SUPPLEMENT DATED NOVEMBER 17, 1998
TO THE PROSPECTUS DATED MAY 1, 1998
AS SUPPLEMENTED OCTOBER 7, 1998
OF
TEMPLETON VARIABLE PRODUCTS SERIES FUND
I. THE SECTION "PORTFOLIO MANAGEMENT - MUTUAL SHARES INVESTMENTS FUND" IS
REPLACED WITH THE FOLLOWING:
Franklin Mutual Advisers, Inc., 51 John F. Kennedy Parkway, Short Hills,
New Jersey, 07078 is the Investment Manager, which manages the Fund's
assets and makes its investment decisions. Michael F. Price is Chairman of
the Board of the Fund's Investment Manager. For its services, the
Investment Manager receives a fee equivalent on an annual basis to 0.60% of
the average daily net assets of the Fund. "See Management of the Trust" for
more information about fees.
The following persons are primarily responsible for the day-to-day
management of the Fund's portfolio.
PETER A. LANGERMAN
Chief Executive Officer and Senior Vice President
Franklin Mutual Advisers, Inc.
Mr. Langerman has a Bachelor of Arts degree from Yale University, a Masters
in Science from New York University Graduate School of Business and a Juris
Doctor from Stanford University Law School. Before November 1996, he was a
research analyst for Heine Securities Corporation, the predecessor of
Franklin Mutual Advisers, Inc. He has been with the Franklin Templeton
Group since November 1996 and has managed the Fund from inception.
ROBERT L. FRIEDMAN
Chief Investment Officer and Senior Vice President
Franklin Mutual Advisers, Inc.
Mr. Friedman has a Bachelor of Arts degree in Humanities from Johns Hopkins
University and a Masters in Business Administration from the Wharton
School, University of Pennsylvania. Before November 1996, Mr. Friedman was
a research analyst for Heine Securities Corporation, the predecessor of
Franklin Mutual Advisers, Inc. He has been with the Franklin Templeton
Group since November 1996 and has managed the Fund from inception.
LAWRENCE N. SONDIKE
Senior Vice President
Franklin Mutual Advisers, Inc.
Mr. Sondike has a Bachelor of Arts degree from Cornell University and a
Masters in Business Administration from New York University Graduate School
of Business. Before November 1996, he was a research analyst for Heine
Securities Corporation, the predecessor of Franklin Mutual Advisers, Inc.
He has been with the Franklin Templeton Group since November 1996 and has
managed the Fund from inception.
DAVID E. MARCUS
Senior Vice President
Franklin Mutual Advisers, Inc.
Mr. Marcus holds a Bachelor of Science in Business Administration/Finance
from Northeastern University. Before November 1996, he was a research
analyst for Heine Securities Corporation, the predecessor of Franklin
Mutual Advisers, Inc. He has been with the Franklin Templeton Group since
November 1996 and has managed the Fund since March 1998.
PAGE
II. THE SECTION "FOREIGN SECURITIES" UNDER "EXPLANATION OF RISK FACTORS" IS
AMENDED BY DELETING THE FOURTH PARAGRAPH AND ADDING THE FOLLOWING TEXT AT
THE END OF THE SECTION:
EURO. On January 1, 1999, the European Monetary Union ("EMU") plans to
introduce a new single currency, the Euro, which will replace the national
currency for participating member countries. If a Fund holds investments in
countries with currencies replaced by the Euro, the investment process,
including trading, foreign exchange, payments, settlements, cash accounts,
custody and accounting will be impacted.
The process to establish the Euro may result in market volatility. It is
not possible to predict the impact of the Euro on the business or financial
condition of European issuers or on the Funds. The transition and the
elimination of currency risk among EMU countries may change the economic
environment and behavior of investors, particularly in European markets. To
the extent a Fund holds non-U.S. dollar (Euro or other) denominated
securities, it will still be exposed to currency risk due to fluctuations
in those currencies versus the U.S. dollar.
Franklin Resources, Inc. ("Resources"), the parent company of the Funds'
Investment Managers, has created an interdepartmental team to handle all
Euro-related changes to enable the Franklin Templeton Group of Funds to
process transactions accurately and completely with minimal disruption to
business activities. While there can be no assurance that the Funds will
not be adversely affected, the Investment Managers and their affiliated
service providers are taking steps that they believe are reasonably
designed to address the Euro issue.
III. THE SECTION "YEAR 2000" UNDER "OTHER INFORMATION" IS REPLACED WITH THE
FOLLOWING:
YEAR 2000 PROBLEM. The Funds' business operations depend upon a worldwide
network of computer systems that contain date fields, including securities
trading systems, securities transfer agent operations and stock market
links. Many of the systems currently use a two digit date field to
represent the date, and unless these systems are changed or modified, they
may not be able to distinguish the Year 1900 from the Year 2000 (commonly
referred to as the Year 2000 problem). In addition, the fact that the Year
2000 is a non-standard leap year may create difficulties for some systems.
When the Year 2000 arrives, the Funds' operations could be adversely
affected if the computer systems used by the Investment Managers, their
service providers and other third parties they do business with are not
Year 2000 ready. For example, the Funds' portfolio holdings and operational
areas could be impacted, including securities trade processing, interest
and dividend payments, securities pricing, shareholder account services,
reporting, custody functions and others. The Funds could experience
difficulties in effecting transactions if any of their foreign
subcustodians, or if foreign broker/dealers or foreign markets are not
ready for Year 2000.
In evaluating current and potential portfolio positions, Year 2000 is only
one of the factors that the Funds' Investment Managers take into
consideration. The Investment Managers will rely upon public filings and
other statements made by companies regarding their Year 2000 readiness.
Issuers in countries outside of the U.S., and in particular in emerging
markets, may not be required to make the same level of disclosure regarding
Year 2000 readiness that is required in the U.S. The Investment Managers,
of course, cannot audit each company and their major suppliers to verify
their Year 2000 readiness. If a company any Fund is invested in is
adversely affected by Year 2000 problems, it is likely that the price of
its security will also be adversely affected. A decrease in the value of
one or more of a Fund's fund holdings will have a similar impact on the
price of the Fund's shares.
The Investment Managers and their affiliated service providers are making a
concerted effort to take steps they believe are reasonably designed to
address their Year 2000 problems. Of course, the Funds' ability to reduce
the effects of the Year 2000 problem is also very much dependent upon the
efforts of third parties over which the Funds and their Investment Managers
may have no control.
PLEASE KEEP THIS SUPPLEMENT WITH YOUR PROSPECTUS FOR FUTURE REFERENCE.
