JUNE 30, 2000
FRANKLIN S&P 500 INDEX FUND
CLASS 3
[FRANKLIN TEMPLETON INVESTMENTS LOGO]
FRANKLIN(R) TEMPLETON(R) INVESTMENTS
050 S00 08/00
<PAGE>
A WORD ABOUT RISK
All of the funds are subject to certain risks, which will cause investment
returns and the value of your principal to increase or decrease. Generally,
investments offering the potential for higher returns are accompanied by a
higher degree of risk. Stocks and other equities, representing an ownership
interest in an individual company, have historically outperformed other asset
classes over the long term, but tend to fluctuate more dramatically over the
shorter term. Securities of smaller companies, and companies involved in
reorganization or bankruptcy, may have greater price swings and greater credit
and other risks.
Bonds and other debt obligations are affected by the creditworthiness of their
issuers and changes in interest rates, with prices declining as interest rates
increase. High yield, lower-rated ("junk") bonds generally have greater price
swings and higher default risks than investment grade bonds.
Foreign investing, especially in emerging market countries, has additional
risks such as changes in currency values, market price swings, and economic,
political, or social instability. These, and other risks pertaining to specific
portfolios, such as specialized industry or geographic sectors or use of
complex securities, are discussed in the prospectus. Your investment
representative can help you determine which portfolios may be right for you.
[GRAPHIC OMITTED]
FRANKLIN TEMPLETON VARIABLE INSURANCE
PRODUCTS TRUST SEMIANNUAL REPORT
TABLE OF CONTENTS
<TABLE>
<S> <C>
Letter to Contract Owners ........... 2
Fund Summary
Fund Seeking Capital Growth
Franklin S&P 500 Index Fund ......... FSP-1
Prospectus Supplement .............. FSP-4
</TABLE>
Thank you for investing with Franklin Templeton Variable Insurance Products
Trust. We encourage our investors to maintain a long-term perspective, and
remember that all securities markets move both up and down, as do fund unit
prices. We appreciate your past support and look forward to serving your
investment needs in the years ahead.
<PAGE>
LETTER TO CONTRACT OWNERS
Dear Contract Owners:
We are pleased to bring you Franklin Templeton Variable Insurance Products
Trust's semiannual report for the period ended June 30, 2000.
During the first six months of 2000, many of the world's economies
strengthened, in contrast to the U.S. economy, which began to show the first
signs of slowing toward the period's end. Abroad, those countries in the
European Union were able to take advantage of the euro's weakness to bolster
exports and create jobs, pushing the region's unemployment to its lowest level
in seven years. Many Asian and Latin American emerging countries' economies
also enjoyed brisk growth during the period, with steadier consumer consumption
replacing exports and government spending as the principal foundation for
growth. The Japanese economy recently reported a 2.4% annualized increase in
its gross domestic product (GDP) for the first quarter of 2000, the highest in
four years.
It was a different story in the U.S., as the Federal Reserve Board (the Fed)
continued to raise short-term interest rates in an effort to stem what they
apparently believed was a rising inflation threat as a result of the
super-heated economy. The first signs of a slowdown appeared in March, when
retail sales, new vehicle sales and housing starts fell, and this trend
continued into June, reinforcing the possibility that the economy was indeed
decelerating.
In spite of the generally strong economic backdrop, most stock markets around
the globe ended the period in negative territory, weighed down by rising
interest rates. However, this environment affected various stocks differently,
and the end result does not tell the entire story.
For the stock markets, the beginning of the period witnessed the continuance of
many investors' ravenous appetites for "new economy" stocks -- technology,
biotechnology, telecommunications and Internet-related companies -- seemingly
at the expense of "old economy" stocks, which meant almost everything else.
Taking a cue from the end of 1999 and apparently fueled by a rapidly increasing
money supply and central bank reluctance to raise rates in anticipation of
potential Y2K problems, investors jumped into these new economy stocks, and
many rocketed in the first two months of 2000. This was most obvious
2
<PAGE>
in the U.S., where at its peak on March 10, 2000, the technology-heavy
Nasdaq(R) had increased 24.1% since the start of the year, but this "tech
mania" also included technology companies in Europe and Japan, which saw the
prices of some of their hottest stocks double, triple and more.1 However, many
of these stocks ran out of gas in March with the Nasdaq falling 37.3% from its
high, as investor confidence waned following recurrent Fed interest-rate
increases. For the period, the Nasdaq returned -2.02%.
While new economy stocks were grabbing headlines, it was some of the old
economy stocks that were the best performers in the period. Supported by oil
prices hovering around $29 a barrel and natural gas prices at three-year highs,
many energy-related company stocks increased significantly. Likewise,
pharmaceutical stocks rose strongly, as investors seemed to feel that an aging
world population would likely increase the demand for such companies' products
regardless of the level of economic growth or interest rates.
U.S. Treasury and corporate bond prices were volatile in this rising
interest-rate environment, partially due to investor uncertainty over the U.S.
economy's strength. Surprisingly, many emerging market bonds posted solid
performances, bolstered by these countries' improving financial conditions.
It is important to remember, of course, that securities markets always have
been, and always will be, subject to volatility. No one can predict exactly how
they will perform in the future. For this reason, we urge you to exercise
patience and focus not on day-to-day market movements, but on your long-term
retirement and investment goals. As always, we appreciate your support, welcome
your questions and comments, and look forward to serving your investment needs
in the years ahead.
Sincerely,
[GRAPHIC OMITTED]
Rupert H. Johnson, Jr.
Vice President
Franklin Templeton Variable Insurance Products Trust
1. The Nasdaq Composite Index measures all Nasdaq domestic and non-U.S. based
common stocks listed on the Nasdaq Stock Market(R). The Index is market-value
weighted and includes over 5,000 companies (as of 6/30/00).
3
<PAGE>
FRANKLIN S&P 500 INDEX FUND
--------------------------------------------------------------------------------
Fund Goal and Primary Investments: Franklin S&P 500 Index Fund seeks to match
the performance of the Standard & Poor's(R) 500 (S&P 500(R)) Composite Stock
Price Index before the deduction of Fund expenses. The Fund uses investment
"indexing" strategies and invests in the common stocks of the S&P 500 Index in
approximately the same proportion as the S&P 500 Index.
--------------------------------------------------------------------------------
This semiannual report of Franklin S&P 500 Index Fund covers the six months
ended June 30, 2000. During the reporting period, U.S. gross domestic product
rose an annualized 4.8% and 5.2% during the first and second quarters,
respectively. The core Consumer Price Index increased 1.46%, and the Goldman
Sachs Commodity Index, which is a composite index of a broadly diversified
spectrum of commodity sector returns, approached levels not seen in a decade.
Largely as a result of this growth, the Federal Reserve Board (the Fed) raised
the federal funds target rate three times during the six months under review.
These increases contributed to a softening in retail sales figures during the
period, and the Fed left rates steady at its meeting in late June.
Reflecting investor concerns about rising interest rates, U.S. equity markets,
which had broken record highs during the first half of the reporting period,
suffered severe declines in March and April. But when news was released in June
indicating that the economy might be cooling down, they rebounded
significantly. On June 30, the S&P 500 Index was down 0.42% for the six months
under review.1 Other indexes also fell during the six months under review, with
the Dow Jones Industrial Average and Nasdaq Composite Index down 9.03% and
2.02%.
Due to the limited size of the Fund early in the period, we employed a
specialized strategy to minimize transaction costs while tracking the S&P 500
Index. The strategy utilized computer-based statistical data to select a
sampling of stocks that resembled the full index in terms of industry
weighting, market capitalization and other characteristics such as beta (a
measure of volatility), price-to-book ratios, price-to-earnings ratios and
dividend yields. As the Fund grew in asset size, we shifted
1. Source: Standard and Poor's Micropal. The S&P 500 Composite Index consists
of 500 domestic stocks, consisting of four broad sectors: industrials,
utilities, financials and transportation. The S&P 500 serves as standard for
measuring large-cap U.S. stock market performance. Since some industries are
characterized by companies of relatively small stock capitalization, the index
is not composed of the 500 largest companies on the New York Stock Exchange.
The index is unmanaged and includes reinvested dividends. One cannot invest
directly in an index.
FSP-1
<PAGE>
<TABLE>
<CAPTION>
Top 10 Holdings
Franklin S&P 500 Index Fund
6/30/00
Company % of Total
Sector Net Assets
-------------------------- ------------
<S> <C>
General Electric Co. 4.0%
Process Industries
Intel Corp. 3.5%
Electronic Technology
Cisco Systems Inc. 3.4%
Electronic Technology
Microsoft Corp. 3.2%
Technology Services
Pfizer Inc. 2.3%
Health Technology
Exxon Mobil Corp. 2.1%
Energy Minerals
Wal-Mart Stores Inc. 2.0%
Retail Trade
Oracle Corp. 1.8%
Technology Services
Citigroup Inc. 1.6%
Finance
Nortel Networks Corp.
(Canada) 1.6%
Electronic Technology
</TABLE>
The dollar value, number of shares or principal value, and complete legal
titles of all portfolio holdings are listed in the Fund's Statement of
Investments.
to the current replication technique, wherein the Fund holds each constituent
of the index, with the exception of some minor securities, each in its
approximate capitalization weight. This replication strategy allows the Fund to
more tightly track the S&P 500 Index, with performance discrepancies generally
attributable to the Fund's cash flow and expenses. During the period under
review, the Fund slightly outperformed the index due to the positive influence
of cash inflows into the Fund as the market was declining.
As a result of changes to the S&P 500 Index, there were 24 deletions and 25
additions to the Fund's portfolio between January 1 and June 30, based upon
index rebalancing activity. Deletions to the index generally occur because of
merger and acquisition activity, bankruptcies and restructurings, or lack of
industry representation. Whenever a company is removed from the index, another
company is added to keep the number of index constituents at 500. However,
during the reporting period, we made one more addition than deletion because a
deletion to the index made on December 31, 1999, was not offset by an addition
until January 3, 2000.
Looking forward, we intend to keep the Fund's passively managed portfolio fully
invested in the S&P 500 Index by holding constituent securities. S&P 500
financial futures will be used to manage the Fund's liquidity while maintaining
exposure to the S&P 500 Index. Therefore, the Fund's performance should be
dictated by the performance of the S&P 500 Index and general U.S. equity market
conditions.
This discussion reflects our views, opinions and portfolio holdings as of June
30, 2000, the end of the reporting period. The information provided is not a
complete analysis of every aspect of any industry, security, indexing strategy
or the Fund. Our indexing strategy and the Fund's portfolio composition may
change depending on market and economic conditions and the composition of the
S&P 500 Index. Although historical performance is no guarantee of future
results, these insights may help you understand our management philosophy.
FSP-2
<PAGE>
PERFORMANCE SUMMARY AS OF 6/30/00
Franklin S&P 500 Index Fund - Class 3 delivered a +0.24% cumulative total
return for the six-month period ended 6/30/00. Aggregate total return
represents the cumulative change in value, assuming reinvestment of dividends
and capital gains. Since Class 3 shares have existed for less than one year,
average annual total returns are not provided. The manager and administrator
had agreed in advance to waive or limit their respective fees and to assume as
their own expense certain expenses otherwise payable by the Fund so that Total
Fund Operating Expenses do not exceed 0.80% of the Fund's Class 3 net assets
through 2000. Had they not taken this action, the Fund's total return would
have been lower. After December 31, 2001, the manager and administrator may end
this arrangement at any time.
<TABLE>
<CAPTION>
Franklin S&P 500 Index Fund - Class 3
Periods ended 6/30/00
Since
Inception
(11/1/99)
---------------
<S> <C>
Average Total Return +5.76%
Value of $10,000 Investment $10,576
</TABLE>
Ongoing stock market volatility can dramatically change the Fund's short-term
performance; current results may be lower.
Past performance does not guarantee future results.
Franklin S&P 500 Index Fund - Class 3
Performance reflects the Fund's Class 3 operating expenses, but does not
include any contract fees, expenses or sales charges. If they had been
included, performance would be lower. These charges and deductions,
particularly for variable life policies, can have a significant effect on
contract values and insurance benefits. See the contract prospectus for a
complete description of these expenses, including sales charges.
Since markets can go down as well as up, investment return and the value of
your principal will fluctuate with market conditions, and you may have a
gain or loss when you sell your shares.
FSP-3
<PAGE>
FRANKLIN S&P 500 INDEX FUND
CLASS 1, CLASS 2, AND CLASS 3
(FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST)
SUPPLEMENT DATED AUGUST 25, 2000
TO PROSPECTUS DATED MAY 1, 2000
Under "Management," the third paragraph is replaced with the following:
The fund's lead portfolio manager is:
<TABLE>
<S> <C>
Mr. Coffey has been a manager of the fund since August 2000, and has been
T. Anthony Coffey, CFA
VICE PRESIDENT with Franklin Templeton Investments since 1989.
FRANKLIN ADVISERS, INC.
</TABLE>
Please keep this supplement with your current prospectus for future reference.
FSP-4
<PAGE>
FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST
FRANKLIN S&P 500 INDEX FUND
Financial Highlights
<TABLE>
<CAPTION>
Class 1
---------------------------------------
Six Months Ended
June 30, 2000 Year Ended
(unaudited) December 31, 1999d
----------------- -------------------
Per share operating performance
<S> <C> <C>
(for a share outstanding throughout the period)
Net asset value, beginning of period .......................... $ 10.56 $ 10.00
------- -------
Income from investment operations:
Net investment incomea ....................................... .05 .03
Net realized and unrealized gains (losses) ................... ( .01) .53
------- -------
Total from investment operations .............................. .04 .56
------- -------
Less distributions from net investment income ................. ( .01) --
------- -------
Net asset value, end of period ................................ $ 10.59 $ 10.56
======= =======
Total returnb ................................................. .35% 5.60%
Ratios/supplemental data
Net assets, end of period (000's) ............................. $42,433 $14,888
Ratios to average net assets:
Expenses ..................................................... .47%c .55%c
Expenses, excluding waiver and payments by affiliate ......... .47%c .98%c
Net investment income ........................................ .98%c 1.77%c
Portfolio turnover rate ....................................... 10.41% --
</TABLE>
aBased on average shares outstanding.
bTotal return does not include any fees, charges or expenses imposed by the
variable annuity and life insurance contracts for which the Franklin Templeton
Variable Insurance Products Trust serves as an underlying investment vehicle.
Total return is not annualized for periods less than one year.
cAnnualized
dFor the period November 1, 1999 (effective date) to December 31, 1999.
FSP-5
<PAGE>
FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST
FRANKLIN S&P 500 INDEX FUND
Financial Highlights (continued)
<TABLE>
<CAPTION>
Class 2
---------------------------------------
Six Months Ended
June 30, 2000 Year Ended
(unaudited) December 31, 1999d
----------------- -------------------
Per share operating performance
<S> <C> <C>
(for a share outstanding throughout the period)
Net asset value, beginning of period .......................... $ 10.55 $ 10.00
------- -------
Income from investment operations:
Net investment incomea ....................................... .04 .04
Net realized and unrealized gains (losses) ................... ( .02) .51
------- -------
Total from investment operations .............................. .02 .55
------- -------
Less distributions from net investment income ................. --e --
------- -------
Net asset value, end of period ................................ $ 10.57 $ 10.55
======= =======
Total returnb ................................................. .27% 5.50%
Ratios/supplemental data
Net assets, end of period (000's) ............................. $ 88 $ 88
Ratios to average net assets:
Expenses ..................................................... .72%c .80%c
Expenses, excluding waiver and payments by affiliate ......... .72%c 1.23%c
Net investment income ........................................ .72%c 2.17%c
Portfolio turnover rate ....................................... 10.41% --
</TABLE>
aBased on average shares outstanding.
bTotal return does not include any fees, charges or expenses imposed by the
variable annuity and life insurance contracts for which the Franklin Templeton
Variable Insurance Products Trust serves as an underlying investment vehicle.
Total return is not annualized for periods less than one year.
cAnnualized
dFor the period November 1, 1999 (effective date) to December 31, 1999.
eIncludes distributions of net investment income in the amount of $.002.
FSP-6
<PAGE>
FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST
FRANKLIN S&P 500 INDEX FUND
Financial Highlights (continued)
<TABLE>
<CAPTION>
Class 3
---------------------------------------
Six Months Ended
June 30, 2000 Year Ended
(unaudited) December 31, 1999d
----------------- -------------------
Per share operating performance
<S> <C> <C>
(for a share outstanding throughout the period)
Net asset value, beginning of period .......................... $ 10.55 $ 10.00
------- -------
Income from investment operations:
Net investment incomea ....................................... .03 .03
Net realized and unrealized gains ............................ -- .52
------- -------
Total from investment operations .............................. .03 .55
------- -------
Less distributions from net investment income ................. ( .01) --
------- -------
Net asset value, end of period ................................ $ 10.57 $ 10.55
======= =======
Total returnb ................................................. .24% 5.50%
Ratios/supplemental data
Net assets, end of period (000's) ............................. $ 9,530 $ 2,349
Ratios to average net assets:
Expenses ..................................................... .80%c .80%c
Expenses, excluding waiver and payments by affiliate ......... 1.87%c 4.16%c
Net investment income ........................................ .64%c 1.78%c
Portfolio turnover rate ....................................... 10.41% --
</TABLE>
aBased on average shares outstanding.
bTotal return does not include any fees, charges or expenses imposed by the
variable annuity and life insurance contracts for which the Franklin Templeton
Variable Insurance Products Trust serves as an underlying investment vehicle.
Total return is not annualized for periods less than one year.
cAnnualized
dFor the period November 1, 1999 (effective date) to December 31, 1999.
See notes to financial statements.
FSP-7
<PAGE>
FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST
FRANKLIN S&P 500 INDEX FUND
Statement of Investments, June 30, 2000 (unaudited)
<TABLE>
<CAPTION>
SHARES VALUE
-------- ----------
<S> <C> <C> <C>
Common Stocks 96.9%
Commercial Services .8%
a Convergys Corp. ......................... 600 $ 31,125
Deluxe Corp. ............................ 300 7,069
Dun & Bradstreet Corp. .................. 600 17,175
Equifax Inc. ............................ 500 13,125
Interpublic Group of Cos. Inc. .......... 1,200 51,600
Omnicom Group Inc. ...................... 700 62,344
Paychex Inc. ............................ 1,500 63,000
R. R. Donnelley & Sons Co. .............. 400 9,025
a Sabre Holdings Corp., A ................. 561 15,989
SUPERVALU Inc. .......................... 500 9,531
SYSCO Corp. ............................. 1,400 58,975
The McGraw-Hill Cos. Inc. ............... 800 43,200
W.W. Grainger Inc. ...................... 400 12,325
Young & Rubicam Inc. .................... 300 17,156
--------
411,639
--------
Consumer Durables 1.2%
Briggs & Stratton Corp. ................. 100 3,425
Brunswick Corp. ......................... 300 4,969
Centex Corp. ............................ 200 4,700
Cooper Tire & Rubber Co. ................ 400 4,450
Eastman Kodak Co. ....................... 1,300 77,350
Ford Motor Co. .......................... 4,847 208,421
General Motors Corp. .................... 2,148 124,718
Genuine Parts Co. ....................... 800 16,000
Goodyear Tire & Rubber Co. .............. 600 12,000
Harley-Davidson Inc. .................... 1,200 46,200
Hasbro Inc. ............................. 700 10,544
Kaufman & Broad Home Corp. .............. 200 3,963
Leggett & Platt Inc. .................... 800 13,200
Mattel Inc. ............................. 1,700 22,419
Maytag Corp. ............................ 400 14,750
Newell Rubbermaid Inc. .................. 1,100 28,325
Polaroid Corp. .......................... 200 3,613
Pulte Corp. ............................. 200 4,325
Snap-on Inc. ............................ 200 5,325
Stanley Works ........................... 300 7,125
The Black & Decker Corp. ................ 400 15,725
Tupperware Corp. ........................ 300 6,600
Whirlpool Corp. ......................... 300 13,988
--------
652,135
--------
Consumer Non-Durables 5.4%
a Adolph Coors Co., B ..................... 200 12,100
Alberto-Culver Co., B ................... 200 6,113
American Greetings Corp., A ............. 300 5,700
Anheuser-Busch Cos. Inc. ................ 1,800 134,438
Avon Products Inc. ...................... 1,000 44,500
Bestfoods ............................... 1,100 76,175
Brown-Forman Corp., B ................... 300 16,125
Campbell Soup Co. ....................... 1,749 50,940
Clorox Co. .............................. 1,000 44,813
Coca-Cola Co. ........................... 9,885 567,770
Coca-Cola Enterprises Inc. .............. 1,600 26,100
Colgate-Palmolive Co. ................... 2,300 137,713
Conagra Inc. ............................ 1,900 36,219
</TABLE>
FSP-8
<PAGE>
FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST
FRANKLIN S&P 500 INDEX FUND
Statement of Investments, June 30, 2000 (unaudited) (cont.)
<TABLE>
<CAPTION>
SHARES VALUE
--------- ------------
<S> <C> <C> <C>
Common Stocks (cont.)
Consumer Non-Durables (cont.)
General Mills Inc. ................................. 1,200 $ 45,900
Gillette Co. ....................................... 4,216 147,297
H.J. Heinz Co. ..................................... 1,400 61,250
Hershey Foods Corp. ................................ 600 29,100
International Flavors & Fragrances Inc. ............ 400 12,075
Kellogg Co. ........................................ 1,600 47,600
Kimberly-Clark Corp. ............................... 2,216 127,143
Liz Claiborne Inc. ................................. 200 7,050
Nabisco Group Holdings Corp. ....................... 1,300 33,719
Nike Inc., B ....................................... 1,100 43,794
PepsiCo Inc. ....................................... 5,801 257,782
Philip Morris Cos. Inc. ............................ 9,346 248,253
Procter & Gamble Co. ............................... 5,200 297,700
Quaker Oats Co. .................................... 500 37,563
Ralston-Ralston Purina Group ....................... 1,200 23,925
a Reebok International Ltd. .......................... 300 4,781
a Russell Corp. ...................................... 200 4,000
Sara Lee Corp. ..................................... 3,545 68,463
Unilever NV, N.Y. shs., ADR (Netherlands) .......... 2,300 98,900
UST Inc. ........................................... 600 8,813
V. F. Corp. ........................................ 400 9,525
Wm. Wrigley Jr. Co. ................................ 500 40,094
----------
2,813,433
----------
Consumer Services 4.0%
Carnival Corp. ..................................... 2,424 47,268
a Cendant Corp. ...................................... 3,100 43,400
a Clear Channel Communications Inc. .................. 1,400 105,000
a Comcast Corp., A ................................... 3,658 148,149
Darden Restaurants Inc. ............................ 400 6,500
Dow Jones & Co. Inc. ............................... 400 29,300
Gannett Co. Inc. ................................... 1,101 65,854
H & R Block Inc. ................................... 400 12,950
Harcourt General Inc. .............................. 300 16,313
a Harrah's Entertainment Inc. ........................ 400 8,375
Hilton Hotels Corp. ................................ 1,500 14,063
Knight-Ridder Inc. ................................. 300 15,956
Marriott International Inc., A ..................... 1,000 36,063
McDonald's Corp. ................................... 5,305 174,733
Meredith Corp. ..................................... 200 6,750
Seagram Co. Ltd. (Canada) .......................... 1,800 104,400
a Starbucks Corp. .................................... 700 26,731
The New York Times Co., A .......................... 700 27,650
Time Warner Inc. ................................... 5,290 402,040
Tribune Co. ........................................ 1,180 41,500
a Tricon Global Restaurants Inc. ..................... 600 16,950
a Viacom Inc., B ..................................... 6,146 419,080
a Walt Disney Co. .................................... 8,359 324,434
Wendy's International Inc. ......................... 400 7,125
----------
2,100,584
----------
Electronic Technology 24.0%
a 3Com Corp. ......................................... 1,400 80,675
a Adaptec Inc. ....................................... 300 6,825
a ADC Telecommunications Inc. ........................ 1,400 117,425
</TABLE>
FSP-9
<PAGE>
FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST
FRANKLIN S&P 500 INDEX FUND
Statement of Investments, June 30, 2000 (unaudited) (cont.)
<TABLE>
<CAPTION>
SHARES VALUE
-------- -------------
<S> <C> <C> <C>
Common Stocks (cont.)
Electronic Technology (cont.)
a Advanced Micro Devices Inc. .................... 600 $ 46,350
a Agilent Technologies Inc. ...................... 1,812 133,635
a Altera Corp. ................................... 800 81,550
a Analog Devices Inc. ............................ 1,400 106,400
a Andrew Corp. ................................... 400 13,425
a Apple Computer Inc. ............................ 1,300 68,088
a Applied Materials Inc. ......................... 3,200 290,000
B.F. Goodrich Co. .............................. 400 13,625
Boeing Co. ..................................... 3,720 155,543
a Broadcom Corp., A .............................. 800 175,150
a Cabletron Systems Inc. ......................... 800 20,200
a Cisco Systems Inc. ............................. 27,918 1,774,538
Compaq Computer Corp. .......................... 6,787 173,493
a Comverse Technology Inc. ....................... 600 55,800
a Conexant Systems Inc. .......................... 900 43,763
Corning Inc. ................................... 1,100 296,863
a Dell Computer Corp. ............................ 10,362 510,976
a EMC Corp. ...................................... 8,720 670,895
a Gateway Inc. ................................... 1,300 73,775
General Dynamics Corp. ......................... 800 41,800
Hewlett-Packard Co. ............................ 3,966 495,254
Intel Corp. .................................... 13,481 1,802,241
International Business Machines Corp. .......... 7,160 784,468
a KLA-Tencor Corp. ............................... 800 46,850
a Lexmark International Inc. ..................... 500 33,625
Linear Technology Corp. ........................ 1,300 83,119
Lockheed Martin Corp. .......................... 1,600 39,700
a LSI Logic Corp. ................................ 1,200 64,950
Lucent Technologies Inc. ....................... 13,038 772,502
a Maxim Integrated Products Inc. ................. 1,100 74,731
a Micron Technology Inc. ......................... 2,300 202,544
Motorola Inc. .................................. 8,638 251,042
a National Semiconductor Corp. ................... 700 39,725
a NCR Corp. ...................................... 400 15,575
a Network Appliance Inc. ......................... 1,200 96,600
Nortel Networks Corp. (Canada) ................. 11,868 809,991
Northrop Grumman Corp. ......................... 300 19,875
a Novellus Systems Inc. .......................... 500 28,281
Perkinelmer Inc. ............................... 200 13,225
a QUALCOMM Inc. .................................. 3,000 180,000
Raytheon Co., B ................................ 1,400 26,950
Rockwell International Corp. ................... 700 22,050
a Sanmina Corp. .................................. 500 42,750
Scientific-Atlanta Inc. ........................ 600 44,700
a Seagate Technology Inc. ........................ 900 49,500
a Solectron Corp. ................................ 2,400 100,500
a Sun Microsystems Inc. .......................... 6,380 580,181
a Tektronix Inc. ................................. 200 14,800
a Tellabs Inc. ................................... 1,700 116,344
a Teradyne Inc. .................................. 700 51,450
a Texas Instruments Inc. ......................... 6,548 449,766
United Technologies Corp. ...................... 1,941 114,276
a Xilinx Inc. .................................... 1,300 107,331
-----------
12,525,690
-----------
</TABLE>
FSP-10
<PAGE>
FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST
FRANKLIN S&P 500 INDEX FUND
Statement of Investments, June 30, 2000 (unaudited) (cont.)
<TABLE>
<CAPTION>
SHARES VALUE
-------- ------------
<S> <C> <C> <C>
Common Stocks (cont.)
Energy Minerals 4.6%
Amerada Hess Corp. .......................................... 400 $ 24,700
Anadarko Petroleum Corp. .................................... 500 24,656
Apache Corp. ................................................ 500 29,406
Ashland Inc. ................................................ 300 10,519
Burlington Resources Inc. ................................... 900 34,425
Chevron Corp. ............................................... 2,600 220,513
Conoco Inc., B .............................................. 2,638 64,796
Exxon Mobil Corp. ........................................... 13,951 1,095,154
Kerr-McGee Corp. ............................................ 400 23,575
Occidental Petroleum Corp. .................................. 1,500 31,594
Phillips Petroleum Co. ...................................... 1,045 52,968
Royal Dutch Petroleum Co., N.Y. shs. (Netherlands) .......... 8,625 530,977
Sunoco Inc. ................................................. 300 8,831
Texaco Inc. ................................................. 2,200 117,150
Tosco Corp. ................................................. 600 16,988
Union Pacific Resources Group Inc. .......................... 1,100 24,200
Unocal Corp. ................................................ 900 29,813
USX-Marathon Group Inc. ..................................... 1,300 32,581
----------
2,372,846
----------
Finance 12.1%
Aflac Inc. .................................................. 1,100 50,531
Allstate Corp. .............................................. 2,975 66,194
American Express Co. ........................................ 5,323 277,461
American General Corp. ...................................... 1,000 61,000
American International Group Inc. ........................... 6,133 720,628
AmSouth Bancorporation ...................................... 1,600 25,200
AON Corp. ................................................... 1,000 31,063
Associates First Capital Corp., A ........................... 3,083 68,789
Bank of America Corp. ....................................... 6,616 284,488
Bank of New York Co. Inc. ................................... 2,982 138,663
Bank One Corp. .............................................. 4,582 121,709
BB&T Corp. .................................................. 1,500 35,813
Capital One Financial Corp. ................................. 800 35,700
a Charles Schwab Corp. ........................................ 5,528 185,879
a Charter One Financial Inc. .................................. 900 20,700
Chase Manhattan Corp. ....................................... 4,900 225,706
Chubb Corp. ................................................. 700 43,050
Cincinnati Financial Corp. .................................. 600 18,863
Citigroup Inc. .............................................. 13,567 817,412
Comerica Inc. ............................................... 600 26,925
Conseco Inc. ................................................ 1,100 10,725
Countrywide Credit Industries Inc. .......................... 400 12,125
Fannie Mae .................................................. 4,109 214,438
Fifth Third Bancorp ......................................... 1,300 82,225
First Union Corp. ........................................... 4,087 101,409
Firstar Corp. ............................................... 4,071 85,745
Fleet Boston Financial Corp. ................................ 3,719 126,446
Franklin Resources Inc. ..................................... 1,000 30,375
Freddie Mac ................................................. 2,723 110,282
Golden West Financial Corp. ................................. 700 28,569
Hartford Financial Services Group Inc. ...................... 900 50,344
Household International Inc. ................................ 1,933 80,340
Huntington Bancshares Inc. .................................. 800 12,650
J.P. Morgan & Co. Inc. ...................................... 600 66,075
</TABLE>
FSP-11
<PAGE>
FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST
FRANKLIN S&P 500 INDEX FUND
Statement of Investments, June 30, 2000 (unaudited) (cont.)
<TABLE>
<CAPTION>
SHARES VALUE
-------- ------------
<S> <C> <C> <C>
Common Stocks (cont.)
Finance (cont.)
Jefferson-Pilot Corp. ..................... 400 $ 22,575
KeyCorp ................................... 1,800 31,725
Lehman Brothers Holdings Inc. ............. 500 47,281
Lincoln National Corp. .................... 700 25,288
Loews Corp. ............................... 400 24,000
Marsh & McLennan Cos. Inc. ................ 1,100 114,881
MBIA Inc. ................................. 400 19,275
MBNA Corp. ................................ 3,268 88,645
Mellon Financial Corp. .................... 1,957 71,308
Merrill Lynch & Co. Inc. .................. 1,500 172,500
MGIC Investment Corp. ..................... 400 18,200
Morgan Stanley Dean Witter & Co. .......... 4,492 373,959
National City Corp. ....................... 2,449 41,786
Northern Trust Corp. ...................... 900 58,556
Old Kent Financial Corp. .................. 525 14,044
Paine Webber Group Inc. ................... 600 27,300
PNC Financial Services Group .............. 1,200 56,250
Providian Financial Corp. ................. 600 54,000
Regions Financial Corp. ................... 800 15,900
Ryder Systems Inc. ........................ 200 3,788
SAFECO Corp. .............................. 600 11,925
SLM Holding Corp. ......................... 600 22,463
Southtrust Corp. .......................... 600 13,575
St. Paul Cos. Inc. ........................ 900 30,713
State Street Corp. ........................ 600 63,638
Summit Bancorp. ........................... 800 19,700
SunTrust Banks Inc. ....................... 1,300 59,393
Synovus Financial Corp. ................... 1,100 19,387
T. Rowe Price Associates Inc. ............. 500 21,250
The Bear Stearns Cos. Inc. ................ 400 16,650
The Progressive Corp. ..................... 300 22,200
Torchmark Corp. ........................... 600 14,812
U.S. Bancorp. ............................. 3,182 61,253
Union Planters Corp. ...................... 500 13,968
Unumprovident Corp. ....................... 900 18,055
Wachovia Corp. ............................ 800 43,400
Washington Mutual Inc. .................... 2,270 65,545
Wells Fargo & Co. ......................... 6,397 247,883
----------
6,314,593
----------
Health Services .8%
Aetna Inc. ................................ 600 38,512
Cardinal Health Inc. ...................... 1,100 81,400
CIGNA Corp. ............................... 600 56,100
HCA-The Healthcare Corp. .................. 2,235 67,887
a HealthSouth Corp. ......................... 1,300 9,343
a Humana Inc. ............................... 700 3,412
IMS Health Inc. ........................... 1,300 23,400
a Manor Care Inc. ........................... 400 2,800
McKesson HBOC Inc. ........................ 1,200 25,124
a Quintiles Transnational Corp. ............. 300 4,237
Shared Medical Systems Corp. .............. 100 7,293
Tenet Healthcare Corp. .................... 1,200 32,400
</TABLE>
FSP-12
<PAGE>
FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST
FRANKLIN S&P 500 INDEX FUND
Statement of Investments, June 30, 2000 (unaudited) (cont.)
<TABLE>
<CAPTION>
SHARES VALUE
-------- ------------
<S> <C> <C> <C>
Common Stocks (cont.)
Health Services (cont.)
UnitedHealth Group Inc. ......................... 700 $ 60,024
a Wellpoint Health Networks Inc. .................. 300 21,731
----------
433,663
----------
Health Technology 10.8%
Abbott Laboratories ............................. 6,326 281,902
Allergan Inc. ................................... 500 37,250
a Alza Corp. ...................................... 400 23,650
American Home Products Corp. .................... 5,220 306,674
a Amgen Inc. ...................................... 4,100 288,024
Bausch & Lomb Inc. .............................. 200 15,474
Baxter International Inc. ....................... 1,200 84,374
Becton, Dickinson & Co. ......................... 1,000 28,687
a Biogen Inc. ..................................... 600 38,700
a Biomet Inc. ..................................... 500 19,218
a Boston Scientific Corp. ......................... 1,600 35,100
Bristol-Myers Squibb Co. ........................ 7,870 458,427
C. R. Bard Inc. ................................. 200 9,624
Eli Lilly & Co. ................................. 4,551 454,530
a Guidant Corp. ................................... 1,300 64,350
Johnson & Johnson ............................... 5,566 567,035
a Mallinckrodt Inc. ............................... 200 8,687
a MedImmune Inc. .................................. 800 59,200
Medtronic Inc. .................................. 4,873 242,735
Merck & Co. Inc. ................................ 9,225 706,865
Pall Corp. ...................................... 400 7,400
PE Corp.-PE Biosystems Group .................... 800 52,700
Pfizer Inc. ..................................... 25,269 1,212,911
Pharmacia Corp. ................................. 5,093 263,243
Schering-Plough Corp. ........................... 5,851 295,475
a St. Jude Medical Inc. ........................... 400 18,350
a Watson Pharmaceuticals Inc. ..................... 400 21,500
----------
5,602,085
----------
Industrial Services 1.0%
a AES Corp. ....................................... 1,800 82,124
a Allied Waste Industries Inc. .................... 900 9,000
Baker Hughes Inc. ............................... 1,300 41,600
Fluor Corp. ..................................... 300 9,487
Halliburton Co. ................................. 1,801 84,984
a Rowan Cos. Inc. ................................. 300 9,112
Schlumberger Ltd. ............................... 2,300 171,637
Transocean Sedco Forex Inc. ..................... 912 48,734
Waste Management Inc. ........................... 2,600 49,400
----------
506,078
----------
Non-Energy Minerals .6%
Alcan Aluminum Ltd. (Canada) .................... 900 27,900
Alcoa Inc. ...................................... 3,424 99,295
Allegheny Technologies Inc. ..................... 300 5,400
Barrick Gold Corp. (Canada) ..................... 1,500 27,280
a Bethlehem Steel Corp. ........................... 700 2,494
a Freeport-McMoRan Copper & Gold Inc., B .......... 600 5,550
Georgia-Pacific Corp. ........................... 700 18,374
a Homestake Mining Co. ............................ 1,000 6,874
a Inco Ltd. (Canada) .............................. 700 10,762
</TABLE>
FSP-13
<PAGE>
FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST
FRANKLIN S&P 500 INDEX FUND
Statement of Investments, June 30, 2000 (unaudited) (cont.)
<TABLE>
<CAPTION>
SHARES VALUE
-------- ------------
<S> <C> <C> <C>
Common Stocks (cont.)
Non-Energy Minerals (cont.)
Louisiana-Pacific Corp. ................... 400 $ 4,350
Newmont Mining Corp. ...................... 700 15,137
Nucor Corp. ............................... 400 13,274
Owens Corning ............................. 300 2,774
Phelps Dodge Corp. ........................ 300 11,155
a Placer Dome Inc. (Canada) ................. 1,100 10,518
USX-U. S. Steel Group ..................... 300 5,568
Vulcan Materials Co. ...................... 400 17,074
Weyerhaeuser Co. .......................... 900 38,700
Worthington Industries Inc. ............... 400 4,200
----------
326,679
----------
Process Industries 5.5%
Air Products & Chemicals Inc. ............. 900 27,730
Archer-Daniels-Midland Co. ................ 2,400 23,550
Ball Corp. ................................ 200 6,437
Bemis Co. Inc. ............................ 200 6,724
Boise Cascade Corp. ....................... 200 5,174
Crane Co. ................................. 300 7,293
Crown Cork & Seal Co. Inc. ................ 400 6,000
Dow Chemical Co. .......................... 2,800 84,524
E. I. du Pont de Nemours and Co. .......... 4,290 187,687
Eastman Chemical Co. ...................... 300 14,324
Ecolab Inc. ............................... 500 19,530
Engelhard Corp. ........................... 400 6,824
a FMC Corp. ................................. 100 5,800
Fort James Corp. .......................... 800 18,500
Fortune Brands Inc. ....................... 600 13,837
General Electric Co. ...................... 39,719 2,105,106
Great Lakes Chemical Corp. ................ 200 6,300
Hercules Inc. ............................. 400 5,624
International Paper Co. ................... 2,037 60,725
Millipore Corp. ........................... 200 15,074
a Owens-Illinois Inc. ....................... 600 7,012
a Pactiv Corp. .............................. 700 5,512
Potlatch Corp. ............................ 100 3,312
PPG Industries Inc. ....................... 683 30,264
Praxair Inc. .............................. 600 22,462
Rohm & Haas Co. ........................... 900 31,050
a Sealed Air Corp. .......................... 300 15,712
Sherwin-Williams Co. ...................... 600 12,712
Sigma-Aldrich Corp. ....................... 400 11,700
Springs Industries Inc., A ................ 100 3,218
Temple-Inland Inc. ........................ 200 8,400
Textron Inc. .............................. 600 32,587
The Mead Corp. ............................ 400 10,100
Union Carbide Corp. ....................... 600 29,700
a W.R. Grace & Co. .......................... 400 4,850
Westvaco Corp. ............................ 400 9,924
Willamette Industries Inc. ................ 400 10,900
----------
2,876,178
----------
Producer Manufacturing 2.6%
a American Power Conversion Corp. ........... 700 28,568
Armstrong Holdings Inc. ................... 200 3,062
Avery Dennison Corp. ...................... 500 33,562
</TABLE>
FSP-14
<PAGE>
FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST
FRANKLIN S&P 500 INDEX FUND
Statement of Investments, June 30, 2000 (unaudited) (cont.)
<TABLE>
<CAPTION>
SHARES VALUE
--------- ------------
<S> <C> <C> <C>
Common Stocks (cont.)
Producer Manufacturing (cont.)
Caterpillar Inc. ................................ 1,466 $ 49,660
Cooper Industries Inc. .......................... 300 9,768
Cummins Engine Co. Inc. ......................... 200 5,450
Dana Corp. ...................................... 700 14,830
Danaher Corp. ................................... 600 29,662
Deere & Co. ..................................... 900 33,300
Delphi Automotive Systems Corp. ................. 2,400 34,950
Dover Corp. ..................................... 800 32,450
Eaton Corp. ..................................... 300 20,100
Emerson Electric Co. ............................ 1,740 105,052
Honeywell International Inc. .................... 3,225 108,641
Illinois Tool Works Inc. ........................ 1,200 68,400
Ingersoll-Rand Co. .............................. 700 28,174
ITT Industries Inc. ............................. 300 9,112
Johnson Controls Inc. ........................... 400 20,524
Masco Corp. ..................................... 1,800 32,512
Minnesota Mining & Manufacturing Co. ............ 1,600 132,000
Molex Inc. ...................................... 825 39,702
a National Service Industries Inc. ................ 200 3,900
a Navistar International Corp. .................... 200 6,212
PACCAR Inc. ..................................... 300 11,905
Parker Hannifin Corp. ........................... 400 13,700
Pitney Bowes Inc. ............................... 1,100 44,000
a Thermo Electron Corp. ........................... 700 14,743
Thomas & Betts Corp. ............................ 200 3,824
Timken Co. ...................................... 300 5,587
TRW Inc. ........................................ 500 21,687
Tyco International Ltd. (Bermuda) ............... 6,755 320,017
Visteon Corp. ................................... 635 7,694
Xerox Corp. ..................................... 2,816 58,431
----------
1,351,179
----------
Retail Trade 5.5%
Albertson's Inc. ................................ 1,815 60,348
a AutoZone Inc. ................................... 500 11,000
a Bed Bath & Beyond Inc. .......................... 600 21,750
a Best Buy Co. Inc. ............................... 800 50,600
Circuit City Stores-Circuit City Group .......... 800 26,550
Consolidated Stores Corp. ....................... 500 6,000
a Costco Wholesale Corp. .......................... 1,900 62,700
CVS Corp. ....................................... 1,500 60,000
Dillards Inc., A ................................ 400 4,900
Dollar General Corp. ............................ 1,375 26,812
a Federated Department Stores Inc. ................ 900 30,374
GAP Inc. ........................................ 3,539 110,593
Home Depot Inc. ................................. 9,294 464,118
J.C. Penney Co. Inc. ............................ 1,000 18,437
a Kmart Corp. ..................................... 1,800 12,262
a Kohl's Corp. .................................... 1,300 72,312
Longs Drug Stores Inc. .......................... 200 4,350
Lowe's Cos. Inc. ................................ 1,605 65,904
May Department Stores Co. ....................... 1,300 31,200
Nordstrom Inc. .................................. 500 12,062
a Office Depot Inc. ............................... 1,100 6,874
Radioshack Corp. ................................ 800 37,900
</TABLE>
FSP-15
<PAGE>
FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST
FRANKLIN S&P 500 INDEX FUND
Statement of Investments, June 30, 2000 (unaudited) (cont.)
<TABLE>
<CAPTION>
SHARES VALUE
--------- ------------
<S> <C> <C> <C>
Common Stocks (cont.)
Retail Trade (cont.)
a Rite Aid Corp. ..................................... 1,000 $ 6,562
a Safeway Inc. ....................................... 2,069 93,363
Sears, Roebuck & Co. ............................... 1,500 48,937
Staples Inc. ....................................... 2,000 30,750
Target Corp. ....................................... 1,846 107,067
a The Great Atlantic & Pacific Tea Co. Inc. .......... 200 3,324
a The Kroger Co. ..................................... 3,448 76,071
The Limited Inc. ................................... 1,900 41,087
The TJX Companies Inc. ............................. 1,400 26,250
a Tiffany & Co. ...................................... 300 20,250
Toys R Us Inc. ..................................... 1,000 14,562
Walgreen Co. ....................................... 4,100 131,968
Wal-Mart Stores Inc. ............................... 17,934 1,033,446
Winn-Dixie Stores Inc. ............................. 600 8,587
----------
2,839,270
----------
Technology Services 8.6%
Adobe Systems Inc. ................................. 500 65,012
a America Online Inc. ................................ 9,170 483,717
Autodesk Inc. ...................................... 200 6,937
Automatic Data Processing Inc. ..................... 2,578 138,083
a BMC Software Inc. .................................. 1,000 36,483
a Ceridian Corp. ..................................... 600 14,437
a Citrix Systems Inc. ................................ 700 13,255
Computer Associates International Inc. ............. 2,400 122,850
a Computer Sciences Corp. ............................ 700 52,280
a Compuware Corp. .................................... 1,700 17,637
a Electronic Data Systems Corp. ...................... 1,900 78,374
First Data Corp. ................................... 1,647 81,731
a Mercury Interactive Corp. .......................... 300 29,024
a Microsoft Corp. .................................... 21,138 1,691,040
a Novell Inc. ........................................ 1,300 12,024
a Oracle Corp. ....................................... 11,410 959,152
a Parametric Technology Corp. ........................ 900 9,900
a Peoplesoft Inc. .................................... 1,100 18,424
a Sapient Corp. ...................................... 200 21,387
a Siebel Systems Inc. ................................ 800 130,850
a Unisys Corp. ....................................... 1,200 17,474
a VERITAS Software Corp. ............................. 1,600 180,824
a Yahoo! Inc. ........................................ 2,200 272,524
----------
4,453,419
----------
Transportation .6%
a AMR Corp. .......................................... 600 15,862
Burlington Northern Santa Fe Corp. ................. 1,875 43,007
CSX Corp. .......................................... 900 19,068
Delta Air Lines Inc. ............................... 500 25,280
Fedex Corp. ........................................ 1,200 45,600
a Kansas City Southern Industries Inc. ............... 400 35,474
Norfolk Southern Corp. ............................. 1,500 22,312
Southwest Airlines Co. ............................. 2,000 37,874
Union Pacific Corp. ................................ 1,028 38,228
a US Airways Group Inc. .............................. 300 11,700
----------
294,405
----------
</TABLE>
FSP-16
<PAGE>
FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST
FRANKLIN S&P 500 INDEX FUND
Statement of Investments, June 30, 2000 (unaudited) (cont.)
<TABLE>
<CAPTION>
SHARES VALUE
--------- -------------
<S> <C> <C> <C>
Common Stocks (cont.)
Utilities 8.8%
Alltel Corp. ................................... 1,300 $ 80,518
Ameren Corp. ................................... 500 16,874
American Electric Power Co. Inc. ............... 1,340 39,697
AT&T Corp. ..................................... 15,015 474,849
BellSouth Corp. ................................ 7,551 321,860
Centurytel Inc. ................................ 500 14,374
Cinergy Corp. .................................. 700 17,805
CMS Energy Corp. ............................... 400 8,850
Coastal Corp. .................................. 900 54,787
Columbia Energy Group .......................... 300 19,687
Consolidated Edison Inc. ....................... 800 23,700
Constellation Energy Group Inc. ................ 600 19,537
a CP&L Energy Inc. ............................... 600 19,162
Dominion Resources Inc. ........................ 1,000 42,874
DTE Energy Co. ................................. 500 15,280
Duke Energy Corp. .............................. 1,529 86,196
Eastern Enterprises ............................ 100 6,300
Edison International ........................... 1,400 28,700
El Paso Energy Corp. ........................... 900 45,843
Enron Corp. .................................... 2,974 191,822
Entergy Corp. .................................. 900 24,468
FirstEnergy Corp. .............................. 900 21,037
Florida Progress Corp. ......................... 400 18,750
FPL Group Inc. ................................. 700 34,650
a Global Crossing Ltd. (Bermuda) ................. 3,621 95,277
GPU Inc. ....................................... 500 13,531
GTE Corp. ...................................... 3,929 244,580
New Century Energies Inc. ...................... 400 12,000
a Nextel Communications Inc., A .................. 3,100 189,681
a Niagara Mohawk Holdings Inc. ................... 600 8,362
Nicor Inc. ..................................... 200 6,524
Northern States Power Co. ...................... 600 12,112
a ONEOK Inc. ..................................... 200 5,187
PECO Energy Co. ................................ 700 28,218
Peoples Energy Corp. ........................... 200 6,474
PG&E Corp. ..................................... 1,600 39,400
Pinnacle West Capital Corp. .................... 300 10,163
PPL Corp. ...................................... 500 10,968
Public Service Enterprise Group Inc. ........... 800 27,700
Reliant Energy Inc. ............................ 1,200 35,474
SBC Communications Inc. ........................ 13,683 591,790
Sempra Energy .................................. 700 11,900
Southern Co. ................................... 2,660 62,011
Sprint Corp. (FON Group) ....................... 3,516 179,315
a Sprint Corp. (PCS Group) ....................... 3,700 220,150
TXU Corp. ...................................... 1,100 32,450
U.S. West Inc. ................................. 2,009 172,271
Unicom Corp. ................................... 700 27,081
Verizon Communications ......................... 6,184 314,224
Williams Cos. Inc. ............................. 1,771 73,828
a Worldcom Inc. .................................. 11,517 528,341
-----------
4,586,632
-----------
Total Common Stocks (Cost $49,128,250).......... 50,460,508
===========
</TABLE>
FSP-17
<PAGE>
FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST
FRANKLIN S&P 500 INDEX FUND
Statement of Investments, June 30, 2000 (unaudited) (cont.)
<TABLE>
<CAPTION>
SHARES VALUE
------------ -------------
<S> <C> <C> <C>
Common Stocks (cont.)
Short Term Investments 2.8%
c U.S. Treasury Bill, 9/14/00 ............................................ 150,000 $ 148,284
b Franklin Institutional Fiduciary Trust Money Market Portfolio .......... 1,289,884 1,289,884
-----------
Total Short Term Investments (Cost $1,437,698).......................... 1,438,168
-----------
Total Investments (Cost $50,565,948) 99.7%.............................. 51,898,676
Other Assets, less Liabilities .3% ..................................... 152,233
-----------
Net Assets 100.0% ...................................................... $52,050,909
===========
</TABLE>
aNon-income producing
bThe Franklin Institutionary Fiduciary Trust Money Market Portfolio is managed
by Franklin Advisers Inc.
cOn deposit with broker for initial margin on futures contracts (Note 1b).
See notes to financial statements.
FSP-18
<PAGE>
FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST
FRANKLIN S&P 500 INDEX FUND
Financial Statements
Statement of Assets and Liabilities
June 30, 2000 (unaudited)
<TABLE>
<S> <C>
Assets:
Investments in securities:
Cost ................................................ $50,565,948
===========
Value ............................................... 51,898,676
Cash ................................................. 90,675
Receivables:
Investment securities sold .......................... 3,800
Capital shares sold ................................. 268,201
Dividends ........................................... 38,621
Variation margin (Note 1) ........................... 10,100
Offering costs ....................................... 20,052
Other assets ......................................... 6,100
-----------
Total assets ...................................... 52,336,225
-----------
Liabilities:
Payables:
Investment securities purchased ..................... 217,247
Capital shares redeemed ............................. 22,675
Affiliates .......................................... 15,999
Other liabilities .................................... 29,395
-----------
Total liabilities ................................. 285,316
-----------
Net assets, at value ............................. $52,050,909
===========
Net assets consist of:
Undistributed net investment income .................. $ 186,906
Net unrealized appreciation .......................... 1,313,408
Accumulated net realized loss ........................ (440,634)
Capital shares ....................................... 50,991,229
-----------
Net assets, at value ............................. $52,050,909
===========
Class 1:
Net assets, at value ................................. $42,433,168
===========
Shares outstanding ................................... 4,006,398
===========
Net asset value and offering price per share ......... $ 10.59
===========
Class 2:
Net assets, at value ................................. $ 88,128
===========
Shares outstanding ................................... 8,335
===========
Net asset value and offering price per share ......... $ 10.57
===========
Class 3:
Net assets, at value ................................. $ 9,529,613
===========
Shares outstanding ................................... 901,758
===========
Net asset value and offering price per share ......... $ 10.57
===========
</TABLE>
See notes to financial statements.
FSP-19
<PAGE>
FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST
FRANKLIN S&P 500 INDEX FUND
Financial Statements (continued)
Statement of Operations
for the six months ended June 30, 2000 (unaudited)
<TABLE>
<S> <C>
Investment income:
Dividends ................................................... $ 294,023
----------
Expenses:
Management fees (Note 3) .................................... 26,278
Administrative fees (Note 3) ................................ 20,514
Distribution fees (Note 3)
Class 2 .................................................... 108
Class 3 .................................................... 8,806
Transfer agent fees - Class 3 (Note 3) ..................... 6,705
Custodian fees ............................................. 553
Reports to shareholders .................................... 24,277
Registration and filing fees - Class 3 ..................... 25,920
Professional fees (Note 3) ................................. 6,830
Trustees' fees and expenses ................................ 212
Amortization of offering costs (Note 1) .................... 12,011
Amortization of offering costs - Class 3 (Note 1) .......... 7,937
Other ...................................................... 4,574
----------
Total expenses ............................................. 144,725
Expenses waived/paid by affiliate (Note 3) ................. (37,886)
----------
Net expenses ............................................ 106,839
----------
Net investment income .................................. 187,184
----------
Realized and unrealized gains (losses):
Net realized gain (loss) from:
Investments ................................................ (511,265)
Financial futures contracts ................................ 70,631
----------
Net realized loss ........................................ (440,634)
Net unrealized appreciation on investments .................. 843,476
----------
Net realized and unrealized gain ............................. 402,842
----------
Net increase in net assets resulting from operations ......... $ 590,026
==========
</TABLE>
See notes to financial statements.
FSP-20
<PAGE>
FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST
FRANKLIN S&P 500 INDEX FUND
Financial Statements (continued)
Statements of Changes in Net Assets
for the six months ended June 30, 2000 (unaudited) and the year ended December
31, 1999
<TABLE>
<CAPTION>
Six Months Ended Year Ended
June 30, 2000 December 31, 1999a
------------------ -------------------
<S> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income ................................................ $ 187,184 $ 19,760
Net realized loss from investments and financial futures transactions (440,634) --
Net unrealized appreciation on investments ........................... 843,476 469,932
----------- -----------
Net increase in net assets resulting from operations ................ 590,026 489,692
Distributions to shareholders from:
Net investment income:
Class 1 ............................................................. (18,826) --
Class 2 ............................................................. (15) --
Class 3 ............................................................. (3,250) --
----------- -----------
Total distributions to shareholders .................................... (22,091) --
Capital share transactions: (Note 2)
Class 1 ............................................................. 27,100,706 14,487,738
Class 2 ............................................................. 15 83,330
Class 3 ............................................................. 7,057,486 2,264,007
----------- -----------
Total capital share transactions ....................................... 34,158,207 16,835,075
Net increase in net assets .......................................... 34,726,142 17,324,767
Net assets:
Beginning of period .................................................... 17,324,767 --
----------- -----------
End of period .......................................................... $52,050,909 $17,324,767
=========== ===========
Undistributed net investment income included in net assets:
End of period .......................................................... $ 186,906 $ 21,813
=========== ===========
</TABLE>
aFor the period November 1, 1999 (effective date) to December 31, 1999.
See notes to financial statements.
FSP-21
<PAGE>
FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST FRANKLIN S&P 500 INDEX
FUND
Notes to Financial Statements (unaudited)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Franklin S&P 500 Index Fund (the Fund) is a separate, diversified series of
Franklin Templeton Variable Insurance Products Trust (the Trust), which is an
open-end investment company registered under the Investment Company Act of
1940. As of June 30, 2000, 77% of the Fund's shares were sold through one
insurance company. The Fund seeks to match the performance of S&P 500 Index.
Effective May 1, 2000, the name of the Templeton Variable Products Series Fund
- Franklin S&P 500 Index Fund changed to Franklin Templeton Variable Insurance
Products Trust - Franklin S&P 500 Index Fund. The Fund's investment objectives
and other policies did not change as a result of the name change.
The following summarizes the Fund's significant accounting policies.
a. Security Valuation
Securities listed or traded on a recognized national exchange or NASDAQ are
valued at the latest reported sales price. Over-the-counter securities and
listed securities for which no sale is reported are valued within the range of
the latest quoted bid and asked prices. Securities for which market quotations
are not readily available are valued at fair value as determined by management
in accordance with procedures established by the Board of Trustees.
b. Futures Contracts
The Fund may enter into futures contracts and options on futures contracts to
hedge the risk of changes in interest rates. Required initial margin deposits
of cash or securities are maintained by the Fund's custodian in segregated
accounts as disclosed in the Statement of Investments. Subsequent payments,
known as variation margin, are made or received by the Fund depending on the
daily fluctuations in the value of the underlying securities. Such variation
margin is accounted for as unrealized gains or losses until the contract is
closed, at which time the gains or losses are reclassified to realized.
Realized and unrealized gains and losses are included in the Statement of
Operations.
c. Income Taxes
No provision has been made for income taxes because the Fund's policy is to
qualify as a regulated investment company under the Internal Revenue Code and
to distribute substantially all of its taxable income.
d. Security Transactions, Investment Income, Expenses and Distributions
Security transactions are accounted for on trade date. Realized gains and
losses on security transactions are determined on a specific identification
basis. Estimated expenses are accrued daily. Dividend income and distributions
to shareholders are recorded on the ex-dividend date.
Common expenses incurred by the Trust are allocated among the funds based on
the ratio of net assets of each fund to the combined net assets. Other expenses
are charged to each fund on a specific identification basis.
Realized and unrealized gains and losses and net investment income, other than
class specific expenses, are allocated daily to each class of shares based upon
the relative proportion of net assets of each class.
e. Offering Costs
Offering costs are amortized on a straight-line basis over twelve months.
FSP-22
<PAGE>
FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST FRANKLIN S&P 500 INDEX
FUND
Notes to Financial Statements (unaudited) (continued)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (cont.)
f. Accounting Estimates
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of the
financial statements and the amounts of income and expense during the reporting
period. Actual results could differ from those estimates.
2. SHARES OF BENEFICIAL INTEREST
The Fund offers three classes of shares: Class 1, Class 2 and Class 3. Each
class of shares differs by its distribution fees, registration fees,
shareholder servicing costs, voting rights on matters affecting a single class,
and its exchange privilege.
At June 30, 2000, there were an unlimited number of shares authorized ($.01 par
value). Transactions in the Fund's shares were as follows:
<TABLE>
<CAPTION>
Six Months Ended Year Ended
June 30, 2000 December 31, 1999/a/
-------------------------------- ----------------------------
Shares Amount Shares Amount
Class 1 Shares: --------------- ---------------- ------------- --------------
<S> <C> <C> <C> <C>
Shares sold ................................... 3,781,072 $ 39,349,416 1,433,132 $14,724,579
Shares issued in reinvestment of distributions 1,894 18,826 -- --
Shares redeemed ............................... (1,186,572) (12,267,536) (23,128) (236,841)
---------- ------------- --------- -----------
Net increase .................................. 2,596,394 $ 27,100,706 1,410,004 $14,487,738
========== ============= ========= ===========
Class 2 Shares:
Shares sold ................................... -- $ -- 8,333 $ 83,330
Shares issued in reinvestment of distributions 2 15 -- --
---------- ------------- --------- -----------
Net increase .................................. 2 $ 15 8,333 $ 83,330
========== ============= ========= ===========
Class 3 Shares:
Shares sold ................................... 972,705 $ 10,095,873 232,129 $ 2,362,095
Shares issued in reinvestment of distributions 327 3,250 -- --
Shares redeemed ............................... (293,863) (3,041,637) (9,540) (98,088)
---------- ------------- --------- -----------
Net increase .................................. 679,169 $ 7,057,486 222,589 $ 2,264,007
========== ============= ========= ===========
</TABLE>
a/For the period November 1, 1999 (effective date) to December 31, 1999.
Templeton Funds Annuity Company, the Fund's subadministrative manager, is the
record owner of 8,335 of the Fund's Class 2 shares as of June 30, 2000.
3. TRANSACTIONS WITH AFFILIATES
Certain officers and trustees of the Trust are also officers and/or directors
of the following entities:
<TABLE>
<CAPTION>
Entity Affiliation
------------------------------------------------------------------ -----------------------
<S> <C>
Franklin Templeton Services, Inc. (FT Services) Administrative manager
Franklin Advisers, Inc. (Advisers) Investment manager
Franklin/Templeton Distributors, Inc. (Distributors) Principal underwriter
Franklin/Templeton Investor Services, Inc. (Investor Services Transfer agent
</TABLE>
The Fund pays an investment management fee to Advisers of .15% per year of the
average daily net assets of the Fund.
FSP-23
<PAGE>
FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST FRANKLIN S&P 500 INDEX
FUND
Notes to Financial Statements (unaudited) (continued)
3. TRANSACTIONS WITH AFFILIATES (cont.)
Management fees were reduced on assets invested in the Franklin Institutional
Fiduciary Trust Money Market Portfolio.
The Fund pays an administrative fee to FT Services of .10% per year of the
Fund's average daily net assets.
Under a subadvisory agreement, State Street Global Advisors (SSgA) provides
subadvisory services to the Fund and receives from Advisers fees based on the
average daily net assets of the Fund.
Advisers and FT Services have agreed in advance to limit total expenses of the
Fund to an annual rate of .55%, .80%, and .80% of average daily net assets of
Class 1, Class 2, and Class 3, respectively, through December 31, 2000, as
noted in the Statement of Operations.
The Fund reimburses Distributors up to .25% per year of its average daily net
assets of Class 2 and Class 3, for costs incurred in marketing the Fund's
shares.
Included in professional fees are legal fees of $180 that were paid to a law
firm in which a partner of that firm was an officer of the Fund.
4. INCOME TAXES
Net investment income differs for financial statement and tax purposes
primarily due to differing treatments of offering costs. Net realized capital
gains and losses differ for financial statements and tax purposes primarily due
to differing treatment of wash sales.
At June 30, 2000, the net unrealized appreciation based on the cost of
investments for income tax purposes of $50,097,742 was as follows:
<TABLE>
<S> <C>
Unrealized appreciation ............. $ 5,794,302
Unrealized depreciation ............. (3,993,368)
------------
Net unrealized appreciation ......... $ 1,800,934
============
</TABLE>
5. INVESTMENT TRANSACTIONS
Purchases and sales of securities (excluding short-term securities) for the
period ended June 30, 2000 aggregated $38,974,910 and $3,947,074, respectively.
6. FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK
A financial futures contract is an agreement between parties to buy or sell a
security for a set price on a future date. The use of futures transactions
involves risk of imperfect correlation in movements in the price of future
contracts, interest rates, and the underlying hedged assets.
As of June 30, 2000, the Fund had the following futures contracts outstanding:
<TABLE>
<CAPTION>
Contracts to Buy Number of Contracts Delivery Dates Contract Face Value Unrealized Loss
------------------------------- --------------------- ---------------- --------------------- ----------------
<S> <C> <C> <C> <C>
S&P 500 Index, Sep 00 ......... 4 9/15/00 $1,487,420 $ (19,320)
</TABLE>
FSP-24
