Supplement Dated December 1, 1997
to the Prospectus for Templeton Variable Annuity Fund
dated May 1, 1997
On October 18, 1997, the Board of Trustees of Templeton Variable Annuity Fund
(the "Variable Annuity Fund") approved an Agreement and Plan of Reorganization
("Merger Plan"), subject to approval of the shareholders of the Variable Annuity
Fund at a meeting to be held for such purpose. The Merger Plan provides for the
acquisition of substantially all of the assets of the Variable Annuity Fund by,
and in exchange for shares of, the Templeton Stock Fund (the "Stock Fund"), a
series of Templeton Variable Products Series Fund ("TVPSF"). Following this
exchange, the Templeton Funds Annuity Company ("TFAC") separate accounts will
receive Stock Fund Class 1 shares having an aggregate net asset value equal to
the aggregate net asset value of all shares of the Variable Annuity Fund. Stock
Fund Class 1 shares will then be used by TFAC in place of Variable Annuity Fund
shares to fund the benefits and annuity income payments to owners of the
variable annuity contracts issued by TFAC("Contract Owners"). TFAC has advised
the Variable Annuity Fund Board that the Merger Plan will not affect contract
rights, except that variable payments will depend on the performance of the
Stock Fund Class 1 instead of Variable Annuity Fund.
Both the Stock Fund and the Variable Annuity Fund (the "Funds") are managed by
Templeton Investment Counsel, Inc. The Funds also share the same investment
objective, namely long-term growth of capital, and they have nearly the same
investment policies and strategies. The Funds invest primarily in stocks of
companies of any nation around the world. Stock Fund Class 1 shares and Variable
Annuity Fund shares are both sold only to insurance companies, for use in
variable insurance products, at net asset value with no sales charges or Rule
12b-1 distribution fees.
As of the November 28, 1997 Record Date, TFAC, on behalf of the separate
accounts was the sole shareholder of record of the Variable Annuity Fund. TFAC
will vote shares of the Fund held by it in accordance with voting instructions
received from Contract Owners for whose accounts the shares are held. Subject to
shareholder vote, the merger is anticipated to be completed on April 30, 1998.
For more information or a copy of the Proxy Statement please call 1 (800)
774-5001.
