<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Franklin Life Money Market Variable Annuity Fund C
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[x] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act 0-11:(1)
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4) Proposed maximum aggregate value of transaction:
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(1)Set forth the amount on which the filing fee is calculated and state how it
was determined.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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FRANKLIN LIFE MONEY MARKET VARIABLE ANNUITY FUND C
NOTICE OF ANNUAL MEETING
OF
CONTRACT OWNERS
To the Contract Owners:
PLEASE READ THE SPECIAL NOTICE AT THE BOTTOM OF THIS PAGE.
Notice is hereby given that the annual meeting of the Contract Owners of
Franklin Life Money Market Variable Annuity Fund C (the "Fund") will be held at
the home office of The Franklin Life Insurance Company ("The Franklin"), #1
Franklin Square, Springfield, Illinois, at 11:30 a.m., Springfield time, on
April 15, 1996, for the purpose of considering and acting upon the following
matters:
(1) To elect four members of the Board of Managers of the Fund to serve
until the next annual meeting and until their successors are elected
and qualified;
(2) To ratify the selection of Ernst & Young LLP as the Fund's independent
auditors for the ensuing fiscal year; and
(3) To transact any other matters that may properly come before the
meeting or any adjournment thereof.
Contract Owners of record at the close of business on February 15, 1996
shall be eligible to vote at the meeting or any adjournment thereof. Contract
Owners who do not expect to attend the meeting in person are requested to fill
in and sign the accompanying proxy, which is solicited by the Board of Managers
of the Fund, and to return it to the Fund immediately in the envelope provided
for that purpose. The return of the proxy will not restrict or impair a Contract
Owner's right to revoke it or to attend and vote personally at the meeting.
SPECIAL NOTICE: In the past, the Fund has experienced difficulty in
obtaining the quorum of votes necessary to conduct business at its annual
meetings. The Board of Managers of the Fund therefore URGENTLY REQUESTS
CONTRACT OWNERS TO SIGN AND RETURN THE ACCOMPANYING PROXY SO THAT THE
NECESSARY QUORUM WILL BE OBTAINED.
By Order of the Board of Managers
Stephen P. Horvat, Jr., Secretary
Dated: March 11, 1996
<PAGE>
FRANKLIN LIFE MONEY MARKET VARIABLE ANNUITY FUND C
c/o The Franklin Life Insurance Company
#1 Franklin Square
Springfield, Illinois 62713
PROXY STATEMENT
ANNUAL MEETING OF CONTRACT OWNERS
APRIL 15 , 1996
This Proxy Statement is submitted to the Contract Owners of Franklin Life
Money Market Variable Annuity Fund C (the "Fund") in connection with the
solicitation by the Fund's Board of Managers of their proxies in the form
enclosed for the annual meeting of the Contract Owners to be held at the home
office of The Franklin Life Insurance Company ("The Franklin"), #1 Franklin
Square, Springfield, Illinois, at 11:30 a.m., April 15, 1996, and any
adjournments thereof.
Each Contract Owner receiving this Proxy Statement has previously been sent
a copy of the Fund's annual report for the year ended December 31, 1994. The
Fund will furnish without charge, a copy of the Fund's annual report for the
year ended December 31, 1994 to any Contract Owner upon request. Annual reports
may be requested from Franklin Financial Services Corporation - Equity
Administration, #1 Franklin Square, Springfield, Illinois 62713, or Contract
Owners may call collect (217) 528-2011, ext. 2622. Such report does not
constitute any portion of the proxy soliciting materials.
This Proxy Statement is first being sent to Contract Owners on or about
March 11, 1996.
Any Contract Owner submitting a proxy pursuant to this Proxy Statement may
revoke that proxy at any time prior to the meeting by filing with the Secretary
of the Fund either a duly executed written statement to that effect or a duly
executed proxy bearing a later date. In addition, any such proxy may be revoked
by a Contract Owner by personally attending the meeting and casting his votes in
person. Unless so revoked or unless otherwise directed, the persons designated
in the proxy (the "proxy committee") intend to cast all votes represented by all
the proxies submitted pursuant to this Proxy Statement in favor of the nominees
listed herein for election as members of the Board of Managers, for the
ratification of the selection of Ernst & Young LLP as independent auditors for
the Fund and in the discretion of the proxy committee upon such other matters as
may properly come before the meeting.
VOTING PROCEDURES
As used in this Proxy Statement, the term "Contract" means any variable
annuity contract, which depends in whole or in part on the investment
performance of the Fund. Except in cases where the Contract is issued to a
trustee of a qualified employees' trust or pursuant to a qualified annuity plan,
the Contract Owner is the individual variable annuitant to whom a Contract is
issued. In cases where a Contract is issued to a trustee of a qualified
employees' trust, or pursuant to a qualified annuity plan, the Contract Owner
will be respectively the trustee or the employer establishing such trust or
plan.
SPECIAL NOTICE: In the past, the Fund has experienced difficulty in
obtaining the quorum of votes necessary to conduct business at its annual
meetings. The Board of Managers of the Fund therefore URGENTLY REQUESTS
CONTRACT OWNERS TO SIGN AND RETURN THE ACCOMPANYING PROXY SO THAT THE
NECESSARY QUORUM WILL BE OBTAINED.
Only Contract Owners of record at the close of business on February 15,
1996 shall be eligible to vote at the meeting. As of that date, there were an
aggregate of 101,703.664 votes entitled to be cast by Contract Owners. As of
that date, there was no person entitled to cast as much as 5% of the total
voting power of the Fund.
2
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At the meeting, a quorum will exist if there is represented, either in
person or by proxy, 35% of all votes available to Contract Owners as of the
record date. The election of members of the Board of Managers and the
ratification of the selection of Ernst & Young LLP will require a majority vote
of the votes available to the Contract Owners present or represented at the
meeting, assuming the presence of a quorum.
The number of votes which a Contract Owner may cast as to any Contract,
prior to the commencement of variable annuity payments measured by annuity
units, is equal to the number of accumulation units credited to such Contract.
After commencement of such payments, a Contract Owner may cast a number of votes
equal to (i) the amount of the assets in the Fund to meet the variable annuity
obligations related to such Contract, divided by (ii) the value of an
accumulation unit. Fractional votes will be counted.
An employee covered by a so-called "H.R. 10" plan, if not the Contract
Owner, will have the right to instruct the Contract Owner with respect to all
votes attributable to his Contract. An employee covered by a Contract issued in
connection with a pension or profit-sharing plan described in Section 401 of the
Internal Revenue Code will have the right to instruct the Contract Owner with
respect to votes attributable to his payments to the plan, if any, and, to the
extent authorized by the terms of the plan, with respect to any additional votes
under the Contract. If during the annuity period, payments are being made under
an annuity to a person who is not a Contract Owner, that person will have the
right to instruct the Contract Owner with respect to votes attributable to the
amount of the assets in the Fund to meet the variable annuity obligations
related to his Contract.
Each Contract Owner is required to send copies of this Proxy Statement to
each person who is entitled to instruct the Contract Owner as to the manner in
which its votes are to be cast, and each Contract Owner is further required to
cast its votes in accordance with any such instructions which it receives. The
Fund will furnish each Contract Owner with such additional copies of this Proxy
Statement as it may reasonably request for the purpose of furnishing those
copies to persons entitled to instruct it as to the casting of its votes. If
employees, variable annuitants or other persons to whom payments are being made
are entitled to instruct the Contract Owner, and by April 8, 1996 it has
received instructions from some but not all of those persons, the Contract Owner
may cast the votes as to which it has received no instructions for or against
each proposal to be voted on in the same proportion as votes for which
instructions have been received. If no one is entitled to instruct the Contract
Owner, or if the Contract Owner receives no instructions, all votes which the
Contract Owner is entitled to cast may be cast at its sole discretion.
Neither the Fund nor The Franklin has any duty to inquire as to the
instructions received or the authority of the Contract Owner to cast such votes;
and, except to the extent that the Fund or The Franklin has actual knowledge to
the contrary, the votes cast by Contract Owners will be considered valid and
effective as between the Fund, The Franklin and other persons having voting
rights with respect to the Fund.
ITEM 1: ELECTION OF THE BOARD OF MANAGERS OF THE FUND
Four members of the Board of Managers are to be elected to serve until the
next annual meeting of Contract Owners and until the election and qualification
of their successors. The proxy committee intends to vote all proxies submitted
pursuant to this Proxy Statement for the election of the nominees named below,
except those nominees as to which authority to vote is withheld by the person
executing the proxy. If any of the nominees shall be unable to serve, the votes
represented by the proxies submitted pursuant to this Proxy Statement will be
cast in the discretion of the proxy committee for such substitute nominee or
nominees as shall be designated by the current Board of Managers.
Dr. Robert C. Spencer has served on the Board of Managers of the Fund since
its organization in 1969. Mr. Greenwalt and Mr. Robert G. Spencer have served
since April of 1995. Dr. Robert C. Spencer and Mr. Robert G. Spencer are not
related. All of the nominees were elected by the Contract Owners at their
annual meeting in 1995.
None of the nominees named below was a Contract Owner as of March 11, 1996.
The Board of Managers does not have a nominating, compensation or audit
committee or any other committee serving a similar function.
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The following table sets forth the names of the nominees, their ages, the
positions now held by them with the Fund, the positions held by them with The
Franklin and with Franklin Financial Services Corporation ("Franklin
Financial"), the principal underwriter for the Contracts, their principal
occupations during the past five years and certain directorships held by them.
Where no commencement date for an individual's principal occupation is indicated
in the following table, that individual has been engaged in the stated principal
occupation for at least the past five years. Each of the nominees has consented
to be named as such in this Proxy Statement and to serve on the Board of
Managers if elected.
<TABLE>
<CAPTION>
NOMINEE AGE POSITION WITH PRINCIPAL OCCUPATIONS DURING PAST 5 YEARS
THE FUND
<S> <C> <C> <C>
Robert G. Spencer* 58 Chairman, Board Officer of The Franklin; currently Vice President of The Franklin.
of Managers Prior to 1996, Mr. Robert G. Spencer also served as Treasurer of
The Franklin and Treasurer and Assistant Secretary of Franklin
Financial.
Dr. Robert C. Spencer 75 Member, Board Visiting Professor of Government, Montana State University, since
of Managers 1992; Professor of Government and Public Affairs, Sangamon State
University prior thereto.
James W. Voth 65 Member, Board Chairman, Resource International Corp., South Bend, Indiana
of Managers (marketing, manufacturing and engineering services to industry);
prior to 1993, also President of Resource International Corp.
Clifford L. Greenwalt 63 Member, Board Director, President and Chief Executive Officer, CIPSCO
of Managers Incorporated (utility holding company); Director, President and
Chief Executive Officer, Central Illinois Public Service Company,
Springfield, Illinois (a subsidiary of CIPSCO Incorporated);
Director, Electric Energy, Inc., Joppa, Illinois; Director, First
of America Bank, Kalamazoo, Michigan; Director, First of America
Bank - Illinois, N.A. (a subsidiary of First of America Bank).
----------------------------------------
</TABLE>
*Denotes the nominees who are "interested persons" (as defined in the
Investment Company Act of 1940 (the "1940 Act")) of the Fund, The Franklin or
Franklin Financial by reason of the current positions held by them as set forth
in the above table.
During 1995, there were six meetings of the Board of Managers of the Fund.
The nominees named above also serve as members of the Board of Managers of
Franklin Life Variable Annuity Fund A ("Fund A"), a separate account of The
Franklin having as a primary investment objective the long-term appreciation of
capital through investment appreciation and the retention and reinvestment of
income, the assets of which are held with respect to variable annuity contracts
accorded special tax treatment, and of Franklin Life Variable Annuity Fund B
("Fund B"), a separate account of The Franklin having similar investment
objectives as Fund A but the assets of which are held with respect to variable
annuity contracts not accorded special tax treatment.
Mr. Stephen P. Horvat, Jr. is the Secretary to the Board of Managers of the
Fund and has served since 1986. He has been the Senior Vice President, General
Counsel and Secretary, and a director of The Franklin since 1986. He also
serves as Secretary to the Board of Managers of Fund A and Fund B. Mr. Horvat
is 49 years old.
The following table sets forth a summary of compensation paid for services
to the Fund and certain other entities that are deemed to be part of the same
"fund complex" in accordance with the proxy rules of the Securities and Exchange
4
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Commission (the "Commission") to all members of the Board of Managers during the
year ended December 31, 1995. Pursuant to the terms of its agreement to assume
certain of the Fund s administrative expenses, The Franklin pays all
compensation received by the members of the Board of Managers and the officers
of the Fund. Members of the Board of Managers or officers of the Fund who are
also officers, directors or employees of The Franklin do not receive any
remuneration for their services as members of the Board of Managers or officers
of the Fund. Other members of the Board of Managers received a fee of $1,400
($1,050 where the member did not serve for the entire year) for the year and,
thus, the aggregate direct remuneration of all such members of the Board of
Managers was $3,850 during 1995. It is currently anticipated that the annual
aggregate remuneration of such members of the Board of Managers to be paid
during 1996 will not exceed $4,200.
<TABLE>
<CAPTION>
Total Compensation
Name of Person, Aggregate Pension or Retirement Estimated Annual From Fund and Fund
Position Compensation From Benefits Accrued As Benefits Upon Complex Paid to
Fund Part of Fund Expenses Retirement Directors
<S> <C> <C> <C> <C>
All members of the
Board of Managers as
a group (4 persons) $3,850 (1) -0- -0- $11,550 (1)(2)
</TABLE>
(1) Paid by The Franklin pursuant to an agreement to assume certain Fund
administrative expenses.
(2) Includes amounts paid by The Franklin to members of the Boards of Managers
of Fund A and Fund B who are not officers, directors or employees of The
Franklin for service on such Boards of Managers.
THE BOARD OF MANAGERS RECOMMENDS THAT CONTRACT OWNERS VOTE FOR THE ELECTION
OF MESSRS. GREENWALT, ROBERT G. SPENCER AND VOTH AND DR. ROBERT C. SPENCER.
ITEM 2: RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
Subject to ratification by the Contract Owners, the Board of Managers has
selected the firm of Ernst & Young as the independent auditors for the Fund to
serve for the ensuing year. That firm also serves as the independent auditors
for The Franklin and its parents and subsidiaries, for Fund A and Fund B,
described above, and for two separate accounts of The American Franklin Life
Insurance Company, a wholly-owned subsidiary of The Franklin. Ernst & Young LLP
has no direct or indirect interest in the Fund or in The Franklin or its
subsidiaries.
On February 22, 1995, the Fund terminated the engagement of Coopers &
Lybrand L.L.P. as the independent accountants for the Fund for periods beginning
on or after January 1, 1995. Ernst & Young LLP had been selected to audit the
financial statements of The Franklin and the Board of Managers decided to retain
Ernst & Young LLP as a matter of efficiency for the fiscal year ended December
31, 1995. The selection of Ernst & Young LLP as independent auditors of the
Fund for the fiscal year ended December 31, 1995 was ratified by the Contract
Owners at their annual meeting in 1995.
During the audit of the Fund's financial statements for the year ended
December 31, 1994, there was no disagreement between the Fund and Coopers &
Lybrand L.L.P. on any matter of accounting principles or practices, financial
statement disclosure or auditing scope or procedure which disagreement, if not
resolved to the satisfaction of Coopers & Lybrand L.L.P., would have caused
Coopers & Lybrand L.L.P. to make reference in connection with its report to the
subject matter of the disagreement.
The report of Coopers & Lybrand L.L.P. on the financial statements of the
Fund for the year ended December 31, 1994 did not contain an adverse opinion or
disclaimer of opinion nor was such report qualified as to uncertainty, audit
scope or accounting principles.
5
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It is not contemplated that a representative of Ernst & Young LLP will be
present at the annual meeting of Contract Owners.
The Board of Managers recommends that Contract Owners vote FOR the
ratification of Ernst & Young LLP as the Fund's independent auditors.
INFORMATION CONCERNING THE FRANKLIN
The Franklin acts as investment manager to the Fund pursuant to an
Investment Management Agreement between the Fund and The Franklin executed on
January 31, 1995. That agreement was approved by the Contract Owners of the
Fund at the annual meeting of the Fund held April 17, 1995, having been
submitted for approval in accordance with the 1940 Act as a result of the
termination, by its terms and by operation of law, of a prior Investment
Management Agreement upon the transfer to American General Corporation
("American General") of all of the issued and outstanding shares of common stock
of The Franklin.
The Franklin is a wholly-owned subsidiary of American Franklin Company
("AFC"). AFC is a wholly-owned subsidiary of AGC Life Insurance Company, which
in turn is a wholly-owned subsidiary of American General. The address of AFC
is #1 Franklin Square, Springfield, Illinois 62713. The address of AGC Life
Insurance Company is The American General Center, Nashville, Tennessee 37250.
The address of American General is 2929 Allen Parkway, Houston, Texas 77019.
American General has advised the Fund that there was no person who was known to
it to be the beneficial owner of 10% or more of the voting power of American
General as of February 15, 1996.
BROKERAGE FEES AND PORTFOLIO TURNOVER
No officer or director of The Franklin or Franklin Financial (the principal
underwriter for the Contracts), and no member of the Board of Managers, is
affiliated with any brokerage firm (except with Franklin Financial, affiliations
with which are indicated in this Proxy Statement), and no beneficial owner of 5%
or more of the voting power of The Franklin or any of its parents is known to be
affiliated with any brokerage firm utilized by the Fund (except with Franklin
Financial).
During 1995, no amounts were paid as brokerage commissions.
Since the Fund's assets are invested in securities with short maturity
periods, the Fund's portfolio of money market instruments turns over several
times a year.
PRINCIPAL UNDERWRITER FOR THE CONTRACTS
Franklin Financial serves as the "principal underwriter" (as that term is
defined in the 1940 Act) for the Contracts, pursuant to a Sales Agreement with
the Fund. Franklin Financial is a wholly-owned subsidiary of The Franklin, and
all of Franklin Financial's directors and a majority of its executive officers
are also directors or officers of The Franklin. The address of Franklin
Financial is #1 Franklin Square, Springfield, Illinois 62713.
There are no deductions for sales charges made from stipulated payments
under the Contracts. However, a contingent deferred sales charge, applied
against the lesser of cash value or stipulated payments made during the
immediately preceding 72 months, is deducted in the event of certain
redemptions. In the case of periodic stipulated payment variable annuity
contracts, such charges for total redemptions start at 8% for the first three
contract years and then decline by 2% increments per year through the sixth
contract year, with no such charge being imposed after the end of the sixth
contract year. In the case of single stipulated payment variable annuity
contracts, such charges for total redemptions start at 6% for the first two
contract years and then decline by 2% increments per year through the fourth
contract year, with no such charge being imposed after the end of the fourth
contract year. The contingent deferred sales charges applied to partial
redemptions are identical to those applied to total redemptions, except that
such charges remain at a constant 4% subsequent to the fifth contract year in
the case of periodic stipulated payment variable annuity contracts, and the
third contract year in the case of single stipulated payment variable annuity
contracts. Contingent deferred sales charges are
6
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waived in the case of partial redemptions of an amount in each contract year up
to 10% of cash value, death of the variable annuitant and where proceeds of a
total redemption are used to purchase another variable annuity, fixed dollar
annuity or life insurance contract issued by The Franklin. During 1995, the
amounts received by Franklin Financial under the Fund's Sales Agreement in
respect of these charges aggregated $108.
A deduction of $20 per contract year (subject to increase by The Franklin
to a maximum of $30 per contract year) and a transaction fee of $1.00 per
stipulated payment ($.50 if by bank draft or by employer or military
preauthorized automatic deduction from compensation) in the case of periodic
stipulated payment variable annuity contracts, and a one-time deduction of $100
in the case of single stipulated payment variable annuity contracts, is made
from stipulated payments for administrative expenses. However, administration
deductions will be waived with respect to funds transferred to a contract from
another totally redeemed variable annuity or fixed-dollar annuity issued by The
Franklin. During 1995, these charges aggregated $1,060.
PROPOSALS BY CONTRACT OWNERS
Proposals by Contract Owners intended to be presented at the next annual
meeting of Contract Owners to be held in 1997 must be received by the Secretary
to the Board of Managers of the Fund at the home office of The Franklin, #1
Franklin Square, Springfield, Illinois 62713 on or before November 11, 1996, in
order to be included in the proxy statement and form of proxy relating to such
meeting. Contract Owners intending to present any such proposal should refer to
the requirements of Rule 14a-8 under the Securities Exchange Act of 1934.
GENERAL
The Board of Managers is not aware of any matter which is to be presented
for action at the meeting except the matters set forth herein. Should any other
matter be presented for action at the meeting, the enclosed proxy confers upon
the proxy committee authority to cast the votes represented by that proxy in
accordance with its best judgment in the interest of the Fund.
The accompanying proxy is solicited by and on behalf of the Board of
Managers of the Fund. Solicitation of proxies will be made by the use of the
mails, except that officers and regular employees of The Franklin may make
solicitations of proxies by telephone or telegram and by personal calls. The
entire cost of such solicitation is to be borne by The Franklin pursuant to its
agreement to bear the administrative expenses of the Fund.
By Order of the Board of Managers
Stephen P. Horvat, Jr., Secretary
Dated: March 11, 1996
7
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Appendix
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PROXY OF CONTRACT OWNER OF
FRANKLIN LIFE MONEY MARKET VARIABLE ANNUITY FUND C
PROXY SOLICITED BY BOARD OF MANAGERS
The undersigned Contract Owner of Franklin Life Money Market Variable
Annuity Fund C (the "Fund"), having received Notice of the Annual Meeting of
Contract Owners of the Fund and the Proxy Statement accompanying such notice,
each dated March 11, 1996, hereby constitutes and appoints Robert G. Spencer and
Stephen P. Horvat, Jr., and each of them, true and lawful attorneys or attorney
of the undersigned, with power of substitution, to attend and to cast all votes
entitled to be cast by the undersigned, for and in the name, place and stead of
the undersigned, at the annual meeting of Contract Owners of the Fund to be held
at the home office of The Franklin Life Insurance Company, #1 Franklin Square,
Springfield, Illinois, on April 15, 1996, at 11:30 a.m., and at any and all
adjournments thereof, with all powers the undersigned would possess if
personally present.
The proxies will vote in the manner directed herein. The Board of Managers
of the Fund recommends that this proxy be marked FOR the election of all the
nominees listed below, and FOR ratification of the selection of Ernst & Young
LLP as the independent auditors for the Fund. IF NO CONTRARY INDICATION IS
MADE, THE PROXIES WILL VOTE PURSUANT TO THE RECOMMENDATION OF THE BOARD OF
MANAGERS.
(A) Election of the Board of Managers of the Fund for the ensuing year:
/ / for all nominees listed below / / authority withheld to vote
(except as indicated in the space for all nominees listed
below) below
Clifford L. Greenwalt; Dr. Robert C. Spencer; Robert G. Spencer;
James W. Voth
(Instruction: To withhold authority to vote for any individual
nominee, write that nominee's name in the space provided below.)
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(B) Ratification of the selection of Ernst & Young LLP as the independent
auditors for the Fund for the ensuing year:
/ / for / / against / / abstain
(C) In the discretion of the proxies, upon such other matters as may
properly come before the meeting.
Dated: , 1996
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Signature of Contract Owner
