SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the registrant [ X ]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ X ] Preliminary proxy statement [ ] Confidential, for
use of the Commission only
(as permitted Rule
14a-6(e)(2)
[ ] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to 240.14a-11(c) or 240.14a-12
(Name of Registrant as Specified in Its Charter)
TEMPLETON VARIABLE PRODUCTS SERIES FUND
(Name of Person(s) Filing Proxy Statement)
TEMPLETON VARIABLE PRODUCTS SERIES FUND
Payment of filing fee (Check the appropriate box):
[ ] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(j)(2), or Item 22(a)(2) of Schedule 14A..
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and O-11.
(1) Title of each class of securities to which transaction
applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11(Set forth the
amount on which the filing fee is calculated and state
how it was determined.)
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary material.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identifying the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, schedule or registration statement no.:
(3) Filing party:
(4) Date filed:
TEMPLETON VARIABLE PRODUCTS SERIES FUND
IMPORTANT INFORMATION FOR
CONTRACT AND POLICYHOLDERS
This document announces the date, time and location of a special meeting of
shareholders, identifies the proposals to be voted on at the meeting, and
contains a proxy statement and voting instruction card. A voting instruction
card is, in essence, a ballot. When you complete your voting instruction card,
it tells your insurance company how to vote its proxy on important issues
relating to the portion of your account that is allocated to your fund(s). If
you complete and sign the voting instruction card, the shares will be voted
exactly as you instruct. If you simply sign the voting instruction card, it will
be voted in the same proportion as shares for which instructions have been
received from other Contract Owners.
WE URGE YOU TO SPEND A FEW MINUTES WITH THE PROXY STATEMENT REVIEWING THE
PROPOSALS AT HAND. THEN, FILL OUT YOUR VOTING INSTRUCTION CARD AND RETURN IT. WE
WANT TO KNOW HOW YOU WOULD LIKE TO VOTE AND WELCOME YOUR COMMENTS. PLEASE TAKE A
FEW MINUTES WITH THESE MATERIALS AND RETURN YOUR VOTING INSTRUCTION CARD. IF YOU
HAVE ANY QUESTIONS, CALL THE FUND INFORMATION DEPARTMENT AT 1-800/DIAL BEN.
<TABLE>
<CAPTION>
TABLE OF CONTENTS
PAGE
<S> <C>
Notice of 2
Meeting........................................
Information About 3
Voting........................................
The 4
Proposals...................................................
1. Electing 5
Trustees.............................................
2. Ratifying or Rejecting Independent Auditors...................... 15
3. Approving or Disapproving New Investment Management
Agreements.................................. .........16
Information About the Trust and the 22
Funds.......................................................
Additional Information About Voting and The Shareholders Meeting.. 26
- -------- ------------------------------------------------------------------
</TABLE>
PROXY OR VOTING INSTRUCTION CARD ENCLOSED
<PAGE>
TEMPLETON VARIABLE PRODUCTS SERIES FUND
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To the Shareholders of Templeton Variable Products Series Fund (the "Trust"),
consisting of the following series: Templeton Stock Fund ("Stock Fund");
Templeton Bond Fund ("Bond Fund"); Templeton International Fund ("International
Fund"); Templeton Asset Allocation Fund ("Asset Allocation Fund"); Templeton
Developing Markets Fund ("Developing Markets"); and Templeton Money Market Fund
("Money Market Fund") (each a "Fund" and, collectively, the "Funds"):
A Special Meeting (the "Meeting") of shareholders of each of the Funds will be
held at ____________________________ on Monday, February 10, 1997 at 10:00 A.M.
(EST).
During the Meeting, shareholders of the Trust will vote on four proposals:
Electing Trustees of the Trust to hold office for the terms specified;
Ratifying or rejecting the selection of McGladrey & Pullen, LLP as
independent auditors of the Fund for the fiscal year ending March 31,
1997; and
Approving or disapproving new Investment Management Agreements between
Templeton Investment Counsel, Inc. and the Trust on behalf of Stock
Fund, Asset Allocation Fund and International Fund, respectively, as
described in this proxy statement, which increase the investment
management fee. (Votes of shareholders of each such Fund will be
counted separately for the Investment Management Agreements with their
respective Funds.)
Transaction of any other business as may properly come before the
Meeting.
By Order of the Board of Trustees,
Barbara J. Green, Secretary
January 13, 1997
- ------------------------------------------------------------------------
WE URGE YOU TO MARK, SIGN, DATE AND MAIL THE ENCLOSED VOTING INSTRUCTION CARD IN
THE POSTAGE-PAID ENVELOPE PROVIDED SO YOU WILL BE REPRESENTED AT THE MEETING.
- --------------------------------------------------------------------------
<PAGE>
TEMPLETON VARIABLE PRODUCTS SERIES FUND
PROXY STATEMENT
INFORMATION ABOUT VOTING:
WHO IS ASKING FOR MY VOTE?
The enclosed proxy is solicited by and on behalf of the management of
Templeton Variable Products Series Fund (the "Trust") for use at a
Meeting of Shareholders to be held on Monday, February 10, 1997, and,
if your Fund's Meeting is adjourned, at any later meetings, for the
purposes stated in the Notice of Meeting.
WHO IS ELIGIBLE TO VOTE?
Shareholders of record at the close of business on December 9, 1996 are
entitled to be present and to vote at the Meeting or any adjourned
Meeting. As of the record date, certain insurance companies were the
shareholders of record of each of the Funds (collectively the
"Insurance Companies"). Each such Insurance Company will vote shares of
the Fund or Funds held by it in accordance with voting instructions
received from variable annuity contract and variable life insurance
policy owners (collectively, the "Contract Owners") for whose accounts
the shares are held. Accordingly, this Proxy Statement is intended to
be used by the Insurance Companies in obtaining such voting
instructions from Contract Owners. The Notice of Meeting, the proxy (or
voting instruction card), and the proxy statement were mailed to
shareholders of record and Contract Owners on or about January 13,
1997.
Each share is entitled to one vote. Shares represented by duly executed
proxies will be voted in accordance with the shareholders'
instructions. If no instructions are made, the proxy will be voted in
accordance with the Trustees' recommendations.
In the event that a Contract Owner gives no instructions (does not
return the voting instruction card) or leaves the voting discretionary,
the relevant Insurance Company will vote the shares of the appropriate
Funds attributable to the Contract Owner in the same proportion as
shares of each Fund for which it has received instructions.
Voting on Proposals 1, 2 and 4 shall be tabulated on a Trust-wide
basis, with shares of all Funds voting together as a single class,
while voting on Proposal 3 shall be tabulated separately for each
relevant Fund.
<PAGE>
ON WHAT ISSUES AM I BEING ASKED TO VOTE?
You are being asked to vote on four proposals:
Electing nominees to the position of Trustee;
Ratifying or rejecting the selection of McGladrey & Pullen,
LLP as independent auditors of the Trust for the fiscal year
ending December 31, 1997;
Approving or disapproving new Investment Management
Agreements between Templeton Investment Counsel, Inc. ("TICI"
or "Investment Manager") and the Trust on behalf of Stock
Fund, Asset Allocation Fund and International Fund,
respectively, as described in this proxy statement, which
increase the investment management fee. (Votes of shareholders
of each such Fund will be counted separately for the
Investment Management Agreements for their respective Funds);
and
Transaction of any other business that may properly come
before the Meeting.
The following table sets forth the proposals that apply to
your Fund. On proposals 1, 2 and 4, all Funds will vote together as a
single class. Proposal 3 relates to approval or disapproval of new
investment management agreements for certain Funds:
<TABLE>
<CAPTION>
ASSET DEVELOPING MONEY
ALLOCATION BOND INTERNATIONAL STOCK MARKETS FUND MARKET FUND
PROPOSAL FUND FUND FUND FUND
<S> <C> <C> <C> <C> <C> <C>
1. (Trustees) X X X X X X
2. (Auditors) X X X X X X
3. (Advisory Agreements) X X X
4. (Other matters) X X X X X X
</TABLE>
WHAT VOTE IS REQUIRED?
A plurality of all votes cast at the Meeting is sufficient to approve
Proposal 1. A majority of the shares present in person or by proxy at
the Meeting is sufficient to approve Proposal 2. Approval of Proposal 3
requires the affirmative vote of the holders of the lesser of (a) 67%
of each Fund's shares present at the Meeting in person or by proxy, or
(b) a majority of each Fund's outstanding shares.
HOW DO THE TRUSTEES RECOMMEND THAT I VOTE?
The Trustees recommend that you vote:
FOR electing all nominees as Trustees of the Trust;
FOR ratifying the selection of McGladrey & Pullen, LLP as
independent auditors for the Trust;
FOR approving each of the new Investment Management
Agreements; and
FOR the proxyholders to vote, in their discretion, on any
other business that may properly come before the Meeting.
CAN I REVOKE MY VOTING INSTRUCTION?
You may revoke your voting instruction at any time before it is voted
by (1) delivering a written revocation to the Secretary of the Trust,
(2) forwarding to the Trust a later-dated proxy that is received by the
Trust on or before February 7, 1997, or (3) attending the Meeting and
voting in person.
THE PROPOSALS
PROPOSAL 1. ELECTING TRUSTEES
HOW ARE NOMINEES SELECTED?
The Board of Trustees of the Trust (the "Board") has established a
Nominating and Compensation Committee (the "Committee") consisting of
Messrs. Hines and Macklin. The Committee is responsible for the
selection, nomination for appointment and election of candidates to
serve as Trustees of the Trust. The Committee will review shareholders'
nominations to fill vacancies on the Board, if these nominations are in
writing and addressed to the Committee at the Trust's offices. However,
the Committee expects to be able to identify from its own resources an
ample number of qualified candidates.
WHO ARE THE NOMINEES?
All of the nominees are currently directors or trustees of other
investment companies in the Franklin Group of Funds(R) and the
Templeton Group of Funds (the "Franklin Templeton Group of Funds"), and
all of the nominees except Constantine Dean Tseretopoulos and Edith E.
Holiday are currently members of the Board.
Certain nominees hold director and/or officer positions with Franklin
Resources, Inc. ("Resources") and its affiliates. Resources is a
publicly owned holding company, the principal shareholders of which are
Charles B. Johnson and Rupert H. Johnson, Jr., who own approximately
20% and 16% respectively, of its outstanding shares. Resources is
primarily engaged, through various subsidiaries, in providing
investment management, share distribution, transfer agent and
administrative services to a family of investment companies. Resources
is an NYSE, Inc. listed holding company (NYSE: BEN). There are no
family relationships among any of the Trustees or nominees for Trustees
other than Charles B. Johnson and Rupert H. Johnson, Jr., who are
brothers.
In order to be elected as Trustees the nominees must receive the vote
of a majority of the shares of all Funds, voting together as a single
class. The Trustees serve until their successors are elected and
qualified.
Each nominee has consented to serve as Trustee if elected. If any of
the nominees should become unavailable, the persons named in the proxy
will vote in their discretion for another person or other persons who
may be nominated as Trustees.
Listed below, for each nominee, is a brief description of recent
professional experience:
<TABLE>
<CAPTION>
SHARES OWNED
BENEFICIALLY AND % OF
NAME AND OFFICES PRINCIPAL OCCUPATION DURING DIRECTOR TOTAL OUTSTANDING ON
WITH THE FUND PAST FIVE YEARS AND AGE SINCE DECEMBER, 1996
------------------------------- ------------------------------------- ----------- -------------------------
<S> <C> <C> <C>
HARRIS J. ASHTON Chairman of the board, president 1992 -0-
TRUSTEE and chief executive officer of
General Host Corporation (nursery
and craft centers); director of RBC
Holdings (U.S.A.) Inc. (a bank
holding company) and Bar-S Foods;
and director or trustee of 56 of
the investment companies in the
Franklin Templeton Group of Funds.
Age 64.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SHARES OWNED
BENEFICIALLY AND % OF
NAME AND OFFICES PRINCIPAL OCCUPATION DURING DIRECTOR TOTAL OUTSTANDING ON
WITH THE FUND PAST FIVE YEARS AND AGE SINCE DECEMBER, 1996
------------------------------- ------------------------------------- ----------- -------------------------
<S> <C> <C> <C>
NICHOLAS F. BRADY* Chairman of Templeton Emerging 1994 -0-
TRUSTEE Markets Investment Trust PLC;
chairman of Templeton Latin America
Investment Trust PLC; chairman of
Darby Overseas Investments, Ltd.
(an investment firm)
(1994-present); chairman and
director of Templeton Central and
Eastern European Fund; director of
the Amerada Hess Corporation,
Christiana Companies, and the H.J.
Heinz Company; formerly, Secretary
of the United States Department of
the Treasury (1988-1993) and
chairman of the board of Dillon,
Read & Co. Inc. (investment
banking) prior to 1988; and
director or trustee of 23 of the
investment companies in the
Franklin Templeton Group of Funds.
Age 66.
S. JOSEPH FORTUNATO Member of the law firm of Pitney, 1992 -0-
TRUSTEE Hardin, Kipp & Szuch; director of
General Host Corporation (nursery
and craft centers); and director or
trustee of 58 of the investment
companies in the Franklin Templeton
Group of Funds. Age 64.
ANDREW H. HINES, JR. Consultant for the Triangle 1992 -0-
TRUSTEE Consulting Group; chairman and
director of Precise Power
Corporation; executive-in-residence
of Eckerd College (1991-present);
director of Checkers Drive-In
Restaurants, Inc.; formerly,
chairman of the board and chief
executive officer of Florida
Progress Corporation (1982-1990)
and director of various of its
subsidiaries; and officer and/or
director or trustee of 24 of the
investment companies in the
Franklin Templeton Group of Funds.
Age 73
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SHARES OWNED
BENEFICIALLY AND % OF
PRINCIPAL OCCUPATION DURING DIRECTOR TOTAL OUTSTANDING ON
NAME AND OFFICES PAST FIVE YEARS AND AGE SINCE DECEMBER, 1996
WITH THE FUND
------------------------------- ------------------------------------- ----------- -------------------------
<S> <C> <C> <C>
EDITH E. HOLIDAY Director (1993 - present) of ** -0-
Amerada Hess Corporation and
Hercules Incorporated; director of
Beverly Enterprises, Inc.
(1995-present) and H. J. Heinz
Company (1994-present); chairman
(1995-present) and trustee
(1993-present) of National Child
Research Center; formerly,
assistant to the President of the
United States and Secretary of the
Cabinet (1990-1993), general
counsel to the United States
Treasury Department (1989-1990),
and counselor to the Secretary and
Assistant Secretary for Public
Affairs and Public Liaison - United
States Treasury Department
(1988-1989); and director or
trustee of 15 of the investment
companies in the Franklin Templeton
Group of Funds. Age .
CHARLES B. JOHNSON* President, chief executive officer, 1995 -0-
CHAIRMAN OF THE BOARD AND and director of Franklin Resources,
VICE PRESIDENT Inc.; chairman of the board and
director of Franklin Advisers, Inc.
and Franklin Templeton
Distributors, Inc.; director of
General Host Corporation (nursery
and craft centers), Franklin
Templeton Investor Services, Inc.
and Templeton Global Investors,
Inc.; and officer and/or director,
trustee or managing general
partner, as the case may be, of
most other subsidiaries of Franklin
Resources, Inc. and 56 of the
investment companies in the
Franklin Templeton Group of Funds.
Age. 63.
</TABLE>
<TABLE>
<CAPTION>
SHARES OWNED
BENEFICIALLY AND % OF
NAME AND OFFICES PRINCIPAL OCCUPATION DURING DIRECTOR TOTAL OUTSTANDING ON
WITH THE FUND PAST FIVE YEARS AND AGE SINCE DECEMBER, 1996
------------------------------- ------------------------------------- ----------- -------------------------
<S> <C> <C> <C>
BETTY P. KRAHMER Director or trustee of various 1990 -0-
TRUSTEE civic associations; formerly,
economic analyst, U.S. government;
and director or trustee of 23 of
the investment companies in the
Franklin Templeton Group of Funds.
Age 67.
GORDON S. MACKLIN Chairman of White River Corporation 1994 -0-
TRUSTEE (information services); director of
Fund America Enterprises Holdings,
Inc., MCI Communications
Corporation, Fusion Systems
Corporation, Infovest Corporation,
MedImmune, Inc., Source One
Mortgage Services Corporation, and
Shoppers Express, Inc. (on-line
shopping service); formerly,
chairman of Hambrecht and Quist
Group, director of H&Q Healthcare
Investors and Lockheed Martin
Corporation, and president of the
National Association of Securities
Dealers, Inc.; and director or
trustee of 53 of the investment
companies in the Franklin Templeton
Group of Funds. Age 68.
FRED R. MILLSAPS Manager of personal investments 1994 ***
TRUSTEE (1978-present); director of various
business and nonprofit
organizations; formerly, chairman
and chief executive officer of
Landmark Banking Corporation
(1969-1978), financial vice
president of Florida Power and
Light (1965-1969), and vice
president of The Federal Reserve
Bank of Atlanta (1958-1965); and
director or trustee of 24 of the
investment companies in the
Franklin Templeton Group of Funds.
Age 67.
</TABLE>
<TABLE>
<CAPTION>
SHARES OWNED
BENEFICIALLY AND % OF
NAME AND OFFICES PRINCIPAL OCCUPATION DURING DIRECTOR TOTAL OUTSTANDING ON
WITH THE FUND PAST FIVE YEARS AND AGE SINCE DECEMBER, 1996
------------------------------- ------------------------------------- ----------- -------------------------
<S> <C> <C> <C>
CONSTANTINE DEAN TSERETOPOULOS Physician, Lyford Cay Hospital **
TRUSTEE (July 1987-present); Cardiology
fellow, University of Maryland
(July 1985-July 1987); internal
medicine intern; Greater Baltimore
Medical Center (July 1982-July
1985); and director or trustee of_
of the investment companies in the
Franklin Templeton Group of Funds.
</TABLE>
---------------------------------------
* NICHOLAS F. BRADY AND CHARLES B. JOHNSON ARE "INTERESTED
PERSONS" AS DEFINED BY THE INVESTMENT COMPANY ACT
OF 1940 (THE "1940 ACT"). THE 1940 ACT STIPULATES THAT
INTERESTED PERSONS CAN COMPRISE NO MORE THAN 60% OF
A FUND'S BOARD OF DIRECTORS/TRUSTEES. CHARLES B. JOHNSON
IS AN INTERESTED PERSON DUE TO HIS OWNERSHIP
INTEREST IN RESOURCES. MR. BRADY'S STATUS AS AN INTERESTED
PERSON RESULTS FROM HIS BUSINESS AFFILIATIONS WITH RESOURCES
AND TEMPLETON GLOBAL ADVISORS LTD. MR. BRADY AND RESOURCES ARE
BOTH LIMITED PARTNERS OF DARBY OVERSEAS PARTNERS, L.P.
("DARBY OVERSEAS"). MR. BRADY ESTABLISHED DARBY OVERSEAS IN
FEBRUARY 1994, AND IS CHAIRMAN AND SHAREHOLDER OF THE
CORPORATE GENERAL PARTNER OF DARBY OVERSEAS. IN ADDITION,
DARBY OVERSEAS AND TEMPLETON GLOBAL ADVISORS LTD. ARE LIMITED
PARTNERS OF DARBY EMERGING MARKETS FUND, L.P. THE REMAINING
NOMINEES AND TRUSTEES OF THE TRUST ARE NOT INTERESTED PERSONS
(THE "INDEPENDENT TRUSTEES").
** DR. TSERETOPOULOS AND MS. HOLIDAY ARE NOT CURRENTLY TRUSTEES
OF THE TRUST.
*** LESS THAN 0.01%. SUCH TRUSTEES HAVE AN INTEREST IN SHARES OF
ONE OR MORE FUNDS THROUGH VARIABLE ANNUITY CONTRACTS OR
VARIABLE LIFE INSURANCE POLICIES.
HOW OFTEN DO THE TRUSTEES MEET AND WHAT ARE THEY PAID?
The Trustees generally meet quarterly to review the operations of the
Funds and other funds within the Franklin Templeton Group of Funds.
Each fund pays its independent directors/trustees and Mr. Brady an
annual retainer and/or fees for attendance at board and committee
meetings. This compensation is based on the level of assets in the
fund. Accordingly, the Trust pays the Independent Trustees and Mr.
Brady an annual retainer of $6,000 and a fee of $500 per meeting of the
Board and its committees attended, including the Audit Committee and
the Nominating and Compensation Committee. Independent Trustees are
reimbursed by the Trust for any expenses incurred in attending Board
meetings.
During the fiscal year ended December 31, 1996, there were four
meetings of the Board, one meeting of the Nominating and Compensation
Committee, and one meeting of the Audit Committee. Each of the Trustees
then in office attended at least 75% of the total number of meetings of
the Board and the Audit Committee throughout the year. There was 100%
attendance at the meeting of the Nominating and Compensation Committee.
Certain Trustees and officers of the Trust are shareholders of
Resources and may receive indirect remuneration due to their
participation in management fees and other fees received from the
Franklin Templeton Group of Funds by TICI and its affiliates. TICI or
its affiliates pay the salaries and expenses of the officers. No
pension or retirement benefits are accrued as part of Trust or Fund
expenses.
The following table shows the compensation paid to Independent Trustees
and Mr. Brady by the Trust and by the Franklin Templeton Group of
Funds:
<TABLE>
<CAPTION>
NUMBER OF BOARDS WITHIN TOTAL COMPENSATION
THE FRANKLIN TEMPLETON FROM THE FRANKLIN
AGGREGATE GROUP TEMPLETON GROUP OF
COMPENSATION FROM OF FUNDS ON WHICH TRUSTEE FUNDS**
NAME OF TRUSTEE THE TRUST* SERVES
--------------------------- ------------------- ---------------------------- ---------------------
<S> <C> <C> <C>
Harris J. Ashton $7,350 55 $327,925
Nicholas F. Brady 7,350 24 98,225
F. Bruce Clarke*** 7,697 19 83,350
Hasso-G von
Diergardt-Naglo*** 7,697 19 77,350
S. Joseph Fortunato 7,350 57 344,745
Andrew H. Hines, Jr. 8,027 23 106,325
Betty P. Krahmer 7,350 23 93,475
Gordon S. Macklin 7,680 52 321,525
Fred R. Millsaps 7,697 23 104,325
Edith Holiday 0 - 0
Constantine Dean 0 - 22,975
Tseretopoulos
</TABLE.>
-----------------------------------
* FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995.
** FOR THE CALENDAR YEAR ENDED DECEMBER 31, 1995.
*** MESSRS. CLARKE AND VON DIERGARDT-NAGLO SERVED AS TRUSTEES
DURING THE TRUST'S LAST FISCAL YEAR BUT DECLINED TO STAND FOR
RE-ELECTION.
WHO ARE THE EXECUTIVE OFFICERS OF THE TRUST?
Officers of the Trust are appointed by the Trustees and serve at the
pleasure of the Board. Listed below, for each Executive Officer, is a
brief description of recent professional experience:
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION
NAME AND OFFICES WITH FUND DURING PAST FIVE YEARS AND AGE
-------------------------------------- --------------------------------------
<S> <C>
CHARLES B. JOHNSON See Proposal 1, "Electing
CHAIRMAN AND VICE PRESIDENT Trustees".
SINCE 1995
CHARLES E. JOHNSON Senior vice president and director
PRESIDENT SINCE 1996 of Franklin Resources, Inc.; senior
vice president of Franklin Templeton
Distributors, Inc.; president and
chief executive officer of Templeton
Worldwide, Inc.; president and
director of Franklin Institutional
Services Corporation; chairman of
the board of Templeton Investment
Counsel, Inc.; officer and/or
director, as the case may be, of
other subsidiaries of Franklin
Resources, Inc.; and officer and/or
director or trustee of 39 of the
investment companies in the Franklin
Templeton Group of Funds. Age 40.
RUPERT H. JOHNSON, JR. Executive vice president and
VICE PRESIDENT SINCE 1996 director of Franklin Resources, Inc. and
Franklin Templeton Distributors, Inc.;
president and director of Franklin
Advisers, Inc.; director of Franklin
Templeton Investor Services, Inc.; and
officer and/or director, trustee or
managing general partner, as the case
may be, of most other subsidiaries
of Franklin Resources, Inc. and 60
of the investment companies in the
Franklin Templeton Group ofFunds. Age
56.
HARMON E. BURNS Executive vice president, secretary
VICE PRESIDENT SINCE 1996 and director of Franklin Resources, Inc.;
executive vice president and director of
Franklin Templeton Distributors, Inc.;
executive vice president of Franklin
Advisers, Inc.; officer and/ordirector,
as the case may be, of other subsidiaries
of Franklin Resources, Inc.; and
officer and/or director or trustee of
60 of the investment companies in the
Franklin Templeton Group of Funds. Age
51.
DEBORAH R. GATZEK Senior vice president and general
VICE PRESIDENT SINCE 1996 counsel of Franklin Resources, Inc.;
senior vice president of Franklin
Templeton Distributors, Inc.; vice
presiden of Franklin Advisers,
Inc.; and officer of 60 of the
investment companies in the Franklin
Templeton Group o Funds. Age
47.
ELIZABETH M. KNOBLOCK General counsel, secretary and a
VICE PRESIDENT - COMPLIANCE senior vice president of Templeton
SINCE 1996 Investment Counsel, Inc.; formerly,
vice president and associate general
counsel of Kidder Peabody & Co. Inc.
(1989-1990), assistant general counsel
of Gruntal & Co., Inc. (1988), vice
president and associate general
counsel of Shearson Lehman Hutton Inc.
(1988), vice president and assistant
general counsel of E.F. Hutton & Co.
Inc. (1986-1988), and special counsel
of the division of investment
management of the Securities and
Exchange Commission (1984-1986); and
officer of 23 of the investment
companies in the Franklin Templeton
Group of Funds. Age 44.
MARK G. HOLOWESKO President and director of Templeton
VICE PRESIDENT SINCE 1994 Global Advisors Limited; chief
investment officer of global equity
research for Templeton Worldwide,
Inc.; president or vice president of
the Templeton Funds; formerly,
investment administrator with Roy West
Trust Corporation (Bahamas) Limited
(1984-1985); and officer of 23 of the
investment companies in the Franklin
Templeton Group of Funds. Age 36.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION
NAME AND OFFICES WITH FUND DURING PAST FIVE YEARS AND AGE
------------------------------------- --------------------------------------
<S> <C>
MARTIN L. FLANAGAN Senior vice president, treasurer and
VICE PRESIDENT SINCE 1994 chief financial officer of Franklin
Resources, Inc.;director and executive
vice president of Templeton Investment
Counsel, Inc.; director,president
and chief executive officer of Templeton
Global Investors, Inc.; a member of
the International Society of Financial
Analysts and the American Institute
of Certified PublicAccountants;
formerly,accountant with Arthur
Andersen & Company (1982-1983); officer
and/or director, as the case may be, of
other subsidiaries of Franklin
Resources,Inc.; and officer
and/or director ortrustee of
60 of the investment companies
in the Franklin Templeton
Group of Funds. Age 36
SAMUEL J. FORESTER, JR. President of the Templeton Global Bond
VICE PRESIDENT SINCE 1994 Managers Division of Templeton
Investment Counsel, Inc.; president or
vice president of other Templeton
Funds; founder and partner of
Forester, Hairston Investment
Management (1989-1990); managing
director (Mid-East Region) of Merrill
Lynch, Pierce, Fenner & Smith Inc.
(1987-1988); advisor for Saudi Arabian
Monetary Agency (1982-1987). Age 48.
JOHN R. KAY Vice president and treasurer of
VICE PRESIDENT SINCE 1994 Templeton Global Investors, Inc. and
Templeton Worldwide, Inc.; assistant
vice president of Franklin Templeton
Distributors, Inc.; formerly, vice
president and controller of the
Keystone Group, Inc.; and officer of
27 of the investment companies in the
Franklin Templeton Group of Funds. Age
56.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION
NAME AND OFFICES WITH FUND DURING PAST FIVE YEARS AND AGE
-------------------------------------- --------------------------------------
<S> <C>
THOMAS LATTA Vice president of the Templeton
VICE PRESIDENT SINCE 1994 Global Bond Managers division of
Templeton Investment Counsel, Inc.;
vice president of various Templeton
Funds; formerly, portfolio manager,
Forester & Hairston (1988-1991);
investment adviser, Merrill Lynch,
Pierce, Fenner & Smith Incorporated
(1981-1988). Age 35.
BARBARA J. GREEN Senior vice president of Templeton
SECRETARY SINCE 1996 Worldwide, Inc. and Templeton Global
Investors, Inc.; formerly, deputy
director of the Division of
Investment Management, executive
assistant and senior advisor to the
chairman, counselor to the chairman,
special counsel and attorney fellow,
U.S. Securities and Exchange
Commission (1986-1995), attorney,
Rogers & Wells, and judicial clerk,
U.S. District Court (District of
Massachusetts); and secretary of 23
of the investment companies in the
Franklin Templeton Group of Funds.
Age 49.
JAMES R. BAIO Certified public accountant; senior
TREASURER SINCE 1994 vice president of Templeton
Worldwide,
Inc.,
Templeton
Global
Investors,
Inc., and
Templeton
Funds Trust
Company;
formerly,
senior tax
manager
with Ernst
& Young
(certified
public
accountants)
(1977-1989);
and
treasurer
of 23 of
the
investment
companies
in the
Franklin
Templeton
Group of
Funds. Age
42.
</TABLE>
THE TRUSTEES RECOMMEND THAT YOU VOTE FOR THE NOMINEES.
PROPOSAL 2. RATIFYING OR REJECTING INDEPENDENT AUDITORS
HOW IS AN INDEPENDENT AUDITOR SELECTED?
The Board established a standing Audit Committee consisting of Messrs.
Hines and Millsaps, both of whom are Independent Trustees. The Audit
Committee reviews generally the maintenance of the Trust's records and
the safekeeping arrangements of the Trust's custodian, reviews both the
audit and non-audit work of the Trust's independent auditor, and
submits a recommendation to the Board as to the selection of an
independent auditor.
WHICH INDEPENDENT AUDITOR DID THE BOARD OF TRUSTEES SELECT?
For the current fiscal year, the Trustees selected as auditors the firm
of McGladrey & Pullen, LLP, 555 Fifth Avenue, New York, New York 10017.
McGladrey & Pullen, LLP has been the auditor of the Trust since its
inception in 1988, and have examined and reported on the fiscal
year-end financial statements, and certain related Securities and
Exchange Commission filings. Neither the firm of McGladrey & Pullen,
LLP nor any of its members have any material direct or indirect
financial interest in the Trust or the Funds.
Representatives of McGladrey & Pullen, LLP are not expected to be
present at the Meeting, but have been given the opportunity to make a
statement if they wish, and will be available should any matter arise
requiring their presence.
Approval by a majority of the shares of all Funds voting together as a
single class is necessary to ratify the selection of auditors.
THE TRUSTEES RECOMMEND THAT YOU VOTE FOR RATIFYING THE INDEPENDENT AUDITORS
PROPOSAL 3. APPROVING OR DISAPPROVING NEW INVESTMENT MANAGEMENT AGREEMENTS
You are being asked to approve new Investment Management Agreements
(the "Proposed Agreements") between TICI and the Trust on behalf of
Asset Allocation Fund, International Fund and Stock Fund. The Proposed
Agreements would replace each Fund's existing Investment Management
Agreement (the "Current Agreement"), between TICI and the Trust on
behalf of such Funds. In order for the Proposed Agreements to become
effective, the Investment Company Act of 1940, as amended (the "1940
Act"), requires that the Proposed Agreements be approved by the Trust's
Board and each such Fund's shareholders. The Trustees of the Trust,
including those Trustees who are not "interested persons" or affiliates
(as defined in the 1940 Act) of any party to the Proposed Agreements
(the "Independent Trustees"), approved the Proposed Agreements in
person at a meeting held on December 3, 1996. Through this revised fee
structure, the Trustees believe the Funds' Investment Manager will be
in a better position to retain and attract capable personnel to serve
the Funds and to continue to furnish high quality services to the
Funds.
The Proposed Agreements are identical in all material respects to the
Current Agreement except that the Proposed Agreements reflect an
increase in the investment management fee payable to TICI as follows:
<TABLE>
<CAPTION>
FUND CURRENT FEE (ANNUAL RATE)* PROPOSED FEE (ANNUAL RATE)*
------------------- ----------------------------------- -----------------------------------------
<S> <C> <C>
Asset Allocation .50% up to $200 million, 0.45% up 0.65% up to $200 million,
to $1.3 billion 0.40% over $1.3 0.585% up to $1.3 billion
billion. 0.52% over $1..3 billion.
International 0.50% up to $200 million, 0.45% 0.75% up to $200 million
up to $1.3 billion 0.40% over 0.675% up to $1..3 billion
$1.3 billion 0.60% over $1.3 billion
Stock 0.50% up to $200 million, 0.45% 0.75% up to $200 million
up to $1.3 billion 0.40% over 0.675% up to $1.3 billion
$1.3 billion 0.60% over $1.3 billion
</TABLE>
-----------------------------------------
* BASED UPON AVERAGE DAILY NET ASSETS.
The Current Agreement and the Proposed Agreements, including the
services to be provided, terms relating to compensation, and procedures
for termination and renewal, are described below under "What are the
terms of the Current and Proposed Agreements?" The description of the
Proposed Agreements is qualified in its entirety by reference to the
form of Proposed Agreements set forth in Appendix A to this proxy
statement. Additional information about TICI is set forth below under
"Other Information."
WHAT ARE THE TERMS OF THE CURRENT AND PROPOSED AGREEMENTS?
THE CURRENT AGREEMENT. The Current Agreement, dated October 30, 1992,
provides that TICI shall render investment management services to each
of the Funds subject to the control and supervision of the Trustees of
the Trust. The shareholders of each Fund approved the Current Agreement
on October 30, 1992. By its terms, the Current Agreement will continue
in effect from year to year so long as it is approved annually by the
Trustees (at a meeting called for that purpose) or by vote of a
majority of each Fund's outstanding shares. In either case, renewal of
the Current Agreement must be approved by a majority of the Trust's
Independent Trustees. The Current Agreement is subject to termination
without penalty on 60 days' written notice by either party to the other
and will terminate automatically in the event of assignment. The Board
last approved continuance of the Current Agreement through April 30,
1997, at a meeting held on February 23, 1996.
Under the Current Agreement, subject to the control and supervision of
the Trustees, TICI manages the investment and reinvestment of each
Fund's assets in accordance with each Fund's investment objectives and
policies, makes all determination with respect to buying, holding, and
selling each Fund's securities as well as exercising any investment
security rights, including voting rights. The Investment Manager is not
required to furnish any personnel, overhead items or facilities for the
Funds, including trading desk facilities or daily pricing of the Funds'
portfolios, although those services are provided for some other
investment companies by their investment managers. In performing duties
under the Current Agreement, TICI is required to comply with the
provisions of the Trust's Agreement and Declaration of Trust and
By-Laws and each Fund's stated investment objective policies and
restrictions.
The Current Agreement provides that TICI will abide by the Funds'
brokerage policies when selecting broker-dealers to execute portfolio
transactions for the Funds. Although the services provided by
broker-dealers may incidentally help TICI reduce its expenses or
otherwise benefit TICI, its clients, its affiliates, and the Funds, the
value of these services is indeterminable and TICI's fee is not reduced
by any offsetting or compensating arrangement.
When TICI determines to buy or sell the same securities for a Fund that
TICI has recommended for one or more of its other clients or for
clients of its affiliates, the orders will be placed for execution by
methods determined by TICI, with approval by the Board, to be impartial
and fair, in order to seek good results for all parties. Records of
securities transactions of persons who know when orders are placed by
the Funds are available for inspection at least four times annually by
the compliance officer of the Trust so that Independent the Trustees
can be satisfied that the procedures are generally fair and equitable
for all parties.
The Current Agreement also provides that TICI, its directors, officers,
employees or agents will have no liability to the Funds or any
shareholder of the Funds for any error in judgment, mistake of law, or
for loss arising out of any investment or other act or omission in the
performance of its duties, except for any liability, loss or damage
resulting from willful misfeasance, bad faith, gross negligence or
reckless disregard of duty.
For the fiscal year ended December 31, 1995, TICI received the following fees
from the Funds:
<TABLE>
<CAPTION>
TOTAL FEES RECEIVED BY TICI
FUND FISCAL YEAR ENDED 12/31/95
----------------------------- ---------------------------------
<S> <C>
Asset Allocation $ 1,662,023
Stock $ 2,102,259
International $ 1,222,834
</TABLE>
THE PROPOSED AGREEMENTS. Except for the change in the investment
management fee described above on page 17, the Current Agreement and
the Proposed Agreements are substantially the same. If approved, each
of the Proposed Agreements will continue in effect until February,
1999, and thereafter from year to year as long as approved annually by
the Trustees at a meeting called for that purpose or by a vote of each
Fund's shareholders, and by a vote of a majority of the Independent
Trustees. If the Proposed Agreements are not approved by the
shareholders, the Current Agreement will remain in effect through April
30, 1997.
COMPARISON OF FEES AND EXPENSES UNDER THE CURRENT AGREEMENT AND THE
PROPOSED AGREEMENTS. The following tables and examples are provided to
help you understand and compare the various costs and expenses of each
Fund that would be borne directly or indirectly by the shareholders of
each Fund under the Current Agreement and the Proposed Agreements.
THE TABLES INCLUDE ONLY EXPENSES AND FEES CHARGED AT THE FUND LEVEL AND
DO NOT REFLECT SEPARATE ACCOUNT OR CONTRACT-BASED FEES AND EXPENSES.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED DECEMBER 31, 1995
Effective Management Fee Rate STOCK INTERNATIONAL ASSET ALLOCATION
<S> <C> <C> <C>
- Current Agreement .47% .49% .48%
---------------- -----------------
-----------------
- Proposed Agreements .69% .71% .62%
---------------- -----------------
-----------------
- Percentage Change .22% .22% .14%
---------------- ----------------- -----------------
Expense Ratio
---------------------------------
- Current Agreement .66% .71% .66%
----------------
----------------- -----------------
- Proposed Agreements .88% .93% .80%
---------------- ----------------- -----------------
- Percentage Change .22% .22% .14%
-----------------
---------------- -----------------
Management Fee
---------------------------------
- Current Agreement $2,102,259 $1,222,834 $1,662,023
-----------------
---------------- -----------------
- Proposed Agreements $3,092,462 $1,821,937 $2,162,022
-----------------
---------------- -----------------
- Difference between $990,203 $599,103 $499,999
---------------- ----------------- -----------------
aggregate amounts
---------------- ------- ----------------- --------- -----------------
AVERAGE NET ASSETS OF FUND $444,994,144 $249,528,820 $347,354,142
---------------- ----------------- -----------------
</TABLE>
Shown below is a comparison of fees and expenses the Funds incurred
during the fiscal year ended December 31, 1995, and the fees and
expenses the Funds would have incurred had the proposed fee increase
been in effect. The table includes only expenses and fees charged at
the Fund level and does not reflect separate account or contract-based
fees and expenses.
<TABLE>
<CAPTION>
Stock Fund International Fund Asset Allocation Fund
--------------------------- ---------------------- ------------------------
Annual Fund Expenses CURRENT PROPOSED CURRENT PROPOSED CURRENT PROPOSED
------- -------- ------- -------- ------- --------
--------------------------
<S> <C> <C> <C> <C> <C> <C>
--- --- --- --- --- ---
Management Fees .49% .69% .49% .71% .48% .62%
---- ---- ---- ---- ---- ----
Distribution Fees None None None None None None
Other Expenses .19% .19% .22% .22% .18% .18%
---- ---- - ---- ---- ---- ----
---------- ------------ --- --------- ----------- --- ----------- -----------
TOTAL FUND EXPENSES .66% .88% .71% .93% .66% .80%
---- ---- ---- ---- ---- ----
</TABLE>
The following example illustrates, for both the existing fee schedule
and the proposed fee increase, the expenses you would incur on a $1000
investment, assuming a 5% annual rate of return and redemption at the
end of each period shown. This is an illustration only and does not
reflect separate account or contract expenses. Actual expenses and
performance may be more or less than shown.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
STOCK FUND
Current $7 $21 $__37_ $__82_
-- --
------------
------------
Proposed 9 28 ___49 __108_
-- ---
------------ ------------
INTERNATIONAL FUND
Current $7 $23 $__40_ $__88_
-- --
------------
Proposed 9 30 ___51_ _ 114_
-- -----
----------- ------------ ------------
ASSET ALLOCATION FUND
Current $7 $__21_ $__37_ $__82_
-- -- --
------------
Proposed 9 __26_ __44_ ___99_
-- -- --
------------
</TABLE>
HOW HAVE THE FUNDS PERFORMED UNDER THE INVESTMENT MANAGER'S DIRECTION
[Proxy statement will include SEC standardized performance data.]
WHAT FACTORS DID THE TRUSTEES CONSIDER PRIOR TO RECOMMENDING APPROVAL
OF THE PROPOSED AGREEMENTS?
[The following section is preliminary and will be revised as
necessary to reflect the Board's actions at the 12/3/96 meeting.]
In determining whether or not it was appropriate to approve the
Proposed Agreements which increase the investment management fees
payable to TICI and to recommend approval to shareholders, the Trustees
considered various matters and extensive information provided by TICI
and the Trust's legal counsel, Dechert, Price & Rhoads. The nature of
the matters to be considered and the standards to be used by the
Trustees in reaching their decision were reviewed by the Trust's legal
counsel and Brian Lorenz, legal counsel to the Independent Trustees.
After review and discussions of the information provided, the
Independent Trustees met separately to discuss the information and
consider the factors to be weighed and standards to be applied in
evaluating the proposed fee increase.
The Independent Trustees first examined the nature, quality and scope
of the services provided to the Funds by TICI. Second, they reviewed
the basis for an increase in the investment management fee and analyzed
the fee schedule proposed by TICI in terms of investment management
fees charged by TICI and other investment advisers. Finally the
Independent Trustees examined mutual fund-related revenues and expenses
of TICI.
The Independent Trustees were provided with data as to the
qualifications of TICI's personnel, the quality and extent of the
services rendered, and its commitments to its mutual fund advisory
business. The Independent Trustees also considered data presented by
TICI showing the extent to which it had substantially expanded its
investment personnel and other services, including significant
continuing upgrading and development of its computer and communication
systems, dedicated to its mutual fund advisory activities, both in the
United States and abroad. Information prepared specifically for the
purpose of assisting the Independent Trustees in their evaluation of
the Proposed Agreements included an analysis of the performance and
expenses of the Funds prepared by Lipper Analytical Services, Inc.
("Lipper").
After consideration of all of the data and information provided to them
and the separate meeting to evaluate the new investment management fee
proposed by the Investment Manager, the Independent Trustees discussed
the proposed fee schedule with representatives of TICI. After such
discussion, the Independent Trustees then unanimously determined to
recommend to the Board and the Board unanimously approved the fee
schedule reflected in the Proposed Agreements. Noting their favorable
experience in overseeing, on an ongoing basis, the nature, quality and
extent of TICI's services to the Funds, the Independent Trustees
considered, among other factors: (1) the necessity of TICI maintaining
and enhancing its ability to retain and attract capable personnel to
serve the Funds; (2) the increased complexity and expansion of the
domestic and international securities markets and TICI's and affiliates
shared expenditures and projected expenses associated with opening and
maintaining research and support offices in Australia, Bahamas, Canada,
Scotland, Luxembourg, France, Italy, and in the United States; (3) the
Investment Manager's expenditures in developing worthwhile and
innovative advisory services for the Funds such as a proprietary
research database; (4) the complexity of research and investment
activities, and related travel expenses, in developed and emerging
markets; (5) the investment record of the Investment Manager in
managing the Funds and other investment companies for which it acts as
investment adviser; (6) the Investment Manager's overall profitability;
(7) pro forma profitability data giving effect to the proposed increase
in the investment management fee but before any marketing and
promotional expenses anticipated to be paid by the Investment Manager
and its affiliates; (8) the effect of the proposed investment
management fee increase on the expense ratio of the Funds; (9) possible
economies of scale; (10) data as to investment performance, advisory
fees and expense ratios of other investment companies not advised by
the Investment Manager but believed to be generally comparable to the
Funds; (11) other benefits to the Investment Manager from serving as
investment manager to the Funds, as well as benefits to its affiliates
serving as principal underwriter and business manager of the Trust or
providing other services to the Funds and their shareholders; (12)
current and developing conditions in the financial services industry,
including the entry into the industry of large and highly capitalized
companies which are spending and appear to be prepared to continue to
spend substantial sums to engage personnel and to provide services to
competing investment companies; and (13) the financial resources of the
Investment Manager and the desirability of appropriate incentives to
assure that the Investment Manager will continue to furnish high
quality advisory services to the Funds.
In their review of the proposed increase in the level of the investment
management fees, the Independent Trustees considered the fact that the
current investment management fees paid by the Funds are lower than
those paid to the Investment Manager by other investment companies with
investment objectives comparable to that of the Funds for which it also
serves as investment adviser. The Independent Trustees also took into
account the fact that the investment management fee rate paid by the
Funds -- as well as the Funds' total expense ratios, including the
investment management fees -- are well below the median fee rates and
expense ratios of groups of mutual funds selected by Lipper as
comparison groups. Also, if the Proposed Agreements had been in effect,
each Fund's pro forma investment management fee rate, with the
exception of the Stock Fund, would not have exceeded the median for
their groups. Moreover, if the Proposed Agreements had been in effect,
the total expense ratio (including the investment management fee) for
each of the Funds would rank in the second lowest quintile for their
groups - or well below the median for their groups. The proposed
investment management fee is higher than those paid by some other
investment companies, although the fee is comparable to those paid by
most funds which invest internationally.
The Independent Trustees considered specific information provided by
the Investment Manager regarding its profitability and also considered
comparative information relating to the profitability of other mutual
fund investment managers.
THE TRUSTEES RECOMMEND THAT YOU VOTE FOR APPROVAL OF THE NEW INVESTMENT
MANAGEMENT AGREEMENTS.
PROPOSAL 4. OTHER BUSINESS
The Trustees know of no other business to be presented at the Meeting.
However, if any additional matters should be properly presented,
proxies will be voted as specified. Proxies reflecting no specification
will be voted in accordance with the judgment of the persons named in
the proxy.
INFORMATION ABOUT THE TRUST AND THE FUNDS
The Trust was organized as a Massachusetts business trust on February
25, 1988 and is registered under the 1940 Act as an open-end
diversified investment management company. The Trust currently has six
series of shares: Templeton Money Market Fund, Templeton Bond Fund,
Templeton Stock Fund, Templeton Asset Allocation Fund, Templeton
International Fund and Templeton Developing Markets Fund. Shares of the
Funds are sold only to insurance company separate accounts to serve as
the investment vehicle for certain variable annuity and life insurance
contracts.
The Trust's last audited financial statements and annual report, and a
copy of its semi-annual report for any subsequent semi-annual period
are available free of charge. To obtain a copy, please call 1-800/DIAL
BEN or forward a written request to Franklin Templeton Investor
Services, Inc., P.O. Box 33030, St. Petersburg, Florida 33733-8030.
The following table shows the Assets and shares outstanding of each
Fund as of December 9, 1996:
<TABLE>
<CAPTION>
FUND NAME NET ASSETS NUMBER OF SHARES OUTSTANDING
<S> <C> <C>
Asset Allocation Fund $_________ ___________
International Fund $_________ ___________
Stock Fund $_________ ___________
Bond Fund $_________ ___________
Developing Markets Fund $_________ ___________
Money Market Fund $_________ ___________
TOTAL $.................. .....................
================== =====================
</TABLE>
As of December 9, 1996, the following Insurance Companies owned, on
behalf of certain separate accounts, more than 5% of the Funds'
outstanding shares:
<TABLE>
<CAPTION>
NUMBER OF PERCENT OF
NAME AND ADDRESS SHARES OUTSTANDING
FUND INSURANCE COMPANY SHARES
- - <S> <C> <C> <C>
Money Market Phoenix Home Mutual Life
Insurance Company
100 Bright Meadows Blvd.
Enfield, CT 06082 %
Bond Fund Phoenix Home Mutual Life
Insurance Company %
The Travelers Insurance Company
One Tower Square
Hartford, CT 06183 %
-----------
--------------
Stock Fund The Travelers Insurance Company %
----------- --------------
Phoenix Home Mutual Life
Insurance Company %
----------- --------------
International Fund Phoenix Home Mutual Life
Insurance Company %
----------- --------------
The Variable Annuity Life
Insurance Company
2929 Allen Parkway
Houston, TX 77019 %
----------- --------------
Asset Allocation Fund Phoenix Home Mutual Life
Insurance Company %
----------- --------------
The Travelers Insurance Company
----------- --------------
The Variable Annuity Life
Insurance Company %
----------- --------------
Developing Markets Fund IDS Life Insurance Company
IDS Tower 10
Minneapolis, MN 55440 %
----------- --------------
</TABLE>
However, the above-named Insurance Companies will exercise voting
rights attributable to the shares held by them in accordance with
voting instructions received from owners of the contracts issued by
them. To this extent, such Insurance Companies do not exercise control
over the Trust or the Funds by virtue of the voting rights arising from
their record ownership of Trust shares. [Reviewing whether this
disclosure is required, and if so, is sufficient.]
THE INVESTMENT MANAGER. TICI is a wholly-owned subsidiary of
Templeton Global Investors, Inc., which is a wholly-owned subsidiary
of Templeton Worldwide, Inc., which, in turn, is a wholly-owned
subsidiary of Franklin Resources,Inc. ("Resources"), 777 Mariners
Island Blvd., San Mateo, California, 94404-1585. Resources is
primarily engaged, through various subsidiaries, in providing
investment management, share distribution, transfer agent and
administrative services to a family of investment companies. Resources
is an NYSE, Inc. listed holding company (NYSE: BEN). Resources'
principal shareholders are Charles B. Johnson, a Trustee of the Trust,
and Rupert H. Johnson, Jr. who own approximately 20% and 16%
respectively, of its outstanding shares.
The principal executive officers of TICI are:
<TABLE>
<CAPTION>
NAME AND OFFICE PRINCIPAL OCCUPATION ADDRESS
----------------------------- ---------------------------- -----------------------------------------
<S> <C> <C>
Charles E. Johnson Executive Manager Templeton Worldwide, Inc.
Director and Chairman 500 East Broward Blvd., Suite 2100
Fort Lauderdale, Florida
Donald F. Reed Securities Analyst Templeton Worldwide, Inc.
Director and President 500 East Broward Blvd., Suite 2100
Fort Lauderdale, Florida
Martin L. Flanagan Accountant Franklin Resources, Inc.
Director, Executive Vice 777 Mariners Island Blvd.
President and Chief San Mateo, California
Operating Officer
Gregory E. McGowan Attorney Templeton Worldwide, Inc.
Director and Executive Vice 500 East Broward Blvd., Suite 2100
President Fort Lauderdale, Florida
Gary P. Motyl Securities Analyst Templeton Worldwide, Inc.
Director and Executive Vice 500 East Broward Blvd., Suite 2100
President Fort Lauderdale, Florida
Elizabeth M. Knoblock Attorney Templeton Worldwide, Inc.
Senior Vice President, 500 East Broward Blvd., Suite 2100
General Counsel and Fort Lauderdale, Florida
Secretary
</TABLE>
Some of the Trustees or officers of the Trust (whose addresses and
biographical information are set forth above under "Electing Trustees")
also serve as directors or officers of TICI. These Trustees and
officers are listed below:
Martin L. Flanagan
Samuel J. Forester, Jr.
Charles E. Johnson
Elizabeth M. Knoblock
TICI also serves as investment manager to other U.S. registered
investment companies that have an investment objective similar to that
of the Funds. TICI receives and expects to receive from these
investment companies the following investment management fees:
<TABLE>
<CAPTION>
APPROXIMATE NET ASSETS AS INVESTMENT MANAGEMENT FEE (ANNUAL
INVESTMENT COMPANY OF DECEMBER 9, 1996 RATE)
-------------------------------- ----------------------------- -------------------------------------
<S> <C> <C>
Templeton Institutional Funds, $____________ .70%
Inc. - Foreign Equity Series
Templeton Global Opportunities $____________ 0.950% up to $200 million
Fund 0.935% of next $500 million
0.900% of next $500 million 0.875%
thereafter
Templeton Capital Accumlator
Fund, Inc. $____________ 0.75%
Franklin Valuemark Funds-Asset 0.65% up tp $200 milliom
Allocation Fund* $____________ 0.585% up to 1.3 Billion
0.52% over 1.3 Billion
Franklin Valuemark Funds- 1.00% up to $100 million
International Equity Fund $____________ 0.90% up to $250 million
0.80% up to $500 million
0.75% over $500 million
including Fund Administration Fees
</TABLE>
*TICI serves as sub-adviser to these Funds.
THE BUSINESS MANAGER. The business manager of the Trust and each of the
Funds is Templeton Funds Annuity Company ("TFAC"), a Florida
corporation, located at 700 Central Avenue, St. Petersburg, Florida
33701-3628. TFAC is an indirect, wholly-owned subsidiary of Resources.
Pursuant to a Business Management Agreement between the Trust and TFAC
dated October 30, 1992, as amended and restated February 23, 1996, TFAC
performs certain administrative functions for the Funds. TFAC will
continue to serve as the business manager if the Proposed Agreements
are approved. For its services, TFAC receives a monthly fee equal on an
annual basis to 0.15% of the combined average daily net assets of all
of the Funds, reduced to 0.135% of the Funds' aggregate net assets in
excess of $200 million, and further reduced to 0.75% annually of such
net assets in excess of $1.2 billion. This fee is allocated among the
Funds according to their respective average daily net assets. During
the fiscal year ended December 31, 1995, TFAC received fees from the
Trust totaling $1,380,760.00.
THE PRINCIPAL UNDERWRITER. Franklin Templeton Distributors, Inc.
("FTD"), 700 Central Avenue, St. Petersburg, Florida 33701-3628,
an indirect, wholly-owned subsidiary of Resources, serves as the
principal underwriter for the Funds' shares and will continue to do so
if the Proposed Agreements are approved. FTD receives no compensation
for its services as the Funds' principal underwriter.
THE CUSTODIAN. The custodian for the Funds is The Chase Manhattan Bank,
1 Chase Manhattan Plaza, New York, New York 10081, pursuant to a
Custody Agreement dated February 23, 1996 and last amended May 10,
1996.
ADDITIONAL INFORMATION ABOUT VOTING AND THE
SHAREHOLDERS MEETING
SOLICITATION OF PROXIES. In addition to soliciting proxies by mail, the
Trustees and the employees of the Insurance Companies and Resources and
its affiliates may solicit voting instructions from Contract Owners in
person or by telephone. The cost of soliciting proxies, including the
fees of a proxy soliciting agent, are borne by the Trust. The Trust,
however, does not reimburse Trustees, officers, and regular employees
and agents involved in the solicitation of proxies.
QUORUM. A majority of the shares entitled to vote -- present in person
or represented by proxy -- constitutes a quorum at the Meeting. Shares
whose proxies reflect an abstention on any item are all counted as
shares present and entitled to vote for purposes of determining the
presence of a quorum.
METHODS OF TABULATION. The inspector of election will count the total
number of votes cast "for" approval of each of the proposals for
purposes of determining whether sufficient affirmative votes have been
cast. Abstentions will be treated as votes not cast and, therefore,
will not be counted for purposes of obtaining approval of Proposals 1
and 2, and will not have any effect on the outcome of the proposal.
With respect to any other proposal, abstentions have the effect of a
negative vote on the proposal.
Each of the Insurance Companies holding shares of the Funds have agreed
to vote their shares in proportion to and in the manner instructed by
Contract Owners. If instructions are not received or leaves the voting
discretionary for a particular Fund, the relevant Insurance Company
will vote shares in the same proportion as shares of that Fund for
which it has received instructions.
ADJOURNMENT. If a sufficient number of votes in favor of the proposals
contained in the Notice of Annual Meeting and Proxy Statement is not
received by the time scheduled for the Meeting, the persons named in
the proxy may propose one or more adjournments of the Meeting to permit
further solicitation of proxies with respect to any such proposals. Any
proposed adjournment requires the affirmative vote of a majority of
shares present at the Meeting. The appropriate Insurance Company will
vote in favor of such adjournment those shares which they are entitled
to vote in favor of such proposals. They will vote against such
adjournment those shares required to be voted against such proposals.
Any proposals for which sufficient favorable votes have been received
by the time of the Meeting may be acted upon and considered final
regardless of whether the Meeting is adjourned to permit additional
solicitation with respect to any other proposal.
REVOCATION OF PROXIES. Proxies executed by any of the Insurance
Companies may be revoked at any time before they are voted by written
revocation received by the Secretary of the Trust, by properly
executing a later-dated proxy or by attending the Meeting and voting in
person.
SHAREHOLDER PROPOSALS. The Trust's Agreement and Declaration of Trust
does not provide for annual meetings of shareholders, and the Trust
does not currently intend to hold such meeting in 1998. Shareholder
proposals to be included in the proxy statement for any subsequent
meeting must be received at the Trust's offices, 700 Central Avenue,
St. Petersburg, Florida 33701-3628, within a reasonable period of time
prior to any such meeting.
By Order of the Board of Trustees,
Barbara J. Green, Secretary
January 10, 1997
VOTING INSTRUCTIONS FORM
INSURANCE COMPANY A SEPARATE VOTING INSTRUCTION FORM IS
NAME PRINTS PROVIDED FOR EACH TEMPLETON VARIABLE
HERE PRODUCTS SERIES FUND PORTFOLIO IN WHICH
YOUR CONTRACT VALUES WERE INVESTED AS OF
DECEMBER 9, 1996. PLEASE SIGN, DATE AND
RETURN ALL VOTING INSTRUCTION FORMS
RECEIVED IN THE ENCLOSED POSTAGE-PAID
ENVELOPE.
VOTING INSTRUCTIONS MUST BE RECEIVED BY
FEBRUARY 9, 1997 TO BE VOTED FOR THE
MEETING TO BE HELD ON FEBRUARY 10, 1997
Please fold and detach card at perforation. Return portion below only.
PORTFOLIO NAME PRINTS HERE
THESE VOTING INSTRUCTIONS ARE SOLICITED BY (INSURANCE COMPANY) IN CONNECTION
WITH A SOLICITATION OF PROXIES BY THE TRUSTEES OF TEMPLETON VARIABLE PRODUCTS
SERIES FUND.
The undersigned hereby instructs (Insurance Company) to vote the shares of
Templeton Variable Products Series Fund ("TVPSF") attributable to his or her
variable annuity contract at the Meeting of Shareholders to be held at 500
Broward Blvd., Ft. Lauderdale, FL at 10:00 a.m., February 10, 1997, and any
adjournments thereof, as indicated below.
DATE:
PLEASE SIGN IN BOX
BELOW IF A CONTRACT IS HELD JOINTLY,
EACH CONTRACT OWNER SHOULD SIGN. IF
ONLY ONE SIGNS, HIS OR HER SIGNATURE
WILL BE BINDING. IF THE CONTRACT
OWNER IS A CORPORATION, THE PRESIDENT
OR A VICE PRESIDENT SHOULD SIGN IN
HIS OR HER OWN NAME, INDICATING
TITLE. IF THE CONTRACT OWNER IS A
PARTNERSHIP, A PARTNER SHOULD SIGN IN
HIS OR HER NAME, INDICATING THAT HE
OR HE S A "PARTNER." IF THE
CONTRACT OWNER IS A TRUST, THE
TRUSTEE SHOULD SIGN IN HIS OR HER OWN
NAME, INDICATING THAT HE OR SHE IS A
"TRUSTEE."
Signature(s) Title(s), if applicable
INDICATE YOUR VOTE BELOW BY FILLING IN THE APPROPRIATE BOXES IN THIS MANNER
USING BLUE OR BLACK INK OR DARK PENCIL. PLEASE DO NOT USE RED INK.
PLEASE FOLD AND DETACH CARD AT PERFORATION. RETURN PORTION BELOW ONLY.
THIS VOTING INSTRUCTION, IF PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER
DIRECTED BY THE CONTRACTHOLDER. IF NO DIRECTION IS MADE, THIS VOTING
INSTRUCTION WILL BE VOTED FOR ALL PROPOSALS. PLEASE REFER TO THE PROXY STATEMENT
FOR A DISCUSSION OF THE PROPOSALS.
<TABLE>
<CAPTION>
PROPOSAL 1 - Election of Trustees
<S> <C> <C>
Nominees: Harris J. Ashton, Nicholas F. Brady, S. Joseph FOR electing all WITHHOLD
Fortunato, Andrew H. Hines, Jr., Edith E. Holiday, Charles B. nominees AUTHORITY
Johnson, Betty P. Krahmer, Gordon S. Macklin and Fred R. listed (except as to vote for all
Millsaps marked to the right) nominees
To withhold authority to vote for any individual
nominee(s), write that nominee's name on the line below.
</TABLE>
Proposal 2 - Ratification of the selection of McGladrey & Pullen, LLP as the
Trust's independent auditors for the fiscal year ending December 31, 1997.
FOR AGAINST ABSTAIN
Proposal 3 - Approval of new Investment Manager Agreements between Templeton
Investment Counsel, Inc. and the Trust on behalf of Templeton Stock Fund,
Templeton Asset Allocation Fund and Templeton International Fund, respectively,
as described in the proxy statement, which increase the investment management
fee paid by such Funds.
FOR AGAINST ABSTAIN
PLEASE MARK YOUR VOTING INSTRUCTION FORM, DATE AND SIGN IT ON THE REVERSE SIDE,
AND RETURN IT PROMPTLY IN THE ACCOMPANYING ENVELOPE WHICH REQUIRES NO POSTAGE IF
MAILED IN THE UNITED STATES.
