AMERICAN CENTURY VARIABLE PORTFOLIOS INC, N-30D, 1998-02-19

AMERICAN CENTURY VARIABLE PORTFOLIOS INC
N-30D, 1998-02-19

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ANNUAL
REPORT

[american century logo]
American
Century(reg.sm)

DECEMBER 31, 1997

AMERICAN CENTURY
VARIABLE
PORTFOLIOS, INC.

VP Value

TABLE OF CONTENTS

Our Message to You ........................................................ 1
Performance & Portfolio Information ....................................... 2
Management Q & A .......................................................... 3
Schedule of Investments ................................................... 5
Statement of Assets and Liabilities ....................................... 7
Statement of Operations ................................................... 8
Statements of Changes in Net Assets ....................................... 9
Notes to Financial Statements ............................................. 10
Financial Highlights ...................................................... 12
Independent Auditors' Report .............................................. 13
Background Information
Investment Philosophy and Policies ............................. 16
Comparative Indices ............................................ 16
Glossary .................................................................. 17

WE WELCOME YOUR COMMENTS OR QUESTIONS ABOUT THIS REPORT.
SEE THE BACK COVER FOR WAYS TO CONTACT US BY MAIL, PHONE OR E-MAIL.

American Century and Benham Group are registered marks of American Century
Services Corporation.

AMERICAN CENTURY INVESTMENTS

OUR MESSAGE TO YOU

[Photo of James E. Stowers and James E. Stowers III]

VP Value performed very well in 1997, especially in light of the strong
crosscurrents in domestic markets. The market rally in the early part of the
year had a very narrow focus. At one point, large companies were outperforming
smaller ones by the greatest margin in fifty years. Smaller stocks bounced back
sharply in the second and much of the third quarter, until the turmoil in
Southeast Asia pulled down equity prices in general. VP Value's strong showing
despite this turbulent environment demonstrates the benefits of the management
team's risk-adjusted investment approach.

The economy remained strong in 1997, with low interest rates and benign
inflation, and this--in addition to the continuing stream of assets flowing into
stocks--helped explain the U.S. market's third year of exceptional returns. In
fact, 1995-1997 marked one of the best three-year performance periods in the
stock market's history. Volatility aside, 1997 was a very good year. Although we
believe a fourth year of similar returns is unlikely, please keep in mind that
the U.S. economy is very healthy, and over time that should continue to benefit
stocks.

This past year was very eventful for American Century. In July, J.P. Morgan
agreed to become a significant minority shareholder in American Century. J.P.
Morgan has been in business more than 150 years, serving institutions,
governments and individuals with complex financial needs. Under the terms of the
business partnership, which was finalized January 15, 1998, American Century
will continue to operate as an independent company. Our corporate management
team will remain the same, and the Stowers family will retain voting control of
American Century.

On a more personal note, 1998 also marks the 40th year since we launched our
first mutual funds. Not many fund companies can claim a 40-year track record, or
a fund family that includes nearly 70 stock, bond, money market, and combination
(stock and bond) funds that provide investors with such a wide range of choice
and flexibility.

Whatever your financial goals, we believe American Century has an
outstanding lineup of funds to help you reach them.

Sincerely,

/s/James E. Stowers /s/James E. Stowers III
James E. Stowers, Jr. James E. Stowers III
CHAIRMAN OF THE BOARD AND FOUNDER CHIEF EXECUTIVE OFFICER
AMERICAN CENTURY
INVESTMENT MANAGEMENT, INC.

ANNUAL REPORT OUR MESSAGE TO YOU 1

PERFORMANCE & PORTFOLIO INFORMATION

6 MONTHS(1) 1 YEAR LIFE OF FUND(2)

TOTAL RETURNS AS OF DECEMBER 31, 1997

VP Value .......................... 11.24% 26.08% 23.16%
S&P 500 ........................... 10.51% 33.28% 29.21%
S&P 500/BARRA Value Index ......... 11.58% 29.99% 26.29%

(1) NOT ANNUALIZED.
(2) THE FUND'S INCEPTION DATE WAS 5/1/96.

See pages 16 and 17 for more information about comparative indices and returns.

[mountain graph - data below]

GROWTH OF $10,000 OVER LIFE OF FUND

$10,000 investment made 5/1/96

Date TCI Value S&P Barra Value Index S&P 500
5/01/96 $10,000 $10,000 $10,000
5/31/96 $10,120 $10,151 $10,222
6/30/96 $10,275 $10,102 $10,302
7/31/96 $9,673 $9,676 $9,831
8/31/96 $9,974 $9,943 $10,016
9/30/96 $10,323 $10,369 $10,619
10/31/96 $10,484 $10,720 $10,897
11/30/96 $11,148 $11,540 $11,696
12/31/96 $11,228 $11,351 $11,505
1/31/97 $11,363 $11,874 $12,208
2/28/97 $11,544 $11,961 $12,280
3/31/97 $11,256 $11,552 $11,816
4/30/97 $11,460 $11,985 $12,502
5/31/97 $12,216 $12,737 $13,236
6/30/97 $12,727 $13,223 $13,876
7/31/97 $13,483 $14,281 $14,955
8/31/97 $13,462 $13,636 $14,096
9/30/97 $14,218 $14,435 $14,909
10/31/97 $13,544 $13,904 $14,394
11/30/97 $13,810 $14,434 $15,036
12/31/97 $14,157 $14,755 $15,335

Past performance does not guarantee future results. Investment return and
principal value will fluctuate, and redemption value may be more or less than
original cost.

The line representing the fund's return includes operating expenses (such as
transaction costs and management fees) that reduce returns, while the return
lines of the indices do not.

PORTFOLIO AT A GLANCE
12/31/97 12/31/96
Number of Companies 67 78
Price/Earnings Ratio 16.6 15.0
Portfolio Turnover 138% 49%(1)

(1) MAY 1, 1996 (INCEPTION) THROUGH DECEMBER 31, 1996.

See Glossary on page 17 for investment terms.

2 PERFORMANCE & PORTFOLIO INFORMATION AMERICAN CENTURY INVESTMENTS

MANAGEMENT Q & A

An interview with Phil Davidson and Peter Zuger, portfolio managers on the
VP Value investment team.

HOW DID THE FUND PERFORM FOR THE YEAR ENDING DECEMBER 31, 1997?

VP Value performed very competitively, posting a 26.08% return. It
moderately lagged its benchmark, the S&P 500 BARRA/Value Index, which gained
29.99% for the year. The S&P 500 registered a 33.28% gain in 1997.

VP Value is managed to be less volatile than the market. Accordingly, it
usually will outperform the broad market during downturns and underperform it
during rallies. We are satisfied with VP Value's fair showing relative to the
S&P 500. The fund participated nicely in the year's rising equity market.

WHAT EXPLAINS THE FUND'S PERFORMANCE COMPARED TO ITS BENCHMARK INDEX?

VP Value seeks long-term capital appreciation via a bottom-up, risk-adjusted
approach. We think defensively, analyzing one stock at a time, and buy and sell
stocks using very disciplined investment criteria. As a result, VP Value is
somewhat more conservative than its benchmark, and may trail it in strong market
environments. This was the case in 1997. We believe the fund's defensive nature
enables it to offer investors good participation in strong markets while
controlling risk.

WHICH STOCKS OR SECTORS ADDED MOST TO RETURNS?

The fund's best-performing stocks were Mercantile Bancorporation and First
Virginia Bank, which were good performers throughout 1997. Both continued to
reap the benefits of merger and acquisition activity in the financial services
industry. Mercantile's shares returned 21.80% in the fourth quarter alone, and
both stocks closed out the year at their highs.

VP Value benefited as well from its holdings in Hudson Foods. We purchased
the stock at a very attractive price in August following the discovery of
bacteria in ground beef produced at the company's Nebraska meat packing plant.
We have owned this company in the past and continued to be impressed with its
sound management practices and strong fundamentals. Despite the company's
trouble in its beef operations, which represent just 6% of revenues, we were
confident that its long-term prospects remained promising. That confidence
turned out to be well-founded -- Hudson was ultimately purchased by Tyson Foods
and its stock rebounded sharply.

Other food and beverage stocks that contributed to performance included
Universal Foods and Archer Daniels Midland. ADM's share price was depressed
early in the period due to concerns about high grain prices. Those concerns
evaporated later in the year when grain harvests were respectable, and
substantial share price appreciation followed.

WHICH STOCKS WERE DISAPPOINTING?

The fund's worst-performing stock in 1997 was Homestake Mining. When we
purchased Homestake in November of 1997, gold prices were falling, but they
didn't hit their lows until December. That's when we also purchased Barrick
Gold, another mining stock. Although Homestake and Barrick together have been
mildly negative, we continue to hold them because we believe an advantageous
supply-and-demand environment is developing for gold. Gold prices have dropped
below mining costs, causing a number of mines to close. However, jewelry demand
remains steady, which should ultimately have a positive effect on gold prices as
demand exceeds mine production. Central bank sales of gold were another factor
contributing to gold's weak current price. Going forward, we believe central
bank sales will be disciplined, allowing gold prices to recover.

Tecumseh Products was also a disappointment. Tecumseh is a sound,
well-managed company that manufactures compressors for refrigerators and air
conditioners. We bought the stock in March at an attractive price. However, a
cooler-than-expected

ANNUAL REPORT MANAGEMENT Q & A 3

MANAGEMENT Q & A

summer resulted in soft demand for the company's products, a problem that was
compounded by increasing investor concerns about currency devaluation and an
economic slowdown in Brazil, an important market for Tecumseh. The two events
ultimately caused the stock price to decline more than 18% in the second half of
the year. However, we are maintaining the position because we believe Tecumseh
will overcome these short-term difficulties and produce attractive returns.

WHAT CHANGES DID YOU MAKE TO THE PORTFOLIO SINCE THE SEMIANNUAL REPORT?

Our greatest shift has been in the electric utilities sector, where we
reduced holdings from 10% of investments at mid-year to 2% at December 31.
Stocks we eliminated included New York State Electric and Gas, Florida Progress
Group and Wisconsin Energy Corp. These stocks moved significantly higher in the
fourth quarter as interest rates fell and investors became defensive in the wake
of the Asian currency crisis. We also eliminated several chemical stocks and
some food retailers because their prices approached what we consider fair
valuation.

On the buy side, we increased holdings in the energy sector in response to
changes in the industry. The fund was underweighted in energy heading into the
fourth quarter, and we began building our position then as prices softened and
valuations became attractive. Holdings in this sector reached 9.1% of
investments by year end. We also increased the weighting in metals and mining
stocks from 1.3% of investments to 6.0%, for reasons discussed earlier. The
portfolio has meaningful positions in pharmaceutical firms and automobile and
auto parts manufacturers as well.

WHAT IS YOUR OUTLOOK GOING FORWARD?

Our outlook is largely unchanged. Our emphasis continues to be on individual
stock selection rather than on the market in general or on specific sectors or
themes. We are still finding a wide variety of companies that are attractively
valued. We also are confident VP Value is well-positioned in seasoned businesses
that are temporarily undervalued. These securities should continue to provide
long-term capital appreciation and help cushion performance when markets are
volatile. Current market leadership has been dominated by large-capitalization
stocks with visible near-term earnings growth. This narrow leadership is
unlikely to prove sustainable. Our approach should benefit when leadership
broadens.

TOP TEN HOLDINGS % of fund investments

As of As of
12/31/97 6/30/97
Giant Food Inc. Cl A 4.5% 4.1%
Mercantile
Bancorporation Inc. 2.6% 2.0%
Mallinckrodt Inc. 2.4% 2.5%
Beckman Instruments, Inc. 2.4% --
IBP, Inc. 2.3% 1.9%
Great Lakes Chemical Corp. 2.3% 2.4%
WMX Technologies, Inc. 2.3% 0.7%
Reynolds Metals Co. 2.2% 0.5%
Superior Industries
International, Inc. 2.2% 2.3%
Burlington Resources, Inc. 2.1% 0.4%

TOP FIVE INDUSTRIES % of fund investments

As of As of
12/31/97 6/30/97
Energy (Production
and Marketing) 9.1% 7.9%
Retail (Food and Drug) 6.5% 7.8%
Banking 6.1% 3.7%
Metals and Mining 6.0% 1.3%
Automobiles and Auto Parts 5.7% 5.4%

4 MANAGEMENT Q & A AMERICAN CENTURY INVESTMENTS

SCHEDULE OF INVESTMENTS

DECEMBER 31, 1997

Shares Value
- --------------------------------------------------------------------------------

COMMON STOCKS

AEROSPACE & DEFENSE--1.2%
42,200 Litton Industries, Inc.(1) $ 2,426,500
---------------

AUTOMOBILES & AUTO PARTS--5.7%
151,900 Cooper Tire and Rubber Company 3,702,563
88,300 Echlin Inc. 3,195,356
156,800 Superior Industries International, Inc. 4,204,200
---------------
11,102,119
---------------

BANKING--6.1%
64,500 First Virginia Banks, Inc. 3,333,844
83,500 Mercantile Bancorporation Inc. 5,135,250
55,100 NationsBank Corp. 3,350,769
---------------
11,819,863
---------------

BUSINESS SERVICES & SUPPLIES--1.2%
127,500 Reynolds & Reynolds Co. 2,350,781
---------------

CHEMICALS & RESINS--5.4%
99,600 Great Lakes Chemical Corp. 4,469,550
92,500 Nalco Chemical Co. 3,659,531
52,600 Praxair, Inc. 2,367,000
---------------
10,496,081
---------------

COMMUNICATIONS SERVICES--1.0%
39,100 Frontier Corp. 940,844
18,200 GTE Corp. 950,950
---------------
1,891,794
---------------

COMPUTER PERIPHERALS--0.5%
65,400 BMC Industries, Inc. 1,054,575
---------------

COMPUTER SOFTWARE & SERVICES--3.5%
140,300 First Data Corp. 4,103,775
86,700 GTECH Holdings Corp.(1) 2,768,981
---------------
6,872,756
---------------

CONSUMER PRODUCTS--1.1%
40,600 Whirlpool Corp. 2,233,000
---------------

CONTROL & MEASUREMENT--2.4%
119,000 Beckman Instruments, Inc. 4,760,000
---------------

Shares Value
- --------------------------------------------------------------------------------

ELECTRICAL & ELECTRONIC
COMPONENTS--3.7%
58,400 AMP, Inc. $ 2,452,800
69,800 General Signal Corp. 2,944,688
37,800 Tecumseh Products Cl A 1,849,838
---------------
7,247,326
---------------

ENERGY (PRODUCTION & MARKETING)--9.1%
8,400 Apache Corp. 294,525
92,700 Burlington Resources Inc. 4,154,119
53,300 Murphy Oil Corp. 2,888,194
110,600 Seagull Energy Corp.(1) 2,281,125
9,500 Swift Energy Co. 200,094
121,900 Ultramar Diamond Shamrock Corp. 3,885,562
103,500 Unocal Corp. 4,017,094
---------------
17,720,713
---------------

ENVIRONMENTAL SERVICES--2.8%
160,400 WMX Technologies, Inc. 4,411,000
178,100 Waste Management
International plc ADR(1) 1,113,125
---------------
5,524,125
---------------

FOOD & BEVERAGE--5.4%
108,661 Archer-Daniels-Midland Co. 2,356,585
215,000 IBP, Inc. 4,501,563
86,400 Universal Foods Corp. 3,650,400
---------------
10,508,548
---------------

HEALTHCARE--2.4%
26,500 Bausch & Lomb Inc. 1,050,062
99,700 Columbia/HCA Healthcare Corp. 2,953,613
30,500 Lab Holdings Inc. 691,016
---------------
4,694,691
---------------

INDUSTRIAL EQUIPMENT & MACHINERY--1.5%
60,600 Cooper Industries, Inc. 2,969,400
---------------

INSURANCE--5.2%
53,300 Aetna Life and Casualty Co. 3,760,981
40,400 Argonaut Group, Inc. 1,391,275
25,700 CNA Financial Corp.(1) 3,283,175
33,700 SAFECO Corp. 1,640,769
---------------
10,076,200
---------------

LEISURE--1.4%
46,500 Eastman Kodak Co. 2,827,781
---------------

SEE NOTES TO FINANCIAL STATEMENTS

ANNUAL REPORT SCHEDULE OF INVESTMENTS 5

SCHEDULE OF INVESTMENTS

DECEMBER 31, 1997

Shares Value
- --------------------------------------------------------------------------------

METALS & MINING--6.0%
44,400 Arch Coal Inc. $ 1,215,450
182,600 Barrick Gold Corp. 3,400,925
316,100 Homestake Mining Co. 2,805,387
72,700 Reynolds Metals Co. 4,362,000
---------------
11,783,762
---------------

PAPER & FOREST PRODUCTS--2.8%
36,600 Chesapeake Corp. 1,258,125
52,300 Rayonier, Inc. 2,226,019
63,600 Westvaco Corp. 1,999,425
---------------
5,483,569
---------------

PHARMACEUTICALS--4.2%
100,700 Allergan, Inc. 3,379,744
125,700 Mallinckrodt Inc. 4,776,600
---------------
8,156,344
---------------

PRINTING & PUBLISHING--2.0%
92,300 Banta Corp. 2,520,944
49,400 McClatchy Newspapers, Inc. 1,343,062
---------------
3,864,006
---------------

RAILROAD--1.7%
62,200 CSX Corp. 3,358,800
---------------

RETAIL (FOOD & DRUG)--6.5%
78,100 American Stores Co. 1,605,931
260,800 Giant Food Inc. Cl A 8,785,700
50,600 Hannaford Brothers Co. 2,197,938
---------------
12,589,569
---------------

RETAIL (GENERAL MERCHANDISE)--4.3%
92,500 Dillard's Inc. Cl A 3,260,625
25,300 May Department Stores Co. (The) 1,332,994
61,600 Mercantile Stores Co., Inc. 3,749,900
---------------
8,343,519
---------------

RETAIL (SPECIALTY)--0.9%
70,900 Pep Boys-Manny, Moe & Jack (The) 1,692,737
---------------

RUBBER & PLASTICS--2.4%
98,500 Rubbermaid Inc. 2,462,500
77,900 Tupperware Corp. 2,171,462
---------------
4,633,962
---------------

Shares/Principal Amount Value
- --------------------------------------------------------------------------------

TEXTILES & APPAREL--1.7%
132,900 Fruit of the Loom, Inc.(1) $ 3,405,562
---------------

TRANSPORTATION--1.9%
62,300 XTRA Corp. 3,652,337
---------------

UTILITIES--2.0%
24,100 Texas Utilities Co. 1,001,656
65,400 Union Electric Co. 2,828,550
---------------
3,830,206
---------------

TOTAL COMMON STOCKS--96.0% 187,370,626
---------------
(Cost $181,652,670)

SHORT-TERM CASH INVESTMENTS

$7,700,000 par value FHLB Discount Note,
5.40%, 1/2/98(2) 7,700,000

200,000 Units of Participation in Chase Vista
Federal Money Market Fund
(Institutional Shares) 200,000
---------------

TOTAL SHORT-TERM CASH INVESTMENTS--4.0% 7,900,000
---------------
(Cost $7,898,845)

TOTAL INVESTMENT SECURITIES--100.0% $195,270,626
===============
(Cost $189,551,515)

NOTES TO SCHEDULE OF INVESTMENTS

ADR = AMERICAN DEPOSITARY RECEIPT
FHLB = FEDERAL HOME LOAN BANK
(1) NON-INCOME PRODUCING.
(2) THE RATES FOR U.S. GOVERNMENT AGENCY DISCOUNT NOTES ARE THE YIELD TO
MATURITY AT PURCHASE.

SEE NOTES TO FINANCIAL STATEMENTS

6 SCHEDULE OF INVESTMENTS AMERICAN CENTURY INVESTMENTS

STATEMENT OF ASSETS AND LIABILITIES

DECEMBER 31, 1997

ASSETS

Investment securities, at value
(identified cost of $189,551,515) (Note 3) ................. $195,270,626
Cash .......................................................... 2,418,115
Receivable for investments sold ............................... 370,520
Dividends and interest receivable ............................. 261,116
------------
198,320,377
------------
LIABILITIES

Payable for investments purchased ............................. 5,117,725
Payable for capital shares redeemed ........................... 5,033,614
Accrued management fees (Note 2) .............................. 153,566
Payable for directors' fees and expenses ...................... 314
------------
10,305,219
------------
NET ASSETS .................................................... $188,015,158
============

CAPITAL SHARES, $0.01 PAR VALUE

Authorized .................................................... 500,000,000
============
Outstanding ................................................... 27,131,321
============

NET ASSET VALUE PER SHARE ..................................... $ 6.93
============

NET ASSETS CONSIST OF:

Capital (par value and paid-in surplus) ....................... $166,127,034
Undistributed net investment income ........................... 1,369,189
Accumulated net realized gain
from investments and foreign currency transactions .......... 14,799,824
Net unrealized appreciation on
investments and translation of assets and liabilities
in foreign currencies (Note 3) .............................. 5,719,111
------------
$188,015,158
============

SEE NOTES TO FINANCIAL STATEMENTS

ANNUAL REPORT STATEMENT OF ASSETS AND LIABILITIES 7

STATEMENT OF OPERATIONS

YEAR ENDED DECEMBER 31, 1997

INVESTMENT INCOME

INCOME:
Dividends (net of foreign taxes withheld of $4,853) ............ $ 2,244,41
Interest ....................................................... 323,084
-----------
2,567,497
-----------
EXPENSES (Note 2):
Management fees ................................................ 985,657
Directors' fees and expenses ................................... 957
-----------
986,614
-----------

NET INVESTMENT INCOME .......................................... 1,580,883
-----------

REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND FOREIGN CURRENCY (NOTE 3)

NET REALIZED GAIN (LOSS) ON:
Investments .................................................... 14,827,831
Foreign currency transactions .................................. (3,693)
-----------
14,824,138
-----------
CHANGE IN NET UNREALIZED APPRECIATION ON:
Investments .................................................... 4,646,593
Translation of assets and liabilities in foreign currencies .... 1,506
-----------
4,648,099
-----------

NET REALIZED AND UNREALIZED GAIN ON
INVESTMENTS AND FOREIGN CURRENCY ............................... 19,472,237
-----------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS ...................................... $21,053,12
===========

SEE NOTES TO FINANCIAL STATEMENTS

8 STATEMENT OF OPERATIONS AMERICAN CENTURY INVESTMENTS

STATEMENTS OF CHANGES IN NET ASSETS

YEAR ENDED DECEMBER 31, 1997 AND
PERIOD ENDED DECEMBER 31, 1996

INCREASE IN NET ASSETS 1997 1996(1)

OPERATIONS

Net investment income ........................ $ 1,580,883 $ 122,872
Net realized gain on investments and foreign
currency transactions ..................... 14,824,138 434,897
Change in net unrealized appreciation on
investments and translation of
assets and liabilities
in foreign currencies ..................... 4,648,099 1,071,012
------------- -------------
Net increase in net assets
resulting from operations ................ 21,053,120 1,628,781
------------- -------------

DISTRIBUTIONS TO SHAREHOLDERS

From net investment income ................... (292,815) (42,223)
From net realized gains
on investment transactions ............... (458,739) --
------------- -------------
Decrease in net assets from distributions .... (751,554) (42,223)
------------- -------------
CAPITAL SHARE TRANSACTIONS

Proceeds from shares sold .................... 180,436,404 23,361,157
Proceeds from reinvestment of distributions .. 751,552 42,223
Payments for shares redeemed ................. (37,368,227) (1,096,075)
------------- -------------
Net increase in net assets from
capital share transactions ............... 143,819,729 22,307,305
------------- -------------

NET INCREASE IN NET ASSETS ................... 164,121,295 23,893,863

NET ASSETS

Beginning of period .......................... 23,893,863 --
------------- -------------
End of period ................................ $ 188,015,158 $ 23,893,863
============= =============

Undistributed net investment income .......... $ 1,369,189 --
============= =============
TRANSACTIONS IN SHARES OF THE FUND

Sold ......................................... 28,338,269 4,494,002
Issued in reinvestment of distributions ...... 134,355 8,257
Redeemed ..................................... (5,620,068) (223,494)
------------- -------------
Net increase ................................. 22,852,556 4,278,765
============= =============

(1) MAY 1, 1996 (INCEPTION) THROUGH DECEMBER 31, 1996.

SEE NOTES TO FINANCIAL STATEMENTS

ANNUAL REPORT STATEMENTS OF CHANGES IN NET ASSETS 9

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 1997

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION--American Century Variable Portfolios, Inc., formerly TCI
Portfolios, Inc., (the Corporation) is registered under the Investment Company
Act of 1940 as an open-end diversified management investment company. American
Century VP Value, formerly TCI Value, (the Fund) is one of the six series of
funds issued by the Corporation. The Fund's investment objective is long-term
capital growth. Income is a secondary objective. The Fund seeks to achieve its
investment objective by investing in securities management believes to be
undervalued at the time of purchase. The following significant accounting
policies, related to the Fund, are in accordance with accounting policies
generally accepted in the investment company industry.

SECURITY VALUATIONS--Portfolio securities traded primarily on a principal
securities exchange are valued at the last reported sales price, or the mean of
the latest bid and asked prices where no last sales price is available.
Securities traded over-the-counter are valued at the mean of the latest bid and
asked prices or, in the case of certain foreign securities, at the last reported
sales price, depending on local convention or regulation. Debt securities not
traded on a principal securities exchange are valued through valuations obtained
from a commercial pricing service or at the mean of the most recent bid and
asked prices. When valuations are not readily available, securities are valued
at fair value as determined in accordance with procedures adopted by the Board
of Directors.

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

INVESTMENT INCOME--Dividend income less foreign taxes withheld (if any) is
recorded as of the ex-dividend date. Interest income is recorded on the accrual
basis and includes accretion of discounts and amortization of premiums.

FOREIGN CURRENCY TRANSACTIONS--The accounting records of the Fund are
maintained in U.S. dollars. All assets and liabilities initially expressed in
foreign currencies are converted into U.S. dollars at prevailing exchange rates.
Purchases and sales of investment securities, dividend and interest income, and
certain expenses are translated at the rates of exchange prevailing on the
respective dates of such transactions.

Net realized foreign currency exchange gains or losses arise from sales of
foreign currencies and the difference between asset and liability amounts
initially stated in foreign currencies and the U.S. dollar value of the amounts
actually received or paid. Net unrealized foreign currency exchange gains or
losses arise from changes in the value of assets and liabilities, other than
portfolio securities, resulting from changes in the exchange rates.

FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS--The Fund may enter into forward
foreign currency exchange contracts for the purpose of settling specific
purchases or sales of securities denominated in a foreign currency or to hedge
the Fund's exposure to foreign currency exchange rate fluctuations. When
required, the Fund will segregate assets in an amount sufficient to cover its
obligations under the hedge contracts. The net U.S. dollar value of foreign
currency underlying all contractual commitments held by the Fund and the
resulting unrealized appreciation or depreciation are determined daily using
prevailing exchange rates. Forward contracts involve elements of risk in excess
of the amount reflected in the Statement of Assets and Liabilities. The Fund
bears the risk of an unfavorable change in the foreign currency exchange rate
underlying the forward contract. Additionally, losses may arise if the
counterparties do not perform under the contract terms. There were no open
forward foreign currency exchange contracts at December 31, 1997.

FUTURES CONTRACTS--The Fund may enter into stock index futures contracts in
order to manage the Fund's exposure to changes in market conditions. One of the
risks of entering into futures contracts includes the possibility that the
changes in value of the contract may not correlate with the changes in value of
the underlying securities. Upon entering into a futures contract, the Fund is
required to deposit either cash or securities in an amount equal to a certain
percentage of the contract value (initial margin). Subsequent payments
(variation margin) are made or received daily, in cash, by the Fund. The
variation margin is equal to the daily change in the contract value and is
recorded as an unrealized gain or loss. The Fund recognizes a realized gain or
loss when the contract is closed or expires. Net realized and unrealized gains
or losses occurring during the holding period of futures contracts are a
component of realized gain (loss) on investments and unrealized appreciation
(depreciation) on investments, respectively. There were no open futures
contracts at December 31, 1997.

10 NOTES TO FINANCIAL STATEMENTS AMERICAN CENTURY INVESTMENTS

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 1997

lateral, represented by securities, received in a repurchase transaction be
transferred to the custodian in a manner sufficient to enable the Fund to obtain
those securities in the event of a default under the repurchase agreement. ACIM
monitors, on a daily basis, the value of the securities transferred to ensure
the value, including accrued interest, of the securities under each repurchase
agreement is equal to or greater than amounts owed to the Fund under each
repurchase agreement.

JOINT TRADING ACCOUNT--Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, the Fund, along with other registered
investment companies having management agreements with ACIM, may transfer
uninvested cash balances into a joint trading account. These balances are
invested in one or more repurchase agreements that are collateralized by U.S.
Treasury or Agency obligations.

INCOME TAX STATUS--It is the policy of the Fund to distribute all taxable
income and capital gains to shareholders and to otherwise qualify as a regulated
investment company under provisions of the Internal Revenue Code. Accordingly,
no provision has been made for federal income taxes.

DISTRIBUTIONS TO SHAREHOLDERS--Distributions to shareholders are recorded on
the ex-dividend date. Distributions from net investment income and net realized
gains are declared and paid annually.

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

USE OF ESTIMATES--The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of increases and decreases in net assets
from operations during the reporting period. Actual results could differ from
those estimates.

ADDITIONAL INFORMATION--Effective January 15, 1998, Funds Distributor, Inc.
(FDI) became the Corporation's distributor. Certain officers of FDI are also
officers of the Corporation.

- --------------------------------------------------------------------------------
2. TRANSACTIONS WITH RELATED PARTIES

The Corporation has entered into a Management Agreement with ACIM that
provides the Fund with investment advisory and management services in exchange
for a single, unified fee. The Agreement provides that all expenses of the Fund,
except brokerage commissions, taxes, interest, expenses of those directors who
are not considered "interested persons" as defined in the Investment Company Act
of 1940 (including counsel fees) and extraordinary expenses, will be paid by
ACIM. The fee is computed daily and paid monthly based on the Fund's average
daily closing net assets during the previous month. The annual management fee
for the Fund is 1.00%.

Certain officers and directors of the Corporation are also officers and/or
directors, and, as a group, controlling stockholders of American Century
Companies, Inc., the parent of the Corporation's investment manager, ACIM, the
Corporation's transfer agent, American Century Services Corporation, and the
registered broker-dealer, American Century Investment Services, Inc.

- --------------------------------------------------------------------------------
3. INVESTMENT TRANSACTIONS

Purchases and sales of investment securities, excluding short-term
investments, totaled $277,960,879 and $132,127,335, respectively.

As of December 31, 1997, accumulated net unrealized appreciation was
$4,132,495, based on the aggregate cost of investments of $191,138,131 for
federal income tax purposes, which consisted of unrealized appreciation of
$8,167,009 and unrealized depreciation of $4,034,514.

ANNUAL REPORT NOTES TO FINANCIAL STATEMENTS 11

FINANCIAL HIGHLIGHTS

FOR A SHARE OUTSTANDING THROUGHOUT THE YEAR ENDED DECEMBER 31 (EXCEPT AS NOTED)

1997 1996(1)
PER-SHARE DATA

Net Asset Value,
Beginning of Period .................... $ 5.58 $ 5.00
------------- ------------
Income From Investment Operations

Net Investment Income ................ 0.07 0.05

Net Realized and Unrealized Gain
on Investment Transactions ........... 1.37 0.56
------------- ------------
Total From
Investment Operations ................ 1.44 0.61
------------- ------------
Distributions

From Net Investment Income ........... (0.04) (0.03)

From Net Realized Gains
on Investment Transactions ........... (0.05) --
------------- ------------
Total Distributions .................. (0.09) (0.03)
------------- ------------
Net Asset Value,
End of Period .......................... $ 6.93 $ 5.58
============= ============
Total Return(2) ...................... 26.08% 12.28%

RATIOS/SUPPLEMENTAL DATA

Ratio of Operating Expenses
to Average Net Assets .................. 1.00% 1.00%(3)

Ratio of Net Investment Income
to Average Net Assets .................. 1.60% 1.98%(3)

Portfolio Turnover Rate ................ 138% 49%

Average Commission Paid per
Share of Equity Security Traded ........ $ 0.0369 $ 0.0271

Net Assets, End
of Period (in thousands) ............... $ 188,015 $ 23,894

(1) MAY 1, 1996 (INCEPTION) THROUGH DECEMBER 31, 1996.

(2) TOTAL RETURN ASSUMES REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS
DISTRIBUTIONS, IF ANY. TOTAL RETURNS FOR PERIODS LESS THAN ONE YEAR ARE NOT
ANNUALIZED.

(3) ANNUALIZED.

SEE NOTES TO FINANCIAL STATEMENTS

12 FINANCIAL HIGHLIGHTS AMERICAN CENTURY INVESTMENTS

INDEPENDENT AUDITORS' REPORT

The Board of Directors and Shareholders,
American Century Variable Portfolios, Inc.:

We have audited the accompanying statement of assets and liabilities, including
the schedule of investments, of American Century VP Value (formerly TCI Value)
(the "Fund"), one of the funds comprising American Century Variable Portfolios,
Inc. (formerly TCI Portfolios, Inc.), as of December 31, 1997, and the related
statements of operations and changes in net assets for the year then ended, and
the financial highlights for the year then ended. These financial statements and
the financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and the
financial highlights based on our audit. The financial statements and the
financial highlights of the Fund for the period May 1, 1996 through December 31,
1996 were audited by other auditors whose report, dated January 21, 1997,
expressed an unqualified opinion on those statements and financial highlights.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and the financial highlights
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned at December 31, 1997 by
correspondence with the custodian and brokers. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audit provides a reasonable basis for our opinion.

In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of American Century VP
Value as of December 31, 1997, the results of its operations, the changes in its
net assets, and the financial highlights for the year then ended in conformity
with generally accepted accounting principles.

Deloitte & Touche LLP
Kansas City, Missouri
January 30, 1998

ANNUAL REPORT INDEPENDENT AUDITORS' REPORT 13

NOTES

14 NOTES AMERICAN CENTURY INVESTMENTS

NOTES

ANNUAL REPORT NOTES 15

BACKGROUND INFORMATION

INVESTMENT PHILOSOPHY AND POLICIES

Conservative investment practices are the hallmark of American Century's
conservative equity funds. Broad diversification across many industries is
stressed to reduce the impact of one sector on fund performance. The management
team also looks for dividend yield, since dividend income can help offset the
impact of market downturns on fund performance. American Century funds are
managed by teams, rather than by one "star" manager. We believe this enables us
to make better, more consistent management decisions.

VP VALUE'S investment objective is long-term capital growth, with income as
a secondary objective. To achieve this objective, the fund invests in the equity
securities of seasoned, established businesses that the fund's management team
believes are temporarily undervalued. This is determined by comparing a stock's
share price with key financial measures, including earnings, book value, cash
flow and dividends. If the stock's price relative to these measures is low and
the company's balance sheet is solid, its securities are candidates for
purchase. The management team may secondarily look for income when making
portfolio selections.

COMPARATIVE INDICES

The indices listed below are used in the report to serve as a comparison for
the performance of the fund. They are not investment products available for
purchase.

The S&P 500 is a capitalization-weighted index of the stocks of 500
publicly-traded U.S. companies that are considered to be leading firms in
leading industries. Created by the Standard & Poor's Corporation, the index is
viewed as a broad measure of U.S. stock performance.

The S&P 500/BARRA VALUE index is a capitalization-weighted index consisting
of S&P 500 stocks that have lower price/book ratios and in general share other
characteristics associated with value-style stocks.

16 BACKGROUND INFORMATION AMERICAN CENTURY INVESTMENTS

GLOSSARY

RETURNS

* TOTAL RETURN figures show the overall percentage change in the value of a
hypothetical investment in the fund and assume that all of the fund's
distributions are reinvested.

* AVERAGE ANNUAL RETURNS illustrate the annually compounded returns that would
have produced the fund's cumulative total returns if the fund's performance had
been constant over the entire period. Average annual returns smooth out
variations in a fund's return; they are not the same as year-by-year results.
For year-by-year total returns, please refer to the "FINANCIAL HIGHLIGHTS" on
page 12.

PORTFOLIO STATISTICS

* NUMBER OF COMPANIES-- the number of different companies held by a fund on a
given date.

* PRICE/EARNINGS (P/E) RATIO-- a stock value measurement calculated by dividing
a company's stock price by its earnings per share, with the result expressed as
a multiple instead of as a percentage. (Earnings per share is calculated by
dividing the after-tax earnings of a corporation by its outstanding shares.)

* PORTFOLIO TURNOVER-- the percentage of a fund's investment portfolio that is
replaced during a given time period, usually a year. Actively managed portfolios
tend to have higher turnover than passively managed portfolios such as index
funds.

TYPES OF STOCKS

* BLUE-CHIP STOCKS-- stocks of the most established companies in American
industry. They are generally large, fairly stable companies that have
demonstrated consistent earnings and usually have long-term growth potential.
Examples include General Electric and Coca-Cola.

* CYCLICAL STOCKS-- generally considered to be stocks whose price and earnings
fluctuations tend to follow the ups and downs of the business cycle. Examples
include the stocks of automobile manufacturers, steel producers and textile
operators.

* GROWTH STOCKS-- stocks of companies that have experienced above-average
earnings growth and appear likely to continue such growth. These stocks often
sell at high P/E ratios. Examples can include the stocks of high-tech,
healthcare and consumer staple companies.

* LARGE-CAPITALIZATION ("LARGE-CAP") STOCKS-- generally considered to be stocks
of companies with a market capitalization (the total value of a company's
outstanding stock) of more than $5 billion. These tend to be the stocks that
make up the Dow Jones Industrial Average and the S&P 500.

* MEDIUM-CAPITALIZATION ("MID-CAP") STOCKS-- generally considered to be stocks
of companies with a market capitalization (the total value of a company's
outstanding stock) of between $1 billion and $5 billion. These tend to be the
stocks that make up the S&P MidCap 400.

* SMALL-CAPITALIZATION ("SMALL-CAP") STOCKS-- generally considered to be stocks
of companies with a market capitalization (the total value of a company's
outstanding stock) of less than $1 billion. These tend to be the stocks that
make up the Russell 2000 Index.

* VALUE STOCKS-- generally considered to be stocks that are purchased because
they are relatively inexpensive. These stocks are typically characterized by low
P/E ratios.

STATISTICAL TERMINOLOGY

* PRICE/BOOK RATIO-- a stock value measurement calculated by dividing a
company's stock price by its book value per share, with the result expressed as
a multiple instead of as a percentage. (Book value per share is calculated by
subtracting a company's liabilities from its assets, then dividing that value by
the number of outstanding shares.)

ANNUAL REPORT GLOSSARY 17

[american century logo]
American
Century(reg.sm)

P.O. BOX 419385
KANSAS CITY, MISSOURI
64141-6385

INVESTOR SERVICES:
1-800-345-3533 OR 816-531-5575

AUTOMATED INFORMATION LINE:
1-800-345-8765

TELECOMMUNICATIONS DEVICE FOR THE DEAF:
1-800-345-1833 OR 816-444-3485

FAX: 816-340-4360

INTERNET: www.americancentury.com

AMERICAN CENTURY VARIABLE PORTFOLIOS, INC.

INVESTMENT MANAGER
AMERICAN CENTURY INVESTMENT MANAGEMENT, INC.
KANSAS CITY, MISSOURI

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

9801 [recycled logo]
SH-BKT-11076 Recycled
<PAGE>
ANNUAL
REPORT

[american century logo]
American
Century(reg.sm)

DECEMBER 31, 1997

AMERICAN CENTURY
VARIABLE
PORTFOLIOS, INC.

VP International

TABLE OF CONTENTS

Our Message to You ........................................................ 1
Performance & Portfolio Information ....................................... 2
Management Q & A .......................................................... 3
Schedule of Investments ................................................... 5
Statement of Assets and Liabilities ....................................... 10
Statement of Operations ................................................... 11
Statements of Changes in Net Assets ....................................... 12
Notes to Financial Statements ............................................. 13
Financial Highlights ...................................................... 15
Independent Auditors' Report .............................................. 16
Background Information
Investment Philosophy and Policies ............................. 20
How Currency Returns Affect
Performance ................................................ 20
Comparative Indices ............................................ 20
Glossary .................................................................. 21

We welcome your comments or questions about this report.

See the back cover for ways to contact us by mail, phone or e-mail.

American Century and Benham Group are registered marks of American Century
Services Corporation.

AMERICAN CENTURY INVESTMENTS

OUR MESSAGE TO YOU

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

VP International performed very well in 1997, especially in light of the
strong crosscurrents in foreign markets. The fund finished its fiscal year well
ahead of its performance benchmark. Once again, investment discipline and
attention to business fundamentals made the difference. Our management team
focuses on individual companies and looks for sound, fast-growing businesses
worldwide. Our managers build portfolios according to the earnings growth and
quality of each company, not by countries or geographic regions.

Although foreign markets were volatile this year, 1997 served as a good
example of the diversification that international markets can offer investors,
even in times of crisis. Over the long term, global markets in fact tend to
perform independently. But when a crisis occurs, as it did in Southeast Asia
late in 1997, global markets often move together. Once the downward adjustments
subside and investors regain perspective, these markets usually decouple and go
their separate ways again. Regional volatility notwithstanding, 1997 saw a wide
variation in returns.

VP International was able to take advantage of this performance variation,
and invested in some very attractive opportunities, especially in Europe. We
also avoided much -- though not all -- of the turbulence afflicting the
economies of Southeast Asia.

In spite of these conditions, our management team found individual companies
we think have the fundamentals not only to come through the tough times in good
shape, but to make rapid progress once the present troubles abate. This approach
has helped VP International produce strong returns since its inception.

In 1997, we were also active on the corporate front. In July, J.P. Morgan
agreed to become a significant minority shareholder in American Century. J.P.
Morgan has been in business over 150 years, serving institutions, governments
and individuals with complex financial needs. Under the terms of the business
partnership, which was finalized January 15, 1998, American Century will
continue to operate as an independent company. Our corporate management team
will remain the same, and the Stowers family will retain voting control of
American Century.

Whatever your financial goals, we believe American Century has an
outstanding lineup of funds to help you reach them.

Sincerely,

/s/James E. Stowers, Jr. /s/James E.Stowers III
James E. Stowers, Jr. James E. Stowers III
Chairman of the Board and Founder Chief Executive Officer
American Century Investment
Management, Inc.

ANNUAL REPORT OUR MESSAGE TO YOU 1

<TABLE>
<CAPTION>
PERFORMANCE & PORTFOLIO INFORMATION

AVERAGE ANNUAL RETURNS
6 MONTHS(1) 1 YEAR 3 YEARS LIFE OF FUND(2)
TOTAL RETURNS AS OF DECEMBER 31, 1997
<S> <C> <C> <C> <C>
VP International .................... -0.15% 18.63% 15.04% 10.60%
MSCI EAFE(reg.tm) Index ............. -8.48% 1.78% 6.27% 5.08%

(1) Not annualized.
(2) The fund's inception date was 5/1/94.
</TABLE>

See pages 20 and 21 for more information about the comparative index and
returns.

PORTFOLIO AT A GLANCE
12/31/97 12/31/96
Number of Companies 117 101
Portfolio Turnover 173% 154%

[line graph - data below]

GROWTH OF $10,000 OVER LIFE OF FUND

Value on 12/13/97
VP International $14,468
MSCI EAFE(reg.tm) $11,991

$10,000 investment made 5/1/94

VP INTERNATIONAL MSCI EAFE INDEX
ACCT ACCT
DATE RETURN VALUE RETURN VALUE
5/1/94 $10,000 $10,000
6/30/94 -2.20% $9,780 0.83% $10,083
9/30/94 1.00% $10,100 0.93% $10,093
12/31/94 -5.00% $9,500 -0.10% $9,990
3/31/95 -7.00% $9,300 1.76% $10,176
6/30/95 -1.20% $9,880 2.50% $10,250
9/30/95 3.60% $10,360 6.77% $10,677
12/31/95 6.60% $10,660 11.10% $11,110
3/31/96 9.20% $10,920 14.31% $11,431
6/30/96 14.39% $11,439 16.11% $11,611
9/30/96 15.20% $11,520 15.97% $11,597
12/31/96 21.96% $12,196 17.81% $11,781
3/31/97 28.40% $12,840 15.97% $11,597
6/30/97 44.89% $14,489 31.02% $13,102
9/30/97 50.18% $15,018 30.10% $13,010
12/31/97 44.68% $14,468 19.91% $11,991

Past performance does not guarantee future results. Investment return and
principal value will fluctuate, and redemption value may be more or less than
original cost.

The line representing the fund's total return includes operating expenses (such
as transaction costs and management fees) that reduce returns, while the return
line of the MSCI EAFE(reg.tm) index does not.

See Glossary on page 21 for investment terms.

2 PERFORMANCE & PORTFOLIO INFORMATION AMERICAN CENTURY INVESTMENTS

MANAGEMENT Q & A

An interview with Henrik Strabo and Mark Kopinski, portfolio managers on the
VP International investment team.

VP INTERNATIONAL PERFORMED VERY WELL THIS YEAR. WHAT EXPLAINS ITS OUTSTANDING
RETURNS?

This was a difficult year in foreign markets. The fund's benchmark, the
Morgan Stanley Capital International EAFE Index, returned just 1.78% for the
year ended December 31, 1997. The markets of Southeast Asia and Japan were much
weaker. We think this serves to highlight just how well VP International
performed, returning 18.63%.

We are both pleased with and proud of VP Inter- national's performance, but
we're also aware that it sets a very high hurdle going forward. Our challenge is
to keep returns ahead of the fund's benchmark.

HOW DO YOU EXPLAIN THE GOOD RESULTS THIS YEAR?

Our investment methodology is largely responsible for the good results to
date. This year, the "bottom up" approach, which focuses on the earnings growth
of individual companies, led us to faster-growing European companies and away
from slower-growing companies in troubled areas, such as Southeast Asia and
Japan. In Europe, many companies continued the robust growth they have enjoyed
for more than two years. Low interest rates and optimism that low rates will
continue enabled businesses to restructure and re-engineer their operations,
resulting in greater efficiencies and profitability. Fund returns were also
boosted by holdings in financial service firms that continued to benefit from
the boom brought on by the liberalization and restructuring of the financial
sector in Europe.

WHICH EUROPEAN HOLDINGS CONTRIBUTED TO PERFORMANCE THIS YEAR?

Some of the year's top performers included Credit Suisse Group, one of the
fund's larger positions, Skandia, an insurance company located in Sweden, and
Credito Italiano, an Italian bank. Credito Italiano is undergoing a major
transformation that is typical of the better growth companies in Europe. Unlike
its competitors, Credito Italiano has restructured to focus on high-profit
growth areas, such as asset management and mutual funds. We are pleased with
Credito Italiano's performance and expect it and VP International's other bank
holdings to benefit from improving internal efficiencies as well as from changes
in European economic structure.

In general, the portfolio's performance benefited from a significant stake
in European bank stocks. Strong growth in the banking and financial sector is
being driven by several important catalysts, most notably the trend toward
consolidation (mergers and acquisitions) currently taking place in the industry,
labor reforms that will tighten the region's work forces and the decline in
interest rates as European countries prepare for EMU (European Monetary Union).

WHICH OTHER HOLDINGS CONTRIBUTED TO PERFORMANCE?

VP International's best-performing stock this year was Phillips Electronics
N.V., the largest electronics manufacturer in Europe. Phillips dramatically
improved its bottom line with several recently implemented

TOP TEN HOLDINGS % of fund investments
As of As of
12/31/97 6/30/97
Novartis AG 3.7% 4.5%
Roche Holding AG 2.2% 1.9%
Novo Nordisk A/S Cl B 2.0% --
ING Groep N.V. 2.0% 2.9%
Axa-UAP 1.9% 1.1%
Misys plc 1.8% 1.3%
Union Bank of Switzerland 1.8% --
VEBA AG 1.7% --
Credito Italiano 1.7% 1.3%
VNU Tijdschriftengroep Nederland 1.6% 1.5%

TOP FIVE INDUSTRIES % of fund investments
As of As of
12/31/97 6/30/97
Financial Services 12.6% 9.1%
Banking 11.7% 7.6%
Pharmaceuticals 11.1% 8.6%
Computer Software & Services 6.6% 2.9%
Communications Services 5.5% 7.7%

ANNUAL REPORT MANAGEMENT Q & A 3

MANAGEMENT Q & A

cost-cutting measures, including a smaller and more productive work force and
the sale or turnaround of less profitable operations. SAP, a German software
company, also ranked among the best performers. SAP, the largest supplier of
business applications software in the world, is experiencing booming demand
globally as companies focus on productivity and business efficiency. SAP's
software products can help manage operations as diverse as personnel and
production.

WHAT MAJOR CHANGES DID YOU MAKE IN THE PORTFOLIO SINCE THE SEMIANNUAL REPORT?

The greatest change has been the shift from Japanese companies to companies
in Europe. A number of disappointing earnings announcements caused us to sell
many Japanese holdings. Our earnings momentum strategy led us to begin
decreasing these positions back in April. We also pay attention to macroeconomic
events, and when the growth of Japan's gross domestic product slowed
significantly, it confirmed what we were seeing in individual companies, so we
reacted quickly.

On a sector or industry basis, our greatest shifts during the second half of
the fiscal year were in the electrical and electronic components industry, where
we reduced the fund's holdings in response to Asia's negative impact on
earnings. In the banking and financial services sectors, we increased weightings
from 16.7% of total portfolio assets to 24.3%.

WHICH STOCKS WERE DISAPPOINTING?

Asian companies continued to dominate this list. Examples include Shanghai
Industrial, a Hong Kong-based conglomerate that had been prospering before
October's currency crisis. A second example is Standard Chartered, a U.K.-based
bank with offices throughout Asia. Standard Chartered's fundamental business
remains sound, but its earnings outlook has become slightly clouded, again due
to its Asian exposure. We believe this company is well positioned to benefit
from the expected "flight to quality" as investors look for more stable
companies, and we continue to watch it closely.

Another disappointing performer was Fujikura, a Japanese manufacturer of
fiber optics, which suffered a significant price slowdown after it announced a
decline in order growth. This followed a similar announcement by Corning, Inc.,
the global leader in fiber optics production. Both firms had built inventories
in response to customers who double- and triple-ordered in fear of supply
shortages. When end demand slowed in the third quarter, the companies were left
with significant inventories.

WHAT IS YOUR OUTLOOK FOR INTERNATIONAL INVESTING?

We believe that there will continue to be significant investment
opportunities internationally. The world is changing at a tremendous pace. As
American-style capitalism makes its way into almost every corner of the world,
it is creating an unprecedented number of attractive businesses. Despite the
setbacks in Asia, there are many promising companies in other parts of the
world. Europe continues to benefit from the introduction of market-oriented
policies, corporate restructuring, lower taxes and the introduction of a common
currency in 1999. Longer-term, we are confident that pockets of Asia will
recover and once again provide significant returns.

[bar chart - data below]

VP INTERNATIONAL INVESTMENTS BY COUNTRY

12/31/97 6/30/97
U.K. 18% 9%
Switzerland 12% 12%
France 10% 5%
Netherlands 9% 14%
Germany 8% 11%
Japan 8% 18%
Italy 4% 1%
Canada 4% 8%
Other* 27% 22%

*No country, other than the U.S., represented more than 3% of the fund as of
12/31/97.

4 MANAGEMENT Q & A AMERICAN CENTURY INVESTMENTS

<TABLE>
<CAPTION>
SCHEDULE OF INVESTMENTS

DECEMBER 31, 1997

Shares Value
- ---------------------------------------------------------------------------------------------

COMMON STOCKS & WARRANTS

ARGENTINA--0.3%
<S> <C> <C>
17,000 YPF Sociedad Anonima ADR $ 581,188
----------------------

(energy - production and marketing)

AUSTRALIA--0.8%

249,200 Woodside Petroleum Limited 1,756,668
----------------------

(energy - production and marketing)

AUSTRIA--0.7%

9,600 VA Technologie AG 1,457,689
----------------------
(business services and supplies)

BRAZIL--1.2%

13,314,000 Centrais Eletricas Brasileiras S/A 662,091

(utilities)

16,000 Telecomunicacoes Brasileiras S.A. ADR 1,863,000
----------------------
(communications services)

2,525,091
----------------------

CANADA--4.3%

79,200 Geac Computer Corp. Ltd. 2,609,984

(computer software and services)

60,500 Investor's Group, Inc. 1,913,311

(financial services)

21,600 Newbridge Networks Corp.(1) 753,300

(communications equipment)

55,360 Newcourt Credit Group Inc. (Acquired
5/22/97 through 11/18/97,

Cost $1,458,766)(2) 1,853,403

(financial services)

15,170 Newcourt Credit Group Inc.
Subscription Receipts(1) 502,040

(financial services)

9,200 Northern Telecom Ltd. 818,457

(communications equipment)

28,300 QLT PhotoTherapeutics, Inc.(1) 316,810

(biotechnology)

13,700 Talisman Energy, Inc.(1) 419,364
----------------------

(energy - production and marketing)

9,186,669
----------------------

DENMARK--2.0%

30,355 Novo Nordisk A/S Cl B 4,342,823
----------------------
(pharmaceuticals)

Shares Value
- ---------------------------------------------------------------------------------------------

FINLAND--2.1%

284,000 Merita OY Ltd. Cl A $ 1,553,536

(banking)

6,400 Raisio Group plc 760,101

(food and beverage)

67,400 Sampo Insurance Company Ltd. 2,189,878
----------------------

(insurance)

4,503,515
----------------------

FRANCE--10.2%

15,717 Accor SA 2,923,182

(leisure)

8,544 Alcatel Alsthom Compagnie Generale 1,086,372

(communications services)

51,293 Axa-UAP 3,970,273

(insurance)

26,540 Cap Gemini SA 2,176,928

(computer software and services)

11,600 Compagnie Francaise d'Etudes et de
Construction Technip 1,224,300

(chemicals and resins)

33,000 Dassault Systemes S.A. ADR 1,025,062

(computer software and services)

8,000 Elf Aquitaine SA 930,774

(energy - production and marketing)

22,700 France Telecom S.A. ADR(1) 817,200

(communications services)

12,000 Groupe Danone 2,144,104

(food and beverage)

4,100 Pinault-Printemps-Redoute SA 2,188,166

(retail - general merchandise)

34,500 Rhone-Poulenc 1,545,949

(chemicals and resins)

11,600 Societe Generale 1,580,986
----------------------

(banking)

21,613,296
----------------------

GERMANY--6.8%

30,800 Bayerische Hypotheken-und
Wechsel-Bank AG 1,503,818

(banking)

23,800 Bayerische Vereinsbank AG 1,557,770

(financial services)

16,000 Berliner Kraft-und Licht-
Aktiengesellschaft 484,026

(utilities)

See Notes to Financial Statements

ANNUAL REPORT SCHEDULE OF INVESTMENTS 5

SCHEDULE OF INVESTMENTS

DECEMBER 31, 1997

Shares Value
- ---------------------------------------------------------------------------------------------

28,500 Deutsche Bank AG $ 2,012,790

(financial services)

39,600 Deutsche Pfandbrief-und
Hypothekenbank AG 2,347,482

(banking)

5,800 Mannesmann AG 2,931,851

(industrial equipment and machinery)

54,000 VEBA AG 3,678,576
----------------------

(utilities)

14,516,313
----------------------

HONG KONG--0.4%

22,000 HSBC Holdings plc 542,334

(banking)

78,000 Shanghai Industrial Holdings Ltd.
(Acquired 7/24/97 through
12/8/97, Cost $326,531)(2) 289,933
----------------------

(diversified company)

832,267
----------------------

HUNGARY--0.5%

41,000 Magyar Tavkozlesi Rt. ADR(1) 1,066,000
----------------------

(communications services)

INDONESIA(3)

100 PT Gudang Garam 152
----------------------

(tobacco)

IRELAND--1.1%

64,000 Bank of Ireland 985,845

(financial services)

17,400 CBT Group Plc ADR(1) 1,430,063
----------------------

(computer software and services)

2,415,908
----------------------

ISRAEL--0.4%

22,000 Check Point Software
Technologies Ltd(1) 899,250
----------------------

(computer software and services)

ITALY--4.3%

289,800 Banco Ambrosiano Veneto
S.p.A. Warrants(1) 178,560

(banking)

36,021 Banca Popolare di Bergamo
Credito Varesino SpA 629,179

(banking)

Shares Value
- ---------------------------------------------------------------------------------------------

434,700 Banco Ambrosiano Veneto S.p.A. $ 1,663,559

(financial services)

1,141,800 Credito Italiano 3,520,827

(banking)

141,300 Mondadori (Arnoldo) Editore SpA 1,110,240

(printing and publishing)

331,000 Telecom Italia SpA 2,114,298
----------------------

(communications services)

9,216,663
----------------------

JAPAN--7.8%

63,000 Canon, Inc. 1,468,543

(consumer products)

16,000 Circle K Japan Co., Ltd. 766,783

(retail - food and drug)

13,600 Keyence Corporation 2,012,652

(control and measurement)

191,000 Minebea Company Ltd. 2,050,378

(electrical and electronic components)

4,700 Nintendo Co., Ltd. 461,296

(electrical and electronic components)

20 NTT Data Corp. 1,078,097

(communications services)

10,000 Promise Co., Ltd. 555,151

(financial services)

10,000 Rohm Co. Ltd. 1,019,821

(electrical and electronic components)

149,000 Shiseido Co., Ltd. 2,033,662

(consumer products)

33,800 Sony Corp. 3,006,403

(electrical and electronic components)

74,000 Takeda Chemical Inds. 2,110,800
----------------------

(pharmaceuticals)

16,563,586
----------------------

MEXICO--1.4%

15,100 Desc S.A. de C.V. 566,250

(chemicals and resins)

245,600 Grupo Financiero Banamex Accival,
SA de CV Cl B(1) 735,703

(financial services)

17,000 Grupo Televisa S.A. GDR(1) 657,688

(broadcasting and media)

30,900 Panamerican Beverages Inc. Cl A 1,008,112
----------------------

(food and beverage)

2,967,753
----------------------

See Notes to Financial Statements

6 SCHEDULE OF INVESTMENTS AMERICAN CENTURY INVESTMENTS

SCHEDULE OF INVESTMENTS

DECEMBER 31, 1997

Shares Value
- ---------------------------------------------------------------------------------------------

NETHERLANDS--9.0%

32,239 ASR Verzekeringsgroep N.V. $ 1,754,731

(insurance)

30,900 Getronics N.V. 985,018

(computer software and services)

102,586 ING Groep N.V. 4,323,141

(financial services)

30,000 KLM Royal Dutch Air Lines NV 1,110,289

(airlines)

112,210 Koninklijke Ahold NV 2,929,143

(retail - food and drug)

34,900 Randstad Holdings N.V. 1,314,024

(business services and supplies)

11,400 Stork N.V. 393,782

(business services and supplies)

46,400 Unilever N.V. 2,897,100

(diversified company)

124,000 VNU Tijdschriftengroep Nederland 3,500,025
----------------------

(printing and publishing)

19,207,253
----------------------

NORWAY--0.7%

5,400 Petroleum Geo-Services ASA(1) 340,664

(energy - services)

150,000 Storebrand ASA(1) 1,058,215
----------------------

(insurance)

1,398,879
----------------------

PORTUGAL--1.2%

36,000 Banco Espirito Santo e Comercial
de Lisboa, SA 1,071,878

(banking)

30,900 Portugal Telecom S.A. 1,434,553
----------------------

(communications services)

2,506,431
----------------------

RUSSIAN FEDERATION--0.3%

21,425 Unified Energy Systems GDR(1) 645,428
----------------------

(utilities)

SOUTH AFRICA--0.6%

102,200 Amalgamated Banks of South Africa 588,020

(banking)

28,441 Liberty Life Association of Africa Ltd. 730,530
----------------------

(insurance)

1,318,550
----------------------

Shares Value
- ---------------------------------------------------------------------------------------------

SPAIN--1.5%

21,000 Banco Popular Espanol SA $ 1,467,953

(banking)

56,000 Telefonica de Espana 1,598,898
----------------------

(communications services)

3,066,851
----------------------

SWEDEN--2.1%

25,100 Hennes & Mauritz AB Cl B 1,107,246

(retail - apparel)

41,700 Skandia Forsakrings AB 1,968,295

(financial services)

114,900 Skandinaviska Enskilda Banken 1,455,420
----------------------

(banking)

4,530,961
----------------------

SWITZERLAND--11.8%

600 ABB AG 753,001

(electrical and electronic components)

18,900 Credit Suisse Group 2,921,315

(banking)

1,835 Julius Baer Holding AG 3,401,053

(financial services)

1,222 Nestle S.A. 1,829,469

(food and beverage)

4,845 Novartis AG 7,853,226

(pharmaceuticals)

468 Roche Holding AG 4,642,711

(pharmaceuticals)

2,600 Union Bank of Switzerland 3,755,565
----------------------

(banking)

25,156,340
----------------------

UNITED KINGDOM--18.2%

233,700 Amvescap Plc 2,017,936

(financial services)

114,000 British Aerospace PLC 3,265,513

(aerospace and defense)

160,964 British-Borneo Petroleum Syndicate plc 1,124,129

(energy - production and marketing)

234,000 Cable & Wireless plc 2,066,887

(communications equipment)

5,000 COLT Telecom Group plc(1) 50,892

(communications services)

105,100 Compass Group PLC 1,290,990

(restaurants)

See Notes to Financial Statements

ANNUAL REPORT SCHEDULE OF INVESTMENTS 7

SCHEDULE OF INVESTMENTS

DECEMBER 31, 1997

Shares Value
- ---------------------------------------------------------------------------------------------

26,800 Flextech plc (Acquired 6/26/97
through 7/11/97, Cost
$271,771)(1)(2) $ 233,181

(broadcasting and media)

373,600 General Electric Company plc 2,433,330

(diversified company)

50,000 Glaxo Wellcome plc ADR 2,393,750

(pharmaceuticals)

135,500 Hays plc 1,816,529

(business services and supplies)

318,400 Ladbroke Group plc 1,387,791

(leisure)

259,000 Lloyds TSB Group plc 3,365,283

(financial services)

125,872 Misys plc 3,803,008

(computer software and services)

176,600 Next Plc 2,017,641

(retail - general merchandise)

233,400 Pearson plc 3,048,066

(printing and publishing)

86,900 Railtrack Group PLC 1,387,373

(railroad)

80,373 Siebe plc 1,585,715

(diversified company)

148,600 Standard Chartered plc 1,594,701

(banking)

125,000 Tesco plc 1,021,556

(retail - food and drug)

90,000 Vodafone Group plc 652,310

(communications services)

64,000 Zeneca Group plc 2,258,040
----------------------

(pharmaceuticals)

38,814,621
----------------------

UNITED STATES--0.8%

36,400 Transocean Offshore 1,754,025
----------------------

(energy - services)

TOTAL COMMON STOCKS & WARRANTS--90.5% 192,844,170
----------------------

(Cost $170,863,857)

Shares/Principal Amount Value
- ---------------------------------------------------------------------------------------------

PREFERRED STOCKS

BRAZIL--0.4%

3,284,520 Petroleo Brasileiro S/A $ 768,119
----------------------

(energy - production and marketing)

GERMANY--1.6%

25,400 Henkel KGaA 1,603,170

(chemicals and resins)

3,600 SAP AG 1,178,145

(computer software and services)

960 Wella Aktiengesellschaft 728,709
----------------------

(consumer products)

3,510,024
----------------------

TOTAL PREFERRED STOCKS--2.0% 4,278,143
----------------------

(Cost $3,521,583)

CONVERTIBLE BOND

ITALY--0.1%

ITL 253,575,000 Banco Ambrosiano Veneto S.p.A.,
Floater, 6.30%, 1/1/03, resets
semiannually off the six month
LIBOR with no caps 277,260
----------------------

(banking)
(Cost $226,903)

TEMPORARY CASH INVESTMENTS

Repurchase Agreement (Goldman Sachs & Co., Inc.), 6.35%, due 1/2/98,
collateralized by $8,370,000 par value U.S. Treasury Bonds,
11.125%, due 8/15/03 (Delivery
value $10,603,739) 10,600,000

Repurchase Agreement (Merrill Lynch & Co., Inc.), 6.30%, due 1/2/98,
collateralized by $4,890,000 par value U.S. Treasury Notes, 7.75%,
due 2/15/01 (Delivery value
$5,201,820) 5,200,000
----------------------

TOTAL TEMPORARY CASH INVESTMENTS--7.4% 15,800,000
----------------------

(Cost $15,800,000)

TOTAL INVESTMENT SECURITIES--100.0% $213,199,573
=======================

(Cost $190,412,343)
</TABLE>

See Notes to Financial Statements

8 SCHEDULE OF INVESTMENTS AMERICAN CENTURY INVESTMENTS

SCHEDULE OF INVESTMENTS

DECEMBER 31, 1997

FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS

Contracts Settlement Unrealized
to Sell Date Value Gain
- --------------------------------------------------------------------------------

7,542,153 CHF 1/28/98 $ 5,173,228 $163,202

6,411,336 DEM 1/28/98 3,570,343 91,637

26,806,709 FRF 1/28/98 4,461,672 108,086

4,851,217 GBP 1/28/98 8,000,433 94,800

592,371,830 JPY 1/28/98 4,557,881 119,821

7,689,141 NLG 1/28/98 3,799,978 97,807

8,837,497 SEK 1/28/98 1,114,611 52,832
--------------------------------------

$30,678,146 $728,185
--------------------------------------

(Value on Settlement Date $31,406,331)

NOTES TO SCHEDULE OF INVESTMENTS

ADR = American Depositary Receipt

CHF = Swiss Franc

DEM = German Mark

FRF = French Franc

GBP = British Pound

GDR = Global Depositary Receipt

ITL = Italian Lira

JPY = Japanese Yen

LIBOR = London Inter Bank Offered Rate

NLG = Netherlands Guilder

SEK = Swedish Krona

(1) Non-income producing.

(2) Security was purchased under Rule 144A of the Securities Act of 1933 and,
unless registered under the Act or exempted from registration, may only be
sold to qualified institutional investors. The aggregate value of
restricted securities at December 31, 1997, was $2,376,517, which
represented 1.1% of net assets.

(3) Investment in country was less than 0.05% of the total
investment securities.

See Notes to Financial Statements

ANNUAL REPORT SCHEDULE OF INVESTMENTS 9

STATEMENT OF ASSETS AND LIABILITIES

DECEMBER 31, 1997

ASSETS

Investment securities, at value
(identified cost of $190,412,343) (Note 3) ................. $213,199,573

Foreign currency holdings, at value
(identified cost of $127,920) .............................. 127,920

Cash ....................................................... 107,393

Receivable for forward foreign
currency exchange contracts ................................ 728,185

Receivable for investments sold ............................ 3,968,102

Receivable for capital shares sold ......................... 3,233,070

Dividends and interest receivable .......................... 236,554
------------
221,600,797
------------
LIABILITIES

Payable for investments purchased .......................... 4,364,124

Payable for capital shares redeemed ........................ 446,526

Accrued management fees (Note 2) ........................... 267,074

Payable for directors' fees and expenses ................... 351
------------
5,078,075
------------
Net Assets ................................................. $216,522,722
============
CAPITAL SHARES, $0.01 PAR VALUE

Authorized ................................................. 200,000,000
============
Outstanding ................................................ 31,655,841
============
Net Asset Value Per Share .................................. $ 6.84
============
NET ASSETS CONSIST OF:

Capital (par value and paid-in surplus) .................... $179,577,890

Undistributed net investment income ........................ 730,456

Accumulated undistributed
net realized gain from investments
and foreign currency transactions .......................... 12,713,908

Net unrealized appreciation on investments
and translation of assets and liabilities
in foreign currencies (Note 3) ............................. 23,500,468
------------
$216,522,722
============
See Notes to Financial Statements

10 STATEMENT OF ASSETS AND LIABILITIES AMERICAN CENTURY INVESTMENTS

STATEMENT OF OPERATIONS

YEAR ENDED DECEMBER 31, 1997

INVESTMENT LOSS

Income:

Dividends (net of foreign
taxes withheld of $278,794) ............................... $ 1,906,643

Interest .................................................. 620,252
------------
2,526,895
------------
Expenses (Note 2):

Management fees ........................................... 2,659,954

Directors' fees and expenses .............................. 1,703
------------
2,661,657
------------
Net investment loss ....................................... (134,762)
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FOREIGN CURRENCY (NOTE 3)

Net realized gain (loss) on:

Investments ............................................... 17,808,988

Foreign currency transactions ............................. (4,120,905)
------------
13,688,083
------------
Change in net unrealized appreciation on:

Investments ............................................... 16,364,047

Translation of assets and
liabilities in foreign currencies ......................... (3,013,532)
------------
13,350,515
------------
Net realized and unrealized gain on
investments and foreign currency .......................... 27,038,598
------------
Net Increase in Net Assets
Resulting from Operations ................................. $ 26,903,836
============
See Notes to Financial Statements

ANNUAL REPORT STATEMENT OF OPERATIONS 11

STATEMENTS OF CHANGES IN NET ASSETS

YEARS ENDED DECEMBER 31, 1997 AND DECEMBER 31, 1996

Increase in Net Assets 1997 1996

OPERATIONS

Net investment income (loss) ............. $ (134,762) $ 262,415

Net realized gain on investments

and foreign currency transactions ........ 13,688,083 4,021,576

Change in net unrealized
appreciation on investments
and translation of assets
and liabilities in foreign currencies .... 13,350,515 6,792,807
------------- -------------
Net increase in net assets
resulting from operations ................ 26,903,836 11,076,798
------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS

From net investment income ............... (1,287,755) (279,252)

In excess of net
investment income ........................ (148,297) (928,713)

From net realized gains
from investment transactions ............. (2,769,529) (402,655)
------------- -------------
Decrease in net assets
from distributions ....................... (4,205,581) (1,610,620)
------------- -------------
CAPITAL SHARE TRANSACTIONS

Proceeds from shares sold ................ 251,281,839 84,797,362

Proceeds from
reinvestment of distributions ............ 4,205,581 1,610,620

Payments for shares redeemed ............. (162,998,136) (46,147,914)
------------- -------------
Net increase in net assets
from capital share transactions .......... 92,489,284 40,260,068
------------- -------------
Net increase in net assets ............... 115,187,539 49,726,246

NET ASSETS

Beginning of year ........................ 101,335,183 51,608,937
------------- -------------
End of year .............................. $ 216,522,722 $ 101,335,183
============= =============
Undistributed net
investment income ........................ $ 730,456 $ 1,422,517
============= =============
TRANSACTIONS IN SHARES OF THE FUND

Sold ..................................... 38,184,069 15,365,530

Issued in reinvestment
of distributions ......................... 691,707 292,840

Redeemed ................................. (24,224,772) (8,329,954)
------------- -------------
Net increase ............................. 14,651,004 7,328,416
============= =============
See Notes to Financial Statements

12 STATEMENTS OF CHANGES IN NET ASSETS AMERICAN CENTURY INVESTMENTS

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 1997

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION--American Century Variable Portfolios, Inc., formerly TCI
Portfolios, Inc., (the Corporation) is registered under the Investment Company
Act of 1940 as an open-end diversified management investment company. American
Century VP International, formerly TCI International, (the Fund) is one of the
six series of funds issued by the Corporation. The Fund's investment objective
is capital growth. The Fund seeks to achieve its investment objective by
investing primarily in an internationally diversified portfolio of equity
securities that are considered by management to have prospects for appreciation.
The Fund will invest primarily in securities of issuers located in developed
markets. The following significant accounting policies, related to the Fund, are
in accordance with accounting policies generally accepted in the investment
company industry.

SECURITY VALUATIONS--Portfolio securities traded primarily on a principal
securities exchange are valued at the last reported sales price, or the mean of
the latest bid and asked prices where no last sales price is available.
Securities traded over-the-counter are valued at the mean of the latest bid and
asked prices or, in the case of certain foreign securities, at the last reported
sales price, depending on local convention or regulation. When valuations are
not readily available, securities are valued at fair value as determined in
accordance with procedures adopted by the Board of Directors.

Net realized foreign currency exchange gains or losses arise from sales of
portfolio securities, sales of foreign currencies, and the difference between
asset and liability amounts initially stated in foreign currencies and the U.S.
dollar value of the amounts actually received or paid. Net unrealized foreign
currency exchange gains or losses arise from changes in the value of portfolio
securities and other assets and liabilities resulting from changes in the
exchange rates.

Net realized and unrealized foreign currency exchange gains or losses
occurring during the holding period of portfolio securities are a component of
realized gain (loss) on foreign currency transactions and unrealized
appreciation (depreciation) on translation of assets and liabilities in foreign
currencies, respectively.

FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS--The Fund may enter into forward
foreign currency exchange contracts for the purpose of settling specific
purchases or sales of securities denominated in a foreign currency or to hedge
the Fund's exposure to foreign currency exchange rate fluctuations. When
required, the Fund will segregate assets in an amount sufficient to cover its
obligations under the hedge contracts. The net U.S. dollar value of foreign
currency underlying all contractual commitments held by the Fund and the
resulting unrealized appreciation or depreciation are determined daily using
prevailing exchange rates. Forward contracts involve elements of market risk in
excess of the amount reflected in the Statement of Assets and Liabilities. The
Fund bears the risk of an unfavorable change in the foreign currency exchange
rate underlying the forward contract. Additionally, losses may arise if the
counterparties do not perform under the contract terms.

REPURCHASE AGREEMENTS--The Fund may enter into repurchase agreements with
institutions that the Fund's investment manager, American Century Investment
Management, Inc. (ACIM), has determined are creditworthy pursuant to criteria
adopted by the Board of Directors. Each repurchase agreement is recorded at
cost. The Fund requires that the collateral, represented by securities, received
in a repurchase transaction be transferred to the custodian in a manner
sufficient to enable the Fund to obtain those securities in the event of a
default under the repurchase agreement. ACIM monitors, on a daily basis, the
value of the securities transferred to ensure the value, including accrued
interest, of the securities under each repurchase agreement is equal to or
greater than amounts owed to the Fund under each repurchase agreement.

DISTRIBUTIONS TO SHAREHOLDERS--Distributions to shareholders are recorded on
the ex-dividend date. Distributions from net investment income and net realized
gains are declared and paid annually. The character of distributions made during
the year from net investment income or net real-

ANNUAL REPORT NOTES TO FINANCIAL STATEMENTS 13

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 1997

ized gains may differ from their ultimate characterization for federal income
tax purposes. These differences are primarily due to differing treatments for
foreign currency transactions and wash sales and may result in reclassification
among certain capital accounts.

ADDITIONAL INFORMATION--Effective January 15, 1998, Funds Distributor, Inc.
(FDI) became the Corporation's distributor. Certain officers of FDI are also
officers of the Corporation.

- --------------------------------------------------------------------------------
2. TRANSACTIONS WITH RELATED PARTIES

- --------------------------------------------------------------------------------
3. INVESTMENT TRANSACTIONS

Purchases and sales of investment securities, excluding short-term
investments, totaled $364,701,781 and $285,403,341, respectively. On December
31, 1997, accumulated net unrealized appreciation was $20,953,224, based on the
aggregate cost of investments for federal income tax purposes of $192,246,349,
which consisted of unrealized appreciation of $25,257,762 and unrealized
depreciation of $4,304,538.

14 NOTES TO FINANCIAL STATEMENTS AMERICAN CENTURY INVESTMENTS

<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS

For a Share Outstanding Throughout the Years Ended December 31 (except as noted)

1997 1996 1995 1994(1)

PER-SHARE DATA

Net Asset Value,
<S> <C> <C> <C> <C>
Beginning of Period ................. $ 5.96 $ 5.33 $ 4.75 $ 5.00
------------- ------------- ------------ ----------
Income From Investment Operations

Net Investment Income (Loss) ...... (0.02) 0.02(2) 0.03(2) --

Net Realized and Unrealized Gain
(Loss) on Investment Transactions . 1.11 0.74 0.55 (0.25)
------------- ------------- ------------ ----------
Total From
Investment Operations ............. 1.09 0.76 0.58 (0.25)
------------- ------------- ------------ ----------
Distributions

From Net Investment Income ........ (0.06) (0.03) -- --

In Excess of Net
Investment Income ................. (0.01) (0.07) -- --

From Net Realized Gains
on Investment Transactions ........ (0.14) (0.03) -- --
------------- ------------- ------------ ----------
Total Distributions ............... (0.21) (0.13) -- --
------------- ------------- ------------ ----------
Net Asset Value, End of Period ...... $ 6.84 $ 5.96 $ 5.33 $ 4.75
============= ============= ============ ==========
Total Return(3) ................... 18.63% 14.41% 12.21% (5.00)%

RATIOS/SUPPLEMENTAL DATA

Ratio of Operating Expenses
to Average Net Assets ............... 1.50% 1.50% 1.50% 1.50%(4)

Ratio of Net Investment Income (Loss)
to Average Net Assets ............... (0.08)% 0.31% 0.70% (0.11)%(4)

Portfolio Turnover Rate ............. 173% 154% 214% 157%

Average Commission Paid per
Share of Equity Security Traded ..... $ 0.0076 $ 0.0225 $ 0.0020 --(5)

Net Assets, End
of Period (in thousands) ............ $ 216,523 $ 101,335 $ 51,609 $ 17,993

- ----------
(1) May 1, 1994 (inception) through December 31, 1994.

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

(3) Total return assumes reinvestment of dividends and capital gains
distributions, if any. Total returns for periods less than one year are not
annualized.

(4) Annualized.

(5) Disclosure of average commission paid per share of equity security traded
was not required prior to the year ended December 31, 1995.

See Notes to Financial Statements
</TABLE>

ANNUAL REPORT FINANCIAL HIGHLIGHTS 15

INDEPENDENT AUDITORS' REPORT

The Board of Directors and Shareholders,

American Century Variable Portfolios, Inc.:

We have audited the accompanying statement of assets and liabilities, including
the schedule of investments, of American Century VP International (formerly TCI
International) (the "Fund"), one of the funds comprising American Century
Variable Portfolios, Inc. (formerly TCI Portfolios, Inc.), as of December 31,
1997, and the related statements of operations and changes in net assets for the
year then ended, and the financial highlights for the year then ended. These
financial statements and the financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements and the financial highlights based on our audit. The
financial statements and the financial highlights of the Fund for each of the
periods in the three year period May 1, 1994 (inception) through December 31,
1996 were audited by other auditors whose report, dated January 21, 1997,
expressed an unqualified opinion on those statements and financial highlights.

In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of American Century VP
International as of December 31, 1997, the results of its operations, the
changes in its net assets, and the financial highlights for the year then ended
in conformity with generally accepted accounting principles.

Deloitte & Touche LLP
Kansas City, Missouri
January 30, 1998

16 INDEPENDENT AUDITORS' REPORT AMERICAN CENTURY INVESTMENTS

NOTES

ANNUAL REPORT NOTES 17

NOTES

18 NOTES AMERICAN CENTURY INVESTMENTS

NOTES

ANNUAL REPORT NOTES 19

BACKGROUND INFORMATION

INVESTMENT PHILOSOPHY AND POLICIES

The philosophy behind American Century's growth funds focuses on three
important principles. Chiefly, the funds seek to own successful companies, which
we define as those whose earnings and revenues are growing at accelerating
rates. In addition, we attempt to keep the funds fully invested, regardless of
short-term market activity. Experience has shown that market gains can occur in
unpredictable spurts and that missing even some of these opportunities may
significantly limit potential for gain. Finally, American Century funds are
managed by teams, rather than by one "star" manager. We believe this enables us
to make better, more consistent management decisions.

VP INTERNATIONAL'S investment objective is capital growth. The fund invests
primarily in the equity securities of foreign companies that exhibit
accelerating earnings growth. It favors companies based in developed markets. It
will typically have significant share price fluctuations.

International investing involves special risks including political
instability and economic risk.

HOW CURRENCY RETURNS AFFECT FUND PERFORMANCE

For U.S. investors, the total return from international stocks includes the
effects of currency fluctuations -- the movement of international currency
values in relation to the value of the U.S. dollar. Currency exchange rates come
into play when international stock income, gains and losses are converted into
U.S. dollars.

Changing currency values may have a significant impact on the total returns
of international stock funds. The value of the foreign investments held by
international stock funds may be reduced or increased by changes in currency
exchange rates. The U.S. dollar value of a foreign security generally decreases
when the value of the dollar rises against the foreign currency in which the
security is denominated. This tended to be the case in 1997, when the dollar
increased in value against most major foreign currencies. (The weakened foreign
currencies bought fewer dollars.) Conversely, the U.S. dollar value of a foreign
security tends to increase when the value of the dollar falls against the
foreign currency. (The stronger foreign currency buys more dollars.) In
addition, the value of fund assets may be affected by losses and other expenses
incurred in converting between U.S. dollars and various currencies in order to
purchase and sell foreign securities. Currency restrictions, exchange control
regulations, currency devaluations and political developments may also affect
net asset value.

COMPARATIVE INDICES

The index listed below is used in the report to serve as a comparison for
the performance of the fund. It is not an investment product available for
purchase.

The MORGAN STANLEY EUROPE, AUSTRALASIA, FAR EAST INDEX (EAFE(reg.tm)) is a
widely followed group of stocks from 20 different countries.

20 BACKGROUND INFORMATION AMERICAN CENTURY INVESTMENTS

GLOSSARY

RETURNS

TOTAL RETURN figures show the overall percentage change in the value of a
hypothetical investment in the fund and assume that all of the fund's
distributions are reinvested.

AVERAGE ANNUAL RETURNS illustrate the annually compounded returns that would
have produced the fund's cumulative total returns if the fund's performance had
been constant over the entire period. Average annual returns smooth out
variations in a fund's return; they are not the same as year-by-year results.
For year-by-year total returns, please refer to the "Financial Highlights" on
page 15.

PORTFOLIO STATISTICS

NUMBER OF COMPANIES -- the number of different companies held by a fund on a
given date.

PORTFOLIO TURNOVER -- the percentage of a fund's investment portfolio that is
replaced during a given time period, usually a year. Actively managed portfolios
tend to have higher turnover than passively managed portfolios such as index
funds.

ANNUAL REPORT GLOSSARY 21

[american century logo]
American
Century(reg.sm)

P.O. BOX 419385
KANSAS CITY, MISSOURI
64141-6385

INVESTOR SERVICES:
1-800-345-3533 OR 816-531-5575

AUTOMATED INFORMATION LINE:
1-800-345-8765

TELECOMMUNICATIONS DEVICE FOR THE DEAF:
1-800-345-1833 OR 816-444-3485

FAX: 816-340-4360

INTERNET: WWW.AMERICANCENTURY.COM

AMERICAN CENTURY VARIABLE PORTFOLIOS, INC.

INVESTMENT MANAGER

AMERICAN CENTURY INVESTMENT MANAGEMENT, INC.

KANSAS CITY, MISSOURI

FUNDS DISTRIBUTOR, INC.

9802 [recycled logo]
SH-BKT-11075 Recycled
<PAGE>
ANNUAL
REPORT

[american century logo]
American
Century(reg.sm)

DECEMBER 31, 1997
AMERICAN CENTURY

VARIABLE

PORTFOLIOS, INC.

VP Capital Appreciation

TABLE OF CONTENTS

Our Message to You ........................................................ 1
Performance & Portfolio Information ....................................... 2
Management Q & A .......................................................... 3
Schedule of Investments ................................................... 5
Statement of Assets and Liabilities ....................................... 7
Statement of Operations ................................................... 8
Statements of Changes in Net Assets ....................................... 9
Notes to Financial Statements ............................................. 10
Financial Highlights ...................................................... 13
Independent Auditors' Report .............................................. 14
Background Information
Investment Philosophy and Policies .................................. 16
Comparative Indices ................................................. 16
Glossary .................................................................. 17

WE WELCOME YOUR COMMENTS OR QUESTIONS ABOUT THIS REPORT.
SEE THE BACK COVER FOR WAYS TO CONTACT US BY MAIL, PHONE OR E-MAIL.

American Century and Benham Group are registered marks of American Century
Services Corporation.

AMERICAN CENTURY INVESTMENTS

OUR MESSAGE TO YOU

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

VP Capital Appreciation turned in disappointing results in 1997. Part of the
problem was the unusually strong crosscurrents in domestic markets, especially
in the mid- and small-cap sectors. These proved very difficult to navigate. But
part of the problem also lay with our stock selection. We were overweighted in
volatile sectors, such as technology, and were underrepresented in several
better-performing sectors, such as financials.

Frankly, we need to improve our equity results, and we have reconfigured the
portfolio team for VP Capital Appreciation in our ongoing effort to bring
results to the level investors have come to expect from American Century. We are
committed to providing investors with returns we can all be proud of, and we
intend to continue adding investment resources wherever they are needed. We
believe our efforts will be rewarded going forward.

That said, we should also point out that the market rally for much of the
year had a very narrow focus. At one point, the very largest companies, many of
which are household names, were outperforming smaller companies by the greatest
margin in fifty years. Smaller stocks bounced back sharply in the second and
much of the third quarter, until the turmoil in Southeast Asia pulled down
equity prices in general.

The economy remained strong in 1997, with low interest rates and benign
inflation, and this -- in addition to the continuing stream of assets flowing
into stocks -- helped explain the U.S. market's third year of exceptional
returns. In fact, 1995-1997 marked one of the best three-year performance
periods in the stock market's history. Although we believe a fourth year of
similar returns is unlikely, please keep in mind that the U.S. economy is very
healthy, and that should continue to benefit stocks.

This past year was very eventful for American Century. In July, J.P. Morgan
agreed to become a significant minority shareholder in American Century. J.P.
Morgan has been in business over 150 years, serving institutions, governments
and individuals with complex financial needs. Under the terms of the business
partnership, which was finalized January 15, 1998, American Century will
continue to operate as an independent company. Our corporate management team
will remain the same, and the Stowers family will retain voting control of
American Century.

Whatever your financial goals, we believe American Century has an
outstanding lineup of funds to help you reach them.

Sincerely,

/s/James E. Stowers, Jr. /signature/James E. Stowers III
James E. Stowers, Jr. James E. Stowers III
CHAIRMAN OF THE BOARD AND FOUNDER CHIEF EXECUTIVE OFFICER
AMERICAN CENTURY INVESTMENT MANAGEMENT, INC.

ANNUAL REPORT OUR MESSAGE TO YOU 1

<TABLE>
<CAPTION>
PERFORMANCE & PORTFOLIO INFORMATION

TOTAL RETURNS AS OF DECEMBER 31, 1997

AVERAGE ANNUAL RETURNS

6 MONTHS(1) 1 YEAR 3 YEARS 5 YEARS 10 YEARS LIFE OF FUND(2)
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
VP Capital Appreciation ...... 0.21% -3.26% 6.66% 5.76% 8.69% 9.34%
S&P MidCap 400 ...............17.00% 32.25% 27.33% 17.80% 19.47% 20.18%(3)
S&P MidCap 400/BARRA Growth ..13.34% 30.17% 25.19% 15.71% N/A(4) N/A(4)

(1) NOT ANNUALIZED.

(2) THE FUND'S INCEPTION DATE WAS 11/20/87.

(3) FOR THE PERIOD 11/30/87 (THE DATE NEAREST THE FUND'S INCEPTION FOR WHICH
DATA ARE AVAILABLE) TO 12/31/97.

(4) FIGURES ARE NOT AVAILABLE FOR THIS INDEX PRIOR TO 1991.
</TABLE>

See pages 16 and 17 for more information about comparative indices and returns.

[line graph - data below]

GROWTH OF $10,000 OVER 10 YEARS

VP CAP APP S & P 400
12/31/87 $10,000 $10,000
6/30/88 $10,076 $11,925
12/31/88 $9,773 $12,087
6/30/89 $11,261 $14,565
12/31/89 $12,580 $16,383
6/30/90 $13,854 $16,814
12/31/90 $12,422 $15,545
6/30/91 $14,238 $18,973
12/31/91 $17,624 $23,332
6/30/92 $15,725 $22,493
12/31/92 $17,388 $26,112
6/30/93 $18,230 $27,597
12/31/93 $19,181 $29,755
6/30/94 $17,825 $27,582
12/31/94 $18,957 $28,689
6/30/95 $22,647 $33,745
12/31/95 $24,852 $37,568
6/30/96 $25,195 $41,029
12/31/96 $23,778 $44,781
6/30/97 $22,956 $50,620
12/31/97 $23,003 $59,225

Past performance does not guarantee future results. Investment return and
principal value will fluctuate, and redemption value may be more or less than
original cost.

The line representing the fund's total return includes operating expenses (such
as transaction costs and management fees) that reduce returns, while the return
line of the index does not.

PORTFOLIO AT A GLANCE

12/31/97 12/31/96
- -------------------------------------------------------------------------------
Number of Companies 50 55
Price/Earnings Ratio (Median) 25.2 45.6
Portfolio Turnover 107% 182%

See Glossary on page 17 for investment terms.

2 PERFORMANCE & PORTFOLIO INFORMATION AMERICAN CENTURY INVESTMENTS

MANAGEMENT Q & A

An interview with Glenn Fogle, co-manager on the VP Capital Appreciation
investment team.

HOW DID VP CAPITAL APPRECIATION PERFORM FOR THE YEAR ENDED DECEMBER 31, 1997?

The fund had a poor year; its total return was -3.26%. The S&P MidCap 400
returned 32.25% while the S&P MidCap 400/BARRA Growth Index returned 30.17%. The
S&P MidCap 400 measures the performance of the 400 largest companies not
included in the S&P 500. The BARRA Growth index includes the portion of the S&P
400 with the highest price-to-book ratios.

We are disappointed with the fund's loss and have made several changes to
address performance and management weaknesses. Arnold Douville has joined us as
vice president and portfolio manager. Previously, Arnold was senior portfolio
manager for Munder Capital Management, where he spent the last eight years and
was responsible for the mid-cap growth effort. We have also streamlined our
teams so that Arnold and I will work exclusively on VP Capital Appreciation and
one other fund, while a separate team will focus on American Century's small
capitalization funds.

WHY DID THE FUND UNDERPERFORM THE MARKET BY SUCH A WIDE MARGIN?

One broad factor was a prevailing market environment that went against the
fund. Three other factors were specific to fund weightings.

In broad terms, the types of companies VP Capital Appreciation favors
struggled during much of the year. In the early part of 1997, investor sentiment
was solidly risk-averse and clearly favored larger companies that are perceived
to have stable earnings. As the economic outlook of investors brightened,
performance improved dramatically. From May 1 through September 30, the fund
returned 31.6%. But in October, as the extent of problems in Southeast Asian
economies became apparent, investors were no longer willing to buy rapidly
growing midsize stocks. They retreated to safer, larger names that VP Capital
Appreciation does not own because their growth rates are not accelerating. The
year ended as it began, with the portfolio performing poorly.

The fund also had a higher weighting than the S&P MidCap 400 in technology
stocks, which have been hit particularly hard by the turmoil in Southeast Asia.
Many communications and computer companies have a significant customer base in
the so-called tiger economies -- Asian countries that have experienced
exceptionally rapid growth. Investors bailed out of these stocks as the outlook
for Southeast Asia worsened. VP Capital Appreciation also has been reducing its
exposure to the technology sector. At the end of June, technology stocks made up
30% of the portfolio, down from 40% six months earlier. At year-end 1997,
technology holdings had dropped to 13% of assets.

VP Capital Appreciation has invested heavily in technology companies in the
past because they demonstrated the rapid earnings acceleration we favor.
However, during times of economic uncertainty, fast-growing stocks are the first
and fastest to fall. We have lightened our technology holdings to reduce the
damage these stocks cause when the market turns against them.

Another factor hurting performance was the fund's light weighting relative
to its benchmark in financial stocks. These stocks performed much better in 1997
than we expected and we missed much of this gain. We rectified this in the third
quarter by increasing our holdings in the financial sector, which continues to
perform well.

A final theme hurting performance was the position we built in energy
equipment and services stocks in the first half of the year. These stocks
tumbled in the fourth quarter as oil prices fell and investors worried that
drilling activity might decline. One measure of market sentiment was drill pipe
manufacturer EVI, Inc. We reported earlier that the stock climbed from $28 in
February, when we bought it, to $42 at June 30. EVI reached $71 in early
October, when the market began to turn on many

ANNUAL REPORT MANAGEMENT Q&A 3

MANAGEMENT Q & A

growth stocks, and ended the year at $51.75. We are holding on to many of the
fund's energy services stocks because producers must continue exploring for oil,
even as the price goes down, to ensure future supply. Oil companies' exploration
budgets are based on very conservative crude oil prices, so unless oil prices
collapse, we would continue to expect that companies supplying rigs and other
equipment to producers will meet their growth projections.

WHICH STOCKS PERFORMED WELL DURING THE YEAR?

Dell Computer Corp. and HBO & Co. led the list of top performers. Dell
benefited from strong underlying computer demand and market share gains. HBO
experienced increased demand for its software, which helps hospitals manage
back-office administrative functions, track clinical data and manage patient
information flow.

WHAT CHANGES DID YOU MAKE TO THE PORTFOLIO IN THE FINAL SIX MONTHS OF THE YEAR?

The biggest change was the addition of a large retail weighting. In the
early 1990s, the proliferation of shopping malls led to excess retail capacity.
In the mid-1990s, there was a winnowing out of the weaker players. The remaining
companies are benefiting from better cost control and less competition.

We are finding the strongest earnings growth among discount and off-price
retailers. At year end, two of the fund's largest holdings were Consolidated
Stores Corp. and Dayton Hudson Corp. Dayton owns Target, which is a very
successful discount chain, while Consolidated owns KayBee Toys and a chain that
goes by the name Big Lots in some states and Odd Lots in others. All three
chains deal in overstocked merchandise that they buy from other retailers.
KayBee is the fourth largest toy seller in the U.S. behind Toys 'R' Us, Wal-Mart
and Target.

We also like this industry because it doesn't have exposure to the economies
of Southeast Asia.

DO YOU BELIEVE SMALL- AND MID-CAP STOCKS WILL RETURN TO FAVOR ANY TIME SOON?

Absolutely. We view 1997 as an anomaly. Investors who took the least risk
earned the greatest reward whereas the risk takers were punished. Just when the
fastest-growing stocks in the market were being recognized with rising prices,
the events in Southeast Asia derailed the recovery. Small- and mid-cap stocks
suffered as investor psychology turned fearful again. We believe small- and
mid-cap growth stocks will eventually become attractive again and the market
should reward our aggressive discipline. Unfortunately, there is no telling
precisely when this might happen or to what degree. We avoid trying to time the
market (and we discourage fund investors from doing so) because market trends
can reverse abruptly and without warning, as we have seen this year.

TOP TEN HOLDINGS % of fund investments

As of As of
12/31/97 6/30/97

EVI, Inc. 3.2% 2.5%
Petroleum Geo-Services A/S ADR 3.0% 2.4%
Consolidated Stores Corp 3.0% 1.7%
Dayton Hudson Corp. 3.0% --
Quorum Health Group, Inc. 2.6% 2.2%
Guidant Corp. 2.6% --
Jacor Communications, Inc. 2.5% 1.6%
USA Waste Services, Inc. 2.5% 0.8%
McKesson Corp 2.4% --
Ross Stores, Inc. 2.3% 1.5%

TOP FIVE INDUSTRIES % of fund investments

As of As of
12/31/97 6/30/97

Energy (Services) 11.9% 13.2%
Retail (General Merchandise) 11.5% 1.7%
Business Services & Supplies 7.2% 6.4%
Electrical & Electronic Components 6.3% 7.5%
Environmental Services 4.6% 3.6%

4 MANAGEMENT Q & A AMERICAN CENTURY INVESTMENTS

<TABLE>
<CAPTION>
SCHEDULE OF INVESTMENTS

DECEMBER 31, 1997

Shares Value
- --------------------------------------------------------------------------------

COMMON STOCKS

AUTOMOBILES & AUTO PARTS--2.0%

<S> <C> <C> <C>
276,800 Tower Automotive, Inc.(1) $11,642,900
------------

BANKING--4.3%

281,100 Bay View Capital Corp. 10,242,581

30,000 Charter One Financial, Inc. 1,888,125

139,000 Community First Bankshares, Inc. 7,453,875

75,000 Golden State Bancorp Inc.(1) 2,803,125

29,000 Golden West Financial Corp. (Del.) 2,836,563
------------

25,224,269
------------

BIOTECHNOLOGY--3.8%

265,000 BioChem Pharma Inc.(1) 5,531,875

356,000 Centocor, Inc.(1) 11,881,500

128,900 Protein Design Labs, Inc.(1) 5,131,831
------------

22,545,206
------------

BROADCASTING & MEDIA--2.5%

283,000 Jacor Communications, Inc.(1) 15,052,062
------------

BUSINESS SERVICES & SUPPLIES--7.2%

310,300 Corrections Corp. of America(1) 11,500,494

273,200 Quintiles Transnational Corp.(1) 10,484,050

210,000 Robert Half International Inc.(1) 8,400,000

418,900 U.S. Filter Corp.(1) 12,540,819
------------

42,925,363
------------

COMMUNICATIONS EQUIPMENT--0.9%

167,600 Davox Corp.(1) 5,436,525
------------

COMPUTER PERIPHERALS--1.0%

140,300 SCI Systems, Inc.(1) 6,111,819
------------

COMPUTER SOFTWARE & SERVICES--3.4%

184,800 HBO & Co. 8,864,625

220,300 Veritas Software Corp.(1) 11,207,762
------------

20,072,387
------------

COMPUTER SYSTEMS--1.1%

310,300 Sequent Computer Systems, Inc.(1) 6,225,394
------------

CONTROL & MEASUREMENT--0.9%

170,000 Orbotech Ltd.(1) 5,408,125
------------

Shares Value
- -----------------------------------------------------------------------------------

ELECTRICAL & ELECTRONIC COMPONENTS--6.3%

400,300 Analog Devices, Inc.(1) $11,083,306

141,363 Computer Products, Inc.(1) 3,211,591

248,300 DII Group, Inc.(1) 6,719,619

319,600 Flextronics International Ltd.(1) 10,946,300

150,000 Vitesse Semiconductor Corp.(1)(2) 5,709,375
------------

37,670,191
------------

ENERGY (SERVICES)--11.9%

192,400 Diamond Offshore Drilling, Inc. 9,259,250

372,400 EVI, Inc.(1) 19,271,700

409,000 Marine Drilling Companies, Inc.(1) 8,512,312

279,300 Petroleum Geo-Services A/S ADR(1) 18,084,675

263,800 Sante Fe International 10,733,363

85,000 Tidewater Inc. 4,685,625
------------

70,546,925
------------

ENVIRONMENTAL SERVICES--4.6%

340,000 Browning-Ferris Industries, Inc. 12,580,000

372,705 USA Waste Services, Inc.(1) 14,628,671
------------

27,208,671
------------

FINANCIAL SERVICES--1.3%

300,000 Green Tree Financial Corp. 7,856,250
------------

FURNITURE & FURNISHINGS--1.6%

251,700 Ethan Allen Interiors Inc. 9,706,181
------------

HEALTHCARE--4.1%

595,800 Quorum Health Group, Inc.(1) 15,639,750

270,000 Tenet Healthcare Corp.(1) 8,943,750
------------

24,583,500
------------

INSURANCE--0.5%

45,000 MGIC Investment Corp. 2,992,500
------------

MEDICAL EQUIPMENT & SUPPLIES--3.8%

117,900 AmeriSource Health Corp.(1) 6,926,625

250,000 Guidant Corp. 15,562,500
------------

22,489,125
------------

PHARMACEUTICALS--4.6%

341,300 Jones Medical Industries, Inc. 13,097,388

130,400 McKesson Corp. 14,107,650
------------

27,205,038
------------

SEE NOTES TO FINANCIAL STATEMENTS

ANNUAL REPORT SCHEDULE OF INVESTMENTS 5

SCHEDULE OF INVESTMENTS

DECEMBER 31, 1997

Shares/Principal Amount Value
- -------------------------------------------------------------------------------------

RETAIL (APPAREL)--2.3%

371,700 Ross Stores, Inc. $ 13,543,819
--------------

RETAIL (GENERAL MERCHANDISE)--11.5%

410,300 Consolidated Stores Corp.(1) 18,027,556

260,700 Dayton Hudson Corp. 17,597,250

325,000 Dillard's Inc. Cl A 11,456,250

278,000 Federated Department Stores, Inc.(1) 11,971,375

250,000 Meyer (Fred), Inc.(1) 9,093,750
--------------

68,146,181
--------------

TEXTILES & APPAREL--0.8%

200,000 Polo Ralph Lauren Corp.(1) 4,862,500
--------------

TRANSPORTATION--1.9%

372,400 Air Express International Corp. 11,288,375
--------------

TOTAL COMMON STOCKS--82.3% 488,743,306
--------------

(Cost $426,504,153)

SHORT-TERM CASH INVESTMENTS(3)

$25,000,000 par value FHLB Discount
Note, 5.75%, 1/21/98 24,925,000

$25,000,000 par value FNMA Discount
Note, 5.75%, 1/26/98 24,904,750

Repurchase Agreement, BA Security
Services, Inc., (U.S. Treasury obligations),
in a joint trading account at 6.50%,
dated 12/31/97, due 1/2/98
(Delivery value $29,110,508) 29,100,000

Repurchase Agreement, Goldman
Sachs & Co., Inc., (U.S. Treasury obligations),
in a joint trading account at 6.35%,
dated 12/31/97, due 1/2/98
(Delivery value $26,209,243) 26,200,000
--------------

TOTAL SHORT-TERM CASH
INVESTMENTS--17.7% 105,129,750
--------------

(Cost $105,120,312)

TOTAL INVESTMENT SECURITIES--100.0% $593,873,056
==============

(Cost $531,624,465)

NOTES TO SCHEDULE OF INVESTMENTS

ADR = AMERICAN DEPOSITARY RECEIPT

FHLB = FEDERAL HOME LOAN BANK

FNMA = FEDERAL NATIONAL MORTGAGE ASSOCIATION

(1) NON-INCOME PRODUCING.

(2) AFFILIATED COMPANY: REPRESENTS OWNERSHIP OF AT LEAST 5% OF THE VOTING
SECURITIES OF THE ISSUER AND IS, THEREFORE, AN AFFILIATE AS DEFINED IN THE
INVESTMENT COMPANY ACT OF 1940. (SEE NOTE 5 IN NOTES TO FINANCIAL STATEMENTS
FOR A SUMMARY OF TRANSACTIONS FOR EACH ISSUER WHICH IS OR WAS AN AFFILIATE
AT OR DURING THE YEAR ENDED DECEMBER 31, 1997.)

(3) THE RATES FOR U.S. GOVERNMENT AGENCY DISCOUNT NOTES ARE THE YIELD TO
MATURITY AT PURCHASE.
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS

6 SCHEDULE OF INVESTMENTS AMERICAN CENTURY INVESTMENTS

STATEMENT OF ASSETS AND LIABILITIES

DECEMBER 31, 1997

ASSETS

Investment securities, at value
(identified cost of $531,624,465)
(Note 3 and Note 5) ......................................... $593,873,056

Cash ......................................................... 102,164

Receivable for investments sold .............................. 1,699,509

Receivable for capital shares sold ........................... 1,982,543

Dividends and interest receivable ............................ 258,488
------------

597,915,760
------------

LIABILITIES

Payable for investments purchased ............................ 3,433,048

Payable for capital shares redeemed .......................... 290,246

Accrued management fees (Note 2) ............................. 493,461

Payable for directors' fees and expenses ..................... 949
------------

4,217,704
------------

Net Assets ................................................... $593,698,056
============

CAPITAL SHARES, $0.01 PAR VALUE

Authorized ................................................... 200,000,000
============

Outstanding .................................................. 61,351,783
============

Net Asset Value Per Share .................................... $ 9.68
============

NET ASSETS CONSIST OF:

Capital (par value and paid-in surplus) ...................... $504,082,358

Accumulated net realized gain from investments ............... 27,367,107

Net unrealized appreciation on investments (Note 3) .......... 62,248,591
------------

$593,698,056
============

SEE NOTES TO FINANCIAL STATEMENTS

ANNUAL REPORT STATEMENT OF ASSETS AND LIABILITIES 7

STATEMENT OF OPERATIONS

YEAR ENDED DECEMBER 31, 1997

INVESTMENT LOSS

Income:

Interest ...................................................... $ 2,991,305

Dividends ..................................................... 1,892,729
------------

4,884,034
------------

Expenses (Note 2):

Management fees ............................................... 10,378,643

Directors' fees and expenses .................................. 9,764
------------

10,388,407
------------

Net investment loss ........................................... (5,504,373)
------------

REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 3)

Net realized gain on investments .............................. 70,911,491

Change in net unrealized appreciation on investments .......... (93,752,280
------------

Net realized and unrealized loss on investments ............... (22,840,789
------------

Net Decrease in Net Assets
Resulting from Operations
$(28,345,162)
============

SEE NOTES TO FINANCIAL STATEMENTS

8 STATEMENT OF OPERATIONS AMERICAN CENTURY INVESTMENTS

<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS

YEARS ENDED DECEMBER 31, 1997
AND DECEMBER 31, 1996

Decrease in Net Assets 1997 1996

OPERATIONS

<S> <C> <C>
Net investment loss ................................. $ (5,504,373) $ (8,513,694)

Net realized gain on investments and foreign
currency transactions ............................... 70,911,491 32,772,249

Change in net unrealized appreciation on
investments and translation of assets and liabilities
in foreign currencies ............................... (93,752,280) (86,371,388)
--------------- ---------------

Net decrease in net assets resulting from operations (28,345,162) (62,112,833)
--------------- ---------------

DISTRIBUTIONS TO SHAREHOLDERS

From net realized gains on investment transactions .. (23,310,498) (165,281,584)
--------------- ---------------

CAPITAL SHARE TRANSACTIONS

Proceeds from shares sold ........................... 256,265,618 364,518,011

Proceeds from reinvestment of distributions ......... 23,310,498 165,281,584

Payments for shares redeemed ........................ (948,087,451) (449,663,781)
--------------- ---------------

Net increase (decrease) in net assets
from capital share transactions ..................... (668,511,335) 80,135,814
--------------- ---------------

Net decrease in net assets .......................... (720,166,995) (147,258,603)

NET ASSETS

Beginning of year ................................... 1,313,865,051 1,461,123,654
--------------- ---------------

End of year ......................................... $ 593,698,056 $ 1,313,865,051
=============== ===============

TRANSACTIONS IN SHARES OF THE FUND

Sold ................................................ 25,776,090 31,440,930

Issued in reinvestment of distributions ............. 2,633,955 16,949,976

Redeemed ............................................ (95,401,790) (41,183,203)
--------------- ---------------

Net increase (decrease) ............................. (66,991,745) 7,207,703
=============== ===============
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS

ANNUAL REPORT STATEMENTS OF CHANGES IN NET ASSETS 9

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 1997

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION - American Century Variable Portfolios, Inc., formerly TCI
Portfolios, Inc., (the Corporation) is registered under the Investment Company
Act of 1940 as an open-end diversified management investment company. American
Century VP Capital Appreciation, formerly TCI Growth, (the Fund) is one of the
six series of funds issued by the Corporation. The Fund's investment objective
is capital growth. The Fund seeks to achieve its investment objective by
investing primarily in common stocks that are considered by management to have
better-than-average prospects for appreciation. The following significant
accounting policies, related to the Fund, are in accordance with accounting
policies generally accepted in the investment company industry.

SECURITY VALUATIONS - Portfolio securities traded primarily on a principal
securities exchange are valued at the last reported sales price, or the mean of
the latest bid and asked prices where no last sales price is available.
Securities traded over-the-counter are valued at the mean of the latest bid and
asked prices or, in the case of certain foreign securities, at the last reported
sales price, depending on local convention or regulation. When valuations are
not readily available, securities are valued at fair value as determined in
accordance with procedures adopted by the Board of Directors.

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

INVESTMENT INCOME - Dividend income less foreign taxes withheld (if any) is
recorded as of the ex-dividend date. Interest income is recorded on the accrual
basis and includes accretion of discounts and amortization of premiums.

FOREIGN CURRENCY TRANSACTIONS - The accounting records of the Fund are
maintained in U.S. dollars. All assets and liabilities initially expressed in
foreign currencies are converted into U.S. dollars at prevailing exchange rates.
Purchases and sales of investment securities, dividend and interest income, and
certain expenses are translated at the rates of exchange prevailing on the
respective dates of such transactions.

Net realized and unrealized foreign currency exchange gains or losses
occurring during the holding period of investments are a component of realized
gain (loss) on investments and unrealized appreciation (depreciation) on
investments, respectively. During the year ended December 31, 1997, the Fund did
not hold any securities denominated in foreign currencies. Therefore, there were
no realized or unrealized foreign currency exchange gains or losses for the
year.

FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS - The Fund may enter into
forward foreign currency exchange contracts for the purpose of settling specific
purchases or sales of securities denominated in a foreign currency or to hedge
the Fund's exposure to foreign currency exchange rate fluctuations. When
required, the Fund will segregate assets in an amount sufficient to cover its
obligations under the hedge contracts. The net U.S. dollar value of foreign
currency underlying all contractual commitments held by the Fund and the
resulting unrealized appreciation or depreciation are determined daily using
prevailing exchange rates. Forward contracts involve elements of risk in excess
of the amount reflected in the Statement of Assets and Liabilities. The Fund
bears the risk of an unfavorable change in the foreign currency exchange rate
underlying the forward contract. Additionally, losses may arise if the
counterparties do not perform under the contract terms. There were no open
forward foreign currency exchange contracts at December 31, 1997.

REPURCHASE AGREEMENTS - The Fund may enter into repurchase agreements with
institutions that the Fund's investment manager, American Century Investment
Management, Inc. (ACIM), has determined are creditworthy pursuant to criteria
adopted by the Board of Directors. Each repurchase agreement is recorded at
cost. The Fund requires that the collateral, represented by securities, received
in a repurchase transaction be transferred to the custodian in a manner
sufficient to enable the Fund to obtain those securities in the event of a
default under the repurchase agreement. ACIM monitors, on a daily basis, the
value of the securities transferred to ensure the value, including accrued
interest, of the securities under each repurchase agreement is equal to or
greater than amounts owed to the Fund under each repurchase agreement.

JOINT TRADING ACCOUNT - Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, the Fund, along with other registered
investment companies having management agreements with ACIM, may transfer
uninvested cash balances into a joint trading account. These balances are
invested in one or more repurchase agreements that are collateralized by U.S.
Treasury or Agency obligations.

INCOME TAX STATUS - It is the policy of the Fund to distribute all taxable
income and capital gains to shareholders and to otherwise qualify as a regulated
investment company

10 NOTES TO FINANCIAL STATEMENTS AMERICAN CENTURY INVESTMENT

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 1997

under provisions of the Internal Revenue Code. Accordingly, no provision has
been made for federal income taxes.

DISTRIBUTIONS TO SHAREHOLDERS - Distributions to shareholders are recorded
on the ex-dividend date. Distributions from net investment income and net
realized gains are declared and paid annually.

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

USE OF ESTIMATES - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements, and the reported amounts of increases and decreases in
net assets from operations during the reporting period. Actual results could
differ from those estimates.

ADDITIONAL INFORMATION - Effective January 15, 1998, Funds Distributor, Inc.
(FDI) became the Corporation's distributor. Certain officers of FDI are also
officers of the Corporation.

- --------------------------------------------------------------------------------
2. TRANSACTIONS WITH RELATED PARTIES

- --------------------------------------------------------------------------------
3. INVESTMENT TRANSACTIONS

Purchases and sales of investment securities, excluding short-term
investments, totaled $1,020,218,508 and $1,772,271,847, respectively.

As of December 31, 1997, accumulated net unrealized appreciation was
$62,073,052, based on the aggregate cost of investments for federal income tax
purposes of $531,800,004, which consisted of unrealized appreciation of
$86,058,661 and unrealized depreciation of $23,985,609.

- --------------------------------------------------------------------------------
4. REDEMPTION IN KIND

During the year ended December 31, 1997, the Fund incurred a redemption in
kind, resulting in net realized gains of $42,886,896. A redemption in kind
occurs when a Fund pays a shareholder with portfolio securities in lieu of cash
in accordance with the prospectus.

ANNUAL REPORT NOTES TO FINANCIAL STATEMENTS 11

<TABLE>
<CAPTION>
NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 1997

5. AFFILIATED COMPANY TRANSACTIONS

A summary of transactions for each issuer which is or was an affiliate at or
during the year ended December 31, 1997, follows:

Share December 31, 1997
Balance Purchase Sales Realized Share Market
12/31/96 Cost Cost Gain (Loss) Balance Value

$ IN THOUSANDS $ IN THOUSANDS
ISSUER(1)
<S> <C> <C> <C> <C> <C> <C>
ClinTrials Inc. 1,050,000 - $27,230,464 $(13,278,989) - -
Curative Health Services, Inc.(2) 750,000 - 15,857,839 6,548,831 - -
Encad, Inc. 700,000 - 28,977,164 (3,739,163) - -
FPA Medical Management, Inc. 1,150,000 - 23,327,800 (36,333) - -
Leasing Solutions, Inc. 700,000 - 20,239,641 (11,125,358) - -
National TechTeam, Inc. 880,000 - 22,790,557 (6,649,379) - -
Seacor Smit Inc.(3) 480,000 - 22,112,857 4,430,797 - -
Vitesse Semiconductor Corp. 1,100,000 - 22,137,176 31,393,060 150,000(4) $5,709,375
------- ------------- ------------- ----------
- $182,673,498 $ 7,543,466 $5,709,375
======= ============= ============= ==========

(1) NONE OF THE SECURITIES PRODUCED INCOME DURING PERIOD HELD.

(2) FORMERLY KNOWN AS CURATIVE TECHNOLOGIES, INC.

(3) FORMERLY KNOWN AS SEACOR HOLDINGS, INC.

(4) INCLUDES ADJUSTMENTS FOR SHARES RECEIVED FROM STOCK SPLIT AND/OR STOCK
SPINOFF DURING THE YEAR.
</TABLE>

12 NOTES TO FINANCIAL STATEMENTS AMERICAN CENTURY INVESTMENTS

<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS

FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED DECEMBER 31

1997 1996 1995 1994 1993

PER-SHARE DATA

Net Asset Value,
<S> <C> <C> <C> <C> <C>
Beginning of Year ............ $ 10.24 $ 12.06 $ 9.21 $ 9.32 $ 8.47
------------- --------------- --------------- ------------- -----------
Income From
Investment Operations

Net Investment Income (Loss) . (0.05)(1) (0.06)(1) (0.02) 0.01 0.03

Net Realized and
Unrealized Gain (Loss)
on Investment Transactions . (0.30) (0.40) 2.88 (0.12) 0.84
------------- --------------- --------------- ------------- -----------
Total From
Investment Operations ........ (0.35) (0.46) 2.86 (0.11) 0.87
------------- --------------- --------------- ------------- -----------
Distributions
From Net
Investment Income .......... -- -- (0.01) -- (0.02)

From Net Realized Gains
on Investment Transactions . (0.21) (1.36) -- -- --
------------- --------------- --------------- ------------- -----------
Total Distributions ........ (0.21) (1.36) (0.01) -- (0.02)
------------- --------------- --------------- ------------- -----------

Net Asset Value,
End of Year .................. $ 9.68 $ 10.24 $ 12.06 $ 9.21 $ 9.32
============= =============== =============== ============= ===========
Total Return(2) ............ (3.26)% (4.32)% 31.10% (1.17)% 10.30%

RATIOS/SUPPLEMENTAL DATA

Ratio of Operating Expenses
to Average Net Assets ........ 1.00% 1.00% 0.99% 1.00% 1.00%

Ratio of Net Investment Income
(Loss) to Average Net Assets . (0.53)% (0.59)% (0.23)% 0.11% 0.35%

Portfolio Turnover Rate ...... 107% 182% 147% 115% 87%

Average Commission
Paid per Share
of Equity Security Traded .... $ 0.0316 $ 0.0326 $ 0.0370 -(3) -(3)

Net Assets, End
of Year (in thousands) ....... $ 593,698 $ 1,313,865 $ 1,461,124 $ 1,002,577 $ 755,689
</TABLE>

(1) COMPUTED USING AVERAGE SHARES OUTSTANDING THROUGHOUT THE PERIOD.

(2) TOTAL RETURN ASSUMES REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS
DISTRIBUTIONS, IF ANY.

(3) DISCLOSURE OF AVERAGE COMMISSION PAID PER SHARE OF EQUITY SECURITY TRADED
WAS NOT REQUIRED PRIOR TO THE YEAR ENDED DECEMBER 31, 1995.

SEE NOTES TO FINANCIAL STATEMENTS

ANNUAL REPORT FINANCIAL HIGHLIGHTS 13

INDEPENDENT AUDITORS' REPORT

The Board of Directors and Shareholders,

American Century Variable Portfolios, Inc.:

We have audited the accompanying statement of assets and liabilities, including
the schedule of investments, of American Century VP Capital Appreciation
(formerly TCI Growth) (the "Fund"), one of the funds comprising American Century
Variable Portfolios, Inc. (formerly TCI Portfolios, Inc.), as of December 31,
1997, and the related statements of operations and changes in net assets for the
year then ended, and the financial highlights for the year then ended. These
financial statements and the financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements and the financial highlights based on our audit. The
financial statements and the financial highlights of the Fund for each of the
years in the four-year period ended December 31, 1996 were audited by other
auditors whose report, dated January 21, 1997, expressed an unqualified opinion
on those statements and financial highlights.

In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of American Century VP
Capital Appreciation as of December 31, 1997, the results of its operations, the
changes in its net assets, and the financial highlights for the year then ended
in conformity with generally accepted accounting principles.

Deloitte & Touche LLP
Kansas City, Missouri
January 30, 1998

14 INDEPENDENT AUDITORS' REPORT AMERICAN CENTURY INVESTMENTS

NOTES

ANNUAL REPORT NOTES 15

BACKGROUND INFORMATION

INVESTMENT PHILOSOPHY AND POLICIES

The philosophy behind American Century's growth funds focuses on three
important principles. Chiefly, the funds seek to own successful companies, which
we define as those whose earnings and revenues are growing at accelerating
rates. In addition, we attempt to keep the funds fully invested, regardless of
short-term market activity. Experience has shown that market gains can occur in
unpredictable spurts and that missing even some of those opportunities may
significantly limit potential for gain. Finally, American Century funds are
managed by teams, rather than by one "star" manager. We believe this enables us
to make better, more consistent management decisions.

VP CAPITAL APPRECIATION seeks capital growth over time by investing in
growth companies across all capitalization ranges. Since mid-1996, VP Capital
Appreciation has invested mainly in the securities of medium-sized firms with
accelerating growth. Such a strategy results in volatility over the short term
and offers the potential for long-term growth.

COMPARATIVE INDICES

The indices listed below are used in the report to serve as a comparison for
the performance of the fund. They are not investment products available for
purchase.

The S&P 500 is a capitalization-weighted index of the stocks of 500
publicly-traded U.S. companies that are considered leading firms in leading
industries. Created by Standard & Poor's Corporation, the index is viewed as a
broad measure of U.S. stock performance.

The S&P MIDCAP 400 is an index created by Standard & Poor's Corporation of
the 400 leading companies not included in the S&P 500. It is considered to
represent the performance of mid-capitalization stocks generally. The index was
created in March 1994. Data presented for prior periods have been provided by
S&P.

The S&P MIDCAP 400/BARRA GROWTH is an index created by Standard & Poor's
Corporation and BARRA. The index divides the S&P 400 into two mutually exclusive
groups based on price/book ratios. The half of the S&P 400 with higher ratios
falls into the Growth index, while a value index tracks the performance of the
other half. Similar growth and value indices are available for the S&P 500.

16 BACKGROUND INFORMATION AMERICAN CENTURY INVESTMENTS

GLOSSARY

RETURNS

TOTAL RETURN figures show the overall percentage change in the value of a
hypothetical investment in the fund and assume that all of the fund's
distributions are reinvested.

PORTFOLIO STATISTICS

NUMBER OF COMPANIES-- the number of different companies held by a fund on a
given date.

PRICE/EARNINGS (P/E) RATIO-- a stock value measurement calculated by dividing a
company's stock price by its earnings per share, with the result expressed as a
multiple instead of as a percentage. (Earnings per share is calculated by
dividing the after-tax earnings of a corporation by its outstanding shares.)

PORTFOLIO TURNOVER-- the percentage of a fund's investment portfolio that is
replaced during a given time period, usually a year. Actively managed portfolios
tend to have higher turnover than passively managed portfolios such as index
funds.

TYPES OF STOCKS

BLUE-CHIP STOCKS-- stocks of the most established companies in American
industry. They are generally large, fairly stable companies that have
demonstrated consistent earnings and usually have long-term growth potential.
Examples include General Electric and Coca-Cola.

CYCLICAL STOCKS-- generally considered to be stocks whose price and earnings
fluctuations tend to follow the ups and downs of the business cycle. Examples
include the stocks of automobile manufacturers, steel producers and textile
operators.

GROWTH STOCKS-- stocks of companies that have experienced above-average earnings
growth and appear likely to continue such growth. These stocks often sell at
high P/E ratios. Examples can include the stocks of high-tech, healthcare and
consumer staple companies.

LARGE-CAPITALIZATION ("LARGE-CAP") STOCKS-- generally considered to be stocks of
companies with a market capitalization (the total value of a company's
outstanding stock) of more than $5 billion. These tend to be the stocks that
make up the Dow Jones Industrial Average and the S&P 500.

MEDIUM-CAPITALIZATION ("MID-CAP") STOCKS-- generally considered to be stocks of
companies with a market capitalization (the total value of a company's
outstanding stock) of between $1 billion and $5 billion. These tend to be the
stocks that make up the S&P MidCap 400.

SMALL-CAPITALIZATION ("SMALL-CAP") STOCKS-- generally considered to be stocks of
companies with a market capitalization (the total value of a company's
outstanding stock) of less than $1 billion. These tend to be the stocks that
make up the Russell 2000 Index.

VALUE STOCKS-- generally considered to be stocks that are purchased because they
are relatively inexpensive. These stocks are typically characterized by low P/E
ratios.

STATISTICAL TERMINOLOGY

PRICE/BOOK RATIO-- a stock value measurement calculated by dividing a company's
stock price by its book value per share, with the result expressed as a multiple
instead of as a percentage. (Book value per share is calculated by subtracting a
company's liabilities from its assets, then dividing that value by the number of
outstanding shares.)

ANNUAL REPORT GLOSSARY 17

[american century logo]
American
Century(reg.sm)

P.O. BOX 419385
KANSAS CITY, MISSOURI
64141-6385

INVESTOR SERVICES:
1-800-345-3533 OR 816-531-5575

AUTOMATED INFORMATION LINE:
1-800-345-8765

TELECOMMUNICATIONS DEVICE FOR THE DEAF:
1-800-345-1833 OR 816-444-3485

FAX: 816-340-4360

INTERNET: WWW.AMERICANCENTURY.COM

AMERICAN CENTURY VARIABLE PORTFOLIOS, INC.

INVESTMENT MANAGER
AMERICAN CENTURY INVESTMENT MANAGEMENT, INC.
KANSAS CITY, MISSOURI

FUNDS DISTRIBUTOR, INC.

9802 [recycled logo]
SH-BKT-11074 Recycled
<PAGE>
ANNUAL
REPORT

[american century logo]
American
Century(reg.sm)

DECEMBER 31, 1997

AMERICAN CENTURY
VARIABLE
PORTFOLIOS, INC.

VP Balanced

TABLE OF CONTENTS

Our Message to You ........................................................ 1
Performance & Portfolio Information ....................................... 2
Management Q & A .......................................................... 3
Schedule of Investments ................................................... 5
Statement of Assets and Liabilities ....................................... 9
Statement of Operations ................................................... 10
Statements of Changes in Net Assets ....................................... 11
Notes to Financial Statements ............................................. 12
Financial Highlights ...................................................... 14
Independent Auditors' Report .............................................. 15
Background Information
Investment Philosophy and Policies ............................. 16
Comparative Indices ............................................ 16
Glossary .................................................................. 17

We welcome your comments or questions about this report.

See the back cover for ways to contact us by mail, phone or e-mail.

American Century and Benham Group are registered marks of American Century
Services Corporation.

AMERICAN CENTURY INVESTMENTS

OUR MESSAGE TO YOU

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

VP Balanced turned in mixed results in 1997. Its bond holdings performed
very competitively, but the equity portion of the portfolio did not fare as
well. Unusually strong crosscurrents in domestic markets--especially in the mid-
and small-cap sectors--often proved difficult to navigate. But our stock
selection was also less effective than we would have liked.

We are making substantial efforts to improve our equity results in order to
bring them to the level investors have come to expect from American Century. We
have added investment resources where they were needed, and remain confident
that VP Balanced's blend of bonds, traditional blue-chip stocks, and smaller,
faster-growing companies can provide solid, more consistent risk-adjusted
returns than aggressive portfolios.

Returning to the broad market, 1997 was a difficult year to select stocks.
The market rally had a very narrow focus for much of the year. At one point, the
very largest companies, many of which are household names, were outperforming
smaller ones by the greatest margin in fifty years. It was hard to perform well
unless you owned a relatively few, high-profile companies. Smaller stocks
bounced back sharply in the second and much of the third quarter, until the
turmoil in Southeast Asia pulled down equity prices in general.

The economy remained strong in 1997, with low interest rates and benign
inflation, and this--in addition to the continuing stream of assets flowing into
stocks--helped explain the U.S. market's third year of exceptional returns. In
fact, 1995-1997 marked one of the best three-year performance periods in the
history of the Standard & Poor's 500 Index. Although we believe a fourth year of
similar returns is unlikely, please keep in mind that the U.S. economy is very
healthy, and that should continue to benefit stocks.

Whatever your financial goals, we believe American Century has an
outstanding lineup of funds to help you reach them.

Sincerely,

/s/James E. Stowers, Jr. /s/James E. Stowers III
James E. Stowers, Jr. James E. Stowers III
Chairman of the Board and Founder Chief Executive Officer
American Century Investment
Management, Inc.

ANNUAL REPORT OUR MESSAGE TO YOU 1

<TABLE>
<CAPTION>
PERFORMANCE & PORTFOLIO INFORMATION

AVERAGE ANNUAL RETURNS

6 MONTHS(1) 1 YEAR 3 YEARS 5 YEARS LIFE OF FUND(2)
- ----------------------------------------------------------------------------------------
TOTAL RETURNS AS OF DECEMBER 31, 1997

<S> <C> <C> <C> <C> <C>
VP Balanced ......... 6.32% 15.81% 16.31% 11.27% 11.05%

Blended index ....... 8.31% 23.16% 22.27% 14.82% 14.08%

(1) Not annualized.

(2) The fund's inception date was 5/1/91.
</TABLE>

See pages 16 and 17 for more information about comparative indices and returns.

[line graph - data below]

Growth of $10,000 Over Life of Fund
$10,000 investment made 5/1/91 Value on 12/31/97

DATE VP BALANCED BLENDED INDEX

5/1/91 $10,000 $10,000
12/31/91 $12,554 $11,241
6/30/92 $11,349 $11,329
12/31/92 $11,795 $12,077
6/30/93 $12,246 $12,729
12/31/93 $12,702 $13,231
6/30/94 $12,379 $12,823
12/31/94 $12,780 $13,238
6/30/95 $14,388 $15,375
12/31/95 $15,479 $17,084
6/30/96 $16,283 $18,206
12/31/96 $17,369 $19,901
6/30/97 $18,918 $22,921
12/31/97 $20,114 $24,991

Past performance does not guarantee future results. Investment return and
principal value will fluctuate, and redemption value may be more or less than
original cost.

The line representing the fund's total return includes operating expenses (such
as transaction costs and management fees) that reduce returns, while the return
line of the blended index does not.

[pie chart]

Asset Allocation (as of December 31, 1997)

Common Stocks 55%
Corporate Bonds 25%
U.S. Treasury Securities 6%
Mortgage- & Asset-Backed Securities 6%
Other 8%

See Glossary on page 17 for investment terms.

2 PERFORMANCE & PORTFOLIO INFORMATION AMERICAN CENTURY INVESTMENTS

MANAGEMENT Q & A

An interview with Bruce Wimberly and Jeff Houston, portfolio managers on the
VP Balanced equity and fixed-income investment teams.

HOW DID THE FUND PERFORM?

VP Balanced posted a 15.81% return for the year ended December 31, 1997.
This return represents the combined performance of the fund's stock and bond
portfolios. Stocks represent approximately 60% of the funds' assets, while the
remaining assets are invested in bonds. The fund lagged its benchmark, a blended
index, which posted a 23.16% total return for the period. This blended index
combines the S&P 500 and the Lehman Brothers Intermediate Government/ Corporate
Index in proportion to the asset mix of the fund.

WHAT EXPLAINS THE FUND'S RELATIVE UNDERPERFORMANCE VERSUS ITS BENCHMARK?

The underperformance came from the stock portion of the portfolio. For much
of 1997, blue-chip stocks that are household names produced the strongest
returns, powering the S&P 500 to a 33.28% gain for the year. While VP Balanced
owns many of these names, it also holds smaller, faster-growing companies that
did not fare well in the conservative market environment of the past year.

In addition, the energy-related stocks that boosted fund returns in the
first six months of the year faded in the final half, as oil prices dropped.
Investors feared capital spending on energy production equipment would shrink.
However, Falcon Drilling Co. remained among the fund's top performers despite a
decline late in the year.

HOW DID THE FUND'S BOND PORTFOLIO PERFORM?

Boosted by the U.S. bond market's strong rally late in the year, the bond
portfolio performed well during 1997. It beat its benchmark index, the Lehman
Brothers Intermediate Government/Corporate Bond Index. This was a significant
achievement because the portfolio's return includes fees and expenses that
reduce returns, while the index's does not.

U.S. bonds in general benefited from low inflation, stock market turmoil and
favorable supply and demand factors. Bond supply fell as the federal budget
deficit shrank, allowing the U.S. Treasury to reduce its bond issuance to
finance government debt. Demand rose due to an increased appetite for
high-quality debt. In the fourth quarter, international investors bought bonds
as Southeast Asian economies suffered significant downturns, raising fears of a
global recession. Investors turned to U.S. bonds because of their high "real"
interest rates (nominal interest rates minus inflation) and as a safe haven from
equity market and international volatility.

WHICH STOCKS CONTRIBUTED MOST TO THE FUND'S PERFORMANCE?

The pharmaceutical industry produced the fund's best performing stocks for
the year.

TOP TEN EQUITY HOLDINGS % of equity portfolio
- ---------------------------------------------------------------------
As of As of
12/31/97 6/30/97

General Electric Co. (U.S.) 6.3% 4.1%
Tyco International Ltd. 6.0% 5.1%
Eli Lilly & Co. 4.6% 3.5%
Procter & Gamble Co. 4.5% 2.0%
Outdoor Systems, Inc. 4.5% 2.8%
Clear Channel
Communications, Inc. 4.3% 3.2%
Bristol-Myers Squibb Co. 3.7% --
SunAmerica, Inc. 3.5% 2.3%
Pfizer, Inc. 3.3% 3.6%
Coca-Cola Company 3.2% --

TOP FIVE INDUSTRIES % of equity portfolio
- ---------------------------------------------------------------------
As of As of
12/31/97 6/30/97

Pharmaceuticals 15.2% 20.5%
Diversified Companies 12.9% 12.4%
Broadcasting & Media 9.8% 6.0%
Consumer Products 9.0% 6.7%
Financial Services 6.8% 0.8%

ANNUAL REPORT MANAGEMENT Q & A 3

MANAGEMENT Q & A

Among pharmaceuticals, Eli Lilly & Co., Pfizer Inc. and Warner-Lambert Co.
were all substantial contributors. Investors rewarded these companies for
their increasing sales volumes, market share gain, and extensive new product
lines.

The fund's top performing stock for the year was long-time holding Outdoor
Systems Inc. This company has been a winner in the consolidation of the highway
billboard industry. We like the stock because it is a domestic business and is
largely immune from turmoil in international markets; it is in a highly
regulated industry, providing barriers to competition; and it has wide profit
margins that proved to be stable during a year that saw many companies' earnings
projections become less certain.

Hurting performance were companies, such as Oxford Health Plans, which
announced they would not meet analysts' expectations and were punished by the
market. Oxford unexpectedly announced poor third-quarter earnings following
difficulties implementing a new billing and bookkeeping system. Technology
holdings also held back performance as investors fled computer-related companies
doing business in Southeast Asia.

HOW WAS THE BOND PORTFOLIO POSITIONED DURING THE SECOND HALF?

The portfolio's performance owed more to its intermediate- term position in
the bond market's risk/return spectrum than to any repositioning we did. We take
a "plain vanilla" approach to the bond portfolio to complement the stock
portfolio and attempt to generate the best possible risk-adjusted returns for
the fund as a whole. We typically invest primarily in intermediate-term
corporate bonds, and we usually don't make large interest rate bets, focusing
instead on adding value by investing in undervalued sectors of the bond market.
We consider the fund's duration (a measure of the portfolio's sensitivity to
interest rate changes -- the higher the duration, the more the portfolio's value
will fluctuate in response to interest rate movements) target to be
approximately 4.25 years, and we rarely stray from that position.

We were even less inclined than usual to change the fund's duration in 1997
because there was so much uncertainty about interest rates. On one hand, the
U.S. economy was growing at levels that would have been considered inflationary
in the past. The Federal Reserve did raise short-term interest rates in March,
leading to speculation that other interest rate increases were just around the
corner. On the other hand, inflation never spiked as expected, and the turmoil
in Southeast Asia may actually have a disinflationary effect on the U.S.
economy. As a result, we basically stood pat.

WHAT'S YOUR OUTLOOK FOR BONDS AND THE FUND'S FIXED-INCOME PORTFOLIO?

Given the prospect of slower economic growth, we're planning to be a little
more cautious about buying corporate bonds and will look instead to find value
in mortgage- and asset-backed securities.

VP BALANCED'S FIXED-INCOME PORTFOLIO
- ---------------------------------------------------------------------
As of As of
12/31/97 6/30/97

- ---------------------------------------------------------------------

Portfolio Sensitivity to Interest Rates

Weighted Average Maturity 6.9 years 6.6 years
Duration 4.1 years 4.2 years
- ---------------------------------------------------------------------
Portfolio Credit Quality % of fixed income portfolio
(S&P Ratings)
- ---------------------------------------------------------------------

AAA 40% 39%
AA 11% 14%
A 36% 28%
BBB 13% 19%
------- -------
100% 100%
======= =======

See Glossary on page 17.

4 MANAGEMENT Q & A AMERICAN CENTURY INVESTMENTS

SCHEDULE OF INVESTMENTS

DECEMBER 31, 1997

Shares Value
- --------------------------------------------------------------------------------

COMMON STOCKS

AIRLINES-1.2%

11,800 AMR Corp.(1) $ 1,516,300

30,200 Alaska Air Group, Inc.(1) 1,170,250
--------------
2,686,550
--------------

BANKING-2.2%

30,900 BankAmerica Corp. 2,255,700

23,720 Charter One Financial, Inc. 1,492,878

9,200 Citicorp 1,163,225
--------------
4,911,803
--------------

BROADCASTING & MEDIA-5.4%

66,400 Clear Channel
Communications, Inc.(1) 5,274,650

24,400 Jacor Communications, Inc.(1) 1,297,775

142,600 Outdoor Systems, Inc.(1) 5,472,275
--------------
12,044,700
--------------

COMMUNICATIONS SERVICES-3.1%

5,400 Ameritech Corp. 434,700

17,800 Bell Atlantic Corp. 1,619,800

58,301 Tele-Communications, Inc. Cl A(1) 1,626,962

107,900 WorldCom, Inc.(1) 3,267,347
--------------
6,948,809
--------------

COMPUTER PERIPHERALS-1.5%

48,000 Cisco Systems Inc.(1) 2,679,000

12,100 SCI Systems, Inc.(1) 527,106
--------------
3,206,106
--------------

COMPUTER SOFTWARE & SERVICES-2.8%

20,900 America Online Inc.(1) 1,864,019

27,500 BMC Software, Inc.(1) 1,802,969

78,700 Compuware Corp.(1) 2,520,859
--------------
6,187,847
--------------

COMPUTER SYSTEMS-2.1%

6,900 Hewlett-Packard Co. 431,250

28,700 International Business
Machines Corp. 3,000,944

30,400 Sun Microsystems, Inc.(1) 1,214,100
--------------
4,646,294
--------------

Shares Value
- --------------------------------------------------------------------------------

CONSUMER PRODUCTS-5.0%

34,700 Gillette Company $ 3,485,181

69,900 Procter & Gamble Co. (The) 5,578,894

48,000 Sunbeam Corp. 2,022,000
--------------
11,086,075
--------------

DIVERSIFIED COMPANIES-7.1%

104,900 General Electric Co. (U.S.) 7,697,038

164,100 Tyco International Ltd. 7,394,756

27,200 U.S. Industries, Inc. 819,400
--------------
15,911,194
--------------

ENERGY (SERVICES)-2.4%

11,600 Diamond Offshore Drilling, Inc. 558,250

32,100 Falcon Drilling Co. Inc.(1) 1,125,506

125,700 Input/Output, Inc.(1) 3,731,719
--------------
5,415,475
--------------

ENVIRONMENTAL SERVICES-0.4%

25,000 USA Waste Services, Inc.(1) 981,250
--------------

FINANCIAL SERVICES-3.7%

17,400 American Express Credit Corp. 1,552,950

58,800 CIT Group Holdings,
Inc. (The) Cl A(1) 1,896,300

18,300 Fannie Mae 1,044,244

17,800 Morgan Stanley, Dean Witter,
Discover & Co. 1,052,425

51,700 Travelers Group, Inc. 2,785,337
--------------
8,331,256
--------------

FOOD & BEVERAGE-1.8%

59,900 Coca-Cola Company (The) 3,990,837
--------------

HEALTHCARE-0.6%

18,300 Cardinal Health, Inc. 1,374,787
--------------

INSURANCE-3.3%

12,100 American International Group, Inc. 1,315,875

39,200 Conseco Inc. 1,781,150

99,600 SunAmerica, Inc. 4,257,900
--------------
7,354,925
--------------

LEISURE-0.6%

32,400 Viacom, Inc. Cl B(1) 1,342,575
--------------

MEDICAL EQUIPMENT & SUPPLIES-1.2%

24,100 Guidant Corp. 1,500,225

24,100 Medtronic, Inc. 1,260,731
--------------
2,760,956
--------------

See Notes to Financial Statements

ANNUAL REPORT SCHEDULE OF INVESTMENTS 5

SCHEDULE OF INVESTMENTS

DECEMBER 31, 1997

Shares/Principal Amount Value
- --------------------------------------------------------------------------------

PHARMACEUTICALS-8.4%

47,900 Bristol-Myers Squibb Co. $ 4,532,537

80,800 Lilly (Eli) & Co. 5,625,700

7,800 Merck & Co., Inc. 828,750

55,000 Pfizer, Inc. 4,100,938

29,400 Warner-Lambert Co. 3,645,600
--------------
18,733,525
--------------

PRINTING & PUBLISHING-1.8%

53,600 McGraw-Hill Companies, Inc. (The) 3,966,400
--------------

RETAIL (SPECIALTY)-0.5%

46,300 Pier 1 Imports, Inc. 1,047,538
--------------

TOTAL COMMON STOCKS-55.1% 122,928,902
--------------
(Cost $92,753,794)

U.S. TREASURY SECURITIES

$1,000,000 U.S. Treasury Notes,
5.875%, 2/15/00 1,004,160

1,000,000 U.S. Treasury Notes,
6.125%, 9/30/00 1,010,550

500,000 U.S. Treasury Notes,
5.75%, 10/31/00 500,725

3,000,000 U.S. Treasury Notes,
7.50%, 11/15/01 3,181,650

2,450,000 U.S. Treasury Notes,
5.75%, 10/31/02 2,452,842

1,000,000 U.S. Treasury Notes,
5.875%, 2/15/04 1,009,370

2,400,000 U.S. Treasury Notes,
7.25%, 5/15/04 2,590,824

950,000 U.S. Treasury Notes,
5.875%, 11/15/05 955,558

1,000,000 U.S. Treasury Notes,
6.125%, 8/15/07 1,028,070
--------------

TOTAL U.S. TREASURY SECURITIES-6.2% 13,733,749
--------------
(Cost $13,459,197)

MORTGAGE-BACKED SECURITIES(2)

1,424,376 FNMA Pool #248679,
5.50%, 10/25/08 1,385,631

1,500,000 FNMA Pool #411821,
7.00%, 1/1/28(3) 1,512,187

1,856,519 GNMA Pool #002202,
7.00%, 4/20/26 1,867,396
--------------

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

TOTAL MORTGAGE-BACKED SECURITIES-2.1% $ 4,765,214
--------------
(Cost $4,676,755)

ASSET-BACKED SECURITIES(2)

$1,000,000 FNMA Whole Loan, Series 1995-W1,
Class A6, 8.10%, 4/25/25 1,042,551

1,000,000 First Merchants Auto Receivables
Corp., Series 1996-B, Class A2,
6.80%, 5/15/01 1,014,610

2,000,000 NationsBank Auto Owner Trust,
Series 1996-A, Class B1,
6.75%, 6/15/01 2,027,500

2,000,000 Union Acceptance Corp., Series
1996-D, Class A3, 6.30%, 1/8/04 2,010,420

1,250,000 United Companies Financial Corp.,
Series 1996-D1, Class A4,
6.78%, 2/15/16 1,267,688

1,000,000 United Companies Financial Corp.,
Series 1996-D1, Class A5,
6.92%, 10/15/18 1,018,540
--------------

TOTAL ASSET-BACKED SECURITIES-3.7% 8,381,309
--------------
(Cost $8,242,115)

CORPORATE BONDS

AUTOMOBILES & AUTO PARTS-1.1%

1,500,000 Ford Motor Credit Corp.,
6.75%, 5/15/05 1,533,795

1,000,000 General Motors Corp.,
7.00%, 6/15/03 1,033,630
--------------
2,567,425
--------------

BANKING-5.7%

1,700,000 ABN Amro Bank NV (Chicago),
7.125%, 6/18/07 1,782,637

1,000,000 Capital One Financial Corp.,
8.125%, 3/1/00 1,033,030

1,750,000 Corestates Capital Corp.,
5.875%, 10/15/03 1,710,117

1,750,000 First Bank System Inc.,
7.625%, 5/1/05 1,867,180

1,000,000 First Union Corp.,
8.77%, 11/15/04 1,048,610

1,500,000 MBNA Corp.,
6.875%, 10/1/99 1,517,445

See Notes to Financial Statements

6 SCHEDULE OF INVESTMENTS AMERICAN CENTURY INVESTMENTS

SCHEDULE OF INVESTMENTS

DECEMBER 31, 1997

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

$1,300,000 NationsBank Capital Trust III, VRN,
6.31%, 1/15/98, resets quarterly
off the 3-month LIBOR plus
0.55% with no caps $ 1,263,633

1,000,000 NationsBank Corp., 6.875%,
2/15/05 1,027,270

1,500,000 Santander Financial Issuances Ltd.,
7.00%, 4/1/06 1,543,200
--------------
12,793,122
--------------

COMMUNICATIONS SERVICES-0.4%

1,000,000 GTE Southwest,
5.82%, 12/1/99 994,440
--------------

DIVERSIFIED COMPANIES-0.5%

1,000,000 Hanson Overseas BV,
6.75%, 9/15/05 1,022,700
--------------

ELECTRICAL & ELECTRONIC
COMPONENTS-1.1%

1,500,000 Anixter International Inc.,
8.00%, 9/15/03 1,586,445

1,000,000 Hutchison Whampoa Financial, Series B,
7.45%, 8/1/17 (Acquired 7/24/97,
Cost $998,970)(4) 919,970
--------------
2,506,415
--------------

FINANCIAL SERVICES-5.5%

1,500,000 Associates Corp., N.A.,
6.375%, 10/15/02 1,509,285

1,000,000 Associates First Capital Corp.,
6.75%, 7/15/01 1,019,040

1,000,000 First USA, Inc.,
7.00%, 8/20/01 1,022,900

1,500,000 Lehman Brothers Holdings, Inc.,
6.625%, 11/15/00 1,512,405

1,000,000 Money Store Inc. (The),
8.05%, 4/15/02 1,037,300

1,750,000 Norwest Financial, Inc.,
6.25%, 11/1/02 1,766,433

1,700,000 Salomon, Inc.,
6.65%, 7/15/01 1,720,638

1,000,000 Travelers/Aetna Property Casualty
Corp., 6.75%, 4/15/01 1,018,020

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

$1,750,000 Wharf International Finance Ltd.,
7.625%, 3/13/07
(Acquired 3/6/97,
Cost $1,736,158)(4) $ 1,636,250
--------------

12,242,271
--------------

INSURANCE-2.1%

1,200,000 Aetna Services Inc.,
6.75%, 8/15/01 1,224,816

1,000,000 Nationwide Mutual Insurance Co.,
6.50%, 2/15/04
(Acquired 2/9/96,
Cost $1,007,535)(4) 999,410

1,000,000 Underwriters Reinsurance Co.,
7.875%, 6/30/06
(Acquired 8/6/96,
Cost $1,028,896)(4) 1,082,470

1,250,000 Zurich Capital Trust I, 8.38%, 6/1/37
(Acquired 5/28/97 through
6/11/97, Cost $1,265,380)(4) 1,372,413
--------------
4,679,109
--------------

LEISURE-0.5%

1,000,000 Hilton Hotels Corp.,
7.70%, 7/15/02 1,024,780
--------------

MACHINERY & EQUIPMENT-0.5%

1,000,000 Time Warner Inc.,
6.85%, 1/15/26 1,033,330
--------------

METALS & MINING-0.8%

1,750,000 Barrick Gold Corp.,
7.50%, 5/1/07 1,853,092
--------------

REAL ESTATE-1.8%

1,700,000 Price REIT, Inc. (The),
7.25%, 11/1/00 1,733,881

1,000,000 Price REIT, Inc. (The),
7.125%, 6/15/04 1,027,130

1,200,000 Spieker Properties, Inc.,
6.80%, 12/15/01 1,218,912
--------------
3,979,923
--------------

RETAIL (GENERAL MERCHANDISE)-0.5%

1,000,000 Sears, Roebuck & Co., MTN,
7.12%, 6/4/04 1,046,910
--------------

See Notes to Financial Statements

ANNUAL REPORT SCHEDULE OF INVESTMENTS 7

SCHEDULE OF INVESTMENTS

DECEMBER 31, 1997

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

TOBACCO-1.5%

$1,250,000 Philip Morris Companies Inc.,
6.95%, 6/1/01 $ 1,280,950

1,000,000 Philip Morris Companies Inc.,
6.80%, 12/1/03 1,014,910

1,000,000 Philip Morris Companies Inc.,
7.00%, 7/15/05 1,022,800
--------------
3,318,660
--------------

UTILITIES-2.4%

2,500,000 CalEnergy Co. Inc.,
7.63%, 10/15/07 2,518,525

1,000,000 Kansas Power & Light Co.,
8.875%, 3/1/00 1,052,990

1,700,000 Pacific Gas & Electric Co.,
Series 93C, 6.25%, 8/1/03 1,710,982
--------------
5,282,497
--------------

TOTAL CORPORATE BONDS-24.4% 54,344,674
--------------
(Cost $53,299,089)

SOVEREIGN GOVERNMENTS & AGENCIES-0.3%

750,000 Korea Electric Power,
6.375%, 12/1/03 561,263
--------------
(Cost $753,946)

COMMERCIAL PAPER-0.7%

FINANCIAL SERVICES

1,500,000 Merrill Lynch & Co., Inc.,
5.85%, 1/14/98(5) 1,496,831
--------------
(Cost $1,496,831)

SHORT-TERM CASH INVESTMENTS-7.5%

$16,800,000 par value FHLB Discount Notes,
5.11%, 1/2/98(5) 16,800,000
--------------
(Cost $16,797,617)

TOTAL INVESTMENT SECURITIES-100.0% $223,011,942
==============
(Cost $191,479,344)

NOTES TO SCHEDULE OF INVESTMENTS

FHLB = Federal Home Loan Bank
FNMA = Federal National Mortgage Association
GNMA = Government National Mortgage Association
LIBOR = London Interbank Offered Rate
MTN = Medium Term Note
VRN = Variable Rate Note. Interest reset date is indicated and used in
calculating the weighted average portfolio maturity. Rate shown is
effective December 31, 1997.
resets= The frequency with which a fixed-income security's coupon changes,
based on current market conditions or an underlying index. The more
frequently a security resets, the less risk the investor is taking that
the coupon will vary significantly from current market rates.

(1) Non-income producing.

(2) Final maturity indicated. Expected remaining maturity used for purposes of
calculating the weighted average portfolio maturity.

(3) When-issued security.

(4) Security was purchased under Rule 144A of the Securities Act of 1933 and,
unless registered under the Act or exempted from registration, may only be
sold to qualified institutional investors. The aggregate value of restricted
securities at December 31, 1997, was $6,010,513, which represented 2.7% of
net assets.

(5) The rate indicated is the yield to maturity at purchase.

See Notes to Financial Statements

8 SCHEDULE OF INVESTMENTS AMERICAN CENTURY INVESTMENTS

STATEMENT OF ASSETS AND LIABILITIES

DECEMBER 31, 1997

ASSETS

Investment securities, at value
(identified cost of $191,479,344) (Note 3) ..................... $223,011,942

Cash ........................................................... 1,980,779

Dividends and interest receivable .............................. 1,146,767
------------
226,139,488
------------

LIABILITIES

Payable for investments purchased .............................. 6,779,430

Payable for capital shares redeemed ............................ 90,207

Accrued management fees (Note 2) ............................... 182,258

Payable for directors' fees and expenses ....................... 358
------------
7,052,253
------------

Net Assets ..................................................... $219,087,235
============

CAPITAL SHARES, $0.01 PAR VALUE

Authorized ..................................................... 200,000,000
============
Outstanding .................................................... 26,585,174
============

Net Asset Value Per Share ...................................... $ 8.24
============
NET ASSETS CONSIST OF:

Capital (par value and paid-in surplus) ........................ $159,166,346

Undistributed net investment income ............................ 3,959,144

Accumulated net realized gain from investments
and foreign currency transactions ............................ 24,429,134

Net unrealized appreciation on investments and translation of
assets and liabilities in foreign currencies (Note 3) ........ 31,532,611
------------
$219,087,235
============

See Notes to Financial Statements

ANNUAL REPORT STATEMENT OF ASSETS AND LIABILITIES 9

STATEMENT OF OPERATIONS

YEAR ENDED DECEMBER 31, 1997

INVESTMENT INCOME

Income:

Interest ...................................................... $ 6,488,81
Dividends (net of foreign taxes withheld of $6,054) ........... 1,007,550
------------
7,496,360
------------
Expenses (Note 2):
Management fees ............................................... 2,346,313
Directors' fees and expenses .................................. 2,265
------------
2,348,578
------------

Net investment income ......................................... 5,147,782
------------

REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND FOREIGN CURRENCY (NOTE 3)

Net realized gain (loss) on:
Investments ................................................... 24,645,097
Foreign currency transactions ................................. (33,902)
------------
24,611,195
------------

Change in net unrealized appreciation on:
Investments ................................................... 6,428,446
Translation of assets and liabilities in foreign currencies ... 293
------------
6,428,739
------------

Net realized and unrealized gain on
investments and foreign currency .............................. 31,039,934
------------

Net Increase in Net Assets
Resulting from Operations ..................................... $ 36,187,716
============

See Notes to Financial Statements

10 STATEMENT OF OPERATIONS AMERICAN CENTURY INVESTMENTS

<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS

YEARS ENDED DECEMBER 31, 1997 AND DECEMBER 31, 1996

Increase in Net Assets 1997 1996

OPERATIONS

<S> <C> <C>
Net investment income ................................. $ 5,147,782 $ 4,503,919

Net realized gain on investments and foreign
currency transactions ............................... 24,611,195 9,871,687

Change in net unrealized appreciation on
investments and translation of assets and liabilities
in foreign currencies ............................... 6,428,739 7,482,658
------------- -------------
Net increase in net assets resulting from operations .. 36,187,716 21,858,264
------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS

From net investment income ............................ (2,554,690) (3,340,445)

From net realized gains on investment transactions .... (9,825,570) (4,846,873)
------------- -------------
Decrease in net assets from distributions ............. (12,380,260) (8,187,318)
------------- -------------
CAPITAL SHARE TRANSACTIONS

Proceeds from shares sold ............................. 103,187,176 55,260,449

Proceeds from reinvestment of distributions ........... 12,380,260 8,187,318

Payments for shares redeemed .......................... (135,680,741) (15,548,799)
------------- -------------
Net increase (decrease) in net assets
from capital share transactions ....................... (20,113,305) 47,898,968
------------- -------------

Net increase in net assets ............................ 3,694,151 61,569,914

NET ASSETS

Beginning of year ..................................... 215,393,084 153,823,170
------------- -------------
End of year ........................................... $ 219,087,235 $ 215,393,084
============= =============
Undistributed net investment income ................... $ 3,959,144 $ 1,399,954
============= =============
TRANSACTIONS IN SHARES OF THE FUND

Sold .................................................. 13,147,136 7,704,328

Issued in reinvestment of distributions ............... 1,737,653 1,168,206

Redeemed .............................................. (16,859,188) (2,170,655)
------------- -------------
Net increase (decrease) ............................... (1,974,399) 6,701,879
============= =============
</TABLE>

See Notes to Financial Statements

ANNUAL REPORT STATEMENTS OF CHANGES IN NET ASSETS 11

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 1997

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION -- American Century Variable Portfolios, Inc., formerly TCI
Portfolios, Inc., (the Corporation) is registered under the Investment Company
Act of 1940 as an open-end diversified management investment company. American
Century VP Balanced, formerly TCI Balanced, (the Fund) is one of the six series
of funds issued by the Corporation. The Fund's investment objective is capital
growth and current income. The Fund seeks to achieve its investment objective by
maintaining approximately 60% of the assets in common stocks that are considered
by management to have better-than-average prospects for appreciation and the
remaining assets in bonds and other fixed income securities. The following
significant accounting policies, related to the Fund, are in accordance with
accounting policies generally accepted in the investment company industry.

SECURITY VALUATIONS -- Portfolio securities traded primarily on a principal
securities exchange are valued at the last reported sales price, or the mean of
the latest bid and asked prices where no last sales price is available.
Securities traded over-the-counter are valued at the mean of the latest bid and
asked prices or, in the case of certain foreign securities, at the last reported
sales price, depending on local convention or regulation. Debt securities not
traded on a principal securities exchange are valued through valuations obtained
from a commercial pricing service or at the mean of the most recent bid and
asked prices. When valuations are not readily available, securities are valued
at fair value as determined in accordance with procedures adopted by the Board
of Directors.

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

INVESTMENT INCOME -- Dividend income less foreign taxes withheld (if any) is
recorded as of the ex-dividend date. Interest income is recorded on the accrual
basis and includes accretion of discounts and amortization of premiums.

FOREIGN CURRENCY TRANSACTIONS -- The accounting records of the Fund are
maintained in U.S. dollars. All assets and liabilities initially expressed in
foreign currencies are converted into U.S. dollars at prevailing exchange rates.
Purchases and sales of investment securities, dividend and interest income, and
certain expenses are translated at the rates of exchange prevailing on the
respective dates of such transactions.

FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS -- The Fund may enter into
forward foreign currency exchange contracts for the purpose of settling specific
purchases or sales of securities denominated in a foreign currency or to hedge
the Fund's exposure to foreign currency exchange rate fluctuations. When
required, the Fund will segregate assets in an amount sufficient to cover its
obligations under the hedge contracts. The net U.S. dollar value of foreign
currency underlying all contractual commitments held by the Fund and the
resulting unrealized appreciation or depreciation are determined daily using
prevailing exchange rates. Forward contracts involve elements of risk in excess
of the amount reflected in the Statement of Assets and Liabilities. The Fund
bears the risk of an unfavorable change in the foreign currency exchange rate
underlying the forward contract. Additionally, losses may arise if the
counterparties do not perform under the contract terms.

REPURCHASE AGREEMENTS -- The Fund may enter into repurchase agreements with
institutions that the Fund's investment manager, American Century Investment
Management, Inc. (ACIM), has determined are creditworthy pursuant to criteria
adopted by the Board of Directors. Each repurchase agreement is recorded at
cost. The Fund requires that the collateral, represented by securities, received
in a repurchase transaction be transferred to the custodian in a manner
sufficient to enable the Fund to obtain those securities in the event of a
default under the repurchase agreement. ACIM monitors, on a daily basis, the
value of the securities transferred to ensure the value, including accrued
interest, of the securities under each repurchase agreement is equal to or
greater than amounts owed to the Fund under each repurchase agreement.

JOINT TRADING ACCOUNT -- Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, the Fund, along with other registered
investment companies having management agreements with ACIM, may transfer
uninvested cash balances into a joint trading account. These balances are
invested in one or more repurchase agreements that are collateralized by U.S.
Treasury or Agency obligations.

INCOME TAX STATUS -- It is the policy of the Fund to distribute all taxable
income and capital gains to shareholders and to

12 NOTES TO FINANCIAL STATEMENTS AMERICAN CENTURY INVESTMENTS

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 1997

otherwise qualify as a regulated investment company under provisions of the
Internal Revenue Code. Accordingly, no provision has been made for federal
income taxes.

DISTRIBUTIONS TO SHAREHOLDERS -- Distributions to shareholders are recorded
on the ex-dividend date. Distributions from net investment income and net
realized gains are declared and paid annually.

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

USE OF ESTIMATES -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements, and the reported amounts of increases and decreases in
net assets from operations during the reporting period. Actual results could
differ from those estimates.

ADDITIONAL INFORMATION -- Effective January 15, 1998, Funds Distributor,
Inc. (FDI) became the Corporation's distributor. Certain officers of FDI are
also officers of the Corporation.

- --------------------------------------------------------------------------------
2. TRANSACTIONS WITH RELATED PARTIES

Certain officers and directors of the Corporation are also officers and/or
directors, and, as a group, controlling stock-holders of American Century
Companies, Inc., the parent of the Corporation's investment manager, ACIM, the
Corporation's transfer agent, American Century Services Corporation, and the
registered broker-dealer, American Century Investment Services, Inc.

- --------------------------------------------------------------------------------
3. INVESTMENT TRANSACTIONS

Purchases of investment securities, excluding short-term investments,
totaled $276,226,056, including purchases of U.S. Treasury and Agency
obligations totaling $43,275,293. Sales of investment securities, excluding
short-term investments, totaled $314,921,438, including sales of U.S. Treasury
and Agency obligations totaling $58,271,678.

As of December 31, 1997, accumulated net unrealized appreciation was
$30,677,572, based on the aggregate cost of investments for federal income tax
purposes of $192,334,370, which consisted of unrealized appreciation of
$31,938,089 and unrealized depreciation of $1,260,517.

ANNUAL REPORT NOTES TO FINANCIAL STATEMENTS 13

<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS

For a Share Outstanding Throughout the Years Ended December 31

1997 1996 1995 1994 1993

PER-SHARE DATA

Net Asset Value,
<S> <C> <C> <C> <C> <C>
Beginning of Year ....................... $ 7.54 $ 7.04 $ 5.96 $ 6.07 $ 5.74
------------- ------------- ------------- ------------- -------------
Income From Investment Operations

Net Investment Income ................. 0.19 0.18 0.17 0.15 0.11

Net Realized and Unrealized Gain (Loss)
on Investment Transactions ............ 0.94 0.65 1.08 (0.11) 0.33
------------- ------------- ------------- ------------- -------------
Total From
Investment Operations ................. 1.13 0.83 1.25 0.04 0.44
------------- ------------- ------------- ------------- -------------
Distributions

From Net Investment Income ............ (0.09) (0.13) (0.17) (0.15) (0.11)

From Net Realized Gains
on Investment Transactions ............ (0.34) (0.20) -- -- --
------------- ------------- ------------- ------------- -------------
Total Distributions ................... (0.43) (0.33) (0.17) (0.15) (0.11)
------------- ------------- ------------- ------------- -------------
Net Asset Value, End of Year ............ $ 8.24 $ 7.54 $ 7.04 $ 5.96 $ 6.07
============= ============= ============= ============= =============
Total Return(1) ....................... 15.81% 12.21% 21.12% 0.61% 7.68%

RATIOS/SUPPLEMENTAL DATA

Ratio of Operating
Expenses
to Average Net Assets ................... 1.00% 0.99% 0.97% 1.00% 1.00%

Ratio of Net Investment
Income
to Average Net Assets ................... 2.19% 2.43% 2.69% 2.49% 1.97%

Portfolio Turnover Rate ................. 125% 130% 87% 63% 68%

Average Commission Paid per
Share of Equity Security Traded ......... $ 0.0395 $ 0.0373 $ 0.0400 -(2) -(2)

Net Assets, End
of Year (in thousands) .................. $ 219,087 $ 215,393 $ 153,823 $ 105,100 $ 75,924

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

(2) Disclosure of average commission paid per share of equity security traded
was not required prior to the year ended December 31, 1995.
</TABLE>

See Notes to Financial Statements

14 FINANCIAL HIGHLIGHTS AMERICAN CENTURY INVESTMENTS

INDEPENDENT AUDITORS' REPORT

The Board of Directors and Shareholders,
American Century Variable Portfolios, Inc.:

We have audited the accompanying statement of assets and liabilities, including
the schedule of investments, of American Century VP Balanced (formerly TCI
Balanced) (the "Fund"), one of the funds comprising American Century Variable
Portfolios, Inc. (formerly TCI Portfolios, Inc.), as of December 31, 1997, and
the related statements of operations and changes in net assets for the year then
ended, and the financial highlights for the year then ended. These financial
statements and the financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and the financial highlights based on our audit. The financial
statements and the financial highlights of the Fund for each of the years in the
four-year period ended December 31, 1996 were audited by other auditors whose
report, dated January 21, 1997, expressed an unqualified opinion on those
statements and financial highlights.

In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of American Century VP
Balanced as of December 31, 1997, the results of its operations, the changes in
its net assets, and the financial highlights for the year then ended in
conformity with generally accepted accounting principles.

Deloitte & Touche LLP
Kansas City, Missouri
January 30, 1998

ANNUAL REPORT INDEPENDENT AUDITORS' REPORT 15

BACKGROUND INFORMATION

INVESTMENT PHILOSOPHY AND POLICIES

The fund's investment philosophy focuses on four important principles.

We attempt to keep the fund fully invested at all times, regardless of
short-term market activity. Experience has shown that market gains can occur in
unpredictable spurts and that missing even some of those opportunities may
significantly limit potential for gain.

For the equity portfolio, the management team seeks to own highly successful
companies, which we define as those whose earnings and revenues are growing at
accelerating rates.

For the fixed income portfolio, "quality first" is the rule. The management
team seeks only investment-grade bonds--those rated in the top four quality
categories by nationally recognized statistical rating organizations.

Each portfolio is managed by a team, rather than by one "star" manager. We
believe this allows us to make better, more consistent management decisions.

VP BALANCED seeks to provide capital growth and current income. The fund
keeps about 60% of its assets in the stocks of firms that are considered by
management to have better-than-average prospects for appreciation. Under normal
market conditions, the remaining assets are held in quality, intermediate-term
bonds and other fixed-income securities.

COMPARATIVE INDICES

The indices listed below are used in the report to serve as a comparison for
the performance of the fund. They are not investment products available for
purchase.

The BLENDED INDEX is considered the benchmark for VP Balanced. It combines
two widely known indices in proportion to the asset mix of the fund.
Accordingly, 60% of the index is represented by the S&P 500. The remainder of
the index is represented by the Lehman Intermediate Government/Corporate Index,
which reflects the 40% of the fund's assets invested in intermediate-term bonds
and other fixed-income securities.

The LEHMAN INTERMEDIATE GOVERNMENT/CORPORATE INDEX is considered to
represent the performance of a portfolio of intermediate-term U.S. government
and corporate bonds. The index includes the Lehman Government and Corporate Bond
indices, which are composed of U.S. government, Treasury and agency securities
with one- to 10-year maturities, as well as corporate and Yankee bonds with one-
to 10-year maturities.

The S&P 500 is a capitalization-weighted index of the stocks of 500
publicly-traded U.S. companies that are considered to be leading firms in
leading industries. Created by Standard & Poor's Corporation, the index is
viewed as a broad measure of U.S. stock market performance.

16 BACKGROUND INFORMATION AMERICAN CENTURY INVESTMENTS

GLOSSARY

FIXED-INCOME TERMS

* CREDIT QUALITY reflects the financial strength of a debt security issuer and
the likelihood of timely payment of interest and principal.

* DURATION is a measure of the sensitivity of a fixed-income portfolio to
changes in interest rates. As the duration of a portfolio increases, the impact
of a change in interest rates on the value of the portfolio also increases.

* STANDARD & POOR'S (S&P) is an independent rating company, one of the two best
known in the U.S. (the other is Moody's). The credit ratings issued by S&P and
Moody's reflect the perceived financial strength (credit quality) of debt
issuers. Debt securities rated "investment grade" (deemed to be of high enough
credit quality to be appropriate investments for banks and other institutions)
by S&P are those rated BBB or higher (the highest rating is AAA).

* WEIGHTED AVERAGE MATURITY (WAM), another measurement of the sensitivity of a
fixed-income portfolio to interest rate changes, indicates the average time
until the principal in the portfolio is expected to be repaid, weighted by
dollar amount. The longer the WAM, the more interest rate exposure and interest
rate sensitivity the portfolio has.

RETURNS

* TOTAL RETURN figures show the overall percentage change in the value of a
hypothetical investment in the fund and assume that all of the fund's
distributions are reinvested.

EQUITY TERMS

* BLUE-CHIP STOCKS -- generally considered to be the stocks of the most
established companies in American industry. They are generally large, fairly
stable companies that have demonstrated consistent earnings and usually have
long-term growth potential. Examples include General Electric and Coca-Cola.

* CYCLICAL STOCKS -- generally considered to be stocks whose price and earnings
fluctuations tend to follow the ups and downs of the business cycle. Examples
include the stocks of automobile manufacturers, steel producers and textile
operators.

* GROWTH STOCKS -- generally considered to be the stocks of companies that have
experienced above-average earnings growth and appear likely to continue such
growth. These stocks often sell at high P/E ratios. Examples can include the
stocks of high-tech, computer hardware and computer software companies.

* LARGE-CAPITALIZATION ("LARGE-CAP") STOCKS -- generally considered to be the
stocks of companies with a market capitalization (the total value of a company's
outstanding stock) of more than $5 billion. These tend to be the stocks that
make up the Dow Jones Industrial Average, the S&P 500 and the Russell 1000
Index.

* MEDIUM-CAPITALIZATION ("MID-CAP") STOCKS -- generally considered to be the
stocks of companies with a market capitalization (the total value of a company's
outstanding stock) of between $1 billion and $5 billion. These tend to be the
stocks that make up the S&P MidCap 400.

* PRICE/EARNINGS (P/E) RATIO -- a stock value measurement calculated by dividing
a company's stock price by its earnings per share, with the result expressed as
a multiple instead of as a percentage. (Earnings per share is calculated by
dividing the after-tax earnings of a corporation by its outstanding shares.)

* SMALL-CAPITALIZATION ("SMALL-CAP") STOCKS -- generally considered to be the
stocks of companies with a market capitalization (the total value of a company's
outstanding stock) of less than $1 billion. These tend to be the stocks that
make up the Nasdaq Composite Index and the Russell 2000 Index.

* VALUE STOCKS -- generally considered to be stocks that are purchased because
they are relatively inexpensive. These stocks are typically characterized by low
P/E ratios.

ANNUAL REPORT GLOSSARY 17

[american century logo]
American
Century(reg.sm)

P.O. BOX 419385
KANSAS CITY, MISSOURI
64141-6385

INVESTOR SERVICES:
1-800-345-3533 OR 816-531-5575

AUTOMATED INFORMATION LINE:
1-800-345-8765

TELECOMMUNICATIONS DEVICE FOR THE DEAF:
1-800-345-1833 OR 816-444-3485

FAX: 816-340-4360

INTERNET: WWW.AMERICANCENTURY.COM

AMERICAN CENTURY VARIABLE PORTFOLIOS, INC.

INVESTMENT MANAGER
AMERICAN CENTURY INVESTMENT MANAGEMENT, INC.
KANSAS CITY, MISSOURI

9802 [recycled logo]
SH-BKT-11073 Recycled
<PAGE>
ANNUAL
REPORT

[american century logo]
American
Century(reg.sm)

DECEMBER 31, 1997

AMERICAN CENTURY VARIABLE
PORTFOLIOS, INC.

VP Advantage

TABLE OF CONTENTS

We welcome your comments or questions about this report.

See the back cover for ways to contact us by mail, phone or e-mail.

American Century and Benham Group are registered marks of American Century
Services Corporation.

AMERICAN CENTURY INVESTMENTS

OUR MESSAGE TO YOU

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

VP Advantage turned in mixed results in 1997. Its bond and cash holdings
performed very competitively, but the equity portion of the portfolio did not
fare as well. Unusually strong crosscurrents in domestic markets--especially in
the mid- and small-cap sectors--often proved difficult to navigate. But our
stock selection was also less effective than we would have liked.

We are making substantial efforts to improve our equity results in order to
bring them to the level investors have come to expect from American Century. We
have added investment resources where they were needed, and remain confident
that VP Advantage's blend of bonds, cash, traditional blue-chip stocks, and
smaller, faster-growing companies can provide solid and more consistent
risk-adjusted returns than aggressive portfolios.

The economy remained strong in 1997, with low interest rates and benign
inflation, and this--in addition to the continuing stream of assets flowing into
stocks--helped explain the U.S. market's third year of exceptional returns. In
fact, 1995-1997 marked one of the best three-year performance periods in the
history of the Standard & Poor's 500 Index. Although we believe a fourth year of
similar returns is unlikely, please keep in mind that the U.S. economy is very
healthy, and that should continue to benefit stocks.

This past year was very eventful for American Century. In July, J.P. Morgan
agreed to become a significant minority shareholder in American Century. J.P.
Morgan has been in business over 150 years, serving institutions, governments
and individuals with complex financial needs. Under the terms of the business
partnership, which was finalized January 15, 1998, American Century will
continue to operate as an independent company. Our corporate management team
will remain the same, and the Stowers family will retain voting control of
American Century.

Whatever your financial goals, we believe American Century has an
outstanding lineup of funds to help you reach them.

Sincerely,

/s/James E. Stowers, Jr. /s/James E. Stowers III
James E. Stowers, Jr. James E. Stowers III
Chairman of the Board and Founder Chief Executive Officer
American Century Investment
Management, Inc.

ANNUAL REPORT OUR MESSAGE TO YOU 1

<TABLE>
<CAPTION>
PERFORMANCE & PORTFOLIO INFORMATION

AVERAGE ANNUAL RETURNS

6 MONTHS(1) 1 YEAR 3 YEARS 5 YEARS LIFE OF FUND(2)
- ----------------------------------------------------------------------------------------

TOTAL RETURNS AS OF DECEMBER 31, 1997

<S> <C> <C> <C> <C> <C>
VP Advantage ........ 5.77% 12.83% 12.89% 9.21% 8.63%

Blended index ....... 6.68% 17.47% 16.97% 11.59% 11.21%
</TABLE>

(1) Not annualized.

(2) The fund's inception date was 8/1/91.

See pages 16 and 17 for more information about comparative indices and returns.

[line graph - data below]

Growth of $10,000 Over Life of Fund
$10,000 investment made 8/1/91 Value on 12/31/97

DATE VP ADVANTAGE BLENDED INDEX

8/1/91 $10,000 $10,000
12/31/91 $11,381 $10,749
6/30/92 $10,571 $10,879
12/31/92 $10,953 $11,453
6/30/93 $11,350 $11,981
12/31/93 $11,702 $12,369
6/30/94 $11,519 $12,113
12/31/94 $11,823 $12,443
6/30/95 $12,983 $14,011
12/31/95 $13,803 $15,248
6/30/96 $14,323 $16,033
12/31/96 $15,080 $17,251
6/30/97 $16,086 $19,301
12/31/97 $17,014 $20,788

Past performance does not guarantee future results. Investment return and
principal value will fluctuate, and redemption value may be more or less than
original cost.

The line representing the fund's total return includes operating expenses (such
as transaction costs and management fees) that reduce returns, while the return
line of the blended index does not.

[pie chart]

Asset Allocation (as of December 31, 1997)

Common Stocks 37%
U.S. Treasury Securities 40%
Short-Term Cash Investments 22%
U.S. Government Agency Securities 1%

See Glossary on page 17 for investment terms.

2 PERFORMANCE & PORTFOLIO INFORMATION AMERICAN CENTURY INVESTMENTS

MANAGEMENT Q & A

An interview with Bruce Wimberly and Jeff Houston, portfolio managers on the
VP Advantage equity and fixed-income investment teams.

HOW DID THE FUND PERFORM?

VP Advantage posted a 12.83% return for the year ended December 31, 1997.
This return represents the combined performance of the fund's target stock
portfolio (40% of assets), bond portfolio (40% of assets) and cash portfolio
(20% of assets). The fund lagged its benchmark, a blended index that combines
the S&P 500, the Lehman Brothers Intermediate Government Bond Index, and a
three-month Treasury bill index in proportion to the asset mix of the fund. The
blended index gained 17.47% for the year.

WHAT EXPLAINS THE FUND'S RELATIVE UNDERPERFORMANCE VERSUS ITS BENCHMARK?

The underperformance came primarily from the stock portion of the portfolio.
For much of 1997, blue-chip stocks that are household names produced the
strongest returns, powering the S&P 500 to a 33.28% gain for the year. While VP
Advantage owns many of these names, it also holds smaller, faster-growing
companies that did not fare well in the conservative market environment of the
past year.

HOW DID THE FUND'S FIXED-INCOME PORTFOLIO PERFORM?

The bond portion beat its benchmark, the Lehman Brothers Intermediate
Government Bond Index. This was a significant achievement because the
portfolio's return includes fees and expenses that reduce returns, while the
index's does not.

U.S. bonds in general benefited from low inflation, stock market turmoil and
favorable supply and demand factors. Bond supply fell as the federal budget
deficit shrank, allowing the U.S. Treasury to reduce its bond issuance to
finance government debt. Demand rose due to an increased appetite for high
quality debt. In the fourth quarter, international investors bought bonds as
Southeast Asian economies suffered significant downturns, raising fears of a
global recession. Investors turned to U.S. bonds because of their high "real"
interest rates (nominal interest rates minus inflation) and as a safe haven from
equity-market and international volatility.

TOP TEN EQUITY HOLDINGS % of equity portfolio
- ---------------------------------------------------------------------
As of As of
12/31/97 6/30/97

General Electric Co. (U.S.) 6.2% 4.1%
Tyco International Ltd. 6.0% 5.0%
Lilly (Eli) & Co. 4.5% 3.5%
Procter & Gamble Co. 4.5% 2.0%
Clear Channel
Communications, Inc. 4.3% 3.2%
Outdoor Systems, Inc. 4.3% 2.8%
Bristol-Myers Squibb Co. 3.7% --
SunAmerica, Inc. 3.6% 2.1%
McGraw-Hill Companies, Inc. 3.3% --
Coca-Cola Company 3.2% --

TOP FIVE INDUSTRIES % of equity portfolio
- ---------------------------------------------------------------------
As of As of
12/31/97 6/30/97

Pharmaceuticals 15.2% 20.6%
Diversified Companies 13.0% 12.4%
Broadcasting & Media 9.6% 6.0%
Consumer Products 9.1% 6.5%
Financial Services 6.6% 0.9%

ANNUAL REPORT MANAGEMENT Q & A 3

MANAGEMENT Q & A

WHICH STOCKS CONTRIBUTED MOST TO THE FUND'S PERFORMANCE?

The pharmaceutical industry produced the fund's best performing stocks for
the year. Among pharmaceuticals, Eli Lilly & Co., Pfizer Inc. and Warner-Lambert
Co. were all substantial contributors. Investors rewarded these companies for
their increasing sales volumes, market share gains, and extensive new product
lines.

The fund's second-best performing stock for the year, behind Eli Lilly, was
long-time holding Outdoor Systems Inc. This company has been a winner in the
consolidation of the highway billboard industry. We like the stock because it is
a domestic business and is largely immune from turmoil in international markets;
it is in a highly regulated industry, providing barriers to competition; and it
has wide profit margins that proved to be stable during a year that saw plenty
of volatility.

Hurting performance were companies, such as Oxford Health Plans, which
announced it would not meet analysts' expectations and was punished by the
market. Oxford unexpectedly announced poor third-quarter earnings following
difficulties implementing a new billing and bookkeeping system. Technology
holdings also held back performance as investors fled computer-related companies
doing business in Southeast Asia.

HOW WAS THE BOND PORTFOLIO POSITIONED?

The portfolio's performance owed more to its intermediate-term position in
the bond market's risk/return spectrum than to any repositioning we did. In
general, we take a "plain vanilla" approach to the bond portfolio to complement
the stock portfolio and generate the best possible risk-adjusted returns for the
fund as a whole. We invest primarily in intermediate-term Treasury bonds, and we
usually don't make large interest rate bets. We consider the fund's duration (a
measure of the portfolio's sensitivity to interest rate changes -- the higher
the duration, the more the portfolio's value will fluctuate in response to
interest rate movements) target to be approximately four years, and we usually
don't stray too far from that position.

WHAT'S YOUR OUTLOOK FOR BONDS AND THE BOND PORTFOLIO?

We think conditions in 1998 will be favorable for U.S. bonds. U.S. economic
growth appears to be slowing, inflation remains low and bond demand should
continue to be supported by our shrinking federal debt issuance and by investors
shifting money out of the volatile global equity markets. However, there's still
some risk of stronger-than-expected growth and price pressures, so we'll keep
the portfolio's duration close to neutral (the same as the benchmark) and watch
the labor market and wages for clues to future price and interest rate
increases.

VP ADVANTAGE'S FIXED-INCOME PORTFOLIO
As of As of
12/31/97 6/30/97
- -------------------------------------------------------------------------------
Portfolio Sensitivity to Interest Rates

Weighted Average Maturity 4.5 years 4.8 years
Duration 3.6 years 3.8 years
- -------------------------------------------------------------------------------
Portfolio Credit Quality % of fixed income portfolio
(S&P Rating)
- -------------------------------------------------------------------------------

AAA 100% 100%

See Glossary on page 17.

4 MANAGEMENT Q & A AMERICAN CENTURY INVESTMENTS

SCHEDULE OF INVESTMENTS

DECEMBER 31, 1997

Shares Value
- --------------------------------------------------------------------------------

COMMON STOCKS

AIRLINES-0.8%

900 AMR Corp.(1) $115,650

2,300 Alaska Air Group, Inc.(1) 89,125
--------------
204,775
--------------

BANKING--1.6%

2,500 BankAmerica Corp. 182,500

1,995 Charter One Financial, Inc. 125,560

800 Citicorp 101,150
--------------

409,210
--------------

BROADCASTING & MEDIA-3.6%

5,200 Clear Channel
Communications, Inc.(1) 413,075

1,800 Jacor Communications, Inc.(1) 95,737

10,700 Outdoor Systems, Inc.(1) 410,612
--------------
919,424
--------------

COMMUNICATIONS SERVICES-2.1%

400 Ameritech Corp. 32,200

1,300 Bell Atlantic Corp. 118,300

4,426 Tele-Communications, Inc. Cl A(1) 123,513

8,400 WorldCom, Inc.(1) 254,363
--------------
528,376
--------------

COMPUTER PERIPHERALS-1.0%

3,900 Cisco Systems Inc.(1) 217,669

900 SCI Systems, Inc.(1) 39,206
--------------
256,875
--------------

COMPUTER SOFTWARE & SERVICES-1.9%

1,500 America Online Inc.(1) 133,781

2,200 BMC Software, Inc.(1) 144,238

6,200 Compuware Corp.(1) 198,594
--------------
476,613
--------------

COMPUTER SYSTEMS-1.3%

500 Hewlett-Packard Co. 31,250

2,200 International Business Machines Corp. 230,038

2,000 Sun Microsystems, Inc.(1) 79,875
--------------
341,163
--------------

Shares Value
- --------------------------------------------------------------------------------

CONSUMER PRODUCTS-3.4%

2,800 Gillette Company $281,225

5,400 Procter & Gamble Co. (The) 430,988

3,600 Sunbeam Corp. 151,650
--------------
863,863
--------------

DIVERSIFIED COMPANIES-4.9%

8,100 General Electric Co. (U.S.) 594,337

12,700 Tyco International Ltd. 572,294

2,500 U.S. Industries, Inc. 75,313
--------------
1,241,944
--------------

ENERGY (SERVICES)-1.7%

900 Diamond Offshore Drilling, Inc. 43,313

2,500 Falcon Drilling Co. Inc.(1) 87,656

9,800 Input/Output, Inc.(1) 290,937
--------------
421,906
--------------

ENVIRONMENTAL SERVICES-0.3%

2,200 USA Waste Services, Inc.(1) 86,350
--------------

FINANCIAL SERVICES-2.5%

1,300 American Express Credit Corp. 116,025

4,500 CIT Group Holdings, Inc. (The) Cl A(1) 145,125

1,500 Fannie Mae 85,594

1,300 Morgan Stanley, Dean Witter,
Discover & Co. 76,862

3,850 Travelers Group, Inc. 207,419
--------------

631,025
--------------

FOOD & BEVERAGE-1.2%

4,600 Coca-Cola Company (The) 306,475
--------------

HEALTHCARE-0.4%

1,450 Cardinal Health, Inc. 108,931
--------------

INSURANCE-2.3%

900 American International Group, Inc. 97,875

3,100 Conseco Inc. 140,856

8,100 SunAmerica, Inc. 346,275
--------------
585,006
--------------

LEISURE-0.4%

2,400 Viacom, Inc. Cl B(1) 99,450
--------------

See Notes to Financial Statements

ANNUAL REPORT SCHEDULE OF INVESTMENTS 5

SCHEDULE OF INVESTMENTS

DECEMBER 31, 1997

Shares/Principal Amount Value
- --------------------------------------------------------------------------------

MEDICAL EQUIPMENT & SUPPLIES-0.9%

1,900 Guidant Corp. $118,275

1,900 Medtronic, Inc. 99,394
--------------
217,669
--------------

PHARMACEUTICALS-5.7%

3,700 Bristol-Myers Squibb Co. 350,113

6,200 Lilly (Eli) & Co. 431,675

700 Merck & Co., Inc. 74,375

4,100 Pfizer, Inc. 305,706

2,300 Warner-Lambert Co. 285,200
--------------
1,447,069
--------------

PRINTING & PUBLISHING-1.2%

4,200 McGraw-Hill Companies, Inc. (The) 310,800
--------------

RETAIL (SPECIALTY)-0.3%

3,700 Pier 1 Imports, Inc. 83,712
--------------

TOTAL COMMON STOCKS-37.5% 9,540,636
--------------
(Cost $7,164,053)

U.S. TREASURY SECURITIES

$1,000,000 U.S. Treasury Notes,
6.125%, 3/31/98 1,001,910

350,000 U.S. Treasury Notes,
6.00%, 9/30/98 351,095

700,000 U.S. Treasury Notes,
5.125%, 11/30/98 697,172

1,000,000 U.S. Treasury Notes,
7.75%, 1/31/00 1,040,410

1,000,000 U.S. Treasury Notes,
5.75%, 10/31/00 1,001,450

200,000 U.S. Treasury Notes,
5.625%, 11/30/00 199,644

400,000 U.S. Treasury Notes,
6.625%, 6/30/01 411,188

250,000 U.S. Treasury Notes,
6.375%, 9/30/01 255,253

300,000 U.S. Treasury Notes,
6.25%, 1/31/02 305,478

200,000 U.S. Treasury Notes,
6.50%, 5/31/02 205,918

1,250,000 U.S. Treasury Notes,
5.75%, 8/15/03 1,251,087

500,000 U.S. Treasury Notes,
7.875%, 11/15/04 559,245

Shares/Principal Amount Value
- --------------------------------------------------------------------------------

$2,000,000 U.S. Treasury Notes,
6.50%, 8/15/05 $2,087,560

300,000 U.S. Treasury Notes,
5.875%, 11/15/05 301,755

450,000 U.S. Treasury Notes,
6.50%, 10/15/06 471,393
--------------

TOTAL U.S. TREASURY SECURITIES--39.9% 10,140,558
--------------
(Cost $9,983,766)

U.S. GOVERNMENT AGENCY SECURITIES--0.6%

150,000 FNMA, MTN, 7.49%, 5/22/07 154,356
--------------

(Cost $150,721)

SHORT-TERM CASH INVESTMENTS

$3,300,000 par value FHLB Discount Notes,
5.40%, 1/2/98(2) 3,300,000

$2,000,000 par value FHLMC Discount Notes,
5.80%, 1/6/98(2) 1,998,740

300,000 Units of Participation in Chase Vista
U.S. Government Money Market Fund
(Institutional Shares) 300,000
--------------
TOTAL SHORT-TERM
CASH INVESTMENTS-22.0% 5,598,740
--------------

(Cost $5,597,894)

TOTAL INVESTMENT SECURITIES-100.0% $25,434,290
==============
(Cost $22,896,434)

NOTES TO SCHEDULE OF INVESTMENTS

FHLB = Federal Home Loan Bank
FHLMC = Federal Home Loan Mortgage Corporation
FNMA = Federal National Mortgage Association
MTN = Medium Term Note

(1) Non-income producing.

(2) The rates for U.S. Government Agency discount notes are the yield to
maturity at purchase.

See Notes to Financial Statements

6 SCHEDULE OF INVESTMENTS AMERICAN CENTURY INVESTMENTS

STATEMENT OF ASSETS AND LIABILITIES

DECEMBER 31, 1997

ASSETS

Investment securities, at value
(identified cost of $22,896,434) (Note 3) ...................... $ 25,434,290

Cash ........................................................... 36,448

Dividends and interest receivable .............................. 178,947
------------
25,649,685
------------
LIABILITIES

Payable for investments purchased .............................. 379,947

Payable for capital shares redeemed ............................ 4,626

Accrued management fees (Note 2) ............................... 21,319
------------
405,892
------------
Net Assets ..................................................... $ 25,243,793
============
CAPITAL SHARES, $0.01 PAR VALUE

Authorized ..................................................... 200,000,000
============

Outstanding .................................................... 3,822,603
============

Net Asset Value Per Share ...................................... $ 6.60
============
NET ASSETS CONSIST OF:

Capital (par value and paid-in surplus) ........................ $ 20,161,065

Undistributed net investment income ............................ 540,483

Accumulated undistributed net realized gain
from investments and foreign currency transactions ........... 2,004,389

Net unrealized appreciation on investments and translation of
assets and liabilities in foreign currencies (Note 3) ........ 2,537,856
------------
$ 25,243,793
============
See Notes to Financial Statements

ANNUAL REPORT STATEMENT OF ASSETS AND LIABILITIES 7

STATEMENT OF OPERATIONS

YEAR ENDED DECEMBER 31, 1997

INVESTMENT INCOME

Income:
Interest ....................................................... $ 896,375
Dividends (net of foreign taxes withheld of $462) .............. 74,521
-----------
970,896
-----------
Expenses (Note 2)
Management fees ................................................ 249,359
Directors' fees and expenses ................................... 244
-----------
249,603
-----------
Net investment income .......................................... 721,293
-----------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND FOREIGN CURRENCY (NOTE 3)

Net realized gain (loss) on:
Investments .................................................... 2,012,681
Foreign currency transactions .................................. (2,601)
-----------
2,010,080
-----------
Change in net unrealized appreciation on:
Investments .................................................... 346,969
Translation of assets and liabilities in foreign currencies .... 27
-----------
346,996
-----------

Net realized and unrealized gain on
investments and foreign currency ............................... 2,357,076
-----------
Net Increase in Net Assets
Resulting from Operations ...................................... $ 3,078,369
===========
See Notes to Financial Statements

8 STATEMENT OF OPERATIONS AMERICAN CENTURY INVESTMENTS

STATEMENTS OF CHANGES IN NET ASSETS

YEARS ENDED DECEMBER 31, 1997 AND DECEMBER 31, 1996

Increase in Net Assets 1997 1996

OPERATIONS

Net investment income .......................... $ 721,293 $ 758,761

Net realized gain on investments and foreign
currency transactions ........................ 2,010,080 1,368,192

Change in net unrealized appreciation on
investments and translation of assets
and liabilities in foreign currencies ........ 346,996 48,325
------------ ------------
Net increase in net assets
resulting from operations .................... 3,078,369 2,175,278
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS

From net investment income ..................... (389,326) (583,561)

From net realized gains
from investment transactions ................. (1,349,891) (1,133,859)
------------ ------------
Decrease in net assets from distributions ...... (1,739,217) (1,717,420)
------------ ------------
CAPITAL SHARE TRANSACTIONS

Proceeds from shares sold ...................... 918,761 1,450,803

Proceeds from reinvestment of distributions .... 1,739,217 1,717,420

Payments for shares redeemed ................... (3,983,245) (2,433,460)
------------ ------------
Net increase (decrease) in net assets
from capital share transactions .............. (1,325,267) 734,763
------------ ------------
Net increase in net assets ..................... 13,885 1,192,621

NET ASSETS

Beginning of year .............................. 25,229,908 24,037,287
------------ ------------
End of year .................................... $ 25,243,793 $ 25,229,908
============ ============
Undistributed net investment income ............ $ 540,483 $ 211,117
============ ============
TRANSACTIONS IN SHARES OF THE FUND

Sold ........................................... 144,345 238,512

Issued in reinvestment of distributions ........ 295,333 288,203

Redeemed ....................................... (628,781) (398,378)
------------ ------------
Net increase (decrease) ........................ (189,103) 128,337
============ ============

See Notes to Financial Statements

ANNUAL REPORT STATEMENTS OF CHANGES IN NET ASSETS 9

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 1997

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION -- American Century Variable Portfolios, Inc., formerly TCI
Portfolios, Inc., (the Corporation) is registered under the Investment Company
Act of 1940 as an open-end diversified management investment company. American
Century VP Advantage, formerly TCI Advantage, (the Fund) is one of the six
series of funds issued by the Corporation. The Fund's investment objective is
current income and capital growth. The Fund seeks to achieve its investment
objective by investing approximately 20% of the Fund's assets in cash or cash
equivalents, 40% in fixed income securities with a weighted average maturity of
three to ten years and 40% in equity securities that are considered by
management to have better-than-average prospects for appreciation. The following
significant accounting policies, related to the Fund, are in accordance with
accounting policies generally accepted in the investment company industry.