American Century Balanced

Objective And Strategy

Objective
Long-term capital growth & current income.

Strategy
Two consistent equity & fixed income investment processes combined in 1 portfolio (60% equities/40% bonds). For the equity portion, managers use quantitative techniques to rank the 1,500 largest US stocks measured by the value & growth potential of each stock. Next, they optimize the portfolio to achieve an optimal balance between risk & expected return. The goal is to create an equity portfolio that provides better returns than the S&P 500 Index without taking on significant additional risk. The bond portion is invested in a diversified portfolio of high-grade government, corporate and asset-backed securities payable in U.S. currency. (At time of purchase, at least 80% of the bond assets are rated in the 3 highest categories, up to 20% are rated in the fourth category, and up to 15% are rated in the fifth category.) Normally, weighted average maturity for the bond portfolio is in the 3-10 yr. range.

Principal Risks

* Certain portfolios are subject to active trading risk. (Some may derive a significant portion of their assets from investors who take part in certain strategic and tactical asset allocation programs). The frequent exchange of shares of the portfolio may cause the portfolio to experience high turnover. High portfolio turnover may result in the portfolio having to pay higher transaction costs and may negatively impact the portfolio manager's ability to achieve the investment objective of the portfolio.

* This Fund may invest in publicly issued equity securities, including common stocks. Investments in common stocks are subject to market risks that may cause their prices to fluctuate over time.

* Fixed income securities are subject to interest rate risk because the prices of fixed income securities tend to move in the opposite direction of interest rates. When interest rates rise, fixed income security prices fall. When interest rates fall, fixed income security prices rise.

* Credit risk is the risk that the issuer of a security may be unable to make interest payments and/or repay principal when due. A downgrade to an issuer's credit rating or a perceived change in an issuer's financial strength may affect a security's value, and thus, impact the VA Short-Term Fixed Portfolio's performance.

* The market for bank loans may not be highly liquid and the Fund may have difficulty selling them. These investments expose the Fund to the credit risk of both the financial institution and the underlying borrower.