REGISTRATION NOS. 33-11780 AND 811-5023
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 1, 1995.
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Post-Effective Amendment No. 11
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 14
TEMPLETON FUNDS RETIREMENT ANNUITY SEPARATE ACCOUNT
(Exact Name of Registrant)
TEMPLETON FUNDS ANNUITY COMPANY
(Name of Depositor)
700 CENTRAL AVENUE, ST. PETERSBURG, FLORIDA 33701-3628
(Address of Depositor's Principal Executive Offices)
Depositor's Telephone Number (813) 823-8712
Thomas M. Mistele
Templeton Funds Annuity Company
700 Central Avenue, P.O. Box 33030
ST. PETERSBURG, FLORIDA 33701-3628
(Name and Address of Agent for Service)
It is proposed that this filing will become effective on , immediately upon
filing pursuant to paragraph (b) of Rule 485.
The Registrant has registered an indefinite number of shares under the
Securities Act of 1933 pursuant to Rule 24f-2 under the Investment Company Act
of 1940 and has filed its Rule 24f-2 Notice for the fiscal year ended December
31, 1994 on or before February 28, 1995.
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TEMPLETON FUNDS RETIREMENT ANNUITY SEPARATE ACCOUNT
CROSS REFERENCE SHEET
ITEM NO. CAPTION(S)
PART A
1 Cover Page
2 Glossary of Special Terms
3 Summary
4 Annuity Unit Values
5 Templeton Funds Annuity Company; The
Separate Account; Templeton Variable Annuity
Fund; Voting Rights
6 Deductions and Charges
7 The Annuities; Substitution of Securities and
Other Changes; Cover Page
8 The Annuities
9 The Annuities
10 Purchase of Annuities; The Annuities;
Templeton Funds Annuity Company
11 N/A
12 Tax Information
13 N/A
14 Statement of Additional Information Table of
Contents
PART B
15 Cover Page
16 Table of Contents
17 Templeton Funds Annuity Company
18 Templeton Funds Annuity Company; Independent
Accountants
19 N/A
20 Templeton Funds Annuity Company; Purchase of
Annuities (in prospectus)
21 N/A
22 N/A
23 Financial Statements
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PROSPECTUS
DECVEMBER 1, 1995
TEMPLETON RETIREMENT ANNUITIES
ISSUED BY TEMPLETON FUNDS RETIREMENT ANNUITY
SEPARATE ACCOUNT
OF
TEMPLETON FUNDS ANNUITY COMPANY
700 Central Avenue
St. Petersburg, Florida 33701-3628
Telephone (800) 774-5001
A TEMPLETON RETIREMENT ANNUITY ("Annuity") is an immediate variable
annuity. The Annuities are available only to an investor who has maintained a
Franklin Templeton Tax Deferred Retirement Plan ("Plan") with one of the
Franklin Templeton Mutual Funds for a period of at least one year and wishes
to use all or a portion of his or her Plan to purchase an Annuity. The
Annuities will not be available to any investor who resides in a state where
the Annuities may not lawfully be sold. The minimum amount required to pur-
chase an Annuity is $10,000. The Annuities are sold without a sales charge.
Once Annuity Payments commence, the purchase price may not be refunded or
redeemed.
The Annuities are issued pursuant to either (i) a Group Contract between
Templeton Funds Annuity Company (the "Company") and Franklin Templeton Trust
Company (the "Contractholder") and represent participations in the Group
Contract or (ii) an Individual Contract between the Company and an individual
Contractowner ("Individual Contractowner"). Both Individual Contracts and
Group Contracts are referred to in this Prospectus by the term "Contract."
All assets under the Contracts are invested, through Templeton Funds
Retirement Annuity Separate Account (the "Separate Account"), in shares of
Templeton Variable Annuity Fund (the "Fund") and the value of the Annuities,
and the amount of each Annuity Payment, will vary with the performance of the
Fund.
TEMPLETON VARIABLE ANNUITY FUND has for its investment objective long term
capital growth through a flexible policy of investing in stocks and debt
obligations of companies and governments of any nation.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
This Prospectus sets forth concisely information about the Annuities and
the Separate Account that a prospective investor should know before
investing.
A Statement of Additional Information (the "SAI") dated December 1,
1995, is on file with the Securities and Exchange Commission and is, in its
entirety, incorporated by reference into and made a part of this Prospectus.
(See page 13 for the Statement of Additional lnformation Table of Contents.)
A copy of the SAI is made available upon request and without charge by
calling or writing Templeton Funds Annuity Company at the address indicated
above.
THIS PROSPECTUS SHOULD BE ACCOMPANIED BY A CURRENT PROSPECTUS OF TEMPLETON
VARIABLE ANNUITY FUND. BOTH PROSPECTUSES SHOULD BE READ CAREFULLY AND
RETAINED FOR FUTURE REFERENCE.
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TABLE OF CONTENTS
<TABLE>
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PAGE
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Glossary of Special Terms .............................................. 3
Expense Table .......................................................... 5
Summary ................................................................ 5
Annuity Unit Values .................................................... 6
Templeton Funds Annuity Company ........................................ 6
The Separate Account ................................................... 6
Templeton Variable Annuity Fund ........................................ 6
Purchase of Annuities .................................................. 6
The Annuities
Payment Options ...................................................... 7
Beneficiaries ........................................................ 8
Annuity Payments ..................................................... 8
Annuity Units ........................................................ 9
Value of the Separate Account ........................................ 9
Delays in Valuation and Payment ...................................... 9
Deductions and Charges ................................................. 10
Tax Information
Internal Revenue Code Limitations .................................... 10
Federal Income Tax Status ............................................ 10
(a)Federal Tax Status of the Company and the Separate Account ..... 10
(b)Federal Tax Status of Annuitants ................................ 11
(c)Withholding ..................................................... 11
Voting Rights .......................................................... 11
Substitution of Securities and Other Changes ........................... 11
Statement of Additional Information Table of Contents .................. 13
Appendix A--Compliance with Internal Revenue Code Rules ................ 14
Appendix B--Dollar Value of First Monthly Payment ...................... 15
</TABLE>
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GLOSSARY OF SPECIAL TERMS
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ANNUITANT A person on whose life the Annuity Payments are
based.
ANNUITY A Templeton Retirement Annuity issued pursuant to
the Contracts.
ANNUITY BENEFITS Those benefit payments, including Annuity
Payments, made to an Annuitant, a Joint Annuitant,
one or more Beneficiaries and/or any of their
respective estates under the terms of the
Contracts.
ANNUITY PAYMENTS The monthly payments made in accordance with the
Annuity Option elected by the Participant under
the Group Contract or the Individual Contractowner
under an Individual Contract. Annuity Payments
will be determined by applying the initial
contribution, less any applicable taxes, to the
tables shown in Appendix B hereto.
ANNUITY PURCHASE DATE The date the contribution is made and the order to
purchase the Annuity is effected.
ANNUITY UNIT An accounting unit of measure used to calculate
the dollar amount of Annuity Payments and Annuity
Benefits. The value of an Annuity Unit fluctuates
generally with the value of the Fund.
APPLICANT A Plan accountholder who submits an application or
enrollment form requesting that his or her Plan
purchase an Annuity.
BENEFICIARY A person or persons designated by a Participant to
receive benefits under an Annuity, if any, payable
after the last death of an Annuitant and any Joint
Annuitant.
BUSINESS DAY Any day on which the New York Stock Exchange is
open for business.
COMPANY Templeton Funds Annuity Company, a Florida
insurance company which maintains the Separate
Account and issues the Annuities.
GROUP CONTRACTHOLDER Franklin Templeton Trust Company, a trust company
chartered under California law, and its successors
and assigns.
FUND Templeton Variable Annuity Fund, the registered
open-end management investment company in which
the Contracts' assets are invested by the Separate
Account.
GROUP CONTRACT The Group Retirement Annuity Contract number
GA-002 between the Company and the Contractholder.
INDIVIDUAL CONTRACT An individual Retirement Annuity Contract between
the Company and an Individual Contractowner.
INDIVIDUAL CONTRACTOWNER An individual or individuals entitled to the
ownership rights stated in the Individual Contract
and in whose name the Contract is issued.
JOINT ANNUITANT A person other than the Annuitant designated by
the Participant as a person on whose life Annuity
Payments may also be based.
PARTICIPANT An Applicant whose application or enrollment form
requesting that his or her Plan purchase an
Annuity has been approved. A Participant will
generally also be an Annuitant.
PAYMENT DATE A day on which the value of Annuity Units for a
given Annuity Payment is calculated.
PERIODIC CHARGE An amount deducted periodically from the Separate
Account to compensate the Company for assuming
mortality and expense risks. (See "Deductions and
Charges.")
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PLAN Any one of the group of Franklin Templeton Tax
Deferred Retirement Plans offered in connection
with the Franklin Templeton Mutual Funds, and for
which the Contractholder acts as trustee or
custodian, to provide for the accumulation of
retirement funds for individuals or groups of
individuals under which at least a part of the
accumulation is tax deferred under the Internal
Revenue Code and under which an Annuity may be
purchased. These Plans currently include the
Franklin Templeton Individual Retirement Account
("IRA"), the Franklin Templeton Simplified
Employee Pension ("SEP-IRA"), Franklin Templeton
"403(b)" retirement plans for employees of tax
exempt organizations, Franklin Templeton "401(k)"
plans and qualified plans for corporations, self
employed individuals and partnerships, and are
held for the individuals or groups by Franklin
Templeton Trust Company as trustee or custodian.
SEPARATE ACCOUNT Templeton Funds Retirement Annuity Separate
Account, a separate account of the Company
registered with the Securities and Exchange
Commission as a unit investment trust. The
Separate Account invests all its assets in the
Fund. The assets of the Separate Account are not
commingled with the general assets of the Company,
and the investment performance of the Separate
Account is kept separate from that of the general
assets of the Company.
FRANKLIN TEMPLETON MUTUAL FUNDS The Franklin Templeton Mutual Funds include each
existing and future U.S. registered open- end
investment company for which Franklin Advisors,
Inc. or Templeton, Galbraith & Hansberger Ltd. or
an affiliate acts as investment adviser or manager
and for which Franklin Templeton Distributors,
Inc. acts as principal underwriter, unless
otherwise specified by the Company. (See "The
Annuities.")
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EXPENSE TABLE
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Separate Account Annual Expenses (As a
percentage of average account value) ........
Mortality and Expense Risk Fee ........................0.80%
Administration Fee ....................................0.30%
Total Separate Account Annual Expenses ................1.10%
Templeton Variable Annuity Fund Annual
Expenses (As a percentage of Fund average net
assets)* .....................................
Management Fees .......................................0.50%
Other Expenses ........................................0.50%
Administrative Fees .........................0.15%
Other (after expense reimbursement) ........0.35%
Total Fund Annual Expenses ............................1.00%
<FN>
*Templeton Funds Annuity Company, the Fund's Business Manager, has agreed to
reimburse the Fund an amount by which the Fund's annual expenses for all
purposes exceed 1.0% of the Fund's average daily net assets through May 1,
1996. Expenses borne by the Business Manager amounted to $0.09 per share for
the fiscal year ended December 31, 1994. If these expenses had been incurred
by the Fund, the annualized ratio of expenses to average net assets would
have been 1.49%.
</TABLE>
<TABLE>
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1 YEAR 3 YEARS 5 YEARS 10 YEARS
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You would pay the following expenses on a $1,000 investment,
assuming a 5% annual return on the Fund's assets (based on a
Joint and 100% Survivor Annuity with 120 payments guaranteed,
both Annuitants age 70 and with a 3% assumed annual interest
rate; see "The Annuities--Payment Options"): .................... $21 $59 $95 $168
</TABLE>
The information in the above table is an estimate based on the Separate
Account's and the Fund 's expenses as of the end of the most recent fiscal
year and is provided for purposes of assisting current and prospective
Annuitants in understanding the various costs and expenses that an investor
in the Annuity will bear, directly or indirectly. The 5% annual return and
annual expenses should not be considered a representation of actual or
expected Annuity performance or expenses, both of which may vary. For a more
detailed discussion of the Separate Account's and the Fund's fees and
expenses, see "Deductions and Charges" and "Management of the Fund,"
respectively.
SUMMARY
A Templeton Retirement Annuity is an immediate variable annuity designed
to be used to distribute the benefits of tax deferred retirement plans. The
Annuities are available only to persons who have maintained an account in a
Plan for at least one year. The minimum Annuity purchase is $10,000. Once
Annuity Payments commence, the purchase price may not be refunded or
redeemed.
The Participant may select an assumed annual interest rate of 3% or 7% and
from a variety of payment options based on his life (or his life and that of
a Joint Annuitant) or for a period certain (see "Payment Options"). The value
of the first Annuity Payment depends on the amount invested, the assumed
annual interest rate specified and the Annuity Payment option selected by the
Participant. The amount of each Annuity Payment thereafter will fluctuate
based on the performance of the underlying mutual fund in which the Annuity
assets are invested (see "Templeton Variable Annuity Fund"). The investment
objective of the Fund is long term capital growth through a flexible policy
of investing in stocks and debt obligations of companies and governments of
any nation.
The Annuities are available under the Group Contract issued to the
Contractholder by the Company. In those states where the Group Contract may
not be offered, an Individual Contract, with substantially similar terms,
will be issued to the Applicant. All obligations under the Contracts are
obligations of the Company. All assets under the Contracts are held in a
segregated account of the Company and are not chargeable with other
liabilities of the Company (see "The Separate Account").
The Annuities are sold without a sales charge. Any applicable state
premium taxes are deducted, as required, from the initial contribution or
from Annuity Payments or Annuity Benefits. The Company assesses a total
charge on an annual basis of 1.1% of assets of the Separate Account as
compensation for Separate Account expenses and for assuming expense and
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mortality risks. The Company guarantees that these charges will not increase
for Annuities already issued (see "Deductions and Charges"). Expenses of
Templeton Variable Annuity Fund are described in its prospectus.
ANNUITY UNIT VALUES
(For an Annuity Unit outstanding for the periods shown and with a 9%
assumed annual interest rate. Annuity unit values will vary for contracts with
an assumed annual interest rate different than 9%.)
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1994 1993 1992 1991 1990
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Annuity Unit value at
beginning of period ... $1.36 $1.10 $1.10 $0.92 $1.15
Annuity Unit value at
end of period .......... $1.19 $1.36 $1.10 $1.10 $0.92
Number of Annuity Units
outstanding at the end
of period .............. 98,101 96,190 90,655 67,630 56,401
</TABLE>
The value of an Annuity Unit changes to reflect the investment results of
the Fund, the expenses of the Separate Account, and the assumed annual
interest rate used to determine Annuity Payments. The value of an Annuity
Unit will increase only when the actual investment results of the Separate
Account exceed the assumed annual rate of interest selected by the
Participant. If actual results are less than the assumed rate, the value of
an Annuity Unit will decrease.
TEMPLETON FUNDS ANNUITY COMPANY
Templeton Funds Annuity Company (the "Company"), 700 Central Avenue, St.
Petersburg, Florida 33701-3628, is the sponsor of the Separate Account. The
Company was organized as a Florida corporation on January 25, 1984 and is
licensed to engage in the life insurance business in Florida. The Company is
an indirect wholly-owned subsidiary of Franklin Resources, Inc. (See
"Templeton Funds Annuity Company" in the SAI for additional information.)
THE SEPARATE ACCOUNT
The Separate Account was established on February 4, 1987, by resolution of
the Board of Directors of the Company and is registered with the Securities
and Exchange Commission (the "Commission") as a unit investment trust. This
registration does not involve any supervision by the Commission of the
administration or investment practices or policies of the Separate Account or
of the Fund. The Separate Account invests its assets, net of certain
expenses (see "Deductions and Charges"), exclusively in Templeton Variable
Annuity Fund (the "Fund"). Although empowered to establish subaccounts which
may make other investments, the Separate Account has no present intention of
so doing.
The Separate Account is administered and accounted for as part of the
general business of the Company, but the income and capital gains or losses
from assets allocated to the Separate Account, whether or not realized, are,
in accordance with the resolution establishing the Separate Account, credited
to or charged against those assets without regard to other income, gains or
losses of the Company. The assets of the Separate Account are not chargeable
with liabilities arising out of any other business of the Company. The
obligations arising under the Contracts are obligations of the Company.
TEMPLETON VARIABLE ANNUITY FUND
The Fund is registered under the Investment Company Act of 1940 as an
open-end diversified management investment company and is currently used only
as a funding vehicle for the Annuities. The Fund was organized as a
Massachusetts business trust on February 5, 1987. The Fund's investment
objective is long term capital growth. It pursues this objective through a
flexible policy of investing primarily in stocks and debt obligations of
companies and governments of any nation, including issuers inside as well as
outside the United States. The Fund's Investment Manager is Templeton
Investment Counsel, Inc., an affiliate of the Company. A prospectus
containing more complete information concerning the Fund accompanies this
Prospectus and should be read carefully before purchasing an Annuity.
PURCHASE OF ANNUITIES
Applications and enrollment forms for requesting the purchase of an
Annuity are available from Templeton Funds Annuity Company, 700 Central
Avenue, St. Petersburg, Florida 33701-3628. Annuities are available on a
continuing basis only to
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eligible persons and are sold with no sales charge. Persons eligible to
request the purchase of an Annuity are those who have maintained an account
in a Plan for at least one year prior to the Annuity Purchase Date. The
Contractholder will determine whether each Applicant meets the eligibility
requirements. For each eligible Applicant requesting to have an Annuity
purchased by his Plan, the Contractholder acting in its capacity as custodian
or trustee under the particular Plan will effect the purchase of an Annuity
in accordance with the Applicant's instructions. Annuity purchases will be
effected only for Applicants who reside in states where the Annuities may
lawfully be sold.
To arrange for the purchase of an Annuity, each Applicant must return a
properly completed application or enrollment form to the Company together
with any other forms which the Company may require. The form contains an
authorization for the Contractholder, as trustee or custodian under the
Applicant's Plan, to use a specified amount of Plan assets to purchase an
Annuity. The minimum amount for purchase of an Annuity is $10,000. After the
Contractholder has reviewed each application or enrollment form to determine
eligibility, the Company will notify each Applicant whether his or her
request to have an Annuity purchased has been approved. Each approved
Applicant covered by the Group Contract will be sent a certificate confirming
the terms, the Annuity Payment option and amount of the Annuity selected as
well as the identity of the Annuitant, any Joint Annuitant and Beneficiaries.
The certificate will also describe applicable terms of the Group Contract.
Other approved Applicants will receive their own Individual Contract.
Each order to purchase an Annuity will be effected on the 10th Business
Day prior to the first day of the month or on such earlier Business Day as
the Company, in its sole discretion, may determine. On each such day, the
payment for each approved application or enrollment request will be
transferred from the applicable Plan and invested in accordance with the
Contract at the Annuity Unit value determined on that day (see "Annuity
Units"). (Prior to such transfer, amounts to be transferred from Plans will
continue to be invested under such Plans.) Completed application or
enrollment forms must be received by the Company at least 10 days prior to a
Business Day on which the Company effects orders to purchase Annuities in
order for the order to be processed on that latter date. Applicants whose
application or enrollment forms are not complete or are not timely received
will be notified that the order will be processed on the next day on which
orders are effected, provided any additional necessary information is timely
provided. An Applicant may withdraw his or her request for application or
enrollment at any time before the Annuity Purchase Date.
The principal underwiter of the Annuities is Templeton Franklin Investment
Services, INc. ("TFIS"). TFIS is an indirect wholly-owned subsidiary of
Franklin Resources, Inc. and is an affiliate of the Company. TFIS receives no
compensation for its services as principal underwriter.
THE ANNUITIES
The Annuities are offered only to persons who have maintained an account
for at least one year in a Franklin Templeton Tax Deferred Retirement Plan
("Plan") with any one or more of the Franklin Templeton Mutual Funds. The
Annuities are designed to permit such persons, on or after the retirement date
permitted under the applicable Plan, to instruct the Contractholder, in its
capacity as custodian or trustee under the Plan, to have the Plan purchase an
immediate variable annuity having a payout option selected by the
Applicant (see "Payment Options"). Once Annuity Payments commence, the
purchase price may not be refunded or redeemed, and no exchanges may be made
to another Franklin Templeton Mutual Fund. Benefits payable under the
Annuities will vary in amount based on the performance of the Fund. The
Company guarantees that the dollar amount of Annuity Payments for Annuities
already issued will not be affected by the changes in the expense assumptions
used in determining the first Annuity Payment. However, because the Fund in
which assets used to purchase the Annuity are invested fluctuates in value
daily, there can be no guarantee that the remaining value of an Annuity (net
of deductions and charges), together with any Annuity Payments already made,
will at any given time exceed or even equal the amount of assets used to
purchase the Annuity.
PAYMENT OPTIONS
Annuity Payments will be made monthly. The value of the first Annuity
Payment is determined as indicated in Appendix B, based on the amount of
contribution and the payment option specified in the application or
enrollment form, which may be one of the following:
Option I--Life Annuity--An Annuity payable monthly during the lifetime of
the Annuitant. The Annuity will stop with the last Annuity Payment due prior
to the death of the Annuitant. Only one Annuity Payment would be made under
this Option if the Annuitant dies before the second Annuity Payment is due;
only two Annuity Payments would be made if the Annuitant dies before the
third Annuity Payment is due, etc.
Option II--Life Annuity with 60 or 120 Monthly Payments Guaranteed--An
Annuity payable monthly during the lifetime of an Annuitant with a guarantee
that if, at the death of the Annuitant, Annuity Payments have been made for
less than 60 or 120 months, as elected, then Annuity Payments will be
continued thereafter, to a Beneficiary designated by the Participant during
the remainder of said period.
Option III--Joint and Last Survivor Annuity--An Annuity payable monthly
during the joint lifetime of the Annuitant and a designated Joint Annuitant.
Upon the death of the Annuitant, Annuity Payments will be made to the Joint
Annuitant during
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the Joint Annuitant's remaining lifetime at a level of 100%, 75% or 50% of
the original level, as elected by the Participant. This percentage is
selected by the Participant in his application or enrollment form. Under this
Option, only one Annuity Payment would be made if both the Annuitant and the
Joint Annuitant die before the second Annuity Payment is due; only two
Annuity Payments would be made if they both die before the third Annuity
Payment is due, etc.
Option IV--Joint and Last Survivor Annuity with 60 or 120 Monthly Payments
Guaranteed--An Annuity payable monthly during the joint lifetime of an
Annuitant and a Joint Annuitant with no reduction in amount after the death
of the Annuitant and with a guarantee that if, at the latter death of either
the Annuitant or the Joint Annuitant, Annuity Payments have been made for
less than 60 or 120 months as elected, then Annuity Payments will be
continued thereafter to a Beneficiary designated by the Participant during
the remainder of said period.
Option V--Unit Refund Life Annuity--An Annuity payable monthly during the
lifetime of an Annuitant, ceasing with the last Annuity Payment due prior to
the death of the Annuitant with a guarantee that, at the death of the
Annuitant, the Beneficiary will receive in one sum the then dollar value of
the number of Annuity Units equal to (1) the total net amount applied to
purchase the Annuity divided by the Annuity Unit value used to determine the
first Annuity Payment, minus (2) the product of the number of the Annuity
Units represented by each payment and the number of payments made. No payment
will be made if the difference of (1) minus (2) is negative.
Other payment options may be arranged subject to prior approval by the
Company.
See "Tax Information--Internal Revenue Code Limitations," regarding
limitations and other requirements which should be considered when selecting
a payment option. For Internal Revenue Code requirements which may modify
payments under the Annuity options in certain cases, see Appendix A.
BENEFICIARIES
An Applicant for an Annuity may designate a Beneficiary or Beneficiaries
to receive any remaining payments or sums which may become payable upon the
last death of the Annuitant and the Joint Annuitant. An Applicant may also
designate one or more contingent Beneficiaries to receive Annuity Benefits in
the event all Beneficiaries die before all Annuity Benefits payable to such
Beneficiaries have been paid. These designations may be changed by the
Participant from time to time.
If more than one Beneficiary or contingent Beneficiary is designated and
the respective interest of each is not specified, they will be paid in equal
shares. If any of several Beneficiaries dies before the Annuitant and any
Joint Annuitant, any amounts payable upon the death of the Annuitant and any
Joint Annuitant will be paid to the surviving Beneficiaries, in equal shares
or as otherwise designated by the Participant. If any of several contingent
Beneficiaries dies before all the Beneficiaries, any amounts payable upon the
death of all Beneficiaries will be paid to the surviving contingent
Beneficiaries, in equal shares or as otherwise designated by the Participant.
After the start of Annuity Payments to one or more of several Beneficiaries
or contingent Beneficiaries, if any of the designated Beneficiaries or
contingent Beneficiaries dies, Annuity Payments will be continued in equal
shares to the remaining Beneficiaries or contingent Beneficiaries then
eligible to receive such payments unless otherwise specified by the
Participant. After the start of Annuity Payments to a Beneficiary or
contingent Beneficiary and after the death of all designated Beneficiaries or
contingent Beneficiaries, the commuted value of any remaining guaranteed
Annuity Payments due or to become due will be paid in one sum to the estate
of the person or persons then receiving such payments. Such commuted value
will be determined on the basis of the assumed interest rate selected by the
Applicant, compounded annually. (See "Annuity Payments.")
Any designation or change of Beneficiary or contingent Beneficiary shall
be made to the Company's home office by filing satisfactory written notice.
When acknowledged in writing by the Company, such designation or change will
take effect on the date the notice was signed. The Company will not be liable
for any payment made or action taken by it before notice was acknowledged.
ANNUITY PAYMENTS
The first payment under any of the Annuity Options will be determined in
accordance with the Annuity Payment rate based on the assumed annual interest
rate selected by the Applicant. No purchase of an Annuity will be effected
until the Company has received proof acceptable to it of the birthdate of the
Annuitant and any Joint Annuitant.
Under the Contract the Annuitant may choose between an assumed annual
interest rate of 3% or 7%. If the Annuitant chooses the 7% assumed annual
interest rate, as compared to choosing the 3% interest rate, Annuity Payments
would start at a higher level but would increase more slowly if investment
returns are more than 7% and decrease more rapidly. Therefore, election of
the 7% assumed annual rate of interest would result in a higher first monthly
payment, but would increase the possibility of reduced future payments during
the periods when net investment performance of the Separate Account did not
exceed the 7% assumed annual interest rate.
If the Annuitant chooses the 3% assumed annual interest rate, Annuity
Payments would start at a lower level but would increase more rapidly if the
investment returns are greater than 3% and decrease more slowly. Therefore,
election of the 3%
8
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assumed annual interest rate would result in a lower first monthly payment
but would decrease the possibility of reduced future payments.
The first Annuity Payment, for payments made on a monthly basis, is
calculated by dividing the Purchase Payment, less any applicable taxes, by
1000 and multiplying the result by the appropriate figure shown on Appendix
B. Values not shown will be calculated on an equivalent basis. The first
Annuity Payment is then divided by the then current value of an Annuity
Unit (see below) to determine the fixed number of Annuity Units used to
calculate each subsequent Annuity Payment. Thereafter, each Annuity Payment
is calculated by multiplying the fixed number of Annuity Units, as determined
above, by the current Annuity Unit Value, less any applicable taxes. Since
the value of an Annuity Unit will fluctuate from month to month, the amount
of each Annuity Payment may also be expected to fluctuate. However, the
Company guarantees that the Administrative Fee and the Periodic Charge will
not be changed for any Annuity once issued. (See "Deductions and Charges.")
In some states the combination of the 7% and 3% assumed interest rates may
not be available. Alternate rates may be offered as permitted under
applicable state law.
ANNUITY UNITS
The value of an Annuity Unit was initially set at $1.00 upon commencement
of the Separate Account's operations. The value of an Annuity Unit is
thereafter determined as follows on each Payment Date:
First: The Net Investment Factor is determined by dividing (a) by (b) and
adding (c) to the result, where:
(a) is the net increase or decrease in the net asset value per share of
the Fund, plus the per share amount of any dividend or capital gain
distribution paid or deemed paid by the Fund since the preceding Payment
Date, plus or minus a per share charge or credit for any taxes incurred by or
reserved for in the Separate Account as of the end of the current Payment
Date which the Company determines to have resulted from maintenance of the
Separate Account;
(b) is the net asset value per share of the Fund on the preceding Payment
Date, plus or minus a per share charge or credit for any taxes incurred by or
reserved for in the Separate Account as of the end of the immediately
preceding Payment Date which the Company determines to have resulted from
maintenance of the Separate Account;
(c) is the net result of 1.000, less the Periodic Charge (see "Deductions
and Charges").
The Net Investment Factor may be more or less than one.
Second: An Annuity Unit value for a Payment Date is equal to:
(a) the value of the Annuity Unit on the immediately preceding Payment
Date;
(b) multiplied by the Net Investment Factor for the period from the
preceding Payment Date ending on the current Payment Date;
(c) divided by the Assumed Net Investment Factor for that period.
The Assumed Net Investment Factor is equal to one plus the interest rate
used in determining the basis for purchase of Annuities, adjusted to reflect
the performance of the Separate Account during the particular valuation
period. For example, using the 7% assumed annual interest rate, the Assumed
Net lnvestment Factor for a one-year valuation period would be 1.07. For a
one-day valuation period, the Assumed Net lnvestment Factor would be
1.000185. Using the 3% assumed annual interest rate, the Assumed Net
Investment Factor for a one-year valuation period would be 1.03. For a
one-day valuation period, the Assumed Net Investment Factor would be
1.000081. The value of an Annuity Unit will increase only when the actual
investment results of the Separate Account exceeds the assumed rate of
interest. If actual results are less than the assumed rate, the value of an
Annuity Unit will decrease.
The value of an Annuity Unit as of any date other than a given Payment
Date is equal to its value on the next succeeding Payment Date.
VALUE OF THE SEPARATE ACCOUNT
The value of the Separate Account on a Payment Date is equal to (a) its
value on the previous Payment Date, less (b) the Periodic Charge, the
Administration Fee and applicable taxes for the period since the preceding
Payment Date (see "Deductions and Charges"), less (c) Annuity Benefits paid
since the previous Payment Date, plus (d) net new contributions, plus (e) any
dividend or capital gains distributions paid to the Separate Account by the
Fund, and plus or minus (f) the increase or decrease in the net asset value of
the Fund since the preceding Payment Date.
DELAYS IN VALUATION AND PAYMENT
The determination of Net Asset Value or of Annuity Unit value and making
of payments under the Annuities may be suspended or delayed:
9
<PAGE>
(a) for any period (i) during which the New York Stock Exchange is closed
other than customary weekend and holiday closings or (ii) during which trading
on the New York Stock Exchange is restricted;
(b) for any period during which an emergency exists (as determined in
accordance with any applicable regulatory requirements) as a result of
which (i) disposal by the Separate Account or the Fund of securities owned by
it is not reasonably practicable or (ii) it is not reasonably practicable for
the Separate Account or the Fund fairly to determine the value of its net
assets; or
(c) for such other periods as the Commission may by order permit for the
protection of Participants, Annuitants, Joint Annuitants and/or
Beneficiaries.
DEDUCTIONS AND CHARGES
Any applicable state premium taxes and other taxes will be deducted either
from the initial Purchase Payment at the time an Annuity is purchased or from
Annuity Payments or Annuity Benefits, as required by applicable law from time
to time.
The Company assesses a Periodic Charge against the Separate Account, equal
on an annual basis to 0.8% of Separate Account assets. The Periodic Charge,
in the following amounts, compensates the Company for assuming the risks that
mortality experience will be lower than the rate assumed and that expenses
will be greater than what is assumed: 0.3% of average annual net assets to
cover expense risk and 0.5% to cover the mortality risk. The Periodic Charge
is guaranteed as to Annuities issued prior to the effective date of any
change in the Periodic Charge. The Company also assesses an administrative
charge (the "Administration Fee"), equal on an annual basis to 0.3% of the
Separate Account assets, to reimburse the Company for a portion of its
administrative expenses incurred in administering the Separate Account. The
Company does not expect to recover from the Administration Fee an amount in
excess of its accumulated administrative expenses. Even though the
administrative expenses may increase, the Company guarantees it will not
increase the amount of the Administration Fee. The Company also levies a
charge against the Separate Account to reimburse the Company for the amount
of any tax liability paid or reserved by the Company that results from the
maintenance of the Separate Account. (For expenses borne by the Fund, see the
current prospectus of the Fund.)
TAX INFORMATION
INTERNAL REVENUE CODE LIMITATIONS
The availability or terms of any payment option may be modified or
restricted to the extent necessary to comply with U.S. Treasury Regulations
covering permissible distributions from retirement plans. (See Appendix A.)
In addition, persons contemplating the purchase of an Annuity should refer to
the terms of their Plan for any limitations or restrictions regarding the
date on which Annuity Payments must commence. In general, and except as
otherwise permitted by U.S. Treasury Regulations, federal tax law requires
that Annuity Payment must commence no later than April 1 of the year after
the year in which the Annuitant attains age 70 1/2 . If the minimum
distribution is not made, a 50% nondeductible excise tax is imposed as to the
amount not distributed in accordance with U.S. Treasury Regulations.
In selecting a payment option for an Annuity, purchasers should also note
that the Internal Revenue Code (the "Code") provides that benefit payments may
be made only (a) over the life of the Annuitant or the lives of the Annuitant
and any Joint Annuitant; or (b) over a period certain that does not exceed the
life expectancy of the Annuitant or the joint life expectancy of the
Annuitant and any Joint Annuitant. Additionally, the Code allows selection of
a payment option with a 100% joint and survivor annuity (i.e., the 100% level
under Option III under the Contracts) only if the Joint Annuitant is either
the Annuitant's spouse or is no more than 10 years younger than the
Annuitant. If the Annuitant dies before the entire distribution due under the
Annuity has been paid, such unpaid portion of the Annuity will be
distributed (without interest) at least as rapidly as under the method of
distribution being used as of the date of his death.
FEDERAL INCOME TAX STATUS
The following discussion is general in nature and is not intended as tax
advice. Each person concerned should consult a competent tax adviser. The
discussion is based on the Company's understanding of current federal income
tax laws as they are currently interpreted by the Internal Revenue
Service (the "I.R.S."). No representation is made regarding the likelihood
that either the particular laws or their interpretation will continue. No
attempt is made to consider any state or other tax laws which may be
applicable.
(A) FEDERAL TAX STATUS OF THE COMPANY AND THE SEPARATE ACCOUNT
General: The Company is taxed as a life insurance company under Part I,
Subchapter L of the Code. Because the Separate Account is not a separate
entity from the Company for purposes of the Code, the Company will be liable
for any
10
<PAGE>
federal income taxes which become payable with respect to the income of the
Separate Account. Under current law, no item of dividend income, interest
income or realized capital gain attributable, at a minimum, to appreciation
after January 1,1985, of the Separate Account will be taxed to the Company to
the extent it is applied to increase reserves under the Contracts.
Under the principles set forth in I.R.S. Revenue Ruling 81-225 and Section
817(h) of the Code and regulations thereunder, the Company believes that the
Company will be treated as owner of the assets invested in the Separate
Account for federal income tax purposes, with the result that earnings and
gains, if any, derived from those assets will not be included in an
Annuitant's gross income until amounts are received pursuant to an Annuity.
(B) FEDERAL TAX STATUS OF ANNUITANTS
The Annuities are designed for use with the Plans and other similar tax
deferred retirement plans. The tax rules applicable to participants in such
plans who purchase an Annuity vary according to the type of plan and the
terms and conditions of the plan itself. Therefore, this discussion is
designed to provide only general information about the use of the Annuities
in connection with the various types of plans. Participants in plans are
cautioned that the rights of any person to any benefits under the plans may
be subject to the terms and conditions of the plans themselves regardless of
the terms and conditions of the Contract and the Annuities.
The Company believes that the Annuitant is not subject to federal income
tax on increases in Annuity value until payments are received under the
Annuity. Federal income taxation of Annuity Payments and Annuity Benefits is
determined under Section 72 of the Code. Section 72 provides, in general,
that a portion of each Annuity Payment which represents the Annuitant's
"investment" in the Annuity is excluded from gross income for income tax
purposes. ("Investment" refers generally to contributions that were not
deductible or excludable from income when made.) If the Annuity is purchased
entirely with assets which were excludable from the Annuitant/Participant's
income, the "investment" by the Annuitant/Participant will be deemed to be
zero and distributions will be fully taxable as payments are received. To the
extent an Annuity is purchased with contributions that were subject to income
tax when made to such a plan, proportional amounts of each Annuity Payment
may be excluded from gross income for income tax purposes up to the aggregate
amount of such contributions. In some circumstances, Annuity Payments made
before the Annuitant attains age 59 1/2 may be subject to an additional 10%
penalty tax. In addition, distributions in excess of $150,000 per year in the
case of periodic distributions and in excess of $750,000 in the case of lump
sum distributions may be subject to an additional 15% excise tax.
(C) WITHHOLDING
With certain limited exceptions, withholding is required on Annuity
Payments and Annuity Benefits. However, with certain exceptions, recipients
of Annuity Payments and Annuity Benefits are allowed to make an election not
to have federal income tax withheld, which election is revocable at any time.
The withholding rate, as determined from the recipient's withholding
certificate, will be applied against the taxable portion of each Annuity
Payment. If no withholding certificate is filed with the Company, tax will be
withheld from Annuity Payments and Annuity Benefits on the basis that the
payee is married with three withholding exemptions.
Persons who elect not to have withholding made are nonetheless liable for
federal income tax on the Annuity Payments and Annuity Benefits received by
them and may become subject to penalties under the estimated tax payment
rules if withholding and estimated tax payments are not sufficient.
VOTING RIGHTS
In accordance with its view of present applicable law, the Company will
vote the shares of the Fund held in the Separate Account at special meetings
of the shareholders of the Fund in accordance with instructions received from
persons having a voting interest in the Separate Account. The Company
understands that under present applicable law, persons currently receiving
payments under an Annuity have such voting interest. The Company will vote
shares for which it has not received instructions in the same proportion as
it votes shares for which it has received instructions.
The number of votes which a person has a right to instruct will be
determined by dividing the reserve for the applicable Annuity in the Separate
Account by the net asset value per share of the Fund. Such number of shares
will be determined as of a date coincident with the date established by the
Fund for determining shareholders eligible to vote at the meeting of the
Fund, which shall not be more than 90 days prior to any meeting of the Fund.
Voting instructions will be solicited by written communication at least 14
days prior to such meeting. The votes attributable to each Annuity decrease
as reserves allocated to that Annuity decrease.
SUBSTITUTION OF SECURITIES AND OTHER CHANGES
If the shares of the Fund should no longer be available for investment by
the Separate Account or if, in the judgment of the Company, further
investment in such shares should be inappropriate in view of the purpose of
the Annuities, the Company may
11
<PAGE>
substitute shares of another mutual fund or other investment vehicle for
shares of the Fund already purchased or to be purchased in the future under
the Annuities. No substitution of securities may take place without prior
approval of the Securities and Exchange Commission in accordance with such
requirements as it may impose, without notice to or approval by persons
having voting interest, or without complying with filing or other procedures
established by applicable state insurance regulators.
At the Company's election and subject to any necessary vote by persons
having the right to give instructions with respect to the voting of Fund
shares, the Separate Account may be operated as a management company under
the Investment Company Act of 1940 or in any other permitted form, or it may
be deregistered under the Act in the event registration is no longer
required. The Company also reserves the right to add or delete other separate
accounts or subaccount of the Separate Account; to combine the Separate
Account with other separate accounts and to combine one or more subaccounts;
to transfer assets among separate accounts and subaccounts established by the
Company or its affiliate or their successors or assigns; to add or delete
mutual funds, other investment vehicles, or series of either as investments
for a separate account or subaccount; to add a fixed account providing for
the provision of Annuity Benefits out of the Company's general account; and
to split or combine the value of the Annuity Units provided such action has
no material effect on benefits or other provisions of Annuities previously
issued under the Contracts.
On the first anniversary of the effective date of the Group Contract and
on each anniversary of that date thereafter, the Company, upon 90 days'
advance written notice to the Contractholder, may change any or all of the
terms of the Group Contract, except that no such change may affect in any way
the amount, value or terms of any Annuity purchased prior to the effective
date of the change. In addition, upon notice to the person(s) currently
receiving payments under an Annuity, the Contracts or an Annuity may be
modified by the Company, but only if such modification: (1) is necessary to
make the Contracts and/or the Annuities comply with any law or regulation
issued by a governmental agency to which the Company, the Separate Account,
the Contracts and/or an Annuity are subject; or (2) is necessary to assure
continued qualification of the Contracts or the Annuities under the Internal
Revenue Code or other applicable federal or state laws relating to annuity
contracts, deferred compensation plans, pension or profit sharing plans,
individual retirement accounts or other retirement plans, as such laws may be
amended from time to time; or (3) is necessary to reflect a change in the
operation of the Separate Account as described in the preceding paragraph. In
the event of any such modifications, the Company will make appropriate
endorsement to the Contracts and, if applicable, the certificates.
12
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION TABLE OF CONTENTS
Templeton Funds Annuity Company
Independent Accountants
Financial Information
Financial Statements--Templeton Funds Retirement Annuity Separate Account
Financial Statements--Templeton Funds Annuity Company
13
<PAGE>
APPENDIX A
Compliance with Internal Revenue Code Rules Relating
To Annuity Contracts Purchased for Distributions
From Qualified Retirement Plans
And Individual Retirement Accounts
1. Benefit payments may be made only (a) over the life of the Annuitant or
the lives of the Annuitant and a Joint Annuitant, or (b) for a period certain
that does not exceed the life expectancy of the Annuitant or the joint life
expectancy of the Annuitant and any Joint Annuitant.
2. If the Annuitant dies before his entire interest in the Annuity has
been paid him, the unpaid interest of the Annuitant will be distributed at
least as rapidly as under the method of distribution being used as of the
date of his death.
3. The availability of, and payments pursuant to, the various Annuity
Options under the Contracts may be restricted or altered to the extent
necessary to comply with applicable U.S. Treasury Regulations.
4. The above rules may be supplemented or amended in order to comply with
U.S. Treasury Regulations, including such regulations as may be issued from
time to time under the Internal Revenue Code Sections 72, 401(a)(9) and 408.
14
<PAGE>
APPENDIX B
DOLLAR VALUE OF FIRST MONTHLY PAYMENT
FOR EACH $1,000 OF NET PURCHASE PAYMENT
The following Tables show the dollar value of the first monthly payment
for each $1,000 of Net Purchase Payment. The amount of each payment depends
upon the Annuity Option chosen and the Annuitant's and Joint Annuitant's, if
any, actual age at the time the first payment is due. "Actual age", as used
above, shall mean actual age to the nearest month on the Annuity Purchase
Date. Annuity Payments under the Contracts will normally be made monthly. The
Company may, in its discretion, agree to less frequent payments, based upon
appropriate Annuity values and procedures.
OPTION 1--LIFE ANNUITY
<TABLE>
<CAPTION>
FIRST MONTHLY PAYMENT FIRST MONTHLY PAYMENT
USING 7% ASSUMED USING 3% ASSUMED
INTEREST RATE INTEREST RATE
ACTUAL FIRST MONTHLY ACTUAL FIRST MONTHLY
AGE PAYMENT AGE PAYMENT
- --------------------------------------------------
<S> <C> <C> <C>
50 $ 6.59 50 $4.09
51 6.65 51 4.16
52 6.72 52 4.23
53 6.79 53 4.31
54 6.86 54 4.39
55 6.94 55 4.48
56 7.02 56 4.57
57 7.11 57 4.67
58 7.21 58 4.77
59 7.31 59 4.88
60 7.42 60 5.00
61 7.54 61 5.13
62 7.67 62 5.26
63 7.81 63 5.41
64 7.95 64 5.56
65 8.11 65 5.73
66 8.29 66 5.90
67 8.47 67 6.09
68 8.67 68 6.29
69 8.88 69 6.50
70 9.11 70 6.74
71 9.36 71 6.98
72 9.63 72 7.25
73 9.92 73 7.54
74 10.23 74 7.85
75 10.57 75 8.18
</TABLE>
15
<PAGE>
OPTION 2--LIFE ANNUITY WITH 60 OR 120 PAYMENTS GUARANTEED
<TABLE>
<CAPTION>
FIRST MONTHLY FIRST MONTHLY
PAYMENT USING PAYMENT USING
7% ASSUMED 3% ASSUMED
INTEREST INTEREST
NUMBER OF NUMBER OF
GUARANTEED GUARANTEED
ACTUAL MONTHLY MONTHLY
AGE PAYMENTS PAYMENTS
- -----------------------------------------
60 120 60 120
- --------------------------------- --------
<S> <C> <C> <C> <C>
50 $ 6.58 $6.53 $4.08 $4.06
- --------------------------------- --------
51 6.64 6.59 4.15 4.12
- --------------------------------- --------
52 6.70 6.65 4.22 4.19
- --------------------------------- --------
53 6.77 6.71 4.30 4.27
- --------------------------------- --------
54 6.84 6.77 4.38 4.35
- --------------------------------- --------
55 6.91 6.84 4.47 4.43
- --------------------------------- --------
56 6.99 6.91 4.56 4.51
- --------------------------------- --------
57 7.08 6.99 4.65 4.60
- --------------------------------- --------
58 7.17 7.07 4.76 4.70
- --------------------------------- --------
59 7.27 7.16 4.86 4.80
- --------------------------------- --------
60 7.37 7.25 4.98 4.90
- --------------------------------- --------
61 7.49 7.35 5.10 5.02
- --------------------------------- --------
62 7.61 7.46 5.23 5.13
- --------------------------------- --------
63 7.74 7.56 5.37 5.26
- --------------------------------- --------
64 7.88 7.68 5.52 5.39
- --------------------------------- --------
65 8.03 7.80 5.68 5.52
- --------------------------------- --------
66 8.19 7.93 5.84 5.67
- --------------------------------- --------
67 8.36 8.06 6.02 5.81
- --------------------------------- --------
68 8.54 8.20 6.21 5.97
- --------------------------------- --------
69 8.73 8.35 6.41 6.13
- --------------------------------- --------
70 8.94 8.50 6.63 6.30
- --------------------------------- --------
71 9.16 8.65 6.85 6.47
- --------------------------------- --------
72 9.40 8.81 7.10 6.65
- --------------------------------- --------
73 9.65 8.97 7.36 6.83
- --------------------------------- --------
74 9.91 9.14 7.63 7.02
- --------------------------------- --------
75 10.19 9.31 7.92 7.20
- -----------------------------------------
</TABLE>
OPTION 3(A)--JOINT AND 100% SURVIVOR LIFE ANNUITY
FIRST MONTHLY PAYMENT USING 7% ASSUMED INTEREST RATE
<TABLE>
<CAPTION>
ACTUAL AGE OF
ANNUITANT
ACTUAL AGE
OF JOINT
ANNUITANT 50 55 60 65 70 75
- -------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
50 $6.12 $6.20 $6.29 $6.36 $6.43 $6.48
- -------------------------------------------------------------
55 6.20 6.32 6.45 6.56 6.67 6.75
- -------------------------------------------------------------
60 6.29 6.45 6.62 6.80 6.96 7.10
- -------------------------------------------------------------
65 6.36 6.56 6.80 7.05 7.31 7.54
- -------------------------------------------------------------
70 6.43 6.67 6.96 7.31 7.68 8.06
- -------------------------------------------------------------
75 6.48 6.75 7.10 7.54 8.06 8.62
ACTUAL AGE OF
ANNUITANT
ACTUAL AGE
OF JOINT
ANNUITANT 50 55 60 65 70 75
- -------------------------------------------------------------
- -------------------------------------------------------------
</TABLE>
16
<PAGE>
FIRST MONTHLY PAYMENT USING 3% ASSUMED INTEREST RATE
<TABLE>
<CAPTION>
ACTUAL AGE OF
ANNUITANT
ACTUAL AGE
OF JOINT
ANNUITANT 50 55 60 65 70 75
- -------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
50 $3.62 $3.74 $3.83 $3.91 $3.97 $4.02
- -------------------------------------------------------------
55 3.74 3.90 4.05 4.18 4.28 4.35
- -------------------------------------------------------------
60 3.83 4.05 4.26 4.46 4.64 4.77
- -------------------------------------------------------------
65 3.91 4.18 4.46 4.76 5.03 5.27
- -------------------------------------------------------------
70 3.97 4.28 4.64 5.03 5.45 5.83
- -------------------------------------------------------------
75 4.02 4.35 4.77 5.27 5.83 6.42
- -------------------------------------------------------------
</TABLE>
OPTION 3(B)--JOINT AND 75% SURVIVOR LIFE ANNUITY
FIRST MONTHLY PAYMENT USING 7% ASSUMED INTEREST RATE
<TABLE>
<CAPTION>
ACTUAL AGE OF
ANNUITANT
ACTUAL AGE
OF JOINT
ANNUITANT 50 55 60 65 70 75
- -------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
50 $6.23 $6.37 $6.54 $6.73 $6.94 $7.17
- -------------------------------------------------------------
55 6.30 6.47 6.66 6.89 7.15 7.42
- -------------------------------------------------------------
60 6.36 6.56 6.80 7.08 7.40 7.74
- -------------------------------------------------------------
65 6.42 6.65 6.94 7.29 7.69 8.12
- -------------------------------------------------------------
70 6.47 6.73 7.07 7.49 8.00 8.57
- -------------------------------------------------------------
75 6.51 6.80 7.18 7.68 8.30 9.03
- -------------------------------------------------------------
</TABLE>
FIRST MONTHLY PAYMENT USING 3% ASSUMED INTEREST RATE
<TABLE>
<CAPTION>
ACTUAL AGE OF
ANNUITANT
ACTUAL AGE
OF JOINT
ANNUITANT 50 55 60 65 70 75
- -------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
50 $3.73 $3.90 $4.07 $4.25 $4.43 $4.60
- -------------------------------------------------------------
55 3.82 4.03 4.25 4.48 4.71 4.93
- -------------------------------------------------------------
60 3.90 4.15 4.43 4.72 5.03 5.32
- -------------------------------------------------------------
65 3.96 4.25 4.59 4.97 5.37 5.78
- -------------------------------------------------------------
70 4.00 4.33 4.72 5.19 5.72 6.28
- -------------------------------------------------------------
75 4.03 4.38 4.83 5.37 6.03 6.79
- -------------------------------------------------------------
</TABLE>
OPTION 3(C)--JOINT AND 50% SURVIVOR LIFE ANNUITY
FIRST MONTHLY PAYMENT USING 7% ASSUMED INTEREST RATE
<TABLE>
<CAPTION>
ACTUAL AGE OF
ANNUITANT
ACTUAL AGE
OF JOINT
ANNUITANT 50 55 60 65 70 75
- -------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
50 $6.35 $6.55 $6.81 $7.13 $7.54 $8.04
- -------------------------------------------------------------
55 6.39 6.62 6.90 7.26 7.70 8.24
- -------------------------------------------------------------
60 6.44 6.68 7.00 7.40 7.89 8.50
- -------------------------------------------------------------
65 6.48 6.75 7.09 7.55 8.11 8.80
- -------------------------------------------------------------
70 6.51 6.80 7.18 7.69 8.34 9.14
- -------------------------------------------------------------
75 6.54 6.84 7.26 7.82 8.55 9.49
ACTUAL AGE OF
ANNUITANT
ACTUAL AGE
OF JOINT
ANNUITANT 50 55 60 65 70 75
- -------------------------------------------------------------
- -------------------------------------------------------------
</TABLE>
17
<PAGE>
FIRST MONTHLY PAYMENT USING 3% ASSUMED INTEREST RATE
<TABLE>
<CAPTION>
ACTUAL AGE OF
ANNUITANT
ACTUAL AGE
OF JOINT
ANNUITANT 50 55 60 65 70 75
- -------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
50 $3.84 $4.07 $4.34 $4.65 $5.00 $5.39
- -------------------------------------------------------------
55 3.90 4.17 4.47 4.83 5.23 5.68
- -------------------------------------------------------------
60 3.96 4.25 4.60 5.02 5.49 6.03
- -------------------------------------------------------------
65 4.00 4.32 4.72 5.20 5.76 6.41
- -------------------------------------------------------------
70 4.03 4.38 4.81 5.36 6.02 6.81
- -------------------------------------------------------------
75 4.05 4.42 4.88 5.49 6.25 7.20
- -------------------------------------------------------------
</TABLE>
OPTION 4(A)--JOINT AND 100% SURVIVOR LIFE ANNUITY
WITH 60 PAYMENTS GUARANTEED
FIRST MONTHLY PAYMENT USING 7% ASSUMED INTEREST RATE
<TABLE>
<CAPTION>
ACTUAL AGE OF
ANNUITANT
ACTUAL AGE
OF JOINT
ANNUITANT 50 55 60 65 70 75
- -------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
50 $6.12 $6.21 $6.29 $6.36 $6.43 $6.48
- -------------------------------------------------------------
55 6.21 6.32 6.45 6.56 6.67 6.75
- -------------------------------------------------------------
60 6.29 6.45 6.62 6.80 6.96 7.10
- -------------------------------------------------------------
65 6.36 6.56 6.80 7.05 7.30 7.53
- -------------------------------------------------------------
70 6.43 6.67 6.96 7.30 7.68 8.04
- -------------------------------------------------------------
75 6.48 6.75 7.10 7.53 8.04 8.59
- -------------------------------------------------------------
</TABLE>
FIRST MONTHLY PAYMENT USING 3% ASSUMED INTEREST RATE
<TABLE>
<CAPTION>
ACTUAL AGE OF
ANNUITANT
ACTUAL AGE
OF JOINT
ANNUITANT 50 55 60 65 70 75
- -------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
50 $3.62 $3.74 $3.83 $3.91 $3.97 $4.02
- -------------------------------------------------------------
55 3.74 3.90 4.05 4.18 4.28 4.35
- -------------------------------------------------------------
60 3.83 4.05 4.26 4.46 4.63 4.77
- -------------------------------------------------------------
65 3.91 4.18 4.46 4.76 5.03 5.26
- -------------------------------------------------------------
70 3.97 4.28 4.63 5.03 5.44 5.82
- -------------------------------------------------------------
75 4.02 4.35 4.77 5.26 5.82 6.41
- -------------------------------------------------------------
</TABLE>
OPTION 4(B)--JOINT AND 100% SURVIVOR LIFE ANNUITY
WITH 120 PAYMENTS GUARANTEED
FIRST MONTHLY PAYMENT USING 7% ASSUMED INTEREST RATE
<TABLE>
<CAPTION>
ACTUAL AGE OF
ANNUITANT
ACTUAL AGE
OF JOINT
ANNUITANT 50 55 60 65 70 75
- -------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
50 $6.12 $6.20 $6.29 $6.36 $6.42 $6.47
- -------------------------------------------------------------
55 6.20 6.32 6.44 6.56 6.66 6.73
- -------------------------------------------------------------
60 6.29 6.44 6.61 6.78 6.94 7.07
- -------------------------------------------------------------
65 6.36 6.56 6.78 7.03 7.27 7.48
- -------------------------------------------------------------
70 6.42 6.66 6.94 7.27 7.62 7.94
ACTUAL AGE OF
ANNUITANT
ACTUAL AGE
OF JOINT
ANNUITANT 50 55 60 65 70 75
- -------------------------------------------------------------
- -------------------------------------------------------------
75 6.47 6.73 7.07 7.48 7.94 8.41
- -------------------------------------------------------------
</TABLE>
18
<PAGE>
FIRST MONTHLY PAYMENT USING 3% ASSUMED INTEREST RATE
<TABLE>
<CAPTION>
ACTUAL AGE OF
ANNUITANT
ACTUAL AGE
OF JOINT
ANNUITANT 50 55 60 65 70 75
- -------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
50 $3.62 $3.74 $3.83 $3.91 $3.97 $4.01
- -------------------------------------------------------------
55 3.74 3.90 4.05 4.17 4.27 4.34
- -------------------------------------------------------------
60 3.83 4.05 4.26 4.46 4.62 4.75
- -------------------------------------------------------------
65 3.91 4.17 4.46 4.75 5.01 5.23
- -------------------------------------------------------------
70 3.97 4.27 4.62 5.01 5.40 5.75
- -------------------------------------------------------------
75 4.01 4.34 4.75 5.23 5.75 6.27
- -------------------------------------------------------------
</TABLE>
OPTION 5--UNIT REFUND LIFE ANNUITY
<TABLE>
<CAPTION>
FIRST MONTHLY PAYMENT FIRST MONTHLY PAYMENT
USING 7% ASSUMED USING 3% ASSUMED
INTEREST RATE INTEREST RATE
ACTUAL FIRST MONTHLY ACTUAL FIRST MONTHLY
AGE PAYMENT AGE PAYMENT
- --------------------------------------------------
<S> <C> <C> <C>
50 $6.46 50 $3.90
51 6.51 51 3.95
52 6.56 52 4.00
53 6.61 53 4.06
54 6.67 54 4.13
55 6.74 55 4.19
56 6.80 56 4.26
57 6.87 57 4.33
58 6.95 58 4.41
59 7.03 59 4.49
60 7.11 60 4.57
61 7.20 61 4.66
62 7.30 62 4.75
63 7.40 63 4.84
64 7.50 64 4.94
65 7.61 65 5.05
66 7.73 66 5.15
67 7.86 67 5.27
68 7.99 68 5.39
69 8.13 69 5.52
70 8.28 70 5.65
71 8.43 71 5.79
72 8.60 72 5.94
73 8.78 73 6.10
74 8.96 74 6.26
75 9.16 75 6.43
</TABLE>
19
<PAGE>
PART B
STATEMENT OF ADDITIONAL INFORMATION
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION TO THE PROSPECTUS
FOR
TEMPLETON RETIREMENT ANNUITIES
ISSUED BY
TEMPLETON FUNDS RETIREMENT ANNUITY SEPARATE ACCOUNT
OF
TEMPLETON FUNDS ANNUITY COMPANY
700 Central Avenue
St. Petersburg, Florida 33701-3628
Dated December 1, 1995
This Statement of Additional Information is not a prospectus. It
provides information which is supplemental to that contained in the current
Prospectus for Templeton Retirement Annuities, dated December 1, 1995.
This Statement should be read in conjunction with the Prospectus, which
may be obtained by calling (800) 774-5001, or by writing Templeton Funds Annuity
Company, P. O. Box 33030, St. Petersburg, Florida 33733-8030.
<PAGE>
TABLE OF CONTENTS
Page
<TABLE>
<CAPTION>
<S> <C>
Templeton Funds Annuity Company........................................................................... 1
Independent Accountants................................................................................... 1
Financial Information..................................................................................... 1
Financial Statements--Templeton Funds Retirement Annuity Separate Account................................ 2
Financial Statements--Templeton Funds Annuity Company..................................................... 6
</TABLE>
TEMPLETON FUNDS ANNUITY COMPANY
Templeton Funds Annuity Company (the "Company"), the sponsor of
Templeton Funds Retirement Annuity Separate Account (the "Separate Account"), is
a Florida insurance company which was organized on January 25, 1984 and is
licensed to engage in the life insurance business in Florida. The Company is
custodian of the assets of the Separate Account. The Company is wholly owned by
Templeton Global Investors, Inc. ("TGI") and is located at 700 Central Avenue,
St. Petersburg, Florida 33701-3628. TGI acts as business manager of several
registered investment companies in the Templeton group of funds ("Templeton
Funds"). TGI is an affiliate of Franklin Templeton Distributors, Inc., ("FTD"),
a registered broker-dealer which serves as principal underwriter for all of the
publicly-distributed open-end Templeton Funds, and Templeton Franklin Investment
Services, Inc. ("TFIS"), the principal underwriter of the Contracts. TGI, FTD
and Franklin Templeton Trust Company are wholly-owned subsidiaries of Franklin
Resources, Inc.("Franklin"), a publicly-traded financial services company whose
stock is listed on the New York Stock Exchange. Franklin acts as an investment
adviser to several of the funds in the Franklin Templeton group of funds.
INDEPENDENT ACCOUNTANTS
The firm of Coopers & Lybrand L.L.P. serves as independent accountants
for the Separate Account.
FINANCIAL INFORMATION
The financial statements of the Company included in this Statement of
Additional Information ("SAI") should be considered only as bearing on the
ability of the Company to meet its obligations under the Contracts.
<PAGE>
PART C
OTHER INFORMATION
Item 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) FINANCIAL STATEMENTS
Contained in Part B:
TEMPLETON FUNDS RETIREMENT ANNUITY SEPARATE ACCOUNT OF
TEMPLETON FUNDS ANNUITY COMPANY
Report of Independent Accountants
Statement of Assets and Liabilities
Statement of Operations
Statements of Changes in Net Assets
Notes to Financial Statements
TEMPLETON FUNDS ANNUITY COMPANY
Report of Independent Accountants
Balance Sheets
Statements of Income
Statements of Stockholders' Equity
Statements of Cash Flows
Notes to Financial Statements
(b) EXHIBITS
(10) Consents of Independent Public Accountants
(3) Underwriting Agreement
All other relevant exhibits have been previously filed and are
incorporated by reference.*
- --------
* For other Exhibits,reference is made to the Registrant's Pre-Effective
Amendment No. 3 to the Registration Statement filed on February 16, 1988,
Post-Effective Amendment No. 3 to the Registration Statement filed on
August 31, 1990, Post-Effective Amendment No. 4 to the Registration
Statement filed on December 20, 1990 and Post-Effective Amendment No. 6 to
the Registration Statement filed on March 20, 1992. Note that the Opinion
of Counsel and Consent to Use was filed as Exhibit 24(b)(10) to the Post-
Effective Amendment No. 4 to the Registration Statement. In accordance
with Part C of the Form N-4, the Opinion of Counsel and Consent to Use
should have been filed as Exhibit 24(b)(9).
<PAGE>
Item 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR
Name and Principal Positions and Offices
BUSINESS ADDRESS WITH DEPOSITOR
Gordon W. Campbell Director, Chairman
425 22nd Avenue, North
St. Petersburg, Florida 33709
Richard P. Austin Director, President
700 Central Avenue
St. Petersburg, Florida 33701-3628
Thomas M. Mistele Director, Executive Vice
700 Central Avenue President, Secretary,
St. Petersburg, Florida 33701-3628 General Counsel
Louie N. Adcock, Jr. Director
Fisher & Sauls, P.A.
100 Second Avenue South
Suite 700, City Center
St. Petersburg, Florida 33701
Thomas A. Watson Director
4989 62nd Avenue South
St. Petersburg, Florida 33715
Martin L. Flanagan Director, Treasurer
777 Mariners Island Blvd.
San Mateo, California 94404-1585
Thomas Banzhof Director
777 Mariners Island Blvd.
San Mateo, California 94404-1585
David J. Tobin Vice President, Controller
700 Central Avenue
St. Petersburg, Florida 33701-3628
Jack L. Collins Assistant Treasurer
700 Central Avenue
St. Petersburg, Florida 33701-3628
Susan Parks Assistant Secretary
700 Central Avenue
St. Petersburg, Florida 33701-3628
<PAGE>
Item 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR OR
REGISTRANT
Reference is made to the section entitled "Templeton Funds Annuity
Company" in Part B of this Registration Statement.
Item 27. NUMBER OF CONTRACTOWNERS
As of October 31, 1995, the Registrant had 300 contractowners.
Item 28. IDEMNIFICATION
Article VIII of the Articles of Incorporation of Securities Fund
Annuities, Inc. (now Templeton Funds Annuity Company) provides:
"This corporation shall indemnify any incorporator, director or
officer to the full extent permitted by law."
Insofar as indemnification for liability arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provision, or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against
public policy as expressed in the Act and is therefore unenforceable.
In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the
Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and the
Registrant will be governed by the final adjudication of such issue.
Item 29. PRINCIPAL UNDERWRITER
(a) The Principal Underwriter of the Contracts is
Templeton Franklin Investment Services, Inc. "TFIS").
TFIS does not serve as principal underwriter for any
other investment companies.
(b) The officers and directors of TFIS, all of whom are
located at 700 Mariners Island Boulevard, San Mateo,
CA are as follows:
<TABLE>
<CAPTION>
NAME POSITION WITH PRINCIPAL UNDERWRITER
<S> <C>
Charles E. Johnson President, CEO and Director
Harmon E. Burns Executive Vice President and Director
Matin L. Flanagan Director
Robert Butman Executive Vice President, President TQA Div.
Jerome M. Ledsinski Executive Vice President, President TPA Div.
<PAGE>
H.G. Mumford Executive Vice President, President FIS Div.
James Wood Executive Vice President, President TIS Div.
Deborah R. Gatzek Senior Vice President
Thomas M. Mistele Vice President, Assistant Secretary
Kenneth A. Lewis Treasurer
Michael J. Corcoran Controller, Financial Principal
Leslie M. Kratter Secretary
Paul D. Wallace Assistant Secretary
</TABLE>
(c) Not Applicable.
Item 30. LOCATION OF ACCOUNTS AND RECORDS
Registrant's accounts and records are maintained by Templeton Funds Annuity
Company, 700 Central Avenue, St. Petersburg, Florida 33701-3628.
Item 31. MANAGEMENT RELATED SERVICES
N/A
Item 32. UNDERTAKINGS
(a) Registrant undertakes to file a post-effective amendment to this
Registration Statement as frequently as is necessary to ensure that the
audited financial statements in the Registration Statement are never more
than 16 months old for so long as payments under the variable annuity
contracts may be accepted.
(b) Registrant undertakes to include either (1) as part of any application or
enrollment form for the purchase of an Annuity offered by the Prospectus, a
space that an applicant can check to request a Statement of Additional
Information, or (2) a post card or similar written communication affixed to
or included in the Prospectus that an applicant can remove to send for a
Statement of Additional Information.
(c) Registrant undertakes to deliver any Statement of Additional Information and
any financial statements required to be made available under this Form N-4
promptly upon written or oral request.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and
the Investment Company Act of 1940, the Registrant certifies that it has met the
requirements for effectiveness of the Registration Statement pursuant to Rule
485(b) under the Securities Act of 1933 and has duly caused this Post-Effective
Amendment No. 1011 to this Registration Statement to be signed on its behalf by
the undersigned, thereunto duly authorized, in the City of St. Petersburg in the
State of Florida on the December 1, 1995.
TEMPLETON FUNDS RETIREMENT ANNUITY SEPARATE ACCOUNT
(Registrant)
By: TEMPLETON FUNDS ANNUITY COMPANY
(Depositor)
By:/s/DAVID J. TOBIN
David J. Tobin
Vice President
ATTEST:
/s/THOMAS M. MISTELE
Thomas M. Mistele
Executive Vice President,
Secretary and General Counsel
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Thomas M. Mistele and Doak Foster, and
each of them, his true and lawful attorney-in-fact and agent with full power of
substitution and resubstitution for him in his name, place and stead, in any and
all capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent, or his substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.
<PAGE>
Pursuant to the requirements of the Securities Act of 1933,
this Post-Effective Amendment No. 10 to the Registration Statement has been
signed below by the following persons in the capacities and on the dates
indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
_________________________ Director and December 1, 1995
Gordon W. Campbell* Chairman
_________________________ Director and December 1, 1995
Richard P. Austin* President
Director, Executive
_________________________ Vice President, Secretary December 1, 1995
Thomas M. Mistele* and General Counsel
_________________________ Director December 1, 1995
Louie N. Adcock, Jr.*
_________________________ Director December 1, 1995
Thomas A. Watson*
_________________________ Director December 1, 1995
Martin L. Flanagan* and Treasurer
_________________________ Director December 1, 1995
Thomas Banzhof*
Vice President
________________________ and Controller December 1, 1995
David J. Tobin*
</TABLE>
*By:
Thomas M. Mistele
as attorney-in-fact
(Powers of Attorney are contained in the Post-Effective Amendment No. 3
to this Registration Statement filed on August 31, 1990, in the Post-Effective
Amendment No. 7 to this Registration Statement filed on May 1, 1992, and in
Post-Effective Amendment No. 9 to this Registration Statement filed on April 29,
1994.)
<PAGE>
Registration Nos. 33-11780 and 811-5023
- ------------------------------------------------------------------------------
Securities and Exchange Commission
Washington, D.C. 20549
------------------------------------------------------------------------------
Exhibits to
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Post-Effective Amendment No. 11
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 14
for
TEMPLETON FUNDS RETIREMENT ANNUITY SEPARATE ACCOUNT
and
TEMPLETON FUNDS ANNUITY COMPANY
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION OF EXHIBIT
24(b)(10) Consents of Independent Public Accountants
3 Underwriting Agreement
UNDERWRITING AGREEMENT
This Agreement is made and entered into this day of
, 1995, by and between Templeton Funds Annuity Company, a Florida
corporation ("Company"), on its own behalf and on behalf of Templeton Retirement
Annuity Separate Account ("Separate Account") and Templeton Franklin Investment
Services, Inc., a Delaware corporation ("Distributor").
WHEREAS, Separate Account is a segregated asset account established and
maintained by Company pursuant to the laws of the State of Florida for certain
variable annuity contracts to be issued by Company (the "Contracts"); and
WHEREAS, Separate Account has been registered as a unit investment
trust-type investment company under the Investment Company Act of 1940 (the
"1940 Act"); and
WHEREAS, Distributor has been registered with the Securities and
Exchange Commisson (the "SEC") as a broker-dealer under the Securities Exchange
Act of 1934 (the "1934 Act") and is a member firm of the National Association of
Security Dealers, Inc. (the "NASD"); and
WHEREAS, the Contracts have been registered under the Securities Act of
1933 (the "1933 Act") and Company proposes to issue and sell the Contracts to
the public through Distributor acting as its principal underwriter;
WHEREAS, Company desires to issue such Contracts to the public through
the Distributor acting as the principal underwriter for such Contracts;
NOW, THEREFORE, Company and Distributor, in consideration of the mutual
contracts and covenants contained herein, sufficiency of which is hereby
acknowledged, and subject to the terms and conditions as set forth below,
Company and Distributor hereby mutually agree as follows:
PRINCIPAL UNDERWRITER. Company hereby appoints
Distributor to promote the sale of the Contracts to the public.
Distributor agrees to use its best efforts to distribute the Contracts
and undertakes to perform sales services related to the Contracts.
COMPLIANCE WITH LAWS, RULES AND REGULATIONS.
Distributor represents that, in addition to being registered with the
SEC and the NASD, it shall be duly registered or otherwise qualified
under the securities laws of any state or other jurisdiction, to the
extent necessary to offer the Contracts for sale. The sales
representative of Distributor soliciting applications for the Contracts
shall be duly and appropriately licensed, registered or otherwise
qualified for the sale of such Contracts under federal securities laws,
and any applicable insurance and securities laws of each state or other
jurisdiction in which the Contracts may lawfully be sold and in which
Company is licensed and admitted to sell the Contracts. Distributor
shall be solely responsible for the training, supervision and control
of its sales representatives for the purpose of the NASD Rules of Fair
Practice and for all securities laws applicable in connection with the
offering and sale of the Contracts.
PROSPECTUS. Distributor agrees to offer the
Contracts for sale in accordance with the then-current prospectus and
such other sales literature or advertisements as have been authorized
by Company. Distributor is not authorized to give any information or to
make any representations concerning the Contracts other than those
contained in such prospectus or such other sales literature or
advertisement as authorized by Company.
SUITABILITY. Both Company and Distributor wish to
insure that the Contracts distributed by Distributor will be issued to
purchasers for whom the Contracts are suitable. Distributor shall take
all reasonable steps to insure that its sales representatives shall not
make recommendations to an applicant to purchase a Contract in the
absence of reasonable grounds to believe that the purchase of the
Contract is suitable for such applicant. Such determination will be
based upon, but will not be limited to, information furnished to a
sales representative after reasonable inquiry of such applicant
concerning the applicant's insurance and investment objectives,
financial situation and needs. Further, Distributor agrees that it
shall be subject to a standard of conduct including, but not limited
to, the following:
All Distributor sales representatives shall
accept purchase payments only in the form of a check or money
order payable to "Templeton Funds Annuity Company," signed by
the applicant for the Contract.
All such checks and money orders shall be
rendered promptly to Company, and in any event not later than
two (2) business days, together with and applications, forms
and any other required documentation. All such purchase
payments shall be the property of Company.
No Distributor sales representative shall
have authority to endorse checks or money order payable to
Templeton Funds Annuity Company.
No Distributor sales representative shall
have any authority to alter, modify, waive or change any of
the terms, rates or conditions of the Contracts.
No Distributor sales representative shall
have any authority to advertise for or on behalf of the
Company without the approval and written authorization from
Company.
Distributor sales representatives shall use
only applications and other materials approved by Company for
use in the solicitation activities with respect to the
Contracts.
No Distributor sales representative shall
solicit or participate in the sale of a Contract in any
jurisdiction until such sales representative and Distributor
are fully qualified and licensed as required by applicable law
and regulations.
No Distributor sales representative shall
solicit for the sale of any Contract without delivering the
then-currently effective prospectus and any applicable
supplements to such prospectus.
Distributor agrees to properly review all
applications received from its sales representatives for
completeness and forward them along with any initial premium
payments to Company at its service center.
Distributor intends that no recommendations
will be made to prospective purchasers of the Contracts. To
the extent that Distributor or Distributor sales
represent-atives make recommendations, or to the extent
required by applicable securities laws, Distributor and
Distributor sales representatives will comply with Section 2
of Article III of the NASD Rules of Fair Practice.
During the term of this Agreement, neither
Distributor nor any Distributor sales representative shall
intentionally encourage a Contract owner to exchange his or
her Contract for any other insurance contract except (i) with
the Company's consent or (ii) to comply with applicable laws,
regulations or rules, including but not limited to the NASD
Rules of Fair Practice.
All solicitation sales activities engaged
in by Distributor and Distributor sales representatives in
regard to the Contracts shall be in compliance with all
applicable federal and state securities laws and regulations,
as well as all applicable insurance laws and regulations. No
Distributor sales representative shall solicit a sale of a
Contract unless at the time of the solicitation such
individual is (i) properly licensed by the NASD and all
applicable state insurance and securities regulatory
authorities; and (ii) appointed as an insurance agent of
Company.
Neither Distributor nor any Distributor
sales representative shall give any written information or
make any written or oral representation in regard to the
Contracts that is inconsistent with the then-currently
effective prospectus or statement of additional information
for the Contracts, or in advertising material for the
Contracts which have been authorized by Company.
Neither the Distributor nor any Distributor
sales representative shall offer, attempt to offer, or solicit
applications for the Contracts or deliver the Contracts, in
any state or other jurisdiction as to which Company has
notified Distributor that the Contracts may not legally be
sold or offered for sale.
5. REPORTS. Distributor shall have the responsibility for
maintaining the records of sales representatives licensed, registered
or otherwise qualified to sell the Contracts and for furnishing
periodic reports thereof to Company. Company agrees to maintain all
required books of accounts and related financial records on behalf of
Distributor. All such books and records hall be maintained and
preserved pursuant to Rules 17a-3 and 17a-4 under the 1934 Act (or any
corresponding provision of any future federal securities law
regulations) and the rules of the NASD. All such books and records
shall be maintained by Company solely on behalf of as agent for
Distributor. Such books and records shall remain the sole property of
Distributor for all purposes, and shall at all times be subject to
reasonable periodic, special or other examination by the SEC and all
other regulatory bodies having jurisdiction. Company further agrees to
send Distributor's customers all required confirmations on customer
transactions.
6. MATERIALS AND EXPENSES.
Company shall furnish Distributor with
copies of all prospectuses, financial statements and other
documents and materials which Distributor reasonably requests
for use in connection with the distribution of the Contracts.
Company shall have responsibility for the preparation, filing
and printing of all required prospectuses and registration
statements in connection with the Contracts and the payment of
all related expenses.
Distributor and Company agree to cooperate
fully in designing, drafting and reviewing all sales
promotional materials. Distributor shall use only such
materials as are provided, or approved in writing in advance,
by Company. Company shall be responsible for the costs of any
promotions, sales and advertising materials, including
applications and any other materials included in the
fulfillment kit.
Company shall be responsible for filing all
sales and advertising materials, including applications, with
all applicable state insurance regulatory authorities, to the
extent such materials are required to be filed with such
bodies.
Distributor shall be responsible for filing
all sales and advertising materials with the NASD to the
extent such materials are required to be filed.
7. RIGHT OF REJECTION. Company shall have the right at
its sole discretion to reject any application or premium payment
received by it and to return or refund an applicant's premium payment
to the applicant.
8. COMPLAINTS AND INVESTIGATIONS. Company and Distributor
agree to cooperate fully in any insurance regulatory investigation or
proceeding or any judicial proceeding arising in connection with the
Contracts offered and sold under this Agreement. Company and
Distributor further agree to cooperate fully in any securities
regulatory investigation or judicial proceeding with respect to
Company, Distributor, their affiliates and their representatives to the
extent that such investigation or proceeding is in connection with the
Contracts distributed under this Agreement.
Without limiting the foregoing:
Distributor will be promptly notified of
any customer complaint or notice of any regulatory inspection,
inquiry, investigation or proceeding or judicial proceeding
received by Company with respect to Distributor or any
representative of Distributor which may effect Company's
issuance of any Contract offered and sold pursuant to this
Agreement.
Distributor will promptly notify Company of
any customer complaint or notice ofregulatory inspection,
inquiry, investigation or proceeding received by Distributor
in connection with any Contract offered and sold pursuant to
this Agreement.
In case of a customer complaint, Distributor and
Company agree to cooperate in investigating such complaint and arriving
at a mutually satisfactory response to such complaint.
<PAGE>
9. TERMINATION. This Agreement shall be effective
upon its execution. It may be terminated at any time by either party on
30 days written notice to the other party, without the payment of any
penalty. This Agreement shall terminate automatically if it is
assigned. Upon termination of this Agreement, all authorizations,
rights and obligations shall cease except (i) the obligation to settle
accounts hereunder, including commissions on premiums subsequently
received for Contracts in effect at the time of termination or issued
pursuant to applications received by Company prior to termination and
(ii) the agreements contained in paragraph 8.
10. REGULATION OF THIS AGREEMENT. This Agreement shall be
subject to the provisions of the Investment Company Act of 1940, the
1934 Act and the rules, regulations, and rulings thereunder and of the
NASD, from time to time in effect, including such exemptions from the
Investment Company Act of 1940 as the SEC may grant. Distributor shall
submit to all regulatory and administrative bodies having jurisdiction
over the operation of the Company or Separate Account, present or
future, any information, reports or other material which any such body
by reason of this Agreement may request or require pursuant to
applicable laws and regulations.
11. COMPLETENESS OF AGREEMENT. This Agreement
supersedes all prior agreements, verbal or written, between the parties
relating to the Contracts and may not be modified in any way
unless by written agreement, duly executed by the parties hereto.
12. APPLICABLE LAW. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of Florida.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this agreement to be
duly executed as of the date first above written.
TEMPLETON FUNDS ANNUITY COMPANY
By:
TEMPLETON FRANKLIN INVESTMENT
SERVICES, INC.
By:
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in Post-Effective Amendment No. 11 to the
Registration Statement of the Templeton Funds Retirement Annuity Separate
Account on Form N-4 (Registration Nos. 33-11780 and 811-5023) of our reports
dated February 10, 1995 on our audits of the financial statements of the
Templeton Funds Retirement Annuity Separate Account, which report is included
in the Annual Report of Contract Owners of the Templeton Variable Annuity Fund
for the year ended December 31, 1994, and the Templeton Funds Annuity Company
for the years ended December 31, 1994 and 1993, which are included in the
Registration Statement.
/s/COOPERS & LYBRAND LLP
November 29, 1995
Jacksonville, Florida
