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PAGE 1
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<PAGE>
PAGE 2
013 B040001 2416
015 A000001 THE CHASE MANHATTAN BANK
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015 A000002 THE CHASE MANHATTAN BANK
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<PAGE>
PAGE 3
015 D020009 SP04719-002
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<PAGE>
PAGE 4
015 A000019 BARCLAYS BANK PLC
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015 C010019 ATHENS
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015 A000020 THE CHASE MANHATTAN BANK
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<PAGE>
PAGE 5
015 A000028 BANQUE GENERALE DU LUXEMBOURG S.A.
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<PAGE>
PAGE 6
015 A000037 DEUTSCHE BANK A.G.
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<PAGE>
PAGE 7
015 B000046 S
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<PAGE>
PAGE 8
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<PAGE>
PAGE 9
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<PAGE>
PAGE 10
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<PAGE>
PAGE 11
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PAGE 12
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PAGE 13
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<PAGE>
PAGE 14
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<PAGE>
PAGE 15
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<PAGE>
PAGE 16
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PAGE 17
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PAGE 18
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SIGNATURE /S/JAMES R. BAIO
James R. Baio
TITLE TREASURER
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE TEMPLETON
VARIABLE ANNUITY FUND DECEMBER 31, 1997 ANNUAL REPORT AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000810355
<NAME> TEMPLETON VARIABLE ANNUITY FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
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<OTHER-ITEMS-LIABILITIES> 53523
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<ACCUMULATED-NII-CURRENT> 282804
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<OVERDISTRIBUTION-GAINS> 0
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<DISTRIBUTIONS-OF-INCOME> (246215)
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</TABLE>
REPORT OF CERTIFIED PUBLIC ACCOUNTANTS
The Board of Trustees
Templeton Variable Annuity Fund
In planning and performing our audit of the financial statements of Templeton
Variable Annuity Fund for the year ended December 31, 1997, we considered its
internal control, including controls over safeguarding securities, in order to
determine our auditing procedures for the purpose of expressing our opinion on
the financial statements and to comply with the requirements of Form N-SAR, not
to provide assurance on internal control.
The management of Templeton Variable Annuity Fund is responsible for
establishing and maintaining internal control. In fulfilling this
responsibility, estimates and judgments by management are required to assess the
expected benefits and related costs of controls. Generally, controls that are
relevant to an audit pertain to the entity's objective of preparing financial
statements for external purposes that are fairly presented in conformity with
general accepted accounting principles. Those controls include safeguarding of
assets against unauthorized acquisition, use or disposition.
Because of inherent limitations in internal control, errors or irregularities
may occur and not be detected. Also, projection of any evaluation of internal
conrtol to future periods is subject to the risk that it may become inadequate
because of changes in conditions or that the effectiveness of the design and
operation may deteriorate.
Our consideration of internal control would not necessarily disclose all matters
in internal control that might be material weaknesses under standards
established by the American Institute of Certified Public Accountants. A
material weakness is a condition in which the design or operation of the
specific internal control component does not reduce to a relatively low level
the risk that errors or irregularities in amounts that would be material in
relation to the financial statements being audited may occur and not be detected
within a timely period by employees in the normal course of performing their
assigned functions. However, we noted no matters involving internal control,
including controls over safeguarding securities, that we consider to be material
weaknesses as defined above as of December 31, 1997.
This report is intended solely for the information and use of management and the
Securities and Exchange Commission.
/s/MCGLADREY & PULLEN, LLP
McGladrey & Pullen, LLP
New York, New York
January 30, 1998
