No. 2-14213).

(10) Amendment No. 9 to the Distribution Agreement between American
Century Variable Portfolios II, Inc. and American Century Investment
Services, Inc., dated March 6, 2002, (filed electronically as Exhibit
e10 to the Registration Statement of American Century Mutual Funds on
February 28, 2002, File No. 2-14213).

(f) Not applicable.

(g) (1) Global Custody Agreement between The Chase Manhattan Bank and the
Twentieth Century and Benham Funds, dated August 9, 1996 (filed
electronically as Exhibit 8 to Post-Effective Amendment No. 31 to the
Registration Statement of American Century Government Income Trust, on
February 7, 1997, File No. 2-99222).

(2) Amendment to Global Custody Agreement between The Chase Manhattan
Bank and the Twentieth Century and Benham Funds, dated December 9,
2000 (filed electronically as Exhibit g2 to Pre-Effective Amendment
No. 2 to the Registration Statement of the Registrant, File No.
333-46922, filed on January 9, 2001).

(3) Master Agreement by and between American Century Services
Corporation (formerly known as Twentieth Century Services, Inc.) and
Commerce Bank, N.A. dated January 22, 1997 (filed electronically as
Exhibit 8e to Post-Effective Amendment No. 76 to the Registration
Statement of American Century Mutual Funds, Inc. on February 28, 1997,
File No. 33-14213).

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

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

(3) Amendment No. 1 dated June 29, 1998 to the Transfer Agency
Agreement between American Century Variable Portfolios II, Inc. and
American Century Services Corporation (filed electronically as Exhibit
9b to Post-Effective Amendment No. 23 to the Registration Statement of
American Century Quantitative Equity Funds, File No. 33-19589).

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

(5) Amendment No. 3 to the Transfer Agency Agreement between American
Century Variable Portfolios II, Inc. and American Century Services
Corporation, dated August 1, 2001 (filed electronically as Exhibit h5
to Post-Effective Amendment No. 44 to the Registration Statement of
American Century Government Income Trust on July 31, 2001, File No.
2-99222).

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

(7) Credit Agreement between American Century Funds and The Chase
Manhattan Bank, as Administrative Agent dated December 18, 2001 (filed
electronically as Exhibit h7 to Post-Effective Amendment No. 33 to the
Registration Statement of American Century California Tax-Free and
Municipal Funds on December 28, 2001, File No. 2-82734).

(i) Opinion and Consent of Counsel (filed electronically as Exhibit i to
the Initial Registration Statement on September 29, 2000, File No.
333-46922).

(j) (1) Consent of PricewaterhouseCoopers LLP.

(2) Power of Attorney dated September 15, 2000 (filed electronically
as Exhibit j2 to the Initial Registration Statement on September 29,
2000, File No. 333-46922).

(k) Not applicable.

(l) Not applicable.

(m) Not applicable.

(n) Not applicable.

(o) Not applicable.

(p) (1) American Century Investments Code of Ethics (filed electronically as
Exhibit p1 to Post-Effective Amendment No. 30 to the Registration Statement of
American Century California Tax-Free and Municipal Funds filed on December 29,
2000, File No. 2-82734).

ITEM 24. Persons Controlled by or Under Common Control with Registrant - None.

ITEM 25. 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 IX of the Registrant's Articles of Incorporation, 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 26. Business and Other Connections of Investment Advisor.

American Century Investment Management, Inc., the investment manager to each of
the Registrant's Funds, is engaged in the business of managing investments for
deferred compensation plans and other institutional investors.

ITEM 27. Principal Underwriter.

I. (a) American Century Investment Services, Inc. (ACIS) acts as principal
underwriter for the following investment companies:

American Century California Tax-Free and Municipal Funds
American Century Capital Portfolios, Inc.
American Century Government Income Trust
American Century International Bond Funds
American Century Investment Trust
American Century Municipal Trust
American Century Mutual Funds, Inc.
American Century Quantitative Equity Funds
American Century Strategic Asset Allocations, Inc.
American Century Target Maturities Trust
American Century Variable Portfolios, Inc.
American Century Variable Portfolios II, Inc.
American Century World Mutual Funds, Inc.

ACIS is registered with the Securities and Exchange Commission as a
broker-dealer and is a member of the National Association of Securities Dealers.
ACIS is located at 4500 Main Street, Kansas City, Missouri 64111. ACIS is a
wholly-owned subsidiary of American Century Companies, Inc.

(b) The following is a list of the executive officers and partners of
ACIS:

Name and Principal Positions and Offices Positions and Offices
Business Address* with Underwriter with Registrant
--------------------------------------------------------------------------------
W. Gordon Snyder Chief Executive Officer none
and President

James E. Stowers III Co-Chairman and Director Director

William M. Lyons Executive Vice President President
and Director

Robert T. Jackson Executive Vice President Executive Vice
and Chief Financial Officer President and
Chief Financial
Officer

Kevin Cuccias Senior Vice President none

Joseph Greene Senior Vice President none

Brian Jeter Senior Vice President none

Mark Killen Senior Vice President none

Dave Larrabee Senior Vice President none

Tom Kmak Senior Vice President none

Barry Mayhew Senior Vice President none

David C. Tucker Senior Vice President Senior Vice President
and General Counsel

* All addresses are 4500 Main Street, Kansas City, Missouri 64111

ITEM 28. 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 29. Management Services - Not applicable.

ITEM 30. Undertakings - Not applicable.

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, American Century Variable Portfolios II, Inc.,
the Registrant, certifies that it meets all the requirements for effectiveness
of this Post-Effective Amendment No. 2 to its Registration Statement pursuant to
Rule 485(b) promulgated under the Securities Act of 1933, as amended, and has
duly caused this Post-Effective Amendment No. 2 to be signed on its behalf by
the undersigned, thereunto duly authorized, in the City of Kansas City, State of
Missouri on the 25th day of April, 2002.

American Century Variable Portfolios II, Inc.
(Registrant)

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

Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 2 has been signed below by the following persons in
the capacities and on the dates indicated.

Signature Title Date
--------- ----- ----
*William M. Lyons President and April 25, 2002
--------------------------------- Principal Executive
William M. Lyons Officer

*Maryanne Roepke Senior Vice President, April 25, 2002
--------------------------------- Treasurer and Chief
Maryanne Roepke Accounting Officer

*James E. Stowers III Director and April 25, 2002
--------------------------------- Chairman of the Board
James E. Stowers III

*Albert A. Eisenstat Director April 25, 2002
---------------------------------
Albert A. Eisenstat

*Ronald J. Gilson Director April 25, 2002
---------------------------------
Ronald J. Gilson

*Myron S. Scholes Director April 25, 2002
---------------------------------
Myron S. Scholes

*Kenneth E. Scott Director April 25, 2002
---------------------------------
Kenneth E. Scott

*Jeanne D. Wohlers Director April 25, 2002
---------------------------------
Jeanne D. Wohlers

/s/Janet A. Nash
*by Janet A. Nash, Attorney in Fact (pursuant to a Power of Attorney dated
September 15, 2000).