MUL P-3
SUPPLEMENT DATED DECEMBER 1, 1999
TO THE PROSPECTUSES OF
FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST (VIP) -
TEMPLETON DEVELOPING MARKETS EQUITY FUND
TEMPLETON GLOBAL ASSET ALLOCATION FUND
TEMPLETON INTERNATIONAL EQUITY FUND
CLASS 1 AND CLASS 2
DATED MAY 1, 1999, AS SUPPLEMENTED NOVEMBER 1, 1999
This supplement applies to the above funds in the VIP Trust, which may or may
not be available under your contract.
On October 21 and 22, 1999, the Templeton Variable Products Series Fund (TVP)
and VIP Boards of Trustees approved a proposal to eliminate the duplication
of funds of the VIP Trust and the TVP Trust, by merging the funds of the TVP
Trust into the corresponding funds of the VIP Trust (Reorganization). The
corresponding funds of the two trusts generally have the same investment
goals and very similar investment policies and strategies. Both Boards
believe that the Reorganization would benefit insurance company shareholders
and their contract owners. If approved by TVP shareholders, the
Reorganization is expected to be completed around May 1, 2000.
As part of the Reorganization, the VIP Board also approved new investment
advisory agreements for the VIP Templeton Global Asset Allocation and
Templeton Developing Markets Equity Funds, and changes to, and elimination
of, certain fundamental investment restrictions of the VIP Templeton Global
Asset Allocation Fund, VIP Templeton Developing Markets Equity Fund, and the
VIP Templeton International Equity Fund, all subject to shareholders'
approval of those VIP funds. In addition, as part of the Reorganization, the
VIP Board will consider at its December 14, 1999 meeting, a new investment
advisory agreement for the VIP Templeton International Equity Fund, subject
to shareholder approval.
For the VIP Templeton Global Asset Allocation Fund, the new investment
advisory agreement will appoint Templeton Investment Counsel, Inc., as
adviser to the combined fund. Templeton Investment Counsel, Inc. is currently
sub-adviser to this fund. Based on pro forma expenses for the combined fund,
the advisory fee and total operating expenses are expected to decrease.
For the VIP Templeton Developing Markets Equity Fund, the new investment
advisory agreement will retain the same adviser for the combined fund. While
the advisory fee rate would remain the same as the fund currently has, the
new agreement effectively increases the fee for advisory services since the
advisory contract would no longer cover fund administration services.
Instead, like all of the newer VIP funds, fund administration services would
be provided in a new separate contract with the fund and for a separate fee.
Based on pro forma expenses for the combined fund, the total operating
expenses are expected to moderately increase (from 1.41% to 1.56% annually).
Any investments in the VIP Templeton Developing Markets Equity Fund prior to
the Reorganization implementation date, will be affected after the
Reorganization implementation date, by the anticipated increase in advisory
fees, if the proposed advisory agreement is approved by the shareholders.
For the VIP Templeton International Equity Fund, the new investment advisory
agreement will appoint Templeton Investment Counsel, Inc. as the adviser to
the combined fund, rather than Franklin Advisers, Inc. Templeton Investment
Counsel, Inc. is currently sub-adviser to the fund. Based on pro forma
expenses of the combined fund, the advisory fee and total expenses are
expected to decrease.
The proposed fundamental investment restriction changes will not materially
affect the manner in which any fund is managed and will help further the goal
of standardizing fundamental investment restrictions among Franklin Templeton
funds.
It is anticipated that in December of 1999, VIP contract owners of record on
November 30, 1999, for the affected funds, will receive a voting instruction
card requesting their instructions to the insurance company shareholder on
the investment advisory agreements and on the changes to, and elimination of,
certain fundamental investment restrictions. A proxy statement, which
explains the details of the proposal(s), will accompany the voting
instruction card.
SUPPLEMENT DATED DECEMBER 1, 1999
TO THE PROSPECTUS OF
FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST (VIP) -
FRANKLIN SMALL CAP FUND
CLASS 1 AND CLASS 2
DATED MAY 1, 1999, AS SUPPLEMENTED NOVEMBER 1, 1999
On October 22, 1999, the VIP Board approved (i) a new investment advisory
agreement between the VIP Trust, on behalf of the Franklin Small Cap Fund
(Small Cap Fund), and Franklin Advisers, Inc. (Advisers); (ii) a new fund
administration agreement between the VIP Trust, on behalf of the Small Cap
Fund, and Franklin Templeton Services, Inc. (FT Services); and, (iii) changes
to, and the elimination of, certain fundamental investment restrictions of
the Small Cap Fund. If approved by VIP Small Cap Fund shareholders, the new
agreements and policy changes will be effective May 1, 2000.
The proposed Small Cap advisory agreement provides for the rate of the
investment advisory fee payable to Advisers to decrease to the following:
0.55% up to $500 million, 0.45% up to $1 billion, 0.40% up to $1.5 billion,
0.35% up to $6.5 billion, 0.325% up to $11.5 billion, 0.30% up to $16.5
billion, 0.29% up to $19 billion, 0.28% up to $21.5 billion, and 0.27% over
$21.5 billion (based on the average daily net assets of the Small Cap Fund).
If approved by the VIP Small Cap shareholders, the proposed advisory
agreement would become effective May 1, 2000.
The new fund administration agreement, effective May 1, 2000, provides for an
increase in the rate of the administration fee payable by the Small Cap Fund
to FT Services to an annual flat rate of 0.25% (based on the average daily
net assets of the Small Cap Fund).
Based on pro forma expenses of the fund, the proposed advisory agreement and
the new fund administration agreement together result in fee rate changes
that are expected to cause a decrease in advisory fees, an increase in
administration fees, and a slight increase in total expenses for the Small
Cap Fund (from 0.77% to 0.82%). Any investments in the Small Cap Fund prior
to May 1, 2000, will be affected after May 1, 2000, by the anticipated
increase from the combined advisory and fund administration fees, if the
proposed advisory agreement is approved by the shareholders.
The proposed fundamental investment restriction changes will not materially
affect the manner in which the Small Cap Fund is managed and will help
further the goal of standardizing fundamental investment restrictions among
Franklin Templeton funds.
It is anticipated that December of 1999, VIP Franklin Small Cap Fund contract
owners of record on November 30, 1999, will receive a voting instruction card
requesting their instructions to the insurance company shareholder on the
investment advisory agreement and on the changes to, and elimination of,
certain fundamental investment restrictions. A proxy statement, which
explains the details of the proposal(s), will accompany the voting
instruction card.
SUPPLEMENT DATED DECEMBER 1, 1999
TO THE PROSPECTUS OF
FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST (VIP) -
FRANKLIN RISING DIVIDENDS SECURITIES FUND
CLASS 1 AND CLASS 2
DATED MAY 1, 1999, AS SUPPLEMENTED NOVEMBER 1, 1999
On July 15, 1999, the VIP Board approved proposals to: (i) modify the
Franklin Rising Dividends Securities Fund's (Rising Dividends Fund) current
criteria for the selection of portfolio companies related to debt as part of
the issuer's capital structure, and (ii) make changes to, and eliminate,
certain other fundamental restrictions of the Rising Dividends Fund. If
approved by the VIP Rising Dividends Fund's shareholders on February 8, 2000,
the changes described below will be effective February 9, 2000. The
prospectus will be amended by replacing the fourth criteria under "Principal
Investments" describing companies that have paid consistently rising
dividends, with the following:
o strong balance sheets, with long-term debt that is no more than 50% of
total capitalization or senior debt that has been rated investment grade by
at least one of the major bond rating agencies (except for utility
companies)
The other proposed fundamental investment restriction changes will not
materially affect the manner in which the Rising Dividends Fund is managed
and will help further the goal of standardizing fundamental investment
restrictions among Franklin Templeton funds.
It is anticipated that December of 1999, VIP Franklin Rising Dividends
Securities Fund contract owners of record on November 30, 1999, will receive
a voting instruction card requesting their instructions to the insurance
company shareholder on the changes to, and elimination of, certain
fundamental investment restrictions. A proxy statement, which explains the
details of the proposal(s), will accompany the voting instruction card.
PLEASE KEEP THESE SUPPLEMENTS FOR FUTURE REFERENCE.
