FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST, N-30D, 2000-09-08

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST
N-30D, 2000-09-08

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SEMIANNUAL REPORT

JUNE 30, 2000

TEMPLETON INVESTMENT PLUS
- Franklin Templeton Variable
Insurance Products Trust
- The Phoenix Edge Series Fund

[FRANKLIN TEMPLETON INVESTMENTS LOGO]

FRANKLIN(R) TEMPLETON(R) INVESTMENTS

<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.

<PAGE>

FRANKLIN TEMPLETON VARIABLE INSURANCE
PRODUCTS TRUST SEMIANNUAL REPORT
TABLE OF CONTENTS [GRAPHIC OMITTED]

Letter to Contract Owners ........................................ 2
Fund Summaries
Funds Seeking Capital Growth
Templeton Developing Markets Securities Fund
(formerly Templeton Developing Markets Fund) ................. TD-1
Templeton Growth Securities Fund
(formerly Templeton Global Growth Fund) ...................... TG-1
Templeton International Securities Fund
(formerly Templeton International Fund) ...................... TI-1
Templeton Asset Strategy Fund
(formerly Templeton Asset Allocation Fund) ................... TA-1
Funds Seeking Income
Templeton Global Income Securities Fund ......................... TGI-1

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.

TIP S00 08/00 PHOENIX TIP

<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,

/s/RUPERT H. JOHNSON, JR.

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>

TEMPLETON DEVELOPING MARKETS SECURITIES FUND

--------------------------------------------------------------------------------
FUND GOAL AND PRIMARY INVESTMENTS: TEMPLETON DEVELOPING MARKETS SECURITIES FUND
(FORMERLY TEMPLETON DEVELOPING MARKETS FUND) SEEKS LONG-TERM CAPITAL
APPRECIATION. THE FUND INVESTS PRIMARILY IN EMERGING MARKET EQUITY SECURITIES.
--------------------------------------------------------------------------------
During the reporting period, emerging market economies generally performed
well. In Asia, China was granted permanent trade status by the U.S. Congress,
putting it one step closer to entering the World Trade Organization. The
economies of South Korea and Thailand continued to recover and the
International Monetary Fund, commending Indonesia for its efforts in bringing
about economic reforms, resumed loan disbursements to the country. Elsewhere in
the region, Hong Kong's unemployment rate fell as its economy expanded by an
annualized rate of 14.3% in the first quarter of 2000. However, trade figures
indicated that imports were rising more rapidly than exports, which could lead
to a widening trade deficit.

Most Latin American economies performed relatively well. Investor confidence in
Mexico appeared to increase due to slower inflation and lower interest rates.
Moreover, Moody's(R), an independent credit rating agency, assigned Mexico a
coveted investment-grade rating, potentially lowering the country's financing
costs as well as making it eligible for investment by a broad group of U.S.
institutional investors normally unable to invest in emerging markets. Investor
confidence in Argentina also seemed to rise partly due to support from the
International Monetary Fund's higher than expected US$7.4 billion standby
facility arrangement. In addition, the country's Lower House approved a labor
reform bill, which could lead to increased productivity and employment. And in
Brazil, economic figures released during the period indicated a narrowing trade
deficit, falling unemployment and strong gross domestic product (GDP) growth --
all signs of a steady recovery.

During the six months under review, South Africa's economy was marked by
falling interest rates and rising commodity prices. Its government announced
plans to accelerate the privatization of state-owned companies and to raise
US$6 billion by 2004, primarily through foreign direct investment.

In Eastern Europe, Russia's first-quarter GDP jumped an annualized 8.4%, while
investment growth, GDP growth and slowing inflation continued to demonstrate
the strength of Hungary's economy.

GEORGRAPHIC DISTRIBUTION
Templeton Developing Markets
Securities Fund
Based on Total Net Assets
6/30/00

[This chart in pie format shows the geographic distribution of Templeton
Developing Markets Securities Fund as a percentage of total net assets on
6/30/00.]

Asia 42.0%
Latin America 26.6%
Mid-East/Africa 13.6%
Europe 12.2%
Short-Term Investments
& Other Net Assets 5.6%

TD-1
<PAGE>

TOP 10 COUNTRIES
Templeton Developing Markets
Securities Fund
6/30/00

% OF TOTAL
COUNTRY NET ASSETS
---------------------------
Brazil 11.7%
South Africa 11.5%
South Korea 11.3%
Mexico 9.6%
Thailand 6.6%
Singapore 5.4%
Hong Kong 4.7%
Turkey 4.6%
Indonesia 4.2%
Poland 4.0%

Despite the improving economic environment and after recovering strongly in
1999, equity markets in most emerging-market countries fell during the first
half of 2000. Rising interest rates, a significant correction in technology
stocks and other equities, and an apparent lack of confidence in developing
countries' equity markets contributed to their negative performances. For the
period, the MSCI Emerging Markets Free Index, one of the Fund's benchmarks, was
down 9.0%.(1)

Throughout the period, we selectively sold holdings and increased the Fund's
cash position from 3.5% of total net assets on January 1, 2000, to 5.5% at the
period's end. However, taking advantage of declining equity prices and the
bargains we believed they represented, we did add several European positions to
the Fund's portfolio. In our opinion, aspirations for membership in the
European Union will probably push most Eastern European economies to strive for
better results, which could lead to further reforms and restructuring. This, in
turn, should lead to positive gains for Eastern Europe and its neighbors. On
June 30, our holdings in Brazil comprised the Fund's largest weighting at 11.7%
of total net assets, followed by South Africa (11.5%), South Korea (11.3%),
Mexico (9.6%) and Thailand (6.6%).

Looking forward, we will continue with our bottom-up investment style, choosing
stocks that are selling at prices below our estimate of their true value.
Although we cannot predict what any particular stock will do in the short term,
we believe that over the long term most emerging-market economies should
continue to grow and that, despite volatility, improved corporate governance
and better economic efficiencies should benefit prices of emerging-market
stocks for years to come.

(1) Source: Morgan Stanley Capital International. MSCI Emerging Markets Free
Index is a market capitalization-weighted equity index comprising 26 of the 48
countries in the MSCI universe. "Free" denotes investment opportunities in the
developing world available to foreign investors.

TD-2
<PAGE>

Of course, investing in any emerging market means accepting a certain amount of
volatility and, in some cases, severe market corrections. While short-term
volatility can be disconcerting, declines in excess of 50% are not unusual in
emerging markets. The Fund's definition of "emerging markets" as used by the
Fund's manager may differ from the definition of the same terms as used in
managing other Franklin Templeton funds.

-------------------------------------------------------------------------------
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 country, industry, security or the
Fund. Our strategies and the Fund's portfolio composition will change depending
on market and economic conditions. Although historical performance is no
guarantee of future results, these insights may help you understand our
investment and management philosophy.
-------------------------------------------------------------------------------

TOP 10 HOLDINGS
Templeton Developing Markets
Securities Fund
6/30/00

COMPANY % OF TOTAL
SECTOR, COUNTRY NET ASSETS
--------------------------------------------
Cemex SA 3.7%
Building Materials and
Components, Mexico

Grupo Financiero 3.0%
Banamex Accival SA
de CV
Banking, Mexico

Centrais Eletricas 3.0%
Brasileiras SA (Eletrobras)
Utilities Electrical and
Gas, Brazil

Samsung Electronics Co. 2.7%
Ltd.
Electrical and Electronics,
South Korea

Korea Electric Power Corp. 2.4%
Utilities Electrical & Gas,
South Korea

Cheung Kong Holdings 1.9%
Ltd.
Multi-Industry, Hong
Kong

Telefonos de Mexico SA 1.8%
(Telmex)
Telecommunications,
Mexico

Akbank 1.8%
Banking, Turkey

Tele Norte Leste 1.6%
Participacoes SA
Telecommunications,
Brazil

Banco Bradesco SA 1.6%
Banking, Brazil

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.

TD-3
<PAGE>

TEMPLETON DEVELOPING
MARKETS SECURITIES
FUND - CLASS 1

PERFORMANCE SUMMARY AS OF 6/30/00

Templeton Developing Markets Securities Fund - Class 1 delivered a -16.94%
cumulative total return for the six-month period ended 6/30/00. Total return of
Class 1 shares represents the cumulative or average annual change in value,
assuming reinvestment of dividends and capital gains. Average returns smooth
out variations in returns, which can be significant; they are not the same as
year-by-year results.

Templeton Developing Markets Securities Fund - Class 1*
Periods ended 6/30/00

SINCE
INCEPTION
1-YEAR 3-YEAR (3/4/96)
------------------------------------------------------------------
Average Annual Total Return -10.74% -12.27% -8.71%
Cumulative Total Return -10.74% -32.48% -32.57%
Value of $10,000 Investment $8,926 $6,752 $6,743

* Performance prior to the 5/1/00 merger reflects the historical performance of
the Templeton Developing Markets Fund.

Ongoing stock market volatility can dramatically change the Fund's short-term
performance; current results may be lower.

-------------------------------------------------------------------------------
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.
-------------------------------------------------------------------------------

Past performance does not guarantee future results.

TD-4
<PAGE>

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

TEMPLETON DEVELOPING MARKETS SECURITIES FUND

Financial Highlights

<TABLE>
<CAPTION>
CLASS 1
----------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED DECEMBER 31,
JUNE 30, 2000 ---------------------------------------------------------
(UNAUDITED) 1999 1998 1997 1996(C)
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the period)
Net asset value, beginning of period .................. $7.77 $5.13 $6.63 $9.43 $10.00
--------------------------------------------------------------------
Income from investment operations:
Net investment income(d) ............................. .05 .05 .07 .09 .05
Net realized and unrealized gains (losses) ........... (1.36) 2.67 (1.42) (2.82) (.62)
--------------------------------------------------------------------
Total from investment operations ...................... (1.31) 2.72 (1.35) (2.73) (.57)
--------------------------------------------------------------------
Less distributions from:
Net investment income ................................ (.07) (.08) (.09) (.04) --
Net realized gains ................................... -- -- (.06) (.03) --
--------------------------------------------------------------------
Total distributions ................................... (.07) (.08) (.15) (.07) --
--------------------------------------------------------------------
Net asset value, end of period ........................ $6.39 $7.77 $5.13 $6.63 $9.43
====================================================================
Total return(b) ....................................... (16.94%) 53.84% (20.94%) (29.22%) (5.70%)

RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's) ..................... $396,373 $297,605 $180,684 $163,459 $72,245
Ratios to average net assets:
Expenses ............................................. 1.52%(a) 1.50% 1.66% 1.58% 1.70%(a)
Expenses, excluding waiver and payments by affiliate.. 1.52%(a) 1.50% 1.66% 1.58% 1.78%(a)
Net investment income ................................ 1.36%(a) .82% 1.67% 1.63% 1.52%(a)
Portfolio turnover rate ............................... 71.01% 60.27% 23.22% 23.82% 9.95%

</TABLE>

(a)Annualized
(b)Total 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.
(c)For the period March 4, 1996 (effective date) to December 31, 1996.
(d)Based on average shares outstanding effective year ended December 31, 1999.

TD-5
<PAGE>

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

TEMPLETON DEVELOPING MARKETS SECURITIES FUND

Financial Highlights (continued)

<TABLE>
<CAPTION>
CLASS 2
----------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED DECEMBER 31,
JUNE 30, 2000 -------------------------------------------
(UNAUDITED) 1999 1998 1997(C)
----------------------------------------------------------------
<S> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the period)
Net asset value, beginning of period ................ $7.74 $5.12 $6.62 $9.85
--------------------------------------------------------
Income from investment operations:
Net investment income(d) ........................... .04 .03 .07 .04
Net realized and unrealized gains (losses) ......... (1.36) 2.66 (1.42) (3.27)
--------------------------------------------------------
Total from investment operations .................... (1.32) 2.69 (1.35) (3.23)
--------------------------------------------------------
Less distributions from:
Net investment income .............................. (.05) (.07) (.09) --
Net realized gains ................................. -- -- (.06) --
--------------------------------------------------------
Total distributions ................................. (.05) (.07) (.15) --
--------------------------------------------------------
Net asset value, end of period ...................... $6.37 $7.74 $5.12 $6.62
========================================================
Total return(b) ..................................... (17.07%) 53.27% (21.03%) (32.79%)

RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's) ................... $63,163 $49,654 $17,287 $9,569
Ratios to average net assets:
Expenses ........................................... 1.77%(a) 1.75% 1.91% 1.77%(a)
Net investment income .............................. 1.07%(a) .52% 1.44% 1.48%(a)
Portfolio turnover rate ............................. 71.01% 60.27% 23.22% 23.82%
</TABLE>

(a)Annualized
(b)Total 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.
(c)For the period May 1, 1997 (effective date) to December 31, 1997.
(d)Based on average shares outstanding effective year ended December 31, 1999.

See notes to financial statements.

TD-6
<PAGE>

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

TEMPLETON DEVELOPING MARKETS SECURITIES FUND

Statement of Investments, June 30, 2000 (unaudited)

<TABLE>
<CAPTION>
SHARES/
INDUSTRY WARRANTS VALUE
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
LONG TERM SECURITIES 94.5%
ARGENTINA 3.2%
Banco Frances SA ....................................... Banking 34,370 $ 252,670
(a) Capex SA, A ............................................ Utilities Electrical & Gas 58,860 353,231
(a) Molinos Rio de la Plata SA, B .......................... Food & Household Products 908,459 1,726,417
PC Holdings SA, B ...................................... Energy Sources 1,909,452 3,494,996
Quilmes Industrial SA, ADR, pfd. ....................... Beverages & Tobacco 210,350 2,340,144
Telecom Argentina Stet-France Telecom SA, ADR .......... Telecommunications 217,560 5,982,900
Transportadora de Gas del Sur SA, B, ADR ............... Utilities Electrical & Gas 78,690 708,210
-----------
14,858,568
-----------
AUSTRIA 2.2%
Austria Tabak AG ....................................... Beverages & Tobacco 6,400 238,027
Bank Austria AG ........................................ Banking 127,580 6,239,342
Bbag Oesterreichische Brau-Beteiligungs AG ............. Beverages & Tobacco 2,130 96,961
Mayr-Melnhof Karton AG ................................. Forest Products & Paper 14,284 678,437
OMV AG ................................................. Energy Sources 30,805 2,687,066
-----------
9,939,833
-----------
BRAZIL 11.7%
Banco Bradesco SA, pfd. ................................ Banking 835,642,112 7,272,493
Brasil Telecom Participacoes SA, pfd. .................. Telecommunications 130,553,000 1,888,821
Centrais Eletricas Brasileiras SA (Electrobras) ........ Utilities Electrical & Gas 22,895,000 469,576
Centrais Eletricas Brasileiras SA (Electrobras) B, pfd. Utilities Electrical & Gas 593,008,000 13,115,864
CIA Cervejaria Brahma, pfd. ............................ Beverages & Tobacco 433,000 367,234
Cia Energetica de Minas Gerais, pfd. ................... Utilities Electrical & Gas 115,734,000 2,020,854
Cia Vale do Rio Doce, A, pfd. .......................... Metals & Mining 148,470 4,189,093
Companhia Paranaense de Energia-Copel, B, pfd. ......... Utilities Electrical & Gas 237,975,000 2,242,557
(a) Companhia Riograndense de Telecom, A, pfd. ............. Telecommunications 4,264,000 1,441,818
Copene-Petroquimica do Nordeste SA, A, pfd. ............ Chemicals 2,956,700 1,101,469
Duratex SA, pfd. ....................................... Forest Products & Paper 52,441,800 1,671,510
Eletropaulo Metropolitana SA, pfd. ..................... Utilities Electrical & Gas 13,263,000 933,703
Empresa Brasileira de Aeronautica SA ................... Aerospace & Military Tech 350,200 2,133,425
Investimentos Itau SA (Itausa), pfd. ................... Multi-Industry 4,260,836 4,133,294
Tele Celular Sul Participacoes SA, pfd. ................ Telecommunications 25,177,000 121,419
Tele Norte Leste Participacoes SA, pfd. ................ Telecommunications 310,828,976 7,279,670
Unibanco Uniao de Bancos Brasileiros SA, GDR ........... Banking 110,080 3,164,800
-----------
53,547,600
-----------
CHILE .9%
Cia de Telecomunicaciones de Chile SA, ADR ............. Telecommunications 175,394 3,179,016
(a) Enersis SA, ADR ........................................ Utilities Electrical & Gas 22,134 441,297
(a) Madeco Manufacturera de Cobre SA, ADR .................. Industrial Components 50,250 383,156
-----------
4,003,469
-----------
CHINA .1%
China Resources Enterprises Ltd. ....................... Multi-Industry 122,000 146,332
Shandong Huaneng Power Development Co. Ltd., ADR ....... Utilities Electrical & Gas 90,450 378,759
Shanghai Petrochemical Co. Ltd., H ..................... Chemicals 288,000 39,162
-----------
564,253
-----------
COLOMBIA .1%
Bavaria SA ............................................. Beverages & Tobacco 1,607 5,041
Cementos Argos SA ...................................... Building Materials & Components 222,800 395,365
-----------
400,406
-----------
</TABLE>

TD-7
<PAGE>

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

TEMPLETON DEVELOPING MARKETS SECURITIES FUND

Statement of Investments, June 30, 2000 (unaudited) (cont.)

<TABLE>
<CAPTION>
SHARES/
INDUSTRY WARRANTS VALUE
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
LONG TERM SECURITIES (CONT.)
CROATIA
Pliva D D, GDR, Reg S ..................................... Health & Personal Care 19,100 $ 197,208
-----------
CZECH REPUBLIC 1.5%
(a) Cesky Telecom AS .......................................... Telecommunications 29,950 507,534
(a) CEZ AS .................................................... Utilities Electrical & Gas 2,462,805 6,527,278
Tabak AS .................................................. Beverages & Tobacco 225 35,114
-----------
7,069,926
-----------
EGYPT .9%
(a) Al Ahram Beverages Co., GDR ............................... Beverages & Tobacco 58,906 1,011,711
Commercial International Bank Ltd. ........................ Banking 201,750 2,150,443
(a) Suez Cement Co. ........................................... Building Materials & Components 71,710 749,483
(a) Suez Cement Co., GDR ...................................... Building Materials & Components 20,130 201,300
-----------
4,112,937
-----------
ESTONIA .2%
Eesti Telekom AS, GDR ..................................... Telecommunications 4,900 98,490
Hansabank Ltd. ............................................ Banking 103,450 777,441
-----------
875,931
-----------
FINLAND
Hartwall OYJ, A ........................................... Beverages & Tobacco 6,520 131,245
-----------
GREECE .4%
Hellenic Telecommunications Organization SA ............... Telecommunications 75,040 1,892,922
-----------
HONG KONG 4.7%
Cheung Kong Holdings Ltd. ................................. Multi-Industry 788,000 8,718,715
(a) China Aerospace International Holdings Ltd. ............... Electronic Components & Instruments 2,285,200 354,713
Dairy Farm International Holdings Ltd. .................... Merchandising 1,561,333 936,800
Hang Lung Development Co. Ltd. ............................ Real Estate 1,650,000 1,280,579
Hong Kong & Shanghai Hotels Ltd. .......................... Leisure & Tourism 1,015,000 589,185
Hong Kong Land Holdings Ltd. .............................. Real Estate 789,000 1,262,400
HSBC Holdings PLC ......................................... Banking 203,654 2,325,145
Hutchison Whampoa Ltd. .................................... Multi-Industry 227,400 2,858,800
Jardine Matheson Holdings Ltd. ............................ Multi-Industry 501,861 2,198,151
Jardine Strategic Holdings Ltd. ........................... Multi-Industry 110,000 328,900
Shangri-La Asia Ltd. ...................................... Leisure & Tourism 158,000 186,471
Swire Pacific Ltd., A ..................................... Multi-Industry 79,500 465,049
-----------
21,504,908
-----------
HUNGARY 2.2%
Borsodchem RT ............................................. Chemicals 78,919 2,447,992
Egis RT ................................................... Multi-Industry 10,638 447,032
(a) Fotex First Hungarian American Photo Service Co. .......... Multi-Industry 2,485 2,904
Gedeon Richter Ltd. ....................................... Health & Personal Care 53,450 2,894,301
(a) Graphisoft NV ............................................. Data Processing & Reproduction 1,300 24,549
Matav RT .................................................. Telecommunications 59,500 415,624
Mol Magyar Olay-Es Gazipari RT ............................ Energy Sources 81,300 1,125,317
OTP Bank .................................................. Banking 19,960 1,044,776
Tiszai Vegyi Kombinat RT .................................. Chemicals 117,573 1,627,390
-----------
10,029,885
-----------
</TABLE>

TD-8
<PAGE>

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

TEMPLETON DEVELOPING MARKETS SECURITIES FUND

Statement of Investments, June 30, 2000 (unaudited) (cont.)

<TABLE>
<CAPTION>
SHARES/
INDUSTRY WARRANTS VALUE
-------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
LONG TERM SECURITIES (CONT.)
INDIA .9%
Associated Cement Cos. Ltd. ............................. Building Materials & Components 85,350 $ 225,352
BSES Ltd. ............................................... Utilities Electrical & Gas 47,900 263,237
(a) Colgate-Palmolive (INDIA) Ltd. .......................... Health & Personal Care 5,000 20,158
Gas Authority Of India Ltd., GDR ........................ Energy Sources 25,200 170,100
Grasim Industries Ltd. .................................. Multi-Industry 5,962 38,196
Hindalco Industries Inc. ................................ Metals & Mining 31,500 556,807
Hindustan Petroleum Corporation Ltd. .................... Energy Sources 48,850 134,229
Mahanagar Telephone Nigam Ltd. .......................... Telecommunications 289,800 1,391,831
NIIT Ltd. ............................................... Data Processing & Reproduction 15,228 753,466
Tata Engineering & Locomotive Co. ....................... Machinery & Engineering 129,900 358,535
(a) Wipro Ltd. .............................................. Data Processing & Reproduction 5,600 363,535
-----------
4,275,446
-----------
INDONESIA 4.2%
(a) Asia Pulp & Paper Co. Ltd., ADR ......................... Forest Products & Paper 396,230 2,005,914
(a) PT Barito Pacific Timber TBK ............................ Forest Products & Paper 1,644,000 70,437
PT Gudang Garamm ........................................ Beverages & Tobacco 521,000 842,291
(a) PT Indah Kiat Pulp & Paper Corp. ........................ Forest Products & Paper 11,463,750 2,324,839
(a) PT Indocement Tunggal Prakarsa .......................... Building Materials & Components 2,790,500 1,028,205
(a) PT Indofoods Sukses Makmurr ............................. Food & Household Products 3,552,705 1,938,208
PT Indosat .............................................. Telecommunications 1,854,000 2,181,799
PT Semen Gresik (Persero) ............................... Building Materials & Components 1,493,618 1,356,671
(a) PT Sinar Mas Agro Resources & Technology Corp. .......... Food & Household Products 268,800 117,470
PT Telekomunikasi Indonesia (Persero), B ................ Telecommunications 18,738,900 6,583,504
PT Timah TBK ............................................ Metals & Mining 1,788,500 531,288
(a) PT Tjiwi Kimia .......................................... Forest Products & Paper 2,233,380 369,997
-----------
19,350,623
-----------
ISRAEL 1.2%
(a) Ampal-American Israel Corp. ............................. Financial Services 4,150 62,250
(a) Crystal Systems Solutions Ltd. .......................... Electronic Components & Instruments 4,230 39,921
Elron Electronic Industries Ltd. ........................ Financial Services 20,010 747,373
(a) Formula Systems Ltd. .................................... Data Processing & Reproduction 15,910 859,600
(a) Fundtech Ltd. ........................................... Data Processing & Reproduction 61,150 1,589,900
Koor Industries Ltd. .................................... Multi-Industry 2,452 263,817
(a) Nice Systems Ltd. ....................................... Telecommunications 9,880 768,525
(a) Sapiens International Corp. ............................. Data Processing & Reproduction 600 3,788
(a) Tecnomatix Technologies Ltd. ............................ Data Processing & Reproduction 27,989 381,350
(a) TTI Team Telecom International Ltd. ..................... Telecommunications 15,000 540,000
(a) Vocaltec Communications Ltd. ............................ Data Processing & Reproduction 19,550 449,650
-----------
5,706,174
-----------
</TABLE>

TD-9
<PAGE>

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

TEMPLETON DEVELOPING MARKETS SECURITIES FUND

Statement of Investments, June 30, 2000 (unaudited) (cont.)

<TABLE>
<CAPTION>
SHARES/
INDUSTRY WARRANTS VALUE
-------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
LONG TERM SECURITIES (CONT.)
MALAYSIA .9%
Genting Bhd. ......................................... Leisure & Tourism 629,800 $ 2,320,316
Golden Hope Plantations Bhd. ......................... Misc Materials & Commodities 189,000 209,889
IOI Corp. Bhd. ....................................... Misc Materials & Commodities 926,000 728,616
Resorts World Bhd. ................................... Leisure & Tourism 286,000 782,737
------------
4,041,558
------------
MEXICO 9.6%
Alfa SA de CV, A ..................................... Multi-Industry 359,500 821,735
Cemex SA ............................................. Building Materials & Components 3,601,555 16,885,433
DESC SA de CV DESC, B ................................ Multi-Industry 602,400 385,546
(a) Fomento Economico Mexicano SA de CV Femsa ............ Beverages & Tobacco 45,570 1,962,358
Grupo Bimbo SA de CV, A .............................. Food & Household Products 434,500 684,182
(a) Grupo Financiero Banamex Accival SA de CV ............ Banking 3,278,853 13,790,269
(a) Grupo Financiero Bancomer SA de CV ................... Banking 2,680,000 1,361,304
Telefonos de Mexico SA (Telmex), ADR ................. Telecommunications 142,234 8,125,117
Vitro SA de CV, A .................................... Food & Household Products 238,349 266,352
------------
44,282,296
------------
PAKISTAN .9%
(a) Hub Power Co. Ltd. ................................... Energy Sources 5,254,000 1,463,636
Pakistan Telecommunications Corp., A ................. Telecommunications 5,577,500 2,883,257
------------
4,346,893
------------
PERU
Credicorp Ltd. ....................................... Banking 13,100 117,900
------------
PHILIPPINES 1.9%
(a) Filinvest Development Corp. .......................... Real Estate 1,296,000 41,971
Philippine Long Distance Telephone Co., ADR .......... Telecommunications 117,890 2,092,548
(a) Philippine National Bank ............................. Banking 1,369,861 1,790,357
RFM Corp. ............................................ Food & Household Products 1,190,715 63,351
San Miguel Corp., B .................................. Food & Household Products 3,659,800 4,529,246
------------
8,517,473
------------
POLAND 4.0%
Bank Rozwoju Eksportu SA ............................. Banking 38,125 1,181,831
(a) Bank Slaski SA W Katowicach .......................... Banking 29,820 1,605,692
Elektrim SA .......................................... Multi-Industry 239,250 2,746,843
Impexmetal SA ........................................ Metals & Mining 93,892 627,384
(a) Orbis SA ............................................. Leisure & Tourism 74,000 577,727
Polski Koncern Naftowy Orlen SA ...................... Energy Sources 488,607 2,356,084
Prokom Software SA ................................... Data Processing & Reproduction 68,016 3,560,884
(a) Telekomunikacja Polska SA ............................ Telecommunications 567,801 4,067,828
Warta SA ............................................. Insurance 43,104 1,445,048
------------
18,169,321
------------
</TABLE>

TD-10
<PAGE>

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

TEMPLETON DEVELOPING MARKETS SECURITIES FUND

STATEMENT OF INVESTMENTS, JUNE 30, 2000 (UNAUDITED) (CONT.)

<TABLE>
<CAPTION>
SHARES/
INDUSTRY WARRANTS VALUE
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
LONG TERM SECURITIES (CONT.)
RUSSIA 1.6%
GAZ Auto Works .............................. Automobiles 2,330 $ 60,697
Lukoil Holdings ............................. Energy Sources 18,700 238,986
Lukoil Holdings, ADR ........................ Energy Sources 64,410 3,188,295
Mosenergo, ADR .............................. Utilities Electrical & Gas 103,450 362,075
Mosenergo, GDR .............................. Utilities Electrical & Gas 23,100 88,349
Novorosissk Sea Shipping .................... Transportation 28,000 2,520
Novorosissk Sea Shipping, pfd. .............. Transportation 224,000 9,184
Rostelecom, ADR ............................. Telecommunications 172,930 2,356,171
Rostelecom, pfd. ............................ Telecommunications 257,300 184,227
(a) Unified Energy Systems ...................... Utilities Electrical & Gas 5,581,800 641,907
(a) Unified Energy Systems, pfd. ................ Utilities Electrical & Gas 18,000 819
-----------
7,133,230
-----------
SINGAPORE 5.4%
Cycle & Carriage Ltd. ....................... Automobiles 28,000 65,749
DBS Group Holdings Ltd. ..................... Banking 176,608 2,267,610
First Capital Corp. Ltd. .................... Real Estate 152,000 145,055
Fraser and Neave Ltd. ....................... Beverages & Tobacco 1,140,100 4,055,301
(a) Golden Agri-Resources Ltd. .................. Misc Materials & Commodities 1,780,000 355,176
Keppel Corp., Ltd. .......................... Transportation 2,380,600 5,149,476
MCL Land Ltd. ............................... Real Estate 29,000 22,308
Natsteel Ltd. ............................... Metals & Mining 1,876,000 2,582,348
Oversea Chinese Banking Corp. Ltd. .......... Banking 538,350 3,705,243
Overseas Union Enterprise Ltd. .............. Leisure & Tourism 261,300 634,737
Sembcorp Industries Ltd. .................... Multi-Industry 1,631,694 1,774,196
Sembcorp Marine Ltd. ........................ Machinery & Engineering 3,501,000 1,316,165
United Industrial Corporation Ltd. .......... Multi-Industry 1,654,000 779,647
United Overseas Bank Ltd. ................... Banking 297,000 1,941,064
-----------
24,794,075
-----------
SLOVAK REPUBLIC .1%
(a) Slovnaft AS ................................. Chemicals 39,010 465,011
(a) Vychodoslovenske Zeleziarne AS .............. Metals & Mining 31,257 78,034
-----------
543,045
-----------
SOUTH AFRICA 11.5%
(a) African Bank Investments Ltd. ............... Financial Services 1,084,000 1,416,555
Anglo American PLC .......................... Metals & Mining 135,267 6,428,175
Barlow Ltd. ................................. Multi-Industry 741,700 4,463,327
CG Smith Ltd. ............................... Multi-Industry 1,143,900 16,872
Comparex Holdings Ltd. ...................... Data Processing & Reproduction 130,000 229,130
De Beers Centenary AG ....................... Misc Materials & Commodities 75,190 1,829,845
(a) Dimension Data Holdings Ltd. ................ Multi-Industry 21,350 176,657
Fedsure Holdings Ltd. ....................... Insurance 360,299 1,753,668
Firstrand Ltd. .............................. Insurance 115,000 118,732
(a) Imperial Holdings Ltd. ...................... Multi-Industry 110,900 902,903
Iscor Ltd. .................................. Metals & Mining 922,984 1,572,340
Kersaf Investments Ltd. ..................... Leisure & Tourism 188,867 740,983
Liberty Group Ltd. .......................... Insurance 290,762 2,766,105
Nampak Ltd. ................................. Forest Products & Paper 544,894 1,177,388
Nedcor Ltd. ................................. Financial Services 15,400 323,445
Old Mutual PLC .............................. Financial Services 1,106,470 2,432,971
Palabora Mining Co. Ltd. .................... Metals & Mining 89,700 488,190
</TABLE>

TD-11
<PAGE>

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

TEMPLETON DEVELOPING MARKETS SECURITIES FUND

STATEMENT OF INVESTMENTS, JUNE 30, 2000 (UNAUDITED) (CONT.)

<TABLE>
<CAPTION>
SHARES/
INDUSTRY WARRANTS VALUE
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
LONG TERM SECURITIES (CONT.)
SOUTH AFRICA (CONT.)
Rembrandt Group Ltd. ................................ Multi-Industry 429,170 $ 4,139,781
Reunert Ltd. ........................................ Electrical & Electronics 78,000 115,044
Sanlam Ltd. ......................................... Financial Services 1,334,000 1,576,009
Sappi Ltd. .......................................... Forest Products & Paper 270,124 2,031,906
Sasol Ltd. .......................................... Energy Sources 986,200 6,618,304
South African Breweries PLC ......................... Beverages & Tobacco 855,924 6,387,869
Super Group Ltd. .................................... Transportation 197,000 233,320
Tiger Brands Ltd. ................................... Food & Household Products 468,638 4,202,536
Tongaat-Hulett Group Ltd. ........................... Multi-Industry 179,995 789,801
------------
52,931,856
------------
SOUTH KOREA 11.3%
Cheil Jedang Corp. .................................. Food & Household Products 27,450 1,257,994
Hana Bank ........................................... Banking 396,568 2,471,826
(a) Hyundai Electronics Industries Co. .................. Electrical & Electronics 150,760 2,974,570
(a) Hyundai Heavy Industries ............................ Energy Equipment & Services 38,440 723,966
Hyundai Motor Co. Ltd. .............................. Automobiles 131,090 1,681,206
(a) Korea Data Systems .................................. Data Processing & Reproduction 164,610 817,865
Korea Electric Power Corp. .......................... Utilities Electrical & Gas 350,170 10,866,018
Korea Telecom Corp., ADR ............................ Telecommunications 18,119 876,507
L.G. Chemical Ltd. .................................. Chemicals 57,510 1,150,174
LG Electronics Inc. ................................. Electrical & Electronics 163,040 4,562,093
Samsung Corp. ....................................... Multi-Industry 77,680 669,496
Samsung Electronics Co. Ltd. ........................ Electrical & Electronics 37,656 12,461,661
(a) Samsung Heavy Industries Co. Ltd. ................... Machinery & Engineering 855,507 3,997,391
Samsung SDI Co. Ltd. ................................ Electrical & Electronics 64,693 3,104,034
SK Corp. ............................................ Energy Sources 186,840 3,426,720
(a) SK Global ........................................... Wholesale & International Trade 47,810 572,421
------------
51,613,942
------------
TAIWAN .5%
(a) Accton Technology Corp. ............................. Data Processing & Reproduction 134,000 298,019
(a) Hon Hai Precision Industry Co. Ltd. ................. Electrical & Electronics 92,000 830,390
(a) UNI-President Enterprises Corp. ..................... Food & Household Products 528,000 401,143
(a) Via Technologies Inc. ............................... Electronic Components & Instruments 52,000 801,948
------------
2,331,500
------------
THAILAND 6.6%
(a) Advanced Info Service Public Co. Ltd., fgn. ......... Telecommunications 20,300 252,553
(a) American Standard Sanitaryware Public Co. Ltd. fgn. . Building Materials & Components 24,500 112,428
(a) Bangkok Bank Public Co. Ltd. ........................ Banking 28,287 21,995
(a) Bangkok Bank Public Co. Ltd., fgn. .................. Banking 1,589,700 1,945,331
BEC World Public Co Ltd., fgn. ...................... Telecommunications 121,890 714,715
Charoen Pokphand Foods Public Co. Ltd., fgn. ........ Food & Household Products 2,091,360 3,145,704
(a) Charoen Pokphand Foods Public Co. Ltd.,
fgn., wts., 4/29/02 ............................... Food & Household Products 1,079,130 3
Electricity Generating Public Co. Ltd. .............. Energy Sources 264,400 283,105
Hana Microelectronics Co. Ltd., fgn. ................ Electrical & Electronics 145,200 1,110,146
(a) Italian-Thai Development Public Co. Ltd., fgn. ...... Construction & Housing 50,300 24,044
(a) Jasmine International Public Co. Ltd., fgn. ......... Telecommunications 824,400 220,681
(a) Land and House Public Co. Ltd., fgn. ................ Real Estate 530,826 277,423
PTT Exploration & Production Public Co. Ltd., fgn. .. Energy Sources 330,400 1,600,408
</TABLE>

TD-12
<PAGE>

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

TEMPLETON DEVELOPING MARKETS SECURITIES FUND

STATEMENT OF INVESTMENTS, JUNE 30, 2000 (UNAUDITED) (CONT.)

<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
--------------
<S> <C> <C>
SHORT TERM INVESTMENTS (COST $35,461,207) 7.7%
U.S. Treasury Bills, 5.41% - 5.94%, with maturities to 9/07/00 .......... $35,734,000 35,484,458
------------
TOTAL INVESTMENTS (COST $459,139,220) 102.2%............................. 469,911,455
OTHER ASSETS, LESS LIABILITIES (2.2%) ................................... (10,376,016)
------------
TOTAL NET ASSETS 100.0% ................................................. $459,535,439
============
</TABLE>

(a)Non-income producing

See notes to financial statements.

TD-13
<PAGE>

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

TEMPLETON DEVELOPING MARKETS SECURITIES FUND

Financial Statements

STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2000 (UNAUDITED)

Assets:
Investments in securities:
Cost ................................................ $ 459,139,220
=============
Value ............................................... 469,911,455
Cash ................................................. 1,411,278
Receivables:
Capital shares sold ................................ 1,912,426
Dividends and interest ............................. 1,354,428
-------------
Total assets ...................................... 474,589,587
-------------
Liabilities:
Payables:
Investment securities purchased .................... 13,909,145
Capital shares redeemed ............................ 376,377
Affiliates ......................................... 537,159
Other liabilities .................................... 231,467
-------------
Total liabilities ................................. 15,054,148
-------------
Net assets, at value ............................. $ 459,535,439
=============
Net assets consist of:
Undistributed net investment income .................. $ 1,037,972
Net unrealized appreciation .......................... 10,772,235
Accumulated net realized loss ........................ (68,608,406)
Capital shares ....................................... 516,333,638
-------------
Net assets, at value ............................. $ 459,535,439
=============
CLASS 1:
Net assets, at value ................................. $ 396,372,661
=============
Shares outstanding ................................... 62,026,011
=============
Net asset value and offering price per share ......... $ 6.39
=============
CLASS 2:
Net assets, at value ................................. $ 63,162,778
=============
Shares outstanding ................................... 9,913,603
=============
Net asset value and offering price per share ......... $ 6.37
=============

See notes to financial statements. See notes to financial statements.

TD-14
<PAGE>

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

TEMPLETON DEVELOPING MARKETS SECURITIES FUND

Financial Statements (continued)

STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2000 (UNAUDITED)

<TABLE>
<S> <C>
Investment income:
(net of foreign taxes of $888,412)
Dividends ................................................................ $ 4,338,136
Interest ................................................................. 1,043,471
-------------
Total investment income ................................................ 5,381,607
-------------
Expenses:
Management fees (Note 3) ................................................. 2,333,184
Administrative fees (Note 3) ............................................. 211,459
Distribution fees - Class 2 (Note 3) ..................................... 70,090
Custodian fees ........................................................... 232,000
Reports to shareholders .................................................. 32,050
Professional fees (Note 3) ............................................... 20,800
Trustees' fees and expenses .............................................. 1,500
Other .................................................................... 15,849
-------------
Total expenses ......................................................... 2,916,932
-------------
Net investment income ................................................. 2,464,675
-------------
Realized and unrealized gains (losses):
Net realized gain (loss) from:
Investments ............................................................ 4,538,488
Foreign currency transactions .......................................... (1,024,771)
-------------
Net realized gain ..................................................... 3,513,717
Net unrealized depreciation on:
Investments ............................................................ (68,742,450)
Translation of assets and liabilities denominated in foreign currencies (235,725)
-------------
Net unrealized depreciation ........................................... (68,978,175)
-------------
Net realized and unrealized loss .......................................... (65,464,458)
-------------
Net decrease in net assets resulting from operations ...................... $ (62,999,783)
=============
</TABLE>

See notes to financial statements.

TD-15
<PAGE>

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

TEMPLETON DEVELOPING MARKETS SECURITIES 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, 1999
-------------------------------------
<S> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income ................................................................. $ 2,464,675 $ 2,058,823
Net realized gain (loss) from investments and foreign currency transactions ........... 3,513,717 (41,927,283)
Net unrealized appreciation (depreciation) on investments and translation of assets
and liabilites denominated in foreign currencies ..................................... (68,978,175) 153,871,630
--------------------------------
Net increase (decrease) in net assets resulting from operations ...................... (62,999,783) 114,003,170
Distributions to shareholders from:
Net investment income:
Class 1 .............................................................................. (2,663,594) (2,683,606)
Class 2 .............................................................................. (412,198) (248,619)
--------------------------------
Total distributions to shareholders ..................................................... (3,075,792) (2,932,225)
Capital share transactions: (Note 2)
Class 1 .............................................................................. 154,255,416 18,804,002
Class 2 .............................................................................. 24,096,992 19,412,917
--------------------------------
Total capital share transactions ........................................................ 178,352,408 38,216,919
Net increase in net assets ........................................................... 112,276,833 149,287,864
Net assets:
Beginning of period ..................................................................... 347,258,606 197,970,742
--------------------------------
End of period ........................................................................... $ 459,535,439 $ 347,258,606
================================
Undistributed net investment income included in net assets:
End of period ........................................................................... $ 1,037,972 $ 1,649,089
================================
</TABLE>

See notes to financial statements.

TD-16
<PAGE>

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

TEMPLETON DEVELOPING MARKETS SECURITIES FUND

Notes to Financial Statements (unaudited)

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

The Templeton Developing Markets Securities 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. Shares of the Fund are sold only to insurance company
separate accounts to fund the benefits of variable life insurance policies or
variable annuity contracts. The Fund seeks long-term capital appreciation. The
portfolio invests primarily in developing markets equity securities.

Effective May 1, 2000, the name of the Templeton Developing Markets Equity Fund
changed to Templeton Developing Markets Securities Fund, as a result of fund
mergers, as discussed in Note 6. 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. FOREIGN CURRENCY TRANSLATION

Portfolio securities and other assets and liabilities denominated in foreign
currencies are translated into U.S. dollars based on the exchange rate of such
currencies against U.S. dollars on the date of valuation. Purchases and sales
of securities and income items denominated in foreign currencies are translated
into U.S. dollars at the exchange rate in effect on the transaction date. When
the Fund purchases or sells foreign securities, the Fund will customarily enter
into a foreign exchange contract to minimize foreign exchange risk from the
trade date to the settlement date of such transactions.

The Fund does not separately report the effect of changes in foreign exchange
rates from changes in market prices on securities held. Such changes are
included in net realized and unrealized gain or loss from investments.

Realized foreign exchange gains or losses arise from sales of foreign
currencies, currency gains or losses realized between the trade and settlement
dates on securities transactions, and the difference between the recorded
amounts of dividends, interest, and foreign withholding taxes and the U.S.
dollar equivalent of the amounts actually received or paid. Net unrealized
foreign exchange gains and losses arise from changes in foreign exchange rates
on foreign currency denominated assets and liabilities other than investments
in securities held at the end of the reporting period.

Certain countries in which the Fund invests have imposed restrictions on the
repatriation of their currencies. Other countries have previously instituted
currency exchange controls in the past during periods of serious imbalance in
their balance of payments or upon the occurrence of other destabilizing events.
Exchange control regulations may restrict the Fund's ability to convert
investment income, capital, or the proceeds of securities into U.S. dollars. As
of June 30, 2000 the Fund has investments with a value of approximately $8.6
million in countries with restrictions on the repatriation of their currencies
or formal exchange controls currently in place.

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.

TD-17
<PAGE>

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

TEMPLETON DEVELOPING MARKETS SECURITIES FUND

Notes to Financial Statements (unaudited) (continued)

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (cont.)

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. Interest income and 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. 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 two classes of shares: Class 1 and Class 2 shares. Each class
of shares differs by its distribution fees, 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
-----------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
CLASS 1 SHARES: -----------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold ....................................... 4,246,841 $ 28,300,214 5,134,763 $ 32,419,782
Shares issued on merger (Note 6) .................. 23,685,284 153,007,317 -- --
Shares issued on reinvestment of distributions .... 385,260 2,663,594 562,601 2,683,606
Shares redeemed ................................... (4,590,335) (29,715,709) (2,600,039) (16,299,386)
------------------------------------------------------------
Net increase ...................................... 23,727,050 $ 154,255,416 3,097,325 $ 18,804,002
============================================================
CLASS 2 SHARES:
Shares sold ....................................... 13,665,026 $ 91,709,861 9,564,512 $ 65,272,741
Shares issued on merger (Note 6) .................. 66,980 431,354 -- --
Shares issued on reinvestment of distributions .... 59,774 412,198 52,231 248,619
Shares redeemed ................................... (10,294,252) (68,456,421) (6,579,693) (46,108,443)
-------------------------------------------------------------
Net increase ...................................... 3,497,528 $ 24,096,992 3,037,050 $ 19,412,917
=============================================================
</TABLE>

TD-18
<PAGE>

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

TEMPLETON DEVELOPING MARKETS SECURITIES FUND

Notes to Financial Statements (unaudited) (continued)

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
Templeton Asset Management Ltd. (TAML) 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 TAML of 1.25% per year of the
average daily net assets of the Fund.

The Fund pays administrative fees to FT Services based on the average net
assets of the Fund as follows:

ANNUALIZED FEE RATE DAILY NET ASSETS
-------------------------------------------------------------------------
.15% First $200 million
.135% Over $200 million, up to and including $700 million
.10% Over $700 million, up to and including $1.2 billion

Fees are further reduced on net assets over $1.2 billion.

The Fund reimburses Distributors up to .25% per year of its average daily net
assets of Class 2, for costs incurred in marketing the Fund's shares.

Investor Services, under terms of an agreement, performs shareholder servicing
for the Fund and is not paid by the Fund for the services.

Included in professional fees are legal fees of $5,749 that were paid to a law
firm in which a partner of that firm was an officer of the Fund.

4. INCOME TAXES

As of December 31, 1999, Franklin Templeton Variable Insuance Products Trust
(FTVIPT)-Templeton Developing Markets Securities Fund had tax basis capital
losses. The capital loss carryovers of the FTVIPT-Templeton Developing Markets
Securities Fund include December 31, 1999 capital loss carryovers of
$64,368,808 acquired as a result of the reorganization with the Templeton
Variable Products Series Fund (TVP), Templeton Developing Markets Fund (See
Note 6). The capital loss carryovers are available to offset future realized
capital gains to the extent provided in the Internal Revenue Code and
regulations thereunder.

Capital loss carryover expiring in:
2006 .............................. $ 43,807,774
2007 .............................. 88,451,296
------------
$132,259,070
============

At December 31, 1999, the Fund had $1,522,503 deferred capital losses and
currency losses occurring subsequent to October 31, 1999. For tax purposes,
such losses will be reflected in the year ending December 31, 2000.

Net investment income and net realized capital gains differ for financial
statement and tax purposes primarily due to differing tax treatments of wash
sales, foreign currency transactions, passive foreign investment company
shares, and merger related expenses.

TD-19
<PAGE>

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

TEMPLETON DEVELOPING MARKETS SECURITIES FUND

Notes to Financial Statements (unaudited) (continued)

4. INCOME TAXES (cont.)

At June 30, 2000, the net unrealized appreciation based on the cost of
investments for income tax purposes of $465,549,221 was as follows:

Unrealized appreciation ............. $ 54,726,429
Unrealized depreciation ............. (50,364,195)
-------------
Net unrealized appreciation ......... $ 4,362,234
=============

5. INVESTMENT TRANSACTIONS

Purchases and sales of securities (excluding short-term securities) for the
period ended June 30, 2000 aggregated $228,427,678 and $267,654,610,
respectively.

6. MERGERS

On May 1, 2000, the Franklin Templeton Variable Insurance Products Trust
(FTVIPT) - Templeton Developing Markets Securities Fund acquired the net assets
of Templeton Variable Products Series Fund (TVP) - Templeton Developing Markets
Fund pursuant to a plan of reorganization approved by the TVP - Templeton
Developing Markets Fund's shareholders. The merger was accounted for by the
method of accounting for tax-free business combinations of investment
companies. The financial statements of TVP - Templeton Developing Markets Fund
survived the reorganization, therefore, the financial statements of FTVIPT -
Templeton Developing Markets Securities Fund reflect the financial statements
of TVP - Templeton Developing Markets Fund. Immediately preceding the merger,
FTVIPT - Templeton Developing Markets Securities Fund completed a split of its
shares in the ratio of one new Class 1 share for each 1.3959 existing Class 1
share and one new Class 2 share for each 1.3996 existing Class 2 share. As a
result, the FTVIPT - Templeton Developing Markets Securities Fund net asset
value per share was $6.46 for Class 1 and $6.44 for Class 2 on May 1, 2000. TVP
- Templeton Developing Markets Fund's shareholders contributed net assets
having an aggregate value of $308,060,631 (including $7,715,560 of unrealized
appreciation) in exchange for 23,685,284 Class 1 shares and 66,980 Class 2
shares (post-split) of the FTVIPT - Templeton Developing Markets Securities
Fund. Immediately prior to the merger, FTVIPT - Templeton Developing Markets
Securities Fund had net assets of $153,438,671 (including unrealized
appreciation of $14,920,668). Upon completion of the merger, the combined net
assets of the FTVIPT - Templeton Developing Markets Securities Fund were
$461,499,302.

TD-20
<PAGE>

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

TEMPLETON DEVELOPING MARKETS SECURITIES FUND

Tax Designation

At December 31, 1999, more than 50% of the Fund's total assets were invested in
securities of foreign issuers. In most instances, foreign taxes were withheld
from dividends paid to the Fund on these investments. The Fund intends to make
an election under Section 853 of the Internal Revenue Code. This election will
allow shareholders to treat their proportionate share of foreign taxes paid by
the Fund as having been paid directly by them.

The following table provides a breakdown by country of foreign source income
and foreign taxes paid, as designated by the Fund, to Class 1 and Class 2
shareholders of record on April 26, 2000.

CLASS 1 CLASS 2
----------------------------------------------------------
FOREIGN TAX FOREIGN FOREIGN TAX FOREIGN
PAID SOURCE INCOME PAID SOURCE INCOME
COUNTRY PER SHARE PER SHARE PER SHARE PER SHARE
--------------------------------------------------------------------------------
Argentina ........... 0.0000 0.0067 0.0000 0.0056
Austria ............. 0.0002 0.0005 0.0002 0.0005
Brazil .............. 0.0065 0.0188 0.0065 0.0155
Chile ............... 0.0009 0.0015 0.0009 0.0013
China ............... 0.0000 0.0022 0.0000 0.0018
Colombia ............ 0.0000 0.0020 0.0000 0.0017
Ghana ............... 0.0001 0.0003 0.0001 0.0003
Hong Kong ........... 0.0000 0.0100 0.0000 0.0084
Hungary ............. 0.0007 0.0020 0.0007 0.0017
India ............... 0.0002 0.0019 0.0002 0.0016
Indonesia ........... 0.0007 0.0021 0.0007 0.0018
Israel .............. 0.0012 0.0020 0.0012 0.0017
Malaysia ............ 0.0015 0.0024 0.0015 0.0020
Mexico .............. 0.0013 0.0130 0.0013 0.0109
Panama .............. 0.0004 0.0011 0.0004 0.0009
Peru ................ 0.0000 0.0010 0.0000 0.0009
Philippines ......... 0.0005 0.0010 0.0005 0.0008
Poland .............. 0.0003 0.0010 0.0003 0.0008
Singapore ........... 0.0056 0.0108 0.0056 0.0091
South Africa ........ 0.0000 0.0145 0.0000 0.0122
South Korea ......... 0.0010 0.0025 0.0010 0.0021
Sri Lanka ........... 0.0001 0.0003 0.0001 0.0003
Thailand ............ 0.0002 0.0007 0.0002 0.0006
Turkey .............. 0.0000 0.0097 0.0000 0.0081
Venezuela ........... 0.0000 0.0050 0.0000 0.0042
----------------------------------------------------
TOTAL ............... $0.0214 $0.1130 $0.0214 $0.0948
====================================================

Shareholders are advised to check with their tax advisors for information on
the treatment of these amounts on their individual income tax returns.

TD-21
<PAGE>

TEMPLETON GROWTH SECURITIES FUND

--------------------------------------------------------------------------------
FUND GOAL AND PRIMARY INVESTMENTS: TEMPLETON GROWTH SECURITIES FUND (FORMERLY
TEMPLETON GLOBAL GROWTH FUND) SEEKS LONG-TERM CAPITAL GROWTH. THE FUND INVESTS
PRIMARILY IN EQUITY SECURITIES OF COMPANIES OF ANY NATION, INCLUDING THOSE IN
THE U.S. AND EMERGING MARKETS.
--------------------------------------------------------------------------------
During the six months under review, global economies appeared to be improving,
although most trailed the U.S. economy's growth rate. Europe displayed slow but
steady improvement in manufacturing output, unemployment rates slightly
declined and consumer confidence increased. The euro has fallen significantly
since its introduction, but a more positive economic outlook for Europe should
help benefit the currency.

In the U.S., the economy continued to post solid gross domestic product (GDP)
gains during the six months under review, but began to show signs of modest
deceleration. During this period, the Federal Reserve Board raised the federal
funds target rate three separate times to 6.5%, up from 5.5%. While by no means
necessarily signaling a major slowdown, some core economic indicators, such as
housing starts and unemployment claims, finally registered signs of slowing.

As the U.S. stock market advanced during the past decade, domestic household
net worth increased, consumer consumption rose, annual savings rates dropped
and many investors borrowed money to purchase stocks (margin debt). During the
reporting period, margin debt reached its highest point ever as a percentage of
total stock market capitalization. As a percentage of GDP, margin debt exceeded
2.4% at the end of the period after hovering at less than 1% for several
decades.

As margin debt has grown, so has the Nasdaq Composite Index. More than half of
the index's stocks are in the telecommunications and technology sectors that
have attracted margin buying. This focus on technology and telecom stocks
during the past several years is due partly to these sectors' earnings growth,
which has far exceeded non-technology companies' earnings growth. Despite the
difference in earnings growth, global technology and telecom companies' share
of world net income was not substantially different from the early 1980s.
However, these stocks comprise over a third of world stock market
capitalization, up from about 15% in the early 1980s, indicating that

GEOGRAPHIC DISTRIBUTION
Templeton Growth Securities Fund
Based on Total Net Assets
6/30/00

[This chart in pie format shows the geographic distribution of Templeton Growth
Securities Fund, as a percentage of total net assets as of 6/30/00.]

North America 34.5%
Europe 32.8%
Asia 14.6%
Latin America 4.5%
Australia/New Zealand 4.0%
Short-Term Investments & Other Net Assets 9.6%

TG-1
<PAGE>

TOP 10 HOLDINGS
Templeton Growth Securities Fund
6/30/00

Company % of Total
Sector, Country Net Assets
---------------------------------------
H.J. Heinz Co. 2.1%
Food & Household
Products, U.S.

Cheung Kong
Holdings Ltd. 1.8%
Multi-Industry,
Hong Kong

Australia & New Zealand
Banking Group Ltd. 1.7%
Banking, Australia

HSBC Holdings PLC 1.6%
Banking, Hong Kong

Kroger Co. 1.5%
Merchandising, U.S.

Abbott Laboratories 1.5%
Health & Personal Care,
U.S.

Aventis SA 1.5%
Health & Personal Care,
France

Fuji Photo Film Co. Ltd. 1.4%
Electrical & Electronics,
Japan

Ford Motor Co. 1.3%
Automobiles, U.S.

Albertson's Inc. 1.3%
Merchandising, U.S.

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.

while such companies' stock prices have soared, their share of world net income
has not experienced the same climb. At Templeton, we have a history of avoiding
what we believe are the most speculative parts of the markets. During the
reporting period, we continued to consider telecommunications and technology
speculative. While we sold most of the Fund's holdings in these sectors too
early, we did so in an attempt to avoid the downside risks.

During the reporting period, the most substantial change to the Fund was an
increase in U.S. exposure. Although this move may appear unusual given
historically high domestic stock market valuations, we believe most risks in
the U.S. are narrowly focused and that those indexes that appear highly priced
actually mask many undervalued securities. Many investors and financial leaders
were concerned about the state of U.S. financial markets partly due to the
combination of many stocks' historically high valuations, the market's size
relative to the overall economy, relatively large margin debt and the rapid
turnover of investments. However, despite these risks, we are comfortable with
the Fund's holdings and with increasing its U.S. exposure.

At the period's end, we believe Templeton Growth Securities Fund's holdings are
substantially less expensive than overall market averages. Generally speaking,
we feel that indexes were expensive because parts of the market were priced
excessively. However, behind the overall market advances, most stocks have been
declining in value. For example, since 1998 more stocks on the New York Stock
Exchange have actually been falling in value rather than increasing, even while
indexes have hit all-time highs. Because of the two-tier nature of valuations,
we were able to identify several securities that had what we believed were low
prices.

Despite a price-to-earnings ratio for the Standard & Poor's 500(R) Composite
Index of 29 times at period-end, the average stock's decline has left the
median price-to-earnings ratio for U.S. stocks at about 13 times. We increased
our U.S. holdings in an attempt to take advantage of such investment
opportunities. Additions to the Fund's portfolio include H.J. Heinz,
BankAmerica, Albertson's and K-Mart. We added each of these stocks after they
suffered substantial price declines and traded at what we believed were
exceptional valuations.

TG-2
<PAGE>

Overseas, we perceived a similar divergence in values. The Hong Kong Stock
Market, for example, had a price-to-earnings ratio in the high 20s early in the
period, but when technology and new economy stocks are removed from the index,
the ratio falls to about 13 -- in our opinion, a reasonable number, and one not
much higher than where the market was during 1998's Asian financial crisis. The
same holds true for South Korea, with the index there, minus technology and
telecommunications stocks, falling below 10 times earnings, also to a level
similar to that during the Asian financial crisis. The Fund's Asian exposure
declined from 20% of total net assets at the beginning of the period to less
than 15% by the end. Many of our Asian positions performed well and we
attempted to take advantage of dramatic price increases by reducing our
holdings.

In Latin America, the Fund's holdings fell from 7.9% of total net assets at the
beginning of the period to 4.5%. Latin American markets were hard hit during
the period, due in large part to rising U.S. interest rates and local election
concerns.

The Fund's exposure to Europe decreased during the six months under review, as
we sold several positions. Our total holdings in Europe declined from 37.6% at
the beginning of the period to 32.8% by the end. However, we found a large
number of companies we believe are inexpensive based on cash flow. During the
latest economic cycle, free cash flow as a percentage of sales in Europe was
twice as high as during the previous cycle. This contributed to a substantial
increase in mergers and acquisitions. In fact, most of the recent global merger
activity involved European companies purchasing American assets. Looking
forward, we believe this trend will continue, and that it should benefit many
of the Fund's holdings.

TG-3
<PAGE>

TEMPLETON GROWTH SECURITIES FUND - CLASS 1

PERFORMANCE SUMMARY AS OF 6/30/00

TEMPLETON GROWTH SECURITIES FUND - CLASS 1 DELIVERED A -1.96% CUMULATIVE TOTAL
RETURN FOR THE SIX-MONTH PERIOD ENDED 6/30/00. Total return of Class 1 shares
represents the cumulative or average annual change in value, assuming
reinvestment of dividends and capital gains. Average returns smooth out
variations in returns, which can be significant; they are not the same as
year-by-year results.

TEMPLETON GROWTH SECURITIES FUND - CLASS 1
PERIODS ENDED 6/30/00
SINCE
INCEPTION
1-YEAR 5-YEAR (3/15/94)
--------------------------------------------------------------------
Average Annual Total Return +5.97% +13.37% +12.25%
Cumulative Total Return +5.97% +87.26% +106.98%
Value of $10,000 Investment $10,597 $18,726 $20,698

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.

TG-4
<PAGE>

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

TEMPLETON GROWTH SECURITIES FUND

Financial Highlights (continued)

<TABLE>
<CAPTION>
CLASS 1
------------------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED DECEMBER 31,
JUNE 30, 2000 -----------------------------------------------------------------
(UNAUDITED) 1999 1998 1997 1996 1995
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the period)
Net asset value, beginning of period .......... $15.63 $14.77 $15.34 $13.80 $11.75 $10.48
------------------------------------------------------------------------------------
Income from investment operations:
Net investment income(c) ..................... .20 .28 .35 .33 .25 .16
Net realized and unrealized gains (losses) ... (.55) 2.66 .98 1.53 2.22 1.17
------------------------------------------------------------------------------------
Total from investment operations .............. (.35) 2.94 1.33 1.86 2.47 1.33
------------------------------------------------------------------------------------
Less distributions from:
Net investment income ........................ (.27) (.36) (.41) (.24) (.21) (.06)
Net realized gains ........................... (1.75) (1.72) (1.49) (.08) (.21) --
------------------------------------------------------------------------------------
Total distributions ........................... (2.02) (2.08) (1.90) (.32) (.42) (.06)
------------------------------------------------------------------------------------
Net asset value, end of period ................ $13.26 $15.63 $14.77 $15.34 $13.80 $11.75
====================================================================================
Total return(b) ............................... (1.96%) 21.04% 8.98% 13.50% 21.28% 12.72%

RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's) ............. $1,243,828 $708,310 $747,080 $758,445 $579,877 $338,755
Ratios to average net assets:
Expenses ..................................... .88%(a) .88% .88% .88% .93% .97%
Net investment income ........................ 2.87%(a) 1.87% 2.27% 2.49% 2.20% 2.46%
Portfolio turnover rate ....................... 64.71% 46.54% 32.30% 24.81% 12.32% 30.92%
</TABLE>

(a)Annualized
(b)Total 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 period less than one
year.
(c)Based on average shares outstanding effective year ended December 31, 1999.

TG-5
<PAGE>

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

TEMPLETON GROWTH SECURITIES FUND

Financial Highlights (continued)

<TABLE>
<CAPTION>
CLASS 2
---------------------------------------
SIX MONTHS ENDED
JUNE 30, 2000 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1999(C)
---------------------------------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the period)
Net asset value, beginning of period ................ $15.60 $15.34
---------------------------------------
Income from investment operations:
Net investment income(d) ........................... .20 .17
Net realized and unrealized gains (losses) ......... (.58) 2.17
---------------------------------------
Total from investment operations .................... (.38) 2.34
---------------------------------------
Less distributions from:
Net investment income .............................. (.25) (.36)
Net realized gains ................................. (1.75) (1.72)
---------------------------------------
Total distributions ................................. (2.00) (2.08)
---------------------------------------
Net asset value, end of period ...................... $13.22 $15.60
=======================================
Total return(b) ..................................... (2.08%) 16.35%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's) ................... $72,156 $4,483
Ratios to average net assets:
Expenses ........................................... 1.13%(a) 1.14%(a)
Net investment income .............................. 3.08%(a) 1.17%(a)
Portfolio turnover rate ............................. 64.71% 46.54%
</TABLE>

(a)Annualized
(b)Total 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.
(c)For the period January 6, 1999 (effective date) to December 31, 1999.
(d)Based on average shares outstanding.

See notes to financial statements.

TG-6
<PAGE>

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

TEMPLETON GROWTH SECURITIES FUND

Statement of Investments, June 30, 2000 (unaudited)

<TABLE>
<CAPTION>
COUNTRY SHARES VALUE
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
COMMON STOCKS 89.1%
AEROSPACE & MILITARY TECHNOLOGY 4.5%
BAE Systems PLC ...................................... United Kingdom 2,090,590 $ 12,944,144
Boeing Co. ........................................... United States 182,500 7,630,781
Lockheed Martin Corp. ................................ United States 612,500 15,197,656
Raytheon Co., A ...................................... United States 483,374 9,395,582
Rolls-Royce PLC ...................................... United Kingdom 3,988,521 14,174,203
-------------
59,342,366
-------------
APPLIANCES & HOUSEHOLD DURABLES
Guangdong Kelon Electrical Holdings Ltd., H .......... China 1,123,000 608,658
-------------
AUTOMOBILES 4.5%
Bayerische Motorenwerke AG ........................... Germany 203,600 6,225,643
Ford Motor Co. ....................................... United States 407,000 17,501,000
General Motors Corp. ................................. United States 140,000 8,128,750
Regie Nationale des Usines Renault SA ................ France 165,000 7,528,469
(a) Visteon Corp. ........................................ United States 53,290 646,138
Volkswagen AG ........................................ Germany 165,400 6,389,345
Volvo AB, B .......................................... Sweden 571,100 12,469,006
-------------
58,888,351
-------------
BANKING 8.1%
Australia & New Zealand Banking Group Ltd. ........... Australia 2,844,184 21,874,923
Banca Nazionale del Lavoro SpA ....................... Italy 1,781,960 6,268,733
Banco Popular Espanol SA ............................. Spain 140,000 4,347,993
Bank Austria AG ...................................... Austria 109,065 5,333,860
Bank of America Corp. ................................ United States 395,000 16,985,000
Deutsche Bank AG ..................................... Germany 150,700 12,646,932
Foreningssparbanken AB, A ............................ Sweden 200,000 2,941,512
HSBC Holdings PLC .................................... Hong Kong 1,800,801 20,559,990
National Australia Bank Ltd. ......................... Australia 465,000 7,788,714
U.S. Bancorp. ........................................ United States 425,000 8,181,250
-------------
106,928,907
-------------
BROADCASTING & PUBLISHING .4%
Wolters Kluwer NV .................................... Netherlands 215,100 5,752,550
-------------
BUILDING MATERIALS & COMPONENTS .6%
Caradon PLC .......................................... United Kingdom 2,805,290 6,412,625
Owens Corning ........................................ United States 200,000 1,850,000
-------------
8,262,625
-------------
BUSINESS & PUBLIC SERVICES .6%
(a) Gartner Group Inc., B ................................ United States 224,400 2,215,950
(a) Humana Inc. .......................................... United States 250,000 1,218,750
Waste Management Inc. ................................ United States 250,000 4,750,000
-------------
8,184,700
-------------
CHEMICALS 4.3%
Akzo Nobel NV ........................................ Netherlands 355,200 15,151,260
BASF AG .............................................. Germany 253,200 10,314,980
DSM NV, Br. .......................................... Netherlands 300,000 9,662,206
Eastman Chemical Co. ................................. United States 125,000 5,968,750
Kemira OY ............................................ Finland 447,900 2,189,611
Lyondell Chemical Co. ................................ United States 770,500 12,905,875
-------------
56,192,682
-------------
</TABLE>

TG-7
<PAGE>

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

TEMPLETON GROWTH SECURITIES FUND

Statement of Investments, June 30, 2000 (unaudited) (cont.)

<TABLE>
<CAPTION>
COUNTRY SHARES VALUE
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
COMMON STOCKS (CONT.)
DATA PROCESSING & REPRODUCTION .9%
Compaq Computer Corp. ....................... United States 400,000 $ 10,225,000
Fujitsu Ltd. ................................ Japan 30,000 1,040,594
-------------
11,265,594
-------------
ELECTRICAL & ELECTRONICS 5.0%
ABB Ltd. .................................... Switzerland 25,975 3,026,616
Alcatel SA .................................. France 187,175 12,325,948
Fuji Photo Film Co. Ltd. .................... Japan 450,000 18,458,485
Hitachi Ltd. ................................ Japan 1,003,500 14,511,176
(a) Hyundai Electronics Industries Co. .......... South Korea 100,000 1,973,050
Koninklijke Philips Electronics NV .......... Netherlands 124,928 5,915,650
Marconi PLC ................................. United Kingdom 237,900 3,091,832
Motorola Inc. ............................... United States 30,300 880,594
Sony Corp. .................................. Japan 57,900 5,417,608
-------------
65,600,959
-------------
ELECTRONIC COMPONENTS & INSTRUMENTS .1%
(a) Agilent Technologies Inc. ................... United States 3,814 281,283
Hewlett-Packard Co. ......................... United States 10,000 1,248,750
-------------
1,530,033
-------------
ENERGY EQUIPMENT & SERVICES .4%
TransCanada PipeLines Ltd. .................. Canada 623,900 4,758,095
-------------
ENERGY SOURCES 6.6%
Amerada Hess Corp. .......................... United States 87,928 5,429,554
Burlington Resources Inc. ................... United States 193,400 7,397,550
Eni SpA ..................................... Italy 2,469,050 14,294,948
Norsk Hydro ASA ............................. Norway 47,000 1,979,480
Occidental Petroleum Corp. .................. United States 623,100 13,124,044
Petroleo Brasileiro SA, ADR ................. Brazil 170,000 5,059,200
(a) Ranger Oil Ltd. ............................. Canada 273,050 1,455,824
(a) Renaissance Energy Ltd. ..................... Canada 254,800 2,467,693
Repsol SA ................................... Spain 200,000 3,997,163
Shell Transport & Trading Co. PLC ........... United Kingdom 1,632,853 13,830,196
Societe Elf Aquitaine SA, Br. ............... France 37,072 7,622,353
Texaco Inc. ................................. United States 180,000 9,585,000
Valero Energy Corp. ......................... United States 28,500 904,875
-------------
87,147,880
-------------
FINANCIAL SERVICES 3.3%
AXA SA ...................................... France 20,880 3,302,404
ING Groep NV ................................ Netherlands 164,034 11,132,249
Lend Lease Corp. Ltd. ....................... Australia 485,500 6,211,145
Merrill Lynch & Co. Inc. .................... United States 125,000 14,375,000
Nomura Securities Co. Ltd. .................. Japan 340,000 8,338,925
-------------
43,359,723
-------------
FOOD & HOUSEHOLD PRODUCTS 5.3%
Archer-Daniels-Midland Co. .................. United States 912,196 8,950,923
H.J. Heinz Co. .............................. United States 630,000 27,562,500
Nabisco Group Holdings Corp. ................ United States 443,900 11,513,656
Newell Rubbermaid Inc. ...................... United States 75,000 1,931,250
Northern Foods PLC .......................... United Kingdom 2,208,797 4,004,170
PanAmerican Beverages Inc., A ............... Mexico 150,000 2,240,625
Sara Lee Corp. .............................. United States 400,000 7,725,000
Tate & Lyle PLC ............................. United Kingdom 450,000 2,285,526
Unilever NV ................................. Netherlands 545,900 3,307,696
-------------
69,521,346
-------------
</TABLE>

TG-8
<PAGE>

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

TEMPLETON GROWTH SECURITIES FUND

Statement of Investments, June 30, 2000 (unaudited) (cont.)
<TABLE>
<CAPTION>
COUNTRY SHARES VALUE
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
COMMON STOCKS (CONT.)
FOREST PRODUCTS & PAPER 2.9%
Assidoman AB ........................ Sweden 192,100 $ 2,748,666
Assidoman AB, 144A .................. Sweden 57,630 824,600
Bowater Inc. ........................ United States 225,000 9,928,125
Carter Holt Harvey Ltd. ............. New Zealand 1,155,252 1,006,094
Georgia-Pacific Timber Co. .......... United States 222,200 4,805,075
International Paper Co. ............. United States 200,000 5,962,500
Metsa Serla OY, B ................... Finland 270,000 2,005,770
Stora Enso OYJ, R ................... Finland 132,700 1,214,759
UPM-Kymmene Corp. ................... Finland 400,000 9,968,943
------------
38,464,532
------------
HEALTH & PERSONAL CARE 4.4%
Abbott Laboratories ................. United States 445,370 19,846,801
Aventis SA .......................... France 260,002 19,053,289
(a) CellTech Group PLC .................. United Kingdom 796,142 15,330,588
Pharmacia Corp. ..................... United States 69,000 3,566,438
------------
57,797,116
------------
INDUSTRIAL COMPONENTS 1.2%
Goodyear Tire & Rubber Co. .......... United States 269,000 5,380,000
Michelin SA, B ...................... France 120,000 3,866,033
Sandvik AB .......................... Sweden 200,000 4,218,447
Yamato Kogyo Co. Ltd. ............... Japan 539,000 2,496,196
------------
15,960,676
------------
INSURANCE 5.4%
Ace Ltd. ............................ Bermuda 302,000 8,456,000
Aetna Inc. .......................... United States 110,000 7,060,625
Allstate Corp. ...................... United States 457,700 10,183,825
Partnerre Ltd. ...................... Bermuda 214,500 7,601,344
Scor ................................ France 8,542 373,453
Torchmark Corp. ..................... United States 273,400 6,749,563
Unumprovident Corp. ................. United States 81,100 1,627,069
XL Capital Ltd., A .................. Bermuda 127,100 6,879,288
Zurich Allied AG .................... Switzerland 11,500 5,700,141
Zurich Allied PLC ................... United Kingdom 1,386,000 16,302,920
------------
70,934,228
------------
LEISURE & TOURISM .3%
Galileo International Inc. .......... United States 160,000 3,340,000
------------
Machinery & Engineering .9%
CNH Global NV ....................... Netherlands 106,800 987,900
Invensys PLC ........................ United Kingdom 1,769,383 6,629,461
METSO OYJ ........................... Finland 392,800 4,744,143
------------
12,361,504
------------
MERCHANDISING 6.4%
Albertson's Inc. .................... United States 512,800 17,050,600
J.C. Penney Co. Inc. ................ United States 180,000 3,318,750
(a) Kmart Corp. ......................... United States 1,100,000 7,493,750
(a) Kroger Co. .......................... United States 910,000 20,076,875
Marks & Spencer PLC ................. United Kingdom 3,261,000 11,428,335
Safeway PLC ......................... United Kingdom 3,223,718 12,542,131
Sears, Roebuck & Co. ................ United States 255,900 8,348,738
W.H. Smith PLC ...................... United Kingdom 673,850 4,014,109
------------
84,273,288
------------
</TABLE>

TG-9
<PAGE>

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

TEMPLETON GROWTH SECURITIES FUND

Statement of Investments, June 30, 2000 (unaudited) (cont.)

<TABLE>
<CAPTION>
COUNTRY SHARES VALUE
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
COMMON STOCKS (CONT.)
METALS & MINING 3.3%
AK Steel Holding Corp. ................................... United States 695,400 $ 5,563,200
Barrick Gold Corp. ....................................... Canada 668,800 12,120,948
Companhia Siderurgica Nacional Sid Nacional CSN .......... Brazil 129,100,000 4,049,045
Corus Group PLC .......................................... United Kingdom 2,000,000 2,914,150
Industrias Penoles SA .................................... Mexico 1,875,300 3,029,133
Pohang Iron & Steel Co. Ltd. ............................. South Korea 127,102 11,053,066
USX-U. S. Steel Group .................................... United States 250,000 4,640,625
------------
43,370,167
------------
MULTI-INDUSTRY 4.4%
Amoy Properties Ltd. ..................................... Hong Kong 2,935,500 1,977,009
Beijing Datang Power Generation Co. Ltd., H .............. China 6,860,000 1,540,031
Broken Hill Proprietary Co. Ltd. ......................... Australia 231,654 2,746,924
Cheung Kong Holdings Ltd. ................................ Hong Kong 2,114,500 23,395,585
Cheung Kong Infrastructure Holdings Ltd. ................. Hong Kong 1,768,000 2,903,083
DESC SA de CV DESC, B .................................... Mexico 5,237,300 3,351,957
DESC SA de CV DESC, C .................................... Mexico 2,671,800 1,682,853
Hutchison Whampoa Ltd. ................................... Hong Kong 207,570 2,609,503
Pacific Dunlop Ltd. ...................................... Australia 1,979,000 1,770,402
Swire Pacific Ltd., A .................................... Hong Kong 2,463,800 14,412,438
Swire Pacific Ltd., B .................................... Hong Kong 1,304,000 1,062,230
------------
57,452,015
------------
REAL ESTATE 1.4%
China Resources Beijing Land Ltd. ........................ China 4,652,000 620,641
General Growth Properties Inc. ........................... United States 164,500 5,222,875
Hang Lung Development Co. Ltd. ........................... Hong Kong 3,624,000 2,812,618
Highwoods Properties Inc. ................................ United States 107,900 2,589,600
National Health Investors Inc. ........................... United States 311,100 3,422,100
New World Development Co. Ltd. ........................... Hong Kong 13,457 15,019
Rouse Co. ................................................ United States 180,000 4,455,000
------------
19,137,853
------------
RECREATION & OTHER CONSUMER GOODS .4%
Eastman Kodak Co. ........................................ United States 89,600 5,331,200
------------
TELECOMMUNICATIONS 3.3%
Cable & Wireless HKT Ltd. ................................ Hong Kong 209,746 461,450
(a) General Motors Corp., H .................................. United States 18,000 526,500
Nippon Telegraph & Telephone Corp. ....................... Japan 848 11,300,789
SK Telecom Co. Ltd., ADR ................................. South Korea 100,000 3,631,250
Smartone Telecommunications Holdings Ltd. ................ Hong Kong 310,000 685,990
Telecom Corp. of New Zealand Ltd. ........................ New Zealand 2,362,716 8,286,251
Telecomunicacoes de Sao Paulo SA ......................... Brazil 276,690,000 3,021,504
Telefonica de Argentina SA, ADR .......................... Argentina 67,000 2,127,250
Telefonos de Mexico SA (Telmex), ADR ..................... Mexico 229,855 13,130,467
------------
43,171,451
------------
TEXTILES & APPAREL .3%
Adidas-Salomon AG ........................................ Germany 80,000 4,417,009
------------
TRANSPORTATION 1.9%
Airborne Freight Corp. ................................... United States 272,000 5,151,000
British Airways PLC ...................................... United Kingdom 1,745,832 10,036,479
Peninsular & Oriental Steam Navigation Co. ............... United Kingdom 294,200 2,507,450
Singapore Airlines Ltd. .................................. Singapore 703,100 6,953,736
------------
24,648,665
------------
</TABLE>

TG-10
<PAGE>

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

TEMPLETON GROWTH SECURITIES FUND

Statement of Investments, June 30, 2000 (unaudited) (cont.)

<TABLE>
<CAPTION>
COUNTRY SHARES VALUE
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCKS (CONT.)
UTILITIES ELECTRICAL & GAS 8.0%
Centrais Eletricas Brasileiras SA (Eletrobras), ADR ....................... Brazil 514,400 $ 5,144,000
CLP Holdings Ltd. ......................................................... Hong Kong 2,043,000 9,513,540
E.On AG ................................................................... Germany 258,000 12,488,977
Endesa SA ................................................................. Spain 200,000 3,889,805
Entergy Corp. ............................................................. United States 97,900 2,661,656
Evn AG .................................................................... Austria 83,370 3,116,665
Hong Kong Electric Holdings Ltd. .......................................... Hong Kong 2,944,000 9,479,353
Iberdrola SA, Br. ......................................................... Spain 981,200 12,697,174
Korea Electric Power Corp. ................................................ South Korea 458,200 14,218,264
National Grid Group PLC ................................................... United Kingdom 275,100 2,157,255
National Power PLC ........................................................ United Kingdom 1,802,600 11,474,837
Potomac Electric Power Co. ................................................ United States 100,000 2,500,000
Powergen PLC .............................................................. United Kingdom 600,000 5,054,725
Thames Water Group PLC .................................................... United Kingdom 530,800 6,826,144
Transportadora de Gas del Sur SA, B, ADR .................................. Argentina 386,900 3,482,100
--------------
104,704,495
--------------
TOTAL COMMON STOCKS (COST $1,115,126,998).................................. 1,172,708,668
--------------
PREFERRED STOCKS 1.3%
Centrais Eletricas Brasileiras SA (Electrobras), ADR, pfd. ................ Brazil 158,760 1,686,825
Embotelladora Andina SA, B, ADR, pfd. ..................................... Chile 302,900 2,896,481
News Corp. Ltd., pfd. ..................................................... Australia 185,422 2,244,911
Petroleo Brasileiro SA, pfd. .............................................. Brazil 157,470 4,757,270
Telecomunicacoes de Sao Paulo SA, ADR, pfd. ............................... Brazil 205,300 3,798,050
Volkswagen AG, pfd. ....................................................... Germany 60,000 1,432,077
--------------
TOTAL PREFERRED STOCKS (COST $18,882,057).................................. 16,815,614
--------------
TOTAL INVESTMENTS BEFORE REPURCHASE AGREEMENTS (COST $1,134,009,055)....... 1,189,524,282
--------------
</TABLE>

TG-11
<PAGE>

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

TEMPLETON GROWTH SECURITIES FUND

Statement of Investments, June 30, 2000 (unaudited) (cont.)

<TABLE>
<CAPTION>
PRINCIPAL
COUNTRY AMOUNT VALUE
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
(b) REPURCHASE AGREEMENTS 9.4%
Deutsche Bank AG, 6.80%, 7/03/00 (Maturity Value $40,022,667)
Collaterized by U.S. Treasury Notes and Bonds .................. United States $40,000,000 $ 40,000,000
Dresdner Bank AG, 6.40%, 7/03/00 (Maturity Value $43,794,345)
Collaterized by U.S. Treasury Notes and Bonds .................. United States 43,771,000 43,771,000
HSBC Securities Inc., 6.80%, 7/03/00 (Maturity Value $40,022,667)
Collaterized by U.S. Treasury Notes and Bonds .................. United States 40,000,000 40,000,000
--------------
TOTAL REPURCHASE AGREEMENTS (COST $123,771,000).................. 123,771,000
--------------
TOTAL INVESTMENTS (COST $1,257,780,055) 99.8%.................... 1,313,295,282
OTHER ASSETS, LESS LIABILITIES .2% .............................. 2,688,014
--------------
TOTAL NET ASSETS 100.0% ......................................... $1,315,983,296
==============
</TABLE>

(a)Non-income producing
(b)At June 30, 2000, all repurchase agreements held by the Fund had been entered
into on that date.

See notes to financial statements.

TG-12
<PAGE>

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

TEMPLETON GROWTH SECURITIES FUND

Financial Statements

STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2000 (UNAUDITED)

Assets:
Investments in securities:
Cost ................................................ $1,257,780,055
==============
Value ............................................... 1,313,295,282
Receivables:
Investment securities sold ......................... 4,786,463
Capital shares sold ................................ 3,533,236
Dividends and interest ............................. 5,960,655
--------------
Total assets ...................................... 1,327,575,636
--------------
Liabilities:
Payables:
Investment securities purchased .................... 4,655,301
Capital shares redeemed ............................ 5,668,779
Affiliates ......................................... 897,842
Funds advanced by custodian .......................... 130,936
Other liabilities .................................... 239,482
--------------
Total liabilities ................................. 11,592,340
--------------
Net assets, at value ........................... $1,315,983,296
==============
Net assets consist of:
Undistributed net investment income .................. $ 12,535,658
Net unrealized appreciation .......................... 55,515,227
Accumulated net realized gain ........................ 149,380,456
Capital shares ....................................... 1,098,551,955
--------------
Net assets, at value ........................... $1,315,983,296
==============
CLASS 1:
Net assets, at value ................................. $1,243,827,684
==============
Shares outstanding ................................... 93,801,883
==============
Net asset value and offering price per share ......... $ 13.26
==============
CLASS 2:
Net assets, at value ................................. $ 72,155,612
==============
Shares outstanding ................................... 5,459,676
==============
Net asset value and offering price per share ......... $ 13.22
==============

See notes to financial statements.

TG-13
<PAGE>

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

TEMPLETON GROWTH SECURITIES FUND

Financial Statements (continued)

STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2000 (UNAUDITED)

Investment income:
(net of foreign taxes of $1,390,890)
Dividends ................................................. $ 14,731,773
Interest .................................................. 1,669,919
--------------
Total investment income ................................ 16,401,692
--------------
Expenses:
Management fees (Note 3) .................................. 3,568,968
Distribution fees - Class 2 (Note 3) ...................... 34,064
Custodian fees ............................................ 176,100
Reports to shareholders ................................... 34,000
Professional fees (Note 3) ................................ 38,200
Trustees' fees and expenses ............................... 2,900
Other ..................................................... 8,351
--------------
Total expenses ......................................... 3,862,583
--------------
Net investment income ................................. 12,539,109
--------------
Realized and unrealized gains (losses):
Net realized gain from:
Investments .............................................. 149,442,355
Foreign currency transactions ............................ 105,598
--------------
Net realized gain ...................................... 149,547,953
Net unrealized depreciation on investments ................ (160,733,474)
--------------
Net realized and unrealized loss ........................... (11,185,521)
--------------
Net increase in net assets resulting from operations ....... $ 1,353,588
==============

See notes to financial statements.

TG-14
<PAGE>

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

TEMPLETON GROWTH SECURITIES 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, 1999
-----------------------------------
<S> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income ............................................... $ 12,539,109 $ 13,240,797
Net realized gain from investments and foreign currency transactions 149,547,953 72,994,064
Net unrealized appreciation (depreciation) on investments ........... (160,733,474) 47,953,928
-----------------------------------
Net increase in net assets resulting from operations ............. 1,353,588 134,188,789
Distributions to shareholders from:
Net investment income:
Class 1 ........................................................... (11,099,754) (15,661,321)
Class 2 ........................................................... (152,094) (19,742)
Net realized gains:
Class 1 ........................................................... (73,119,422) (75,768,827)
Class 2 ........................................................... (1,029,478) (95,513)
-----------------------------------
Total distributions to shareholders .................................. (85,400,748) (91,545,403)
Capital share transactions (Note 2):
Class 1 ........................................................... 620,018,983 (80,925,896)
Class 2 ........................................................... 67,218,023 3,995,606
-----------------------------------
Total capital share transactions ..................................... 687,237,006 (76,930,290)
Net increase (decrease) in net assets ............................ 603,189,846 (34,286,904)
Net assets:
Beginning of period .................................................. 712,793,450 747,080,354
-----------------------------------
End of period ........................................................ $1,315,983,296 $ 712,793,450
===================================
Undistributed net investment income included in net assets:
End of period ........................................................ $ 12,535,658 $ 11,248,397
===================================
</TABLE>

See notes to financial statements.

TG-15
<PAGE>

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

TEMPLETON GROWTH SECURITIES FUND

Notes to Financial Statements (unaudited)

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

The Templeton Growth Securities Fund (the Fund) is a separate, diversified
series of the Franklin Templeton Variable Insurance Products Trust (the Trust),
which is an open-end investment company registered under the Investment Company
Act of 1940. Shares of the Fund are sold only to insurance company separate
accounts to fund the benefits of variable life insurance policies or variable
annuity contracts. The Fund seeks long-term capital growth. The portfolio
invests primarily in equity securities of issuers in foreign countries with
emerging markets.

Effective May 1, 2000, the name of the Templeton Global Growth Fund changed to
Templeton Growth Securities Fund, as a result of Fund mergers, as discussed in
Note 6. 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

B. FOREIGN CURRENCY TRANSLATION

Realized foreign exchange gains or losses arise from sales of foreign
currencies, currency gains or losses realized between the trade and settlement
dates on securities transactions and the difference between the recorded
amounts of dividends, interest, and foreign withholding taxes and the U.S.
dollar equivalent of the amounts actually received or paid. Net unrealized
foreign exchange gains and losses arise from changes in foreign exchange rates
on foreign denominated assets and liabilities other than investments in
securities held at the end of the reporting period.

C. INCOME TAXES

D. SECURITY TRANSACTIONS, INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS

TG-16
<PAGE>

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

TEMPLETON GROWTH SECURITIES FUND

Notes to Financial Statements (unaudited) (continued)

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (cont.)

D. SECURITY TRANSACTIONS, INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS (CONT.)

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.

E. ACCOUNTING ESTIMATES

2. SHARES OF BENEFICIAL INTEREST

The Fund offers two classes of shares: Class 1 and Class 2. Each class of
shares differs by its distribution fees, 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 ........................................ 6,155,205 $ 82,942,043 3,559,626 $ 53,423,886
Shares issued on merger (Note 6) ................... 48,592,348 628,298,597 -- --
Shares issued in reinvestment of distributions ..... 6,513,470 84,219,176 6,314,237 91,430,148
Shares redeemed .................................... (12,780,815) (175,440,833) (15,136,586) (225,779,930)
--------------------------------------------------------------------
Net increase (decrease) ............................ 48,480,208 $ 620,018,983 (5,262,723) $ (80,925,896)
====================================================================
CLASS 2 SHARES:
Shares sold ........................................ 5,301,315 $ 73,217,208 3,228,083 $ 46,873,543
Shares issued on merger (Note 6) ................... 4,308,381 55,535,000 -- --
Shares issued in reinvestment of distributions ..... 91,595 1,181,572 7,976 115,255
Shares redeemed .................................... (4,528,932) (62,715,757) (2,948,742) (42,993,192)
--------------------------------------------------------------------
Net increase ....................................... 5,172,359 $ 67,218,023 287,317 $ 3,995,606
====================================================================
</TABLE>

(a)For the period January 6, 1999 (effective date) to December 31, 1999, for
Class 2.

TG-17
<PAGE>

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

TEMPLETON GROWTH SECURITIES FUND

Notes to Financial Statements (unaudited) (continued)

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
Templeton Global Advisors Ltd. (TGAL) 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 TGAL based on the average net
assets of the Fund as follows:

ANNUALIZED FEE RATE DAILY NET ASSETS
------------------------------------------------------------------
1.00% First $100 million
.90% Over $100 million, up to and including $250 million
.80% Over $250 million, up to and including $500 million
.75% Over $500 million

Under an agreement with TGAL, FT Services provides administrative services to
the Fund. The fee is paid by TGAL based on the average daily net assets, and is
not an additional expense of the Fund.

The Fund reimburses Distributors up to .25% per year of its average daily net
assets of Class 2, for costs incurred in marketing the Fund's shares.

Investor Services, under terms of an agreement, performs shareholder servicing
for the Fund and is not paid by the Fund for the services.

Included in professional fees are legal fees of $616 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 and net realized capital gains differ for financial
statement and tax purposes primarily due to differing treatments of foreign
currency transactions and merger related expenses.

At June 30, 2000, the net unrealized appreciation based on the cost of
investments for income tax purposes of $1,259,349,622 was as follows:

Unrealized appreciation ............. $ 181,924,154
Unrealized depreciation ............. (127,978,494)
--------------
Net unrealized appreciation ......... $ 53,945,660
==============

5. INVESTMENT TRANSACTIONS

Purchases and sales of securities (excluding short-term securities) for the
period ended June 30, 2000 aggregated $912,419,966 and $512,178,868,
respectively.

TG-18
<PAGE>

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

TEMPLETON GROWTH SECURITIES FUND

Notes to Financial Statements (unaudited) (continued)

6. MERGERS

On May 1, 2000, the Franklin Templeton Variable Insurance Products Trust
(FTVIPT) - Templeton Growth Securities Fund acquired the net assets of the
Templeton Variable Products Series Fund (TVP) - Templeton Stock Fund pursuant
to a plan of reorganization approved by TVP - Templeton Stock Fund's
shareholders. The merger was accomplished by a tax-free exchange of 48,592,348
Class 1 shares and 4,308,381 Class 2 shares of the FTVIPT - Templeton Growth
Securities Fund (valued at $12.93 per share and $12.89 per share, respectively)
for the net assets of the TVP - Templeton Stock Fund which aggregated
$683,833,597, including $122,735,093 of unrealized appreciation. The merger was
accounted for as a pooling-of-interests without restatement for financial
reporting purposes. The combined net assets of the FTVIPT - Templeton Growth
Securities Fund immediately after the merger were $1,325,793,044.

TG-19
<PAGE>

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

TEMPLETON GROWTH SECURITIES FUND

Tax Designation

The following table provides a breakdown by country of foreign source income
and foreign taxes paid, as designated by the Fund, to Class 1 and Class 2
shareholders of record on April 26, 2000.

<TABLE>
<CAPTION>
CLASS 1 CLASS 2
---------------------------------------------------------
FOREIGN TAX FOREIGN FOREIGN TAX FOREIGN
PAID SOURCE INCOME PAID SOURCE INCOME
COUNTRY PER SHARE PER SHARE PER SHARE PER SHARE
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Argentina .................... 0.0000 0.0177 0.0000 0.0175
Australia .................... 0.0011 0.0226 0.0011 0.0224
Austria ...................... 0.0011 0.0068 0.0011 0.0067
Belgium ...................... 0.0011 0.0060 0.0011 0.0059
Bermuda ...................... 0.0000 0.0035 0.0000 0.0034
Brazil ....................... 0.0026 0.0167 0.0026 0.0166
Canada ....................... 0.0004 0.0022 0.0004 0.0021
China ........................ 0.0000 0.0042 0.0000 0.0041
Ecuador ...................... 0.0000 0.0003 0.0000 0.0003
Finland ...................... 0.0030 0.0165 0.0030 0.0163
France ....................... 0.0017 0.0115 0.0017 0.0114
Germany ...................... 0.0003 0.0024 0.0003 0.0024
Hong Kong .................... 0.0000 0.0410 0.0000 0.0406
Hungary ...................... 0.0005 0.0019 0.0005 0.0019
India ........................ 0.0000 0.0059 0.0000 0.0058
Italy ........................ 0.0004 0.0024 0.0004 0.0023
Japan ........................ 0.0017 0.0094 0.0017 0.0093
Mexico ....................... 0.0003 0.0044 0.0003 0.0043
Netherlands .................. 0.0020 0.0108 0.0020 0.0107
New Zealand .................. 0.0002 0.0008 0.0002 0.0008
Norway ....................... 0.0004 0.0022 0.0004 0.0022
Philippines .................. 0.0002 0.0008 0.0002 0.0008
Singapore .................... 0.0011 0.0040 0.0011 0.0040
South Africa ................. 0.0000 0.0072 0.0000 0.0071
South Korea .................. 0.0013 0.0065 0.0013 0.0064
Spain ........................ 0.0014 0.0074 0.0014 0.0073
Sweden ....................... 0.0016 0.0100 0.0016 0.0099
Switzerland .................. 0.0006 0.0033 0.0006 0.0033
Thailand ..................... 0.0003 0.0026 0.0003 0.0025
United Kingdom ............... 0.0103 0.0780 0.0103 0.0772
----------------------------------------------------
TOTAL ........................ $0.0336 $0.3090 $0.0336 $0.3055
====================================================
</TABLE>

Shareholders are advised to check with their tax advisors for information on
the treatment of these amounts on their individual income tax returns.

TG-20
<PAGE>

TEMPLETON INTERNATIONAL SECURITIES FUND

--------------------------------------------------------------------------------
FUND GOAL AND PRIMARY INVESTMENTS: TEMPLETON INTERNATIONAL SECURITIES FUND
(FORMERLY TEMPLETON INTERNATIONAL FUND) SEEKS LONG-TERM CAPITAL GROWTH. THE
FUND INVESTS PRIMARILY IN EQUITY SECURITIES OF COMPANIES LOCATED OUTSIDE THE
U.S., INCLUDING THOSE IN EMERGING MARKETS.
--------------------------------------------------------------------------------
During the six months under review, global economies appeared to be improving,
although most trailed the U.S. economy's growth rate. In our view, Europe
displayed slow but steady improvement in manufacturing output, unemployment
rates slightly declined and consumer confidence increased. The euro has fallen
significantly since its introduction, but a more positive economic outlook for
Europe should help benefit the currency. The U.K. was the exception to the
European recovery, where the strong pound negatively impacted the manufacturing
sector, as it made exports more expensive. However, we believe U.K. interest
rate hikes are near an end because of its sluggish economy.

It was hard to find evidence of Japan's recovery as economists and strategists
argued whether the Japanese economy was actually recovering after a 10-year
slumber. Latin American countries, particularly Brazil, made steady gains but
seemed to remain closely tied to U.S. interest-rate cycles, making them
vulnerable to further interest-rate hikes.

Extreme market volatility characterized the first half of 2000. Statistics
indicate that 1998 and 1999 were the worst two years since 1975 for value
investors like us.(1) The first quarter of 2000 continued this trend, with high
growth stocks significantly outperforming value stocks regardless of valuation.
This trend appeared to moderate near the end of the quarter as many investors
seemed to assess the varying impacts of accelerating global economic growth,
higher commodity prices and global central bank tightening. The resultant
market broadening to include more economically sensitive stocks benefited the
Fund in the second quarter of 2000.

(1) Source: Morgan Stanley Capital International.

GEOGRAPHIC DISTRIBUTION
Templeton International Securities Fund
Based on Total Net Assets
6/30/00

[This chart in pie format shows the geographic distribution of Templeton
International Securities Fund as a percentage of total net assets on 6/30/00.]

Europe 60.1%
Asia 17.8%
Latin America 7.2%
Australia/New Zealand 4.4%
North America 3.8%
Mid-East/Africa 1.7%
Short-Term Investments & Other Net Assets 5.0%

TI-1
<PAGE>
TOP 10 HOLDINGS
Templeton International
Securities Fund
6/30/00

COMPANY % OF TOTAL
SECTOR, COUNTRY NET ASSETS
----------------------------------------
Cheung Kong
Holdings Ltd. 2.3%
Multi-Industry,
Hong Kong

Total Fina Elf SA, B 2.1%
Energy Sources, France

AXA SA 2.0%
Financial Services, France

Nomura Securities Co. Ltd. 1.9%
Financial Services, Japan

Nordic Baltic Holding AB 1.9%
Banking, Sweden

Elan Corp., PLC, ADR 1.9%
Health & Personal Care,
Irish Republic

Aventis SA 1.9%
Health & Personal Care,
France

Nippon Telegraph &
Telephone Corp. 1.8%
Telecommunications,
Japan

Koninklijke Philips
Electronics NV 1.8%
Electrical & Electronics,
Netherlands

Muenchener
Rueckversicherungs- 1.7%
Gesellschaft
Insurance, Germany

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.

During the period, especially in the first three months, the Fund sought to
take advantage of the extreme market conditions to decrease our
telecommunications and technology positions. We reduced our holdings in
Portugal Telecom, while eliminating our holdings in Nintendo and Telefonica de
Argentina. As a result of these changes, our telecommunications weighting
declined slightly from 8.9% of total net assets on January 1, 2000, to 8.3% at
the end of the period. We reinvested proceeds from the sale of these securities
in a number of what we consider to be out-of-favor sectors with solid growth
expectations, including pharmaceuticals (Elan Corp. and Merck KGAA), aerospace
(BAE Systems), energy (Eni SpA and Repsol), transportation (Stagecoach
Holdings) and machinery and engineering (Komatsu).

We also benefited from corporate merger activity during the six months under
review, as Alcatel acquired Fund position Newbridge Networks, and three of our
Latin American telecommunications holdings -- Telefonica de Argentina,
Telefonica del Peru and Telecomunicacoes de Sao Paulo -- were acquired by
Spain's Telefonica SA. Our exposure to Latin America will likely decline as
Telefonica SA consumes these stocks, and we were recently unable to identify
bargains in the region and reinvest the proceeds. We continue to believe that
if valuation gaps between growth and value stocks remain at historically high
levels, the consequence will be increased merger, acquisition and buyout
activity.

Looking forward, we expect global markets to remain volatile due to questions
surrounding the direction of interest rates, the U.S. economy's health and the
sustainability of growth rates needed to maintain historically high valuations
in the technology, media and telecommunications sectors. We see tremendous
value opportunities in the U.K. market's utilities, engineering and retail
sectors. Furthermore, we do not hedge our currency exposure and stand to
benefit from any recovery in the euro. In Japan, ongoing market uncertainty
created opportunities to purchase economically sensitive stocks while providing
us the ability to reduce our holdings in highly valued, "new economy" stocks.

TI-2
<PAGE>

We are primarily invested in what we view as low price-to-earnings (P/E)
multiple stocks and feel well-positioned to take advantage of any declines in
the high P/E sectors, as our long-term outlook allows us to purchase growth
stocks at low valuations. In our opinion, the historically high valuation
levels placed on growth companies represent a potential risk. If the global
economic trends turn unfavorable, it would potentially limit corporate earnings
growth or lead to higher interest rates. As always, the Templeton research team
will scour the world seeking those shares selling at the lowest value in
relation to their long-term earnings potential, since such shares can help
reduce risk while offering the potential for attractive, long-term returns.

TI-3
<PAGE>

TEMPLETON INTERNATIONAL
SECURITIES FUND
CLASS 1

-------------------------------------------------------------------------------
Performance reflects the Fund's Class 1 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.
-------------------------------------------------------------------------------
PERFORMANCE SUMMARY AS OF 6/30/00

TEMPLETON INTERNATIONAL SECURITIES FUND - CLASS 1 DELIVERED A +0.57% CUMULATIVE
TOTAL RETURN FOR THE SIX-MONTH PERIOD ENDED 6/30/00. Total return of Class 1
shares represents the cumulative or average annual change in value, assuming
reinvestment of dividends and capital gains. Average returns smooth out
variations in returns, which can be significant; they are not the same as
year-by-year results.

Templeton International Securities Fund - Class 1*
Periods ended 6/30/00
SINCE
INCEPTION
1-YEAR 5-YEAR (5/1/92)
----------------------------------------------------------------------
Average Annual Total Return +12.73% +15.54% +14.44%
Cumulative Total Return +12.73% +105.87% +200.80%
Value of $10,000 Investment $11,273 $20,587 $30,080

*Performance prior to the 5/1/00 merger reflects the historical performance of
Templeton International Fund.

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.

TI-4
<PAGE>

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

TEMPLETON INTERNATIONAL SECURITIES FUND

Financial Highlights

<TABLE>
<CAPTION>
CLASS 1
-------------------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED DECEMBER 31,
JUNE 30, 2000 -------------------------------------------------------------------
(UNAUDITED) 1999 1998 1997 1996 1995
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the period)
Net asset value, beginning of period .......... $22.25 $20.69 $20.18 $18.40 $15.13 $13.22
-------------------------------------------------------------------------------------
Income from investment operations:
Net investment income(c) ..................... .25 .33 .60 .49 .43 .23
Net realized and unrealized gains (losses) ... (.27) 3.78 1.29 2.01 3.15 1.83
-------------------------------------------------------------------------------------
Total from investment operations .............. (.02) 4.11 1.89 2.50 3.58 2.06
-------------------------------------------------------------------------------------
Less distributions from:
Net investment income ........................ (.43) (.57) (.49) (.51) (.24) (.10)
Net realized gains ........................... (2.49) (1.98) (.89) (.21) (.07) (.05)
-------------------------------------------------------------------------------------
Total distributions ........................... (2.92) (2.55) (1.38) (.72) (.31) (.15)
-------------------------------------------------------------------------------------
Net asset value, end of period ................ $19.31 $22.25 $20.69 $20.18 $18.40 $15.13
=====================================================================================
Total return(b) ............................... .57% 23.61% 9.33% 13.95% 24.04% 15.78%

RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's) ............. $1,652,815 $1,056,798 $980,470 $938,410 $682,984 $353,141
Ratios to average net assets:
Expenses ..................................... .84%(a) .85% .86% .81% .65% .71%
Net investment income ........................ 2.57%(a) 1.69% 2.81% 2.70% 3.23% 2.36%
Portfolio turnover rate ....................... 21.83% 30.04% 29.56% 16.63% 9.46% 5.19%
</TABLE>

(a)Annualized
(b)Total 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.
(c)Based on average shares outstanding effective year ended December 31, 1999.

TI-5
<PAGE>

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

TEMPLETON INTERNATIONAL SECURITIES FUND

Financial Highlights (continued)

<TABLE>
<CAPTION>
Class 2
-------------------------------------------------------------
Six Months Ended Year Ended December 31,
June 30, 2000 ----------------------------------------
(unaudited) 1999 1998 1997(c)
-------------------------------------------------------------
<S> <C> <C> <C> <C>
Per share operating performance
(for a share outstanding throughout the period)
Net asset value, beginning of period ................ $22.13 $20.61 $20.14 $18.40
-------------------------------------------------------------
Income from investment operations:
Net investment income(d) ........................... .22 .25 .59 .07
Net realized and unrealized gains (losses) ......... (.26) 3.78 1.25 1.67
-------------------------------------------------------------
Total from investment operations .................... (.04) 4.03 1.84 1.74
-------------------------------------------------------------
Less distributions from:
Net investment income .............................. (.38) (.53) (.48) --
Net realized gains ................................. (2.49) (1.98) (.89) --
-------------------------------------------------------------
Total distributions ................................. (2.87) (2.51) (1.37) --
-------------------------------------------------------------
Net asset value, end of period ...................... $19.22 $22.13 $20.61 $20.14
=============================================================
Total return(b) ..................................... .50% 23.23% 9.08% 9.46%
Ratios/supplemental data
Net assets, end of period (000's) ................... $157,908 $101,365 $39,886 $17,606
Ratios to average net assets:
Expenses ........................................... 1.09%(a) 1.10% 1.11% 1.13%(a)
Net investment income .............................. 2.30%(a) 1.26% 2.69% 1.14%(a)
Portfolio turnover rate ............................. 21.83% 30.04% 29.56% 16.63%
</TABLE>

(a)Annualized
(b)Total 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.
(c)For the period May 1, 1997 (effective date) to December 31, 1997.
(d)Based on average shares outstanding effective year ended December 31,1999.

See notes to financial statements.

TI-6
<PAGE>

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

TEMPLETON INTERNATIONAL SECURITIES FUND

Statement of Investments, June 30, 2000 (unaudited)

<TABLE>
<CAPTION>
COUNTRY SHARES VALUE
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stocks 91.2%
Aerospace & Military Technology 2.1%
BAE Systems PLC ............................................ United Kingdom 4,744,725 $ 29,377,546
Hong Kong Aircraft Engineering Co. Ltd. .................... Hong Kong 947,080 1,822,406
Saab AB, B ................................................. Sweden 726,900 6,132,778
------------
37,332,730
------------
Automobiles 2.6%
Autoliv Inc., SDR .......................................... Sweden 675,450 16,634,044
Volkswagen AG .............................................. Germany 312,000 12,052,452
Volvo AB, B ................................................ Sweden 843,780 18,422,514
------------
47,109,010
------------
Banking 8.5%
Australia & New Zealand Banking Group Ltd. ................. Australia 2,938,850 22,603,010
Banca Nazionale del Lavoro SpA ............................. Italy 5,635,000 19,823,291
Banco Popular Espanol SA ................................... Spain 124,800 3,875,925
Bank Austria AG ............................................ Austria 96,320 4,710,562
Bank Austria AG, 144A ...................................... Austria 230,146 11,255,367
BPI Socieda de Gestora de Participacoes Socias SA .......... Portugal 1,609,890 5,709,705
Credicorp Ltd. ............................................. Peru 292,160 2,629,440
Foreningssparbanken AB, A .................................. Sweden 472,500 6,949,322
HSBC Holdings PLC .......................................... Hong Kong 636,400 7,265,865
HSBC Holdings PLC, ADR ..................................... Hong Kong 180,600 10,463,513
National Bank of Canada .................................... Canada 897,620 13,388,272
Nordic Baltic Holding AB, FDR .............................. Sweden 4,763,875 34,796,142
Unibanco Uniao de Bancos Brasileiros SA, GDR ............... Brazil 358,700 10,312,625
------------
153,783,039
------------
Broadcasting & Publishing 1.5%
Wolters Kluwer NV .......................................... Netherlands 1,030,100 27,548,589
------------
Building Materials & Components .6%
Caradon PLC ................................................ United Kingdom 3,265,240 7,464,027
Hepworth PLC ............................................... United Kingdom 1,330,100 3,795,568
------------
11,259,595
------------
Chemicals 4.2%
Akzo Nobel NV .............................................. Netherlands 564,580 24,082,483
BASF AG .................................................... Germany 474,430 19,327,552
Clariant AG ................................................ Switzerland 54,500 20,310,559
Imperial Chemical Industries PLC ........................... United Kingdom 857,000 6,584,124
Kemira OY .................................................. Finland 1,088,632 5,321,904
------------
75,626,622
------------
Construction & Housing .4%
Fletcher Challenge Building Ltd. ........................... New Zealand 6,285,000 6,686,579
------------
Electrical & Electronics 8.5%
ABB Ltd. ................................................... Switzerland 64,840 7,785,505
Alcatel SA ................................................. France 245,175 16,145,396
Alcatel SA, ADR ............................................ France 338,791 22,529,575
Hitachi Ltd. ............................................... Japan 1,850,000 26,752,044
(a) Hyundai Electronics Industries Co. ......................... South Korea 875,000 17,264,187
Koninklijke Philips Electronics NV ......................... Netherlands 694,974 32,908,742
Nokia Corp., A ............................................. Finland 153,800 7,879,884
Sony Corp. ................................................. Japan 237,900 22,259,912
------------
153,525,245
------------
</TABLE>

TI-7
<PAGE>

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

TEMPLETON INTERNATIONAL SECURITIES FUND

Statement of Investments, June 30, 2000 (unaudited) (cont.)

<TABLE>
<CAPTION>
COUNTRY SHARES VALUE
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stocks (cont.)
Electronic Components & Instruments 1.5%
Williams PLC ........................................ United Kingdom 4,674,600 $ 27,209,589
------------
Energy Sources 6.3%
Eni SpA ............................................. Italy 3,631,060 21,022,586
PC Holdings SA, ADR ................................. Argentina 316,142 5,789,350
Repsol SA, Br. ...................................... Spain 1,253,400 25,050,219
Shell Transport & Trading Co. PLC ................... United Kingdom 2,882,342 24,413,315
Total Fina Elf SA, B ................................ France 243,338 37,460,299
------------
113,735,769
------------
Financial Services 6.4%
AXA SA .............................................. France 208,400 32,960,776
AXA SA, 144A ........................................ France 17,366 2,746,626
ING Groep NV ........................................ Netherlands 386,631 26,238,905
Nomura Securities Co. Ltd. .......................... Japan 1,432,425 35,132,015
(a) Royal Bank of Scotland Group PLC .................... United Kingdom 1,118,729 18,612,451
------------
115,690,773
------------
Food & Household Products 1.5%
Northern Foods PLC .................................. United Kingdom 3,278,607 5,943,552
Panamerican Beverages Inc., A ....................... Mexico 290,000 4,331,875
Tate & Lyle PLC ..................................... United Kingdom 3,303,500 16,778,301
------------
27,053,728
------------
Forest Products & Paper 1.0%
Stora Enso OYJ, R ................................... Finland 1,002,730 9,203,029
UPM-Kymmene Corporation ............................. Finland 351,000 8,747,747
------------
17,950,776
------------
Health & Personal Care 9.0%
Aventis SA .......................................... France 464,880 34,067,018
(a) CellTech Group PLC .................................. United Kingdom 1,003,271 19,319,084
(a) Elan Corp. PLC, ADR ................................. Irish Republic 718,225 34,789,023
Internatio-Muller NV ................................ Netherlands 240,308 4,146,260
Mayne Nickless Ltd., A .............................. Australia 5,353,320 11,024,453
Merck KGAA .......................................... Germany 636,150 19,513,055
Nycomed Amersham PLC ................................ United Kingdom 1,575,700 15,300,385
Teva Pharmaceutical Industries Ltd., ADR ............ Israel 462,545 25,642,338
------------
163,801,616
------------
Insurance 5.9%
Ace Ltd. ............................................ Bermuda 853,045 23,885,260
Muenchener Rueckversicherungs-Gesellschaft .......... Germany 95,520 30,031,977
Scor ................................................ France 250,000 10,929,891
XL Capital Ltd., A .................................. Bermuda 170,450 9,225,606
Zurich Allied AG .................................... Switzerland 44,800 22,205,768
Zurich Allied PLC ................................... United Kingdom 920,100 10,822,739
------------
107,101,241
------------
Machinery & Engineering 2.4%
IHC Caland NV ....................................... Netherlands 187,500 9,166,155
Invensys PLC ........................................ United Kingdom 3,139,529 11,763,075
Komatsu Ltd. ........................................ Japan 3,191,000 22,498,804
------------
43,428,034
------------
</TABLE>

TI-8
<PAGE>

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

TEMPLETON INTERNATIONAL SECURITIES FUND

Statement of Investments, June 30, 2000 (unaudited) (cont.)

<TABLE>
<CAPTION>
COUNTRY SHARES VALUE
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Common Stocks (cont.)
Merchandising 2.4%
Hudsons Bay Co. ...................................... Canada 360,774 $ 3,822,739
Marks & Spencer PLC .................................. United Kingdom 4,772,000 16,723,708
Safeway PLC .......................................... United Kingdom 4,943,186 19,231,857
Storehouse ........................................... United Kingdom 6,812,781 4,486,367
------------
44,264,671
------------
Metals & Mining 3.7%
Anglo American Platinum Corp. Ltd. ................... South Africa 145,609 4,196,460
Barrick Gold Corp. ................................... Canada 1,042,900 18,828,086
Boehler-Uddeholm AG .................................. Austria 64,505 2,266,121
Boehler-Uddeholm AG, 144A ............................ Austria 60,855 2,137,894
Corus Group PLC ...................................... United Kingdom 8,123,200 11,836,111
Industrias Penoles SA ................................ Mexico 1,893,000 3,057,723
Ispat International NV, A ............................ Netherlands 227,600 2,162,200
Pohang Iron & Steel Co. Ltd. ......................... South Korea 128,901 11,209,511
WMC Ltd. ............................................. Australia 2,399,500 10,766,027
------------
66,460,133
------------
Multi-Industry 4.4%
Broken Hill Proprietary Co. Ltd. ..................... Australia 945,543 11,212,129
Cheung Kong Holdings Ltd. ............................ Hong Kong 3,792,825 41,965,179
Elementis PLC ........................................ United Kingdom 5,428,174 6,450,666
Hanson PLC ........................................... United Kingdom 446,211 3,147,802
Next PLC ............................................. United Kingdom 775,500 6,814,989
Swire Pacific Ltd., B ................................ Hong Kong 13,622,100 11,096,473
------------
80,687,238
------------
Telecommunications 8.3%
Cia de Telecomunicaciones de Chile SA, ADR ........... Chile 431,500 7,820,938
Korea Telecom Corp., ADR ............................. South Korea 163,020 7,886,093
Nippon Telegraph & Telephone Corp. ................... Japan 2,510 33,449,270
Philippine Long Distance Telephone Co., ADR .......... Philippines 722,400 12,822,600
Portugal Telecom SA .................................. Portugal 808,010 9,108,352
Smartone Telecommunications Holdings Ltd. ............ Hong Kong 7,652,000 16,932,895
Telecom Corp. of New Zealand Ltd. .................... New Zealand 5,087,400 17,841,955
Telecom Italia SpA, di Risp .......................... Italy 1,887,750 12,545,311
Telefonica del Peru SA, ADR .......................... Peru 267,700 3,045,088
Telefonica del Peru SA, B ............................ Peru 5,365,602 7,722,836
Telefonos de Mexico SA (Telmex), L, ADR .............. Mexico 360,760 20,608,415
------------
149,783,753
------------
Transportation 2.9%
British Airways PLC .................................. United Kingdom 2,575,000 14,803,219
Koninklijke Nedlloyd Groep NV ........................ Netherlands 216,300 4,206,824
Peninsular & Oriental Steam Navigation Co. ........... United Kingdom 1,355,414 11,552,115
Seino Transportation Co. Ltd. ........................ Japan 552,000 2,785,955
Stagecoach Holdings PLC .............................. United Kingdom 16,914,690 18,756,544
------------
52,104,657
------------
</TABLE>

TI-9
<PAGE>

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

TEMPLETON INTERNATIONAL SECURITIES FUND

Statement of Investments, June 30, 2000 (unaudited) (cont.)

<TABLE>
<CAPTION>
COUNTRY SHARES VALUE
-------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stocks (cont.)
Utilities Electrical & Gas 7.1%
CLP Holdings Ltd. ......................................................... Hong Kong 4,081,000 $ 19,003,797
E.On AG ................................................................... Germany 465,650 22,540,667
Evn AG .................................................................... Austria 23,475 877,579
Gener SA, ADR ............................................................. Chile 303,800 4,462,063
Hong Kong Electric Holdings Ltd. .......................................... Hong Kong 4,062,365 13,080,364
Iberdrola SA, Br. ......................................................... Spain 1,575,700 20,390,275
Korea Electric Power Corp. ................................................ South Korea 250,000 7,757,674
National Power PLC ........................................................ United Kingdom 1,972,900 12,558,918
Thames Water Group PLC .................................................... United Kingdom 2,223,811 28,598,444
--------------
129,269,781
--------------
Total Common Stocks (Cost $1,444,014,133).................................. 1,651,413,168
--------------
Preferred Stocks 3.8%
Cia Vale do Rio Doce, A, ADR, pfd. ........................................ Brazil 350,400 9,898,800
Embratel Participacoes SA, ADR, pfd. ...................................... Brazil 420,490 9,934,076
Petroleo Brasileiro SA, pfd. .............................................. Brazil 300,000 9,063,193
Telecomunicacoes Brasileiras SA (Telebras), ADR, pfd. ..................... Brazil 221,950 21,556,894
Telecomunicacoes de Sao Paulo SA, ADR, pfd. ............................... Brazil 556,750 10,299,875
Telemig Celular SA, C, pfd. ............................................... Brazil 1,705,000 43,476
Tele Norte Leste Participacoes SA, ADR, pfd. .............................. Brazil 11,702 276,460
Volkswagen AG, pfd. ....................................................... Germany 275,000 6,563,686
--------------
Total Preferred Stocks (Cost $57,239,299).................................. 67,636,460
--------------
Total Investments before Repurchase Agreements (Cost $1,501,253,432)....... 1,719,049,628
--------------
PRINCIPAL
AMOUNT
---------
(b) Repurchase Agreements 4.4%
Dresdner Bank AG, 6.40%, 7/03/00 (Maturity Value $20,111,721)
Collateralized by U.S. Treasury Notes and Bonds ........................... United States 20,101,000 20,101,000
Paribas Corp., 6.85%, 7/03/00 (Maturity Value $60,034,250)
Collateralized by U.S. Treasury Notes and Bonds ........................... United States 60,000,000 60,000,000
--------------
Total Repurchase Agreements (Cost $80,101,000)............................. 80,101,000
--------------
Total Investments (Cost $1,581,354,432) 99.4%.............................. 1,799,150,628
Other Assets, less Liabilities .6% ........................................ 11,571,531
--------------
Total Net Assets 100.0% ................................................... $1,810,722,159
==============
</TABLE>

(a)Non-income producing
(b)At June 30, 2000, all repurchase agreements held by the Fund had been entered
into on that date.

See notes to financial statements.

TI-10
<PAGE>

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

TEMPLETON INTERNATIONAL SECURITIES FUND

Financial Statements

Statement of Assets and Liabilities
June 30, 2000 (unaudited)

Assets:
Investments in securities:
Cost ................................................ $1,581,354,432
==============
Value ............................................... 1,799,150,628
Receivables:
Investment securities sold .......................... 2,267,482
Capital shares sold ................................. 6,717,850
Dividends and interest .............................. 6,526,687
--------------
Total assets ....................................... 1,814,662,647
--------------
Liabilities:
Payables:
Investment securities purchased ..................... 437,841
Capital shares redeemed ............................. 1,933,327
Affiliates .......................................... 1,193,236
Funds advanced by custodian .......................... 30,240
Other liabilities .................................... 345,844
--------------
Total liabilities .................................. 3,940,488
--------------
Net assets, at value .............................. $1,810,722,159
==============
Net assets consist of:
Undistributed net investment income .................. $ 11,204,261
Net unrealized appreciation .......................... 217,796,196
Accumulated net realized gain ........................ 30,262,822
Capital shares ....................................... 1,551,458,880
--------------
Net assets, at value .............................. $1,810,722,159
==============
Class 1:
Net assets, at value ................................. $1,652,814,646
==============
Shares outstanding ................................... 85,603,213
==============
Net asset value and offering price per share ......... $ 19.31
==============
Class 2:
Net assets, at value ................................. $ 157,907,513
==============
Shares outstanding ................................... 8,217,632
==============
Net asset value and offering price per share ......... $ 19.22
==============

See notes to financial statements.

TI-11
<PAGE>

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

TEMPLETON INTERNATIONAL SECURITIES FUND

Financial Statements (continued)

Statement of Operations
for the six months ended June 30, 2000 (unaudited)

Investment Income:
(net of foreign taxes of $2,589,021)
Dividends ................................................... $ 20,559,326
Interest .................................................... 2,063,681
-------------
Total investment income .................................... 22,623,007
-------------
Expenses:
Management fees (Note 3) .................................... 4,489,442
Administrative fees (Note 3) ................................ 665,140
Distribution fees - Class 2 (Note 3) ........................ 153,708
Custodian fees .............................................. 263,000
Reports to shareholders ..................................... 124,000
Professional fees (Note 3) .................................. 35,400
Trustees' fees and expenses ................................. 6,500
Other ....................................................... 3,227
-------------
Total expenses ............................................. 5,740,417
-------------
Net investment income ..................................... 16,882,590
-------------
Realized and unrealized gains (losses):
Net realized gain (loss) from:
Investments ................................................ 79,041,160
Foreign currency transactions .............................. (1,372,970)
-------------
Net realized gain ......................................... 77,668,190
Net unrealized depreciation on investments .................. (47,373,112)
-------------
Net realized and unrealized gain ............................. 30,295,078
-------------
Net increase in net assets resulting from operations ......... $ 47,177,668
=============

See notes to financial statements.

TI-12
<PAGE>

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

TEMPLETON INTERNATIONAL SECURITIES 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, 1999
---------------------------------------
<S> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income ............................................... $ 16,882,590 $ 17,320,878
Net realized gain from investments and foreign currency transactions 77,668,190 84,997,543
Net unrealized appreciation (depreciation) on investments ........... (47,373,112) 128,046,409
---------------------------------------
Net increase in net assets resulting from operations ............... 47,177,668 230,364,830
Distributions to shareholders from:
Net investment income:
Class 1 ........................................................... (20,195,709) (26,406,410)
Class 2 ........................................................... (2,255,259) (1,047,921)
Net realized gains:
Class 1 ........................................................... (118,600,706) (91,727,528)
Class 2 ........................................................... (14,798,195) (3,898,692)
---------------------------------------
Total distributions to shareholders .................................. (155,849,869) (123,080,551)
Capital share transactions: (Note 2)
Class 1 ........................................................... 692,644,895 (14,797,710)
Class 2 ........................................................... 68,586,998 45,319,734
---------------------------------------
Total capital share transactions ..................................... 761,231,893 30,522,024
Net increase in net assets ....................................... 652,559,692 137,806,303
Net assets:
Beginning of period .................................................. 1,158,162,467 1,020,356,164
---------------------------------------
End of period ........................................................ $1,810,722,159 $1,158,162,467
=======================================
Undistributed net investment income included in net assets:
End of period ........................................................ $ 11,204,261 $ 16,772,639
=======================================
</TABLE>

See notes to financial statements.

TI-13
<PAGE>

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

TEMPLETON INTERNATIONAL SECURITIES FUND

Notes to Financial Statements (unaudited)

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

The Templeton International Securities Fund (the Fund) is a separate,
diversified series of the Franklin Templeton Variable Insurance Products Trust
(the Trust), which is an open-end investment company registered under the
Investment Company Act of 1940. Shares of the Fund are sold only to insurance
company separate accounts to fund the benefits of variable life insurance
policies or variable annuity contracts. The Fund seeks long-term capital
growth. The portfolio invests primarily in equity securities of smaller
companies outside the U.S., including emerging markets.

Effective May 1, 2000, the name of the Templeton International Equity Fund
changed to Templeton International Securities Fund, as a result of fund
mergers, as discussed in Note 6. 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

b. Foreign Currency Translation

Realized foreign exchange gains or losses arise from sales of foreign
currencies, currency gains or losses realized between the trade and settlement
dates on securities transactions and the difference between the recorded
amounts of dividends, interest, and foreign withholding taxes and the U.S.
dollar equivalent of the amounts actually received or paid. Net unrealized
foreign exchange gains and losses arise from changes in foreign exchange rates
on foreign denominated assets and liabilities other than investments in
securities held at the end of the reporting period.

c. Income Taxes

d. Security Transactions, Investment Income, Expenses and Distributions

TI-14
<PAGE>

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

TEMPLETON INTERNATIONAL SECURITIES FUND

Notes to Financial Statements (unaudited) (continued)

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (cont.)

d. Security Transactions, Investment Income, Expenses and Distributions (cont.)

e. Accounting Estimates

2. SHARES OF BENEFICIAL INTEREST

The Fund offers two classes of shares: Class 1 and Class 2. Each class of
shares differs by its distribution fees, 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
-----------------------------------------------------------------------
Shares Amount Shares Amount
Class 1 Shares: -----------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold ........................................ 6,115,864 $ 117,487,707 4,898,075 $ 98,598,572
Shares issued on merger (Note 6) ................... 35,794,416 651,458,377 -- --
Shares issued on reinvestment of distributions ..... 7,326,842 138,796,415 6,924,615 118,133,938
Shares redeemed .................................... (11,133,746) (215,097,604) (11,722,543) (231,530,220)
------------------------------------------------------------------
Net increase (decrease) ............................ 38,103,376 $ 692,644,895 100,147 $ (14,797,710)
==================================================================
Class 2 Shares:
Shares sold ........................................ 21,038,739 $ 409,844,354 57,320,488 $ 1,117,974,227
Shares issued on merger (Note 6) ................... 177,521 3,216,683 -- --
Shares issued on reinvestment of distributions ..... 904,695 17,053,454 290,806 4,946,613
Shares redeemed .................................... (18,483,041) (361,527,493) (54,967,087) (1,077,601,106)
------------------------------------------------------------------
Net increase ....................................... 3,637,914 $ 68,586,998 2,644,207 $ 45,319,734
==================================================================
</TABLE>

TI-15
<PAGE>

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

TEMPLETON INTERNATIONAL SECURITIES FUND

Notes to Financial Statements (unaudited) (continued)

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
Templeton Investment Counsel, Inc. (TICI) 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 TICI based on the average net
assets of the Fund as follows:

Annualized Fee Rate Daily Net Assets
-------------------------------------------------------------------------
.75% First $200 million
.675% Over $200 million, up to and including $1.3 billion
.60% Over $1.3 billion

The Fund pays administrative fees to FT Services based on the average net
assets of the fund as follows:

Annualized Fee Rate Daily Net Assets
-------------------------------------------------------------------------
.15% First $200 million
.135% Over $200 million, up to and including $700 million
.10% Over $700 million, up to and including $1.2 billion

Fees are further reduced on net assets over $1.2 billion.

The Fund reimburses Distributors up to .25% per year of its average daily net
assets of Class 2, for costs incurred in marketing the Fund's shares.

Investor Services, under terms of an agreement, performs shareholder servicing
for the Funds and is not paid by the Fund for the services.

Included in professional fees are legal fees of $97 that were paid to a law
firm in which a partner of that firm was an officer of the Fund.

4. INCOME TAXES

At December 31, 1999, the Fund had deferred capital losses and/or deferred
currency losses of $1,004,292 occurring subsequent to October 31, 1999. For tax
purposes, such losses will be reflected in the year ending December 31, 2000.

Net investment income and net realized capital gains (losses) differ for
financial statement and tax purposes primarily due to differing treatments of
wash sales, foreign currency transactions, passive foreign investment company
shares, and merger related expenses.

The cost of securities for income tax purposes is the same as that shown in the
Statement of Investments. At June 30, 2000, the net unrealized appreciation
based on the cost of investments for income tax purposes was as follows:

Unrealized appreciation ............. $ 399,857,380
Unrealized depreciation ............. (182,061,184)
--------------
Net unrealized appreciation ......... $ 217,796,196
==============

TI-16
<PAGE>

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

TEMPLETON INTERNATIONAL SECURITIES FUND

Notes to Financial Statements (unaudited) (continued)

5. INVESTMENT TRANSACTIONS

Purchases and sales of securities (excluding short-term securities) for the
period ended June 30, 2000 aggregated $267,634,383 and $325,183,049,
respectively.

6. MERGERS

On May 1, 2000, the Franklin Templeton Variable Insurance Products Trust
(FTVIPT) - Templeton International Securities Fund acquired the net assets of
Templeton Variable Products Series Fund (TVP) - Templeton International Fund
pursuant to a plan of reorganization approved by the TVP - Templeton
International Fund's shareholders. The merger was accounted for by the method
of accounting for tax-free business combinations of investment companies. The
financial statements of TVP - Templeton International Fund survived the
reorganization; therefore, the financial statements of FTVIPT - Templeton
International Securities Fund reflect the financial statements of TVP -
Templeton International Fund. Immediately preceding the merger, FTVIPT -
Templeton International Securities Fund completed a reverse split of its shares
in the ratio of one new Class 1 share for each .6496 existing Class 1 share and
one new Class 2 share for each .6496 existing Class 2 share. As a result, the
FTVIPT - Templeton International Securities Fund net asset value per share was
$18.20 for Class 1 and $18.12 for Class 2 on May 1, 2000. TVP - Templeton
International Fund's shareholders contributed net assets having an aggregate
value of $1,071,394,151 (including $137,586,448 of unrealized appreciation) in
exchange for 35,794,416 Class 1 shares and 177,521 Class 2 shares (post-split)
of the FTVIPT - Templeton International Securities Fund. Immediately prior to
the merger, FTVIPT - Templeton International Securities Fund had net assets of
$654,675,060 (including unrealized appreciation of $16,819,111). Upon
completion of the merger, the combined net assets of the FTVIPT - Templeton
International Securities Fund were $1,726,069,211.

TI-17
<PAGE>

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

TEMPLETON INTERNATIONAL SECURITIES FUND

Tax Designation

The following table provides a breakdown by country of foreign source income
and foreign taxes paid, as designated by the Fund, to Class 1 and Class 2
shareholders of record on December 29, 1999.

<TABLE>
<CAPTION>
Class 1 Class 2
----------------------------------------------------------
Foreign Tax Foreign Foreign Tax Foreign
Paid Source Income Paid Source Income
Country Per Share Per Share Per Share Per Share
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Argentina ................... 0.0000 0.0137 0.0000 0.0130
Australia ................... 0.0016 0.0290 0.0016 0.0276
Austria ..................... 0.0007 0.0034 0.0007 0.0033
Bermuda ..................... 0.0000 0.0039 0.0000 0.0037
Brazil ...................... 0.0047 0.0386 0.0047 0.0367
Canada ...................... 0.0011 0.0059 0.0011 0.0056
China ....................... 0.0000 0.0030 0.0000 0.0029
Czech Republic .............. 0.0004 0.0000 0.0004 0.0000
Finland ..................... 0.0032 0.0169 0.0032 0.0161
France ...................... 0.0025 0.0175 0.0025 0.0166
Germany ..................... 0.0001 0.0006 0.0001 0.0006
Hong Kong ................... 0.0000 0.0256 0.0000 0.0243
Italy ....................... 0.0036 0.0187 0.0036 0.0179
Japan ....................... 0.0001 0.0006 0.0001 0.0005
Mexico ...................... 0.0004 0.0044 0.0004 0.0042
Netherlands ................. 0.0060 0.0490 0.0060 0.0467
New Zealand ................. 0.0021 0.0108 0.0021 0.0103
Norway ...................... 0.0016 0.0088 0.0016 0.0084
Peru ........................ 0.0000 0.0035 0.0000 0.0033
Portugal .................... 0.0007 0.0035 0.0007 0.0033
South Africa ................ 0.0000 0.0059 0.0000 0.0056
South Korea ................. 0.0006 0.0027 0.0006 0.0026
Spain ....................... 0.0036 0.0206 0.0036 0.0197
Sweden ...................... 0.0032 0.0202 0.0032 0.0192
Switzerland ................. 0.0023 0.0141 0.0023 0.0134
United Kingdom .............. 0.0178 0.1568 0.0178 0.1497
---------------------------------------------------------
TOTAL ....................... $0.0563 $0.4777 $0.0563 $0.4552
=========================================================
</TABLE>

Shareholders are advised to check with their tax advisors for information on
the treatment of these amounts on their individual income tax returns.

TI-18
<PAGE>

TEMPLETON ASSET STRATEGY FUND

--------------------------------------------------------------------------------
Fund Goal and Primary Investments: Templeton Asset Strategy Fund (formerly
Templeton Asset Allocation Fund) seeks high total return. The Fund will invest
in equity securities of companies of any nation, debt securities of companies
and governments of any nation, and in money market instruments. The Fund may
invest to a lesser extent in lower-rated "junk bonds."
--------------------------------------------------------------------------------
Financial markets generally saw a "return to earnings" in the first half of
2000, partially deflating 1999's dot-com frenzy. As more Internet stocks came
into the market, investors appeared to take a closer look at these companies'
earnings capabilities. In the U.S., the Federal Reserve Board again raised
interest rates because of inflationary fears. This shook growth stocks as a
whole, including the technology-laden Nasdaq(R) Index, whose sell-off sent
ripples around the globe, placing pressure on media and telecommunications
stocks worldwide. In this environment, the benchmark Morgan Stanley Capital
International World Index and J.P. Morgan Global Government Bond Index returned
-2.41% and 0.41% in U.S.-dollar terms, respectively.(1) As of June 30, 2000, the
Fund held 82.0% of its total net assets in equities, 13.3% in fixed income and
4.7% in short-term investments and other net assets.

Equity

Merger and acquisition activity remained robust in the first half of the year,
and the Fund benefited from consolidation activity, especially in the financial
and energy sectors, where several holdings registered solid double-digit gains.
Nordic Baltic Holdings, now the largest bank in the Nordic region, was formed
through the merger of Merita Nordbanken and Unidanmark, while Canadian oil
company, Ranger Oil, is being acquired by Canadian Natural Resources.

Individual stocks, rather than broad industry or geographic weightings, mainly
accounted for the Fund's equity performance. Celltech, a British biotechnology
company, was among the Fund's best performers, up over 125% during the
six-month period. Celltech rose amid the apparent investor enthusiasm for
biotech stocks that accompanied the Human Genome Project's exciting
breakthrough in mapping all the

(1) Source: Standard and Poor's Micropal (Morgan Stanley Capital International,
J.P. Morgan). The Morgan Stanley Capital International World Index is an
arithmetic average, weighted by market value, of the performance of
approximately 1,450 securities listed on the stock exchanges of 22 countries
including the U.S., Europe, Canada, Australia, New Zealand, and the Far East.
The J.P. Morgan Global Government Bond Index measures and tracks bonds from
around the world. Indexes are measured in U.S. dollars and include reinvested
dividends and interest. One cannot invest directly in an index, nor is an index
representative of the Fund's portfolio.

This chart in pie format shows the asset allocation of Templeton Asset Strategy
Fund as a percentage of total net assets on 6/30/00.

Stocks 82.0%
Fixed-Income Securities 13.3%
Short-Term Investments & Other Net Assets 4.7%

TA-1
<PAGE>

Top Five Sectors
Templeton Asset Strategy Fund
6/30/00
% of Total
Sector Net Assets
-----------------------------------------
Telecommunications 11.6%
Health & Personal Care 8.4%
Financial Services 7.3%
Energy Sources 5.8%
Electrical & Electronics 5.7%

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.

genes in the human genetic blueprint. The stock hit our valuation target and we
reduced the position at what we considered to be an excellent price.

Alcatel was another outstanding performer during the reporting period, up more
than 40%. Investors apparently began to place more value on the French
company's optical networking capabilities and its leading position in broadband
telecommunications access equipment. After an earnings disappointment in late
1998, we believe the company's management has proven its ability to unlock
shareholder value though cost-cutting and renewed dedication to profitable
growth.

Nomura Securities also fueled the Fund's performance, rising more than 35% in
the six months under review. Nomura is Japan's leading stock brokerage. We
initiated this position in 1999, when Nomura was trading at what we felt was an
attractive level, quite a bit cheaper than U.S. competitors like Morgan Stanley
and Merrill Lynch. We bought the stock, believing in the tremendous growth
potential for Japanese managed assets. In 2000, that premise began to play out,
with many Japanese savers moving assets out of the postal savings system and
into managed equity investments. Nomura capitalized on its commanding domestic
market position to garner a sizeable percentage of this new money. Feeling the
company is well-placed to make further gains, we partially retained our
investment in Nomura.

Fixed Income

Early in the review period investors generally remained cautious regarding
interest rates, we believe partly because of inflationary fears stemming from
higher oil prices, but largely because of upward revisions in global economic
growth forecasts. Confirmed European economic recovery, better-than-expected
growth in Japan, as well as continued U.S. growth, appeared to fuel this
cautious approach. Improving global economies led to expectations of higher
commodity prices, productivity and employment rates, which added to
inflationary pressures and a tighter monetary policy stance by central banks.
In our opinion, these conditions supported the consensus view that the
industrial economies, with the possible exception of Japan, had reached the
bottom of their respective interest-rate cycles. Later in the period, reduced
U.S. bond supply and equity market volatility helped to offset these
interest-rate concerns. Bonds began to appear more attractive to investors who
put money back into the global fixed income markets.

TA-2
<PAGE>

Volatile equity markets during the six months under review, combined with
expectations for reduced government bond supply resulting in part from U.S.
fiscal surpluses and lower deficits in Europe led the global fixed income
market higher toward the end of the period. The U.S. Treasury buyback
contributed significantly to the U.S. yield curve inversion during the period.
As bond prices and yields move in an inverse relationship, higher prices on
long-term bonds shifted their yields downward, while short-term bond prices
fell lower and their yields inched higher. In contrast, European Monetary Union
(EMU) countries' yield curve only flattened, as yields rose on the short end.
Hence, EMU bond prices fell, while those in the U.S. market rose. Most major
currencies' weakness against the U.S. dollar resulted in lower returns for the
global index in U.S. dollar terms.

In local currency terms, European bonds rose 2.84%, as all European bond
markets offered positive returns. The U.K. index increased 4.26% and the EMU
bond index gained 2.56%. The Danish market underperformed the EMU countries,
while Japan remained relatively flat, as economic recovery expectations, stable
interest rates and a stronger yen seemed to result in capital inflows. The
Australia/New Zealand dollar-bloc bond markets, where rising commodity prices
supported the local currency and helped contain inflation, outperformed the
U.S. bond market in local currency terms.

Emerging market bond prices rose during the period, apparently as a result of
higher commodity prices and improved economic fundamentals for the respective
countries. The J.P. Morgan Emerging Market Bond Index Plus (EMBI+) increased
8.10% during the six-month period.(2) Most countries in the index experienced
positive returns, with the exception of Nigeria, Colombia, the Philippines and
Peru. Russian bonds were among the best performers, increasing 49.78%, followed
by those of Algeria, Venezuela, Mexico and Turkey.

(2) Source: J.P. Morgan. The J.P. Morgan Emerging Markets Bond Index Plus
(EMBI+) tracks total returns for external debt instruments in the emerging
markets. Included in the index are U.S. dollar and other external currency
denominated Brady bonds, loans, Eurobonds, and local markets instruments. It
provides investors with a definition of the market for emerging markets
external-currency debt, a list of the traded instruments, and a compilation of
their terms. The EMBI+ includes 49 instruments from 14 countries, with a total
face value of $175 billion and a market capitalization of $98 billion.

Top Five Country Holdings
Templeton Asset Strategy Fund
6/30/00

% of Total
Country Net Assets
-----------------------------
U.S. 18.1%
U.K. 12.9%
Japan 9.7%
France 6.6%
Netherlands 5.5%

TA-3
<PAGE>

This chart in pie format shows the geographic distribution of Templeton Asset
Strategy Fund as a percentage of total net assets on 6/30/00.

Europe 42.5%
North America 23.5%
Asia 17.1%
Latin America/Caribbean 9.8%
Mid-East/Africa 2.9%
Australia/New Zealand 2.4%

We attempted to maximize total return, including income, during the period by
focusing the Fund's assets on intermediate- and long-term investment grade
bonds and allocating a small amount to what we believe are the highest quality
and most liquid bonds we found in the emerging markets. We believe that this
balance offers the opportunity for higher long-term returns at the cost of
modestly higher short-term volatility.

The Fund's geographic allocation changed slightly during the period. Our North
American market allocation increased, with Canadian exposure unchanged and the
U.S. allocation increasing. We increased the European allocation slightly,
adjusting the underlying country mix to decrease our exposure to Sweden, and
added to positions in Denmark, Germany and Italy. The Fund's Japanese and
Australia/New Zealand allocations remained relatively unchanged. Meanwhile, we
took advantage of the premium on Mexican assets, following the country's debt
upgrade, to sell Mexican securities and add to positions in Argentina, Brazil
and Venezuela.

Our emerging markets exposure continued to have a relatively low duration with
respect to the J.P. Morgan EMBI+, thereby reducing its sensitivity to
interest-rate movements and market uncertainty. At the period's end, the Fund's
bonds were U.S. dollar-denominated sovereign Eurobonds, with fixed coupons
issued by countries we believe to have strong repayment capacity. We also
continued to emphasize Latin America, because we feel the region has improving
fundamentals.

Looking Ahead

We believe the reporting period proved encouraging for our value-oriented
investment style. For three years the market's love affair with
technology-related, new economy stocks significantly contributed to euphoric
valuations for those companies, in our opinion. However, we feel the first six
months of 2000 may signal a shift back to stock assessment based on future
earnings. If, indeed, such a shift is underway, your investment in the Fund
should benefit. Our analysts believe that every stock in the Fund compares
favorably with future earnings prospects, something that we cannot say for many
recently favored stocks. On the fixed income front, we believe that global

TA-4
<PAGE>

inflationary pressures will continue to increase in the near term and world
economic growth will remain strong throughout the year. In such a challenging
environment for bonds, a globally diversified investment strategy can reduce
risks of declines in any particular market or sector.

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 country, industry, security or the
Fund. Our strategies and the Fund's portfolio composition will change
depending on market and economic conditions. Although historical performance
is no guarantee of future results, these insights may help you understand our
investment and management philosophy.

TA-5
<PAGE>

Templeton Asset Strategy Fund - Class 1

Performance reflects the Fund's Class 1 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.

PERFORMANCE SUMMARY AS OF 6/30/00

Templeton Asset Strategy Fund - Class 1 delivered a +2.43% cumulative total
return for the six-month period ended 6/30/00. Total return of Class 1 shares
represents the cumulative or average annual change in value, assuming
reinvestment of dividends and capital gains. Average returns smooth out
variations in returns, which can be significant; they are not the same as
year-by-year results.

Templeton Asset Strategy Fund - Class 1*
Periods ended 6/30/00
Since
Inception
1-Year 5-Year 10-Year (8/24/88)
-------------------------------------------------
Average Annual Total Return +13.39% +15.02% +13.09% +12.59%
Cumulative Total Return +13.39% +101.29% +242.19% +307.72%
Value of $10,000 Investment $11,339 $20,129 $34,219 $40,772

* Performance prior to the 5/1/00 merger reflects the historical performance of
the Templeton Asset Allocation Fund.

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.

TA-6
<PAGE>

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

TEMPLETON ASSET STRATEGY FUND

Financial Highlights
<TABLE>
<CAPTION>

Class 1
---------------------------------------------------------------------------------
Six Months Ended Year Ended December 31,
June 30, 2000 --------------------------------------------------------------
(unaudited) 1999 1998 1997 1996 1995
---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per share operating performance
(for a share outstanding throughout the period)
Net asset value, beginning of period .......... $23.37 $22.46 $22.35 $21.08 $18.72 $15.69
-----------------------------------------------------------------------------
Income from investment operations:
Net investment income(c) ..................... .24 .44 .69 .67 .63 .57
Net realized and unrealized gains ............ .16 3.78 .75 2.44 2.76 2.87
-----------------------------------------------------------------------------
Total from investment operations .............. .40 4.22 1.44 3.11 3.39 3.44
-----------------------------------------------------------------------------
Less distributions from:
Net investment income ........................ (.52) (.50) (.66) (.63) (.58) (.41)
Net realized gains ........................... (3.62) (2.81) (.67) (1.21) (.45) --
-----------------------------------------------------------------------------
Total distributions ........................... (4.14) (3.31) (1.33) (1.84) (1.03) (.41)
-----------------------------------------------------------------------------
Net asset value, end of period ................ $19.63 $23.37 $22.46 $22.35 $21.08 $18.72
=============================================================================
Total return(b) ............................... 2.43% 22.86% 6.41% 15.52% 18.93% 22.48%

Ratios/supplemental data
Net assets, end of period (000's) ............. $693,637 $671,549 $692,163 $735,568 $556,027 $406,123
Ratios to average net assets:
Expenses ..................................... .78%(a) .74% .78% .74% .64% .66%
Net investment income ........................ 2.37%(a) 2.06% 2.88% 3.32% 3.56% 3.73%
Portfolio turnover rate ....................... 15.33% 45.34% 43.18% 45.27% 57.50% 43.02%
</TABLE>

(a)Annualized
(b)Total 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.
(c)Based on average shares outstanding effective year ended December 31, 1999.

TA-7
<PAGE>

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

TEMPLETON ASSET STRATEGY FUND

Financial Highlights (continued)

<TABLE>
<CAPTION>
Class 2
------------------------------------------------------------
Six Months Ended Year Ended December 31,
June 30, 2000 ---------------------------------------
(unaudited) 1999 1998 1997(c)
------------------------------------------------------------
<S> <C> <C> <C> <C>
Per share operating performance
(for a share outstanding throughout the period)
Net asset value, beginning of period .......... $23.27 $22.38 $22.32 $20.40
----------------------------------------------------
Income from investment operations:
Net investment income(d) ..................... .22 .36 .63 .16
Net realized and unrealized gains ............ .15 3.80 .74 1.76
----------------------------------------------------
Total from investment operations .............. .37 4.16 1.37 1.92
----------------------------------------------------
Less distributions from:
Net investment income ........................ (.46) (.46) (.64) --
Net realized gains ........................... (3.62) (2.81) (.67) --
----------------------------------------------------
Total distributions ........................... (4.08) (3.27) (1.31) --
----------------------------------------------------
Net asset value, end of period ................ $19.56 $23.27 $22.38 $22.32
====================================================
Total return(b) ............................... 2.29% 22.54% 6.10% 9.41%
Ratios/supplemental data
Net assets, end of period (000's) ............. $26,429 $20,962 $15,763 $9,665
Ratios to average net assets:
Expenses ..................................... 1.03%(a) .99% 1.03% 1.03%(a)
Net investment income ........................ 2.15%(a) 1.71% 2.61% 1.97%(a)
Portfolio turnover rate ....................... 15.33% 45.34% 43.18% 45.27%
</TABLE>

(a)Annualized
(b)Total 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.
(c)For the period May 1, 1997 (effective date) to December 31, 1997.
(d)Based on average shares outstanding effective year ended December 31, 1999.

See notes to financial statements.

TA-8
<PAGE>

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

TEMPLETON ASSET STRATEGY FUND

Statement of Investments, June 30, 2000 (unaudited)

<TABLE>
<CAPTION>
COUNTRY SHARES VALUE
--------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stocks and Warrants 79.4%
Aerospace & Military Technology 1.7%
BAE Systems PLC .................................. United Kingdom 153,055 $ 947,659
Hong Kong Aircraft Engineering Co. Ltd. .......... Hong Kong 363,200 698,883
Raytheon Co., A .................................. United States 21,775 423,252
Rolls-Royce PLC .................................. United Kingdom 2,733,657 9,714,729
Saab AB, B ....................................... Sweden 54,400 458,967
-----------
12,243,490
-----------
Appliances & Household Durables .1%
Laox Co. Ltd. .................................... Japan 70,000 383,725
-----------
Automobiles 4.7%
Autoliv Inc. ..................................... Sweden 246,900 5,941,031
Autoliv Inc., SDR ................................ Sweden 129,000 3,176,833
Fiat SpA ......................................... Italy 236,170 6,159,834
Ford Motor Co. ................................... United States 220,000 9,459,999
General Motors Corp. ............................. United States 42,700 2,479,269
(a) Visteon Corp. .................................... United States 28,805 349,264
Volkswagen AG .................................... Germany 14,430 557,426
Volvo AB, B ...................................... Sweden 260,000 5,676,662
-----------
33,800,318
-----------
Banking 4.8%
Banca Nazionale Del Lavoro SpA ................... Italy 225,160 792,087
(a) Bangkok Bank Public Co. Ltd., fgn. ............... Thailand 193,400 236,665
Canadian Imperial Bank of Commerce ............... Canada 140,000 3,840,858
DNB Holding ASA .................................. Norway 2,178,900 9,074,819
Foreningssparbanken AB, A ........................ Sweden 170,700 2,510,580
Nordic Baltic Holding AB, FDR .................... Sweden 2,502,060 18,275,465
-----------
34,730,474
-----------
Broadcasting & Publishing .1%
Wolters Kluwer NV ................................ Netherlands 25,861 691,616
-----------
Building Materials & Components
Gujarat Ambuja Cements Ltd. ...................... India 400 1,746
-----------
Business & Public Services .2%
(a) Complete Business Solutions Inc. ................. United States 24,060 422,554
(a) Gartner Group Inc., B ............................ United States 46,630 460,471
HCA-The Healthcare Corp. ......................... United States 13,600 413,100
(a) Humana Inc. ...................................... United States 6,200 30,225
-----------
1,326,350
-----------
Chemicals 1.5%
Akzo Nobel NV .................................... Netherlands 178,695 7,622,337
BASF AG .......................................... Germany 17,150 698,665
DSM NV, Br. ...................................... Netherlands 75,000 2,415,552
-----------
10,736,554
-----------
Data Processing & Reproduction 2.7%
(a) 3Com Corp. ....................................... United States 14,390 829,224
Compaq Computer Corp. ............................ United States 420,790 10,756,444
Fujitsu Ltd. ..................................... Japan 216,000 7,492,274
(a) Palm Inc. ........................................ United States 5,300 176,888
-----------
19,254,830
-----------
</TABLE>

TA-9
<PAGE>

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

TEMPLETON ASSET STRATEGY FUND

Statement of Investments, June 30, 2000 (unaudited) (cont.)

<TABLE>
<CAPTION>
COUNTRY SHARES VALUE
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stocks and Warrants (cont.)
Electrical & Electronics 5.7%
Alcatel SA ........................................ France 195,745 $12,890,305
(a) Hyundai Electronics Industries Co. ................ South Korea 438,700 8,655,770
Koninklijke Philips Electronics NV ................ Netherlands 200,268 9,483,186
Marconi PLC ....................................... United Kingdom 63,620 826,828
Motorola Inc. ..................................... United States 153,930 4,473,591
Sony Corp. ........................................ Japan 51,800 4,846,841
-----------
41,176,521
-----------
Electronic Components & Instruments 2.4%
Hewlett-Packard Co. ............................... United States 63,750 7,960,781
Williams PLC ...................................... United Kingdom 1,581,900 9,207,814
-----------
17,168,595
-----------
Energy Sources 4.3%
Consol Energy ..................................... United States 351,600 5,317,950
Lasmo PLC ......................................... United Kingdom 197,410 417,640
(a) Ranger Oil Ltd. ................................... Canada 1,153,490 6,344,195
(a) Renaissance Energy Ltd. ........................... Canada 549,350 5,320,357
Repsol SA ......................................... Spain 24,000 479,660
Shell Transport & Trading Co. PLC ................. United Kingdom 1,525,600 12,921,768
-----------
30,801,570
-----------
Financial Services 7.3%
AXA SA ............................................ France 102,651 16,235,435
CIT Group Inc., A ................................. United States 497,000 8,076,250
ING Groep NV ...................................... Netherlands 235,686 15,994,947
Nomura Securities Co. Ltd. ........................ Japan 500,600 12,277,841
Old Mutual PLC .................................... South Africa 132,000 290,249
-----------
52,874,722
-----------
Forest Products & Paper 1.4%
(a) Asia Pulp & Paper Co. Ltd., ADR ................... Indonesia 454,800 2,302,425
Assidoman AB ...................................... Sweden 90,000 1,287,767
Assidoman AB, 144A ................................ Sweden 27,000 386,330
Stora Enso OYJ, R ................................. Finland 706,300 6,465,593
-----------
10,442,115
-----------
Health & Personal Care 8.4%
Aventis SA ........................................ France 219,340 16,073,524
(a) CellTech Group PLC ................................ United Kingdom 733,609 14,126,446
Mayne Nickless Ltd., A ............................ Australia 1,730,400 3,563,529
Merck KGAA ........................................ Germany 14,700 450,903
Mylan Laboratories Inc. ........................... United States 14,460 263,895
Ono Pharmaceutical Co Ltd. ........................ Japan 247,000 10,621,899
Teva Pharmaceutical Industries Ltd., ADR .......... Israel 281,700 15,616,744
-----------
60,716,940
-----------
Industrial Components .2%
Goodyear Tire & Rubber Co. ........................ United States 3,600 72,000
(a) Madeco Manufacturera de Cobre SA, ADR ............. Chile 162,500 1,239,063
-----------
1,311,063
-----------
</TABLE>

TA-10
<PAGE>

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

TEMPLETON ASSET STRATEGY FUND

Statement of Investments, June 30, 2000 (unaudited) (cont.)

<TABLE>
<CAPTION>
SHARES/
COUNTRY WARRANTS VALUE
----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stocks and Warrants (cont.)
Insurance 4.0%
Ace Ltd. ................................................. Bermuda 25,200 $ 705,600
Aetna Inc. ............................................... United States 23,890 1,533,439
Allstate Corp. ........................................... United States 80,000 1,780,000
Partnerre Ltd. ........................................... Bermuda 17,500 620,156
ReliaStar Financial Corp. ................................ United States 18,310 960,131
Scor ..................................................... France 9,470 414,024
Torchmark Corp. .......................................... United States 90,000 2,221,875
Unumprovident Corp. ...................................... United States 18,530 371,758
XL Capital Ltd., A ....................................... Bermuda 179,400 9,710,025
Zurich Allied AG ......................................... Switzerland 21,200 10,508,087
-----------
28,825,095
-----------
Leisure & Tourism
Mandarin Oriental International Ltd. ..................... Hong Kong 524,000 348,460
-----------
Machinery & Engineering 1.6%
Invensys PLC ............................................. United Kingdom 189,439 709,783
Kurita Water Industries Ltd. ............................. Japan 432,000 9,533,765
Makita Corp. ............................................. Japan 59,000 563,764
Mckechnie Group PLC ...................................... United Kingdom 101,800 567,893
-----------
11,375,205
-----------
Merchandising 2.9%
Best Denki Co. Ltd. ...................................... Japan 777,000 5,353,556
J.C. Penney Co. Inc. ..................................... United States 8,800 162,250
J.Sainsbury PLC .......................................... United Kingdom 1,670,700 7,562,246
Marks & Spencer PLC ...................................... United Kingdom 1,339,010 4,692,626
Sears, Roebuck & Co. ..................................... United States 42,000 1,370,250
Storehouse ............................................... United Kingdom 3,079,116 2,027,666
-----------
21,168,594
-----------
Metals & Mining 2.9%
Anglogold Ltd., ADR ...................................... South Africa 229,700 4,723,206
Barrick Gold Corp. ....................................... Canada 419,390 7,571,494
Companhia Siderurgica Nacional Sid Nacional CSN .......... Brazil 16,300,000 511,227
Corus Group PLC .......................................... United Kingdom 3,943,000 5,745,247
Industrias Penoles SA .................................... Mexico 168,200 271,690
(a) Kinross Gold Corp. ....................................... Canada 1,727,800 1,539,243
Pohang Iron & Steel Co. Ltd. ............................. South Korea 4,450 386,982
-----------
20,749,089
-----------
Multi-Industry 3.5%
Alfa SA de CV, A ......................................... Mexico 1,277,251 2,919,505
Broken Hill Proprietary Co. Ltd. ......................... Australia 53,794 637,882
Cheung Kong Holdings Ltd. ................................ Hong Kong 652,500 7,219,494
Hanson PLC ............................................... United Kingdom 96,900 683,582
Hutchison Whampoa Ltd. ................................... Hong Kong 38,500 484,010
Swire Pacific Ltd., A .................................... Hong Kong 2,200,000 12,869,293
Swire Pacific Ltd., B .................................... Hong Kong 945,000 769,791
-----------
25,583,557
-----------
Real Estate .1%
(a) Hon Kwok Land Investment Co. Ltd. ........................ Hong Kong 1,226,456 62,146
(a) Hon Kwok Land Investment Co Ltd, wts., 10/28/00 .......... Hong Kong 245,291 535
New World Development Co. Ltd. ........................... Hong Kong 303,543 338,771
-----------
401,452
-----------
</TABLE>

TA-11
<PAGE>

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

TEMPLETON ASSET STRATEGY FUND

Statement of Investments, June 30, 2000 (unaudited) (cont.)

<TABLE>
<CAPTION>
COUNTRY SHARES VALUE
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stocks and Warrants (cont.)
Recreation & Other Consumer Goods .7%
Mattel Inc. ..................................................... United States 377,100 $ 4,973,006
Yue Yuen Industrial Holdings Ltd. ............................... Hong Kong 140 311
------------
4,973,317
------------
Telecommunications 11.3%
AT&T Corp. ...................................................... United States 193,620 6,123,233
Nippon Telegraph & Telephone Corp. .............................. Japan 1,046 13,939,417
Nippon Telegraph & Telephone Corp., ADR ......................... Japan 5,680 388,370
PT Indosat, ADR ................................................. Indonesia 370,800 4,217,850
SBC Communications Inc. ......................................... United States 318,400 13,770,800
Telecom Argentina Stet-France SA (Teco), B, ADR ................. Argentina 4,000 110,000
Telecom Corp. of New Zealand Ltd. ............................... New Zealand 2,562,970 8,988,559
Telecom Italia SpA, di Risp ..................................... Italy 1,200,000 7,974,771
Telefonica de Argentina SA, ADR ................................. Argentina 350,620 11,132,185
Telefonica del Peru SA, ADR ..................................... Peru 225,400 2,563,925
Telefonos de Mexico SA (Telmex), L, ADR ......................... Mexico 212,758 12,153,801
------------
81,362,911
------------
Textiles & Apparel .1%
Adidas-Salomon AG ............................................... Germany 6,510 359,434
(a) Fruit of the Loom Ltd. .......................................... United States 160,000 43,200
------------
402,634
------------
Transportation 2.4%
British Airways PLC ............................................. United Kingdom 1,925,900 11,071,658
(a) Fritz Cos. Inc. ................................................. United States 90,300 931,219
Gesco Corp. Ltd. ................................................ India 522 117
Great Eastern Shipping Co. Ltd. ................................. India 2,552 885
Peninsular & Oriental Steam Navigation Co. ...................... United Kingdom 580,000 4,943,307
Seino Transportation Co. Ltd. ................................... Japan 115,000 580,407
------------
17,527,593
------------
Utilities Electrical & Gas 4.4%
E.On AG ......................................................... Germany 173,800 8,413,117
Endesa SA ....................................................... Spain 122,000 2,372,781
Endesa SA, ADR .................................................. Spain 88,000 1,716,000
Gener SA, ADR ................................................... Chile 287,050 4,216,047
Hong Kong Electric Holdings Ltd. ................................ Hong Kong 2,131,500 6,863,193
Iberdrola SA, Br. ............................................... Spain 85,000 1,099,939
Korea Electric Power Corp. ...................................... South Korea 215,280 6,680,288
------------
31,361,365
------------
Total Common Stocks and Warrants (Cost $480,201,840)............. 571,739,901
------------
Preferred Stocks 2.6%
(a) Empresa Nacional de Comercio Redito Participacoe, pfd. .......... Brazil 275,000 610
Petroleo Brasileiro SA, pfd. .................................... Brazil 360,000 10,875,831
Telecomunicacoes de Sao Paulo SA, ADR, pfd. ..................... Brazil 121,810 2,253,485
Vale do Rio Doce, A, ADR, pfd. .................................. Brazil 196,500 5,551,125
------------
Total Preferred Stocks (Cost $15,523,211)........................ 18,681,051
------------
</TABLE>

TA-12
<PAGE>

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

TEMPLETON ASSET STRATEGY FUND

Statement of Investments, June 30, 2000 (unaudited) (cont.)

<TABLE>
<CAPTION>
PRINCIPAL
COUNTRY AMOUNT* VALUE
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Bonds 13.3%
Bonos y Oblig del Estado, 3.25%, 1/31/05 ............................. Spain 2,174,000 EUR $ 1,915,618
Buoni Poliennali del Tesoro:
10.50%, 7/15/00 ...................................................... Italy 581,013 EUR 556,876
7.75%, 11/01/06 ...................................................... Italy 9,208,191 EUR 9,898,955
(b) Essar Steel Ltd., Reg. S, FRN, 7.635%, 7/20/99 ....................... India 445,000 224,725
Federal Republic of Germany:
3.25%, 2/17/04 ....................................................... Germany 2,837,000 EUR 2,563,046
4.50%, 7/04/09 ....................................................... Germany 4,919,000 EUR 4,475,119
General Motors Acceptance Corp., 5.50%, 2/02/05 ...................... United States 4,888,000 4,597,083
Government of Brazil:
14.50%, 10/15/09 ..................................................... Brazil 2,970,000 3,176,415
12.25%, 3/06/30 ...................................................... Brazil 2,000,000 1,840,000
Government of Canada:
8.75%, 12/01/05 ...................................................... Canada 612,000 CAD 465,028
7.00%, 12/01/06 ...................................................... Canada 843,000 CAD 599,897
6.00%, 6/01/08 ....................................................... Canada 2,812,000 CAD 1,907,822
Government of France, 3.50%, 7/12/04 ................................. France 2,437,000 EUR 2,203,074
Government of Netherlands, 5.75%, 2/15/07 ............................ Netherlands 3,484,000 EUR 3,422,752
Government of New Zealand, 7.00%, 7/15/09 ............................ New Zealand 3,914,000 NZD 1,872,156
Government of Spain, 7.35%, 3/31/07 .................................. Spain 3,201,000 EUR 3,384,977
International Bank for Reconstruction & Development, 5.25%, 3/20/02 .. Japan 381,700,000 JPY 3,913,503
Kingdom of Belgium, 7.75%, 10/15/04 .................................. Belgium 2,574,000 EUR 2,694,676
Kingdom of Denmark:
7.00%, 12/15/04 ...................................................... Denmark 20,285,000 DKK 2,729,159
5.00%, 8/15/05 ....................................................... Denmark 15,411,000 DKK 1,918,058
Kingdom of Sweden, 6.00%, 2/09/05 .................................... Sweden 7,200,000 SEK 843,983
New South Wales Treasury Corp., 144A, 7.00%, 4/01/04 ................. Australia 2,200,000 AUD 1,353,602
Protexa Construcciones SA de CV, 144A, 12.125%, 7/24/02 .............. Mexico 62,039 48,080
Queensland Treasury Corp., 6.50%, 6/14/05 ............................ Australia 889,000 AUD 537,662
Republic of Argentina:
11.375%, 3/15/10 ..................................................... Argentina 1,930,000 1,763,538
11.75%, 6/15/15 ...................................................... Argentina 1,700,000 1,541,475
Republic of Ecuador, 144A, 11.25%, 4/25/02 ........................... Ecuador 185,000 66,600
Republic of Panama, 8.875%, 9/30/27 .................................. Panama 960,000 812,400
Republic of Peru, FRN, 4.50%, 3/07/17 ................................ Peru 1,560,000 1,046,183
Republic of Turkey, 12.375%, 6/15/09 ................................. Turkey 1,165,000 1,237,813
Republic of Venezuela:
144A, 9.125%, 6/18/07 ................................................ Venezuela 1,640,000 1,303,800
Reg S, 9.125%, 6/18/07 ............................................... Venezuela 600,000 477,000
9.25%, 9/15/27 ....................................................... Venezuela 1,760,000 1,160,500
SEI Holdings IX Inc., 144A, 11.00%, 11/30/00 .........................Trinidad and Tobago 170,000 170,000
U.S. Treasury Bond, 5.25%, 11/15/28 .................................. United States 1,065,000 942,858
U.S. Treasury Note:
4.50%, 1/31/01 ....................................................... United States 1,400,000 1,384,688
6.375%, 6/30/02 ...................................................... United States 5,000,000 5,003,125
5.875%, 11/15/04 ..................................................... United States 3,300,000 3,251,533
6.75%, 5/15/05 ....................................................... United States 5,000,000 5,118,750
6.50%, 2/15/10 ....................................................... United States 3,300,000 3,413,438
United Kingdom:
6.50%, 12/07/03 ...................................................... United Kingdom 150,000 GBP 231,391
7.50%, 12/07/06 ...................................................... United Kingdom 3,885,000 GBP 6,477,059
United Mexican States, 11.50%, 5/15/26 ............................... Mexico 2,895,000 3,477,620
-----------
Total Bonds (Cost $103,215,362)....................................... 96,022,037
-----------
</TABLE>

TA-13
<PAGE>

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

TEMPLETON ASSET STRATEGY FUND

Statement of Investments, June 30, 2000 (unaudited) (cont.)

<TABLE>
<CAPTION>
PRINCIPAL
COUNTRY AMOUNT* VALUE
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Short Term Investments 5.6%
Deutsche Bank AG, 6.875%, 7/03/00, Time Deposit ........................ United States $14,000,000 $ 14,000,000
Dresdner Bank AG, 7.00%, 7/03/00, Time Deposit ......................... United States 5,700,000 5,700,000
U.S. Treasury Bills, 5.65% - 5.66% with maturities to 9/07/00 .......... United States 20,900,000 20,683,518
------------
Total Short Term Investments (Cost $40,373,437)......................... 40,383,518
------------
Total Investments (Cost $639,313,850) 100.9%............................ 726,826,507
Net Equity in Forward Contracts ........................................ (15,969)
Other Assets, less Liabilities (.9%) ................................... (6,744,520)
------------
Total Net Assets 100.0% ................................................ $720,066,018
============
</TABLE>
Currency Abbreviations:

AUD- Australian Dollar
CAD- Canadian Dollar
DKK- Danish Krone
EUR- European Unit
GBP- British Pound
JPY- Japanese Yen
NZD- New Zealand Dollar
SEK- Swedish Krona

*The principal amount is stated in U.S. dollars unless otherwise indicated.
(a)Non-income producing
(b)Represents bond in default.

See notes to financial statements.

TA-14
<PAGE>

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

TEMPLETON ASSET STRATEGY FUND

Financial Statements

Statement of Assets and Liabilities
June 30, 2000 (unaudited)

Assets:
Investments in securities:
Cost ....................................................... $639,313,850
============
Value ...................................................... 726,826,507
Receivables:
Investment securities sold ................................. 1,415,821
Capital shares sold ........................................ 26,987
Dividends and interest ..................................... 4,004,917
Unrealized gain on forward exchange contracts (Note 6) ...... 5,319
------------
Total assets ............................................. 732,279,551
------------
Liabilities:
Payables:
Investment securities purchased ............................ 10,647,921
Capital shares redeemed .................................... 881,320
Affiliates ................................................. 449,161
Funds advanced by custodian ................................. 60,631
Unrealized loss on forward exchange contracts (Note 6) ...... 21,288
Other liabilities ........................................... 153,212
------------
Total liabilities ........................................ 12,213,533
------------
Net assets, at value .................................... $720,066,018
============
Net assets consist of:
Undistributed net investment income ......................... $ 4,020,090
Net unrealized appreciation ................................. 87,470,832
Accumulated net realized gain ............................... 25,487,630
Capital shares .............................................. 603,087,466
------------
Net assets, at value .................................... $720,066,018
============
Class 1:
Net assets, at value ........................................ $693,636,741
============
Shares outstanding .......................................... 35,338,815
============
Net asset value and offering price per share ................ $ 19.63
============
Class 2:
Net assets, at value ........................................ $ 26,429,277
============
Shares outstanding .......................................... 1,350,905
============
Net asset value and offering price per share ................ $ 19.56
============

See notes to financial statements.

TA-15
<PAGE>

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

TEMPLETON ASSET STRATEGY FUND

Financial Statements (continued)

Statement of Operations
for the six months ended June 30, 2000 (unaudited)

<TABLE>
<S> <C>
Investment income:
(net of foreign taxes of $1,021,939)
Dividends ................................................................ $ 7,802,649
Interest ................................................................. 2,985,587
-------------
Total investment income ................................................ 10,788,236
-------------
Expenses:
Management fees (Note 3) ................................................. 2,068,757
Administrative fees (Note 3) ............................................. 375,777
Distribution fees - Class 2 (Note 3) ..................................... 28,795
Custodian fees ........................................................... 95,387
Reports to shareholders .................................................. 82,550
Professional fees (Note 3) ............................................... 43,852
Trustees' fees and expenses .............................................. 4,123
Other .................................................................... 1,673
-------------
Total expenses ......................................................... 2,700,914
-------------
Net investment income ................................................. 8,087,322
-------------
Realized and unrealized gains (losses):
Net realized gain (loss) from:
Investments ............................................................ 43,217,208
Foreign currency transactions .......................................... (403,742)
-------------
Net realized gain ..................................................... 42,813,466
Net unrealized appreciation (depreciation) on:
Investments ............................................................ (33,315,088)
Translation of assets and liabilities denominated in foreign currencies 121,166
-------------
Net unrealized depreciation ........................................... (33,193,922)
-------------
Net realized and unrealized gain .......................................... 9,619,544
-------------
Net increase in net assets resulting from operations ...................... $ 17,706,866
=============
</TABLE>

See notes to financial statements.

TA-16
<PAGE>

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

TEMPLETON ASSET STRATEGY 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, 1999
-------------------------------------
<S> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income ................................................................. $ 8,087,322 $ 13,810,413
Net realized gain from investments and foreign currency transactions .................. 42,813,466 88,790,440
Net unrealized appreciation (depreciation) on investments and translation of assets
and liabilities denominated in foreign currencies .................................... (33,193,922) 36,425,123
--------------------------------
Net increase in net assets resulting from operations ................................. 17,706,866 139,025,976
Distributions to shareholders from:
Net investment income:
Class 1 .............................................................................. (15,153,507) (14,822,362)
Class 2 .............................................................................. (472,676) (310,147)
Net realized gains:
Class 1 .............................................................................. (104,057,396) (82,476,906)
Class 2 .............................................................................. (3,633,708) (1,907,029)
--------------------------------
Total distributions to shareholders ..................................................... (123,317,287) (99,516,444)
Capital share transactions: (Note 2)
Class 1 .............................................................................. 124,215,964 (58,852,355)
Class 2 .............................................................................. 8,949,637 3,928,278
--------------------------------
Total capital share transactions ........................................................ 133,165,601 (54,924,077)
Net increase (decrease) in net assets ................................................ 27,555,180 (15,414,545)
Net assets:
Beginning of period ..................................................................... 692,510,838 707,925,383
--------------------------------
End of period ........................................................................... $ 720,066,018 $ 692,510,838
================================
Undistributed net investment income included in net assets:
End of period ........................................................................... $ 4,020,090 $ 11,558,951
================================
</TABLE>

See notes to financial statements.

TA-17
<PAGE>

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

TEMPLETON ASSET STRATEGY FUND

Notes to Financial Statements (unaudited)

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

The Templeton Asset Strategy 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. Shares of the Fund are sold only to insurance company separate accounts
to fund the benefits of variable life insurance policies or variable annuity
contracts. The Fund seeks a high level of total return through a flexible
policy of investing in stocks of companies in any nation, debt obligations of
companies and governments of any nation, and money market instruments.

Effective May 1, 2000, the name of the Templeton Asset Allocation Fund changed
to Templeton Asset Strategy Fund, as a result of fund mergers, as discussed in
Note 7. 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

b. Foreign Currency Translation

Portfolio securities and other assets and liabilities denominated in foreign
currencies are translated into U.S. dollars based on the exchange rate of such
currencies against U.S. dollars on the date of valuation. Purchases and sales
of securities and income items denominated in foreign currencies are translated
into U.S. dollars at the exchange rate in effect on the transaction date. When
the Fund purchases or sells foreign securities it will customarily enter into a
foreign exchange contract to minimize foreign exchange risk from the trade date
to the settlement date of such transactions.

c. Forward Exchange Contracts

The Fund may enter into forward exchange contracts to hedge against foreign
exchange risks. These contracts are valued daily and the Fund's equity therein
is included in the Statement of Assets and Liabilities. Realized and unrealized
gains and losses are included in the Statement of Operations.

d. Income Taxes

No provisions 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 all of its taxable income.

TA-18
<PAGE>

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

TEMPLETON ASSET STRATEGY FUND

Notes to Financial Statements (unaudited) (continued)

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (cont.)

e. Security Transactions, Investment Income, Expenses and Distributions

f. Indexed Securities

The Fund may invest in debt instruments in which the principal and/or interest
is dependent on other factors such as yield curves, currency exchange rates or
commodity prices. The fund's objective in holding these securities, commonly
called indexed securities or structured notes, is to tailor its investments to
the specific risk and returns it wishes to assume while avoiding unwanted risk
or change in the Fund's exposure to a particular foreign exchange rate or the
spread between two foreign exchange rates.

g. Accounting Estimates

TA-19
<PAGE>

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

TEMPLETON ASSET STRATEGY FUND

Notes to Financial Statements (unaudited) (continued)

2. SHARES OF BENEFICIAL INTEREST

The Fund offers two classes of shares: Class 1 and Class 2 . Each class of
shares differs by its distribution fees, voting rights on matters affecting a
single class, and its exchange privilege.

At June 30, 2000, there were an unlimited number of shares authorized ($0.01
par value). Transactions in the Fund's shares were as follows:

<TABLE>
<CAPTION>
Six Months Ended Year Ended
June 30, 2000 December 31, 1999
------------------------------------------------------------------
Shares Amount Shares Amount
Class 1 Shares: ------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold ....................................... 303,121 $ 6,028,866 240,379 $ 5,144,326
Shares issued on merger (Note 7) .................. 2,830,073 53,573,397 -- --
Shares issued on reinvestment of distributions .... 6,151,475 119,210,903 5,305,304 97,299,268
Shares redeemed ................................... (2,681,179) (54,597,202) (7,631,687) (161,295,949)
-------------------------------------------------------------
Net increase (decrease) ........................... 6,603,490 $ 124,215,964 (2,086,004) $ (58,852,355)
=============================================================
Class 2 Shares:
Shares sold ....................................... 340,652 $ 6,899,314 279,540 $ 5,948,034
Shares issued on merger (Note 7) .................. 2,893 54,613 -- --
Shares issued on reinvestment of distributions .... 212,594 4,106,384 121,157 2,217,176
Shares redeemed ................................... (105,859) (2,110,674) (204,412) (4,236,932)
-------------------------------------------------------------
Net increase ...................................... 450,280 $ 8,949,637 196,285 $ 3,928,278
=============================================================
</TABLE>

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
Templeton Investment Counsel, Inc. (TICI) Investment manager
Franklin/Templeton Distributors, Inc. (Distributors) Principal underwriter
Franklin/Templeton Investor Services, Inc. (Investor Services) Transfer agent
</TABLE>

The Fund pays administrative fees to FT Services based on the average net
assets as follows:

Fees are further reduced on net assets over $1.2 billion.

The Fund pays an investment management fee to TICI based on the average net
assets of the Fund as follows:

Annualized Fee Rate Daily Net Assets
-------------------------------------------------------------------------
.65% First $200 million
.585% Over $200 million, up to and including $1.3 billion
.52% Over $1.3 billion

The Fund reimburses Distributors up to .25% per year of its average daily net
assets of Class 2 shares, for costs incurred in marketing the Fund's Class 2
shares.

TA-20
<PAGE>

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

TEMPLETON ASSET STRATEGY FUND

Notes to Financial Statements (unaudited) (continued)

3. TRANSACTIONS WITH AFFILIATES (cont.)

Investor Services, under terms of an agreement, performs shareholder servicing
for the Fund and is not paid by the Fund for the services.

Included in professional fees are legal fees of $12,633 that were paid to a law
firm in which a partner of that firm was an officer of the Fund.

4. INCOME TAXES

At December 31, 1999, the fund had tax basis capital losses of $867,232, which
will expire on 2007. Such losses may be carried over to offset future capital
gains.

At December 31, 1999, the Fund had $989,065 deferred capital and currency
losses occurring subsequent to October 31, 1999. For tax purposes, such losses
will be reflected in the year ending December 31, 2000.

Net investment income and net realized capital gains (losses) differ for
financial statement and tax purposes primarily due to differing treatments of
foreign currency transactions, and merger related expenses.

At June 30, 2000, the net unrealized appreciation based on the cost of
investments for income tax purposes of $639,317,113 was as follows:

Unrealized appreciation ............. $ 164,422,807
Unrealized depreciation ............. (76,913,413)
-------------
Net unrealized appreciation ......... $ 87,509,394
=============

5. INVESTMENT TRANSACTIONS

Purchases and sales of securities (excluding short-term securities) for the
period ended June 30, 2000 aggregated $100,889,433 and $175,799,656,
respectively.

6. FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK

The Fund has been a party to financial instruments with off-balance-sheet risk,
primarily forward exchange contracts, in order to minimize the impact on the
Fund from adverse changes in the relationship between the U.S. dollar and
foreign currencies and interest rates. These instruments involve market risk in
excess of the amount recognized in the Statement of Assets and Liabilities.
Some of these risks have been minimized by offsetting contracts. Risks arise
from the possible inability of counterparties to meet the terms of their
contracts, future movement in currency values and interest rates, and contract
positions that are not exact offsets. The contract amount indicates the extent
of the Fund's involvement in such contracts.

TA-21
<PAGE>

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

TEMPLETON ASSET STRATEGY FUND

Notes to Financial Statements (unaudited) (continued)

6. FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK (cont.)

A forward exchange contract is an agreement between two parties to exchange
different currencies at a specific rate at an agreed future date. At June 30,
2000, the Fund had outstanding forward exchange contracts for the sale or
purchase of currencies as set out below. The contracts are reported in the
financial statements at the Fund's net equity, as measured by the difference
between the forward exchange rates at the reporting date and the forward
exchange rates at the day of entry into the contract.

<TABLE>
<CAPTION>
In Unrealized
Contracts to Sell: Exchange For Settlement Date Gain (Loss)
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
38,100,000 Japanese Yen U.S. $ 367,052 7/26/00 U.S. $ 5,319
---------
Contracts to Sell:
---------------------------------------------------------------
241,795,000 Japanese Yen U.S. $2,287,559 7/19/00 U.S. $ (4,947)
---------
Net unrealized loss on offsetting forward exchange contracts (16,341)
---------
Unrealized loss on forward exchange contracts (21,288)
---------
Net unrealized loss on forward exchange contracts U.S. $ (15,969)
---------
</TABLE>

7. MERGER

On May 1, 2000, the Franklin Templeton Variable Insurance Products (FTVIPT) -
Templeton Asset Strategy Fund acquired the net assets of Templeton Variable
Products Series Fund (TVP) - Templeton Asset Allocation Fund pursuant to a plan
of reorganization approved by the TVP - Templeton Asset Allocation Fund's
shareholders. The merger was accounted for by the method of accounting for
tax-free business combinations of investment companies. The financial
statements of TVP - Templeton Asset Allocation Fund survived the
reorganization; therefore, the financial statements of FTVIPT - Templeton Asset
Strategy Fund reflect the financial statements of TVP - Templeton Asset
Allocation Fund. Immediately preceding the merger, FTVIPT - Templeton Asset
Strategy Fund completed a reverse split of its shares in the ratio of one new
Class 1 share for each .6062 existing Class 1 share and one new Class 2 share
for each .6066 existing Class 2 share. As a result, the FTVIPT - Templeton
Asset Strategy Fund net asset value per share was $18.93 for Class 1 and $18.88
for Class 2 on May 1, 2000. TVP - Templeton Asset Allocation Fund's
shareholders contributed net assets having an aggregate value of $653,548,460
(including $91,802,754 of unrealized appreciation) in exchange for 2,830,073
Class 1 shares and 2,893 Class 2 shares (post-split) of the FTVIPT - Tempelton
Asset Strategy Fund. Immediately prior to the merger, FTVIPT - Templeton Asset
Strategy Fund had net assets of $53,628,010 (including unrealized depreciation
of $347,919). Upon completion of the merger, the combined net assets of the
FTVIPT - Templeton Asset Strategy Fund were $707,176,470.

TA-22
<PAGE>

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

TEMPLETON ASSET STRATEGY FUND

Tax Designation

The following table provides a breakdown by country of foreign source income
and foreign taxes paid, as designated by the Fund, to Class 1 and Class 2
shareholders of record on December 29, 1999.

Class 1 Class 2
----------------------------------------------------------
Foreign Tax Foreign Foreign Tax Foreign
Paid Source Income Paid Source Income
Country Per Share Per Share Per Share Per Share
-------------------------------------------------------------------------------
Argentina .......... 0.0000 0.0019 0.0000 0.0019
Australia .......... 0.0006 0.0188 0.0006 0.0178
Bermuda ............ 0.0000 0.0040 0.0000 0.0037
Brazil ............. 0.0040 0.0221 0.0040 0.0210
Canada ............. 0.0002 0.0011 0.0002 0.0011
Chile .............. 0.0004 0.0014 0.0004 0.0014
China .............. 0.0000 0.0005 0.0000 0.0005
Finland ............ 0.0001 0.0006 0.0001 0.0006
France ............. 0.0027 0.0145 0.0027 0.0138
Germany ............ 0.0001 0.0022 0.0001 0.0022
Hong Kong .......... 0.0000 0.0233 0.0000 0.0221
Hungary ............ 0.0003 0.0007 0.0003 0.0007
India .............. 0.0000 0.0007 0.0000 0.0007
Italy .............. 0.0003 0.0017 0.0003 0.0017
Japan .............. 0.0009 0.0046 0.0009 0.0043
Mexico ............. 0.0004 0.0039 0.0004 0.0036
Netherlands ........ 0.0010 0.0144 0.0010 0.0137
New Zealand ........ 0.0002 0.0009 0.0002 0.0009
Norway ............. 0.0011 0.0061 0.0011 0.0059
Peru ............... 0.0000 0.0001 0.0000 0.0001
Singapore .......... 0.0006 0.0033 0.0006 0.0031
South Korea ........ 0.0009 0.0043 0.0009 0.0040
Sweden ............. 0.0019 0.0102 0.0019 0.0098
Switzerland ........ 0.0005 0.0019 0.0005 0.0019
Turkey ............. 0.0000 0.0001 0.0000 0.0001
United Kingdom ..... 0.0068 0.0520 0.0068 0.0494
----------------------------------------------------------
TOTAL .............. $0.0230 $0.1953 $0.0230 $0.1860
==========================================================

Shareholders are advised to check with their tax advisors for information on
the treatment of these amounts on their individual income tax returns.

TA-23
<PAGE>

TEMPLETON GLOBAL INCOME SECURITIES FUND

--------------------------------------------------------------------------------
Fund Goals and Primary Investments: Templeton Global Income Securities Fund
seeks high current income, consistent with preservation of capital. Capital
appreciation is a secondary consideration. The Fund invests primarily in debt
securities of governments and their political subdivisions and agencies,
supranational organizations and companies of any nation, including emerging
markets. The Fund may also invest in lower-rated "junk bonds."
--------------------------------------------------------------------------------
Economic Overview

Early in the review period investors generally remained cautious regarding
interest rates partly because of inflationary fears stemming from higher oil
prices, but mostly, we believe, because of upward revisions in global economic
growth forecasts. Confirmed European economic recovery, better-than-expected
growth in Japan, as well as continued U.S. growth, appeared to fuel this
cautious approach. Improving global economies led to expectations of higher
commodity prices, productivity and employment rates, all of which would add to
inflationary pressures and a tighter monetary policy stance by central banks.
In our opinion, these conditions supported the consensus view that the
industrial economies, with the possible exception of Japan, had reached the
bottom of their respective interest-rate cycles. Later in the period, reduced
U.S. bond supply and equity market volatility helped to offset these
interest-rate concerns. Bonds began to appear more attractive to investors who
put money back into the global fixed income markets.

In this environment, the J.P. Morgan Global Government Bond Index (GGBI) posted
a 3.28% return in local currency terms for the six months under review, despite
tighter monetary policies by major central banks.(1) Expectations for reduced
government bond supply, resulting in part from U.S. fiscal surpluses and lower
deficits in Europe, contributed to this positive performance. In addition to
supply concerns, volatile equity markets led the global fixed income market
higher toward the end of the period. We note that the GGBI underperformed the
J.P. Morgan U.S. Government Bond Index's 5.55% return, which benefited from the
U.S. Treasury buyback program.(2) The

(1) Source: Standard and Poor's Micropal. The J.P. Morgan Global Government Bond
Index measures and tracks bonds from around the world.

(2) Source: Standard and Poor's Micropal. The J.P. Morgan U.S. Government Bond
Index includes actively traded U.S. fixed-rate bonds with a remaining maturity
of one year or longer.

This chart in pie format shows the geographic distribution of Templeton Global
Income Securities Fund as a percentage of total net assets on 6/30/00.

Europe 49.5%
North America 18.4%
Latin America 14.6%
Australia/New Zealand 7.8%
Asia 6.1%
Short-Term Investments &
Other Net Assets 3.6%

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.

TGI-1
<PAGE>

buyback contributed significantly to the U.S. yield curve inversion during the
period. As bond prices and yields move in an inverse relationship, higher
prices on long-term bonds shifted their yields downward, while short-term bond
prices fell lower and their yields inched higher. In contrast, European
Monetary Union (EMU) countries' yield curve only flattened, as yields rose on
the short end. Hence, EMU bond prices fell, while those in the U.S. market
rose. Most major currencies' weakness against the U.S. dollar resulted in lower
returns for the global index in U.S. dollar terms, and the GGBI posted a U.S.
dollar return of 0.41%.

Emerging market bond prices rose during the period, apparently as a result of
higher commodity prices and improved economic fundamentals for the respective
countries. The J.P. Morgan Emerging Market Bond Index Plus (EMBI+) increased
8.10% during the six-month period. Most countries in the index experienced
positive returns, with the exception of Nigeria, Colombia, the Philippines and
Peru. Russian bonds were among the best performers, increasing 49.78%, followed
by those of Algeria, Venezuela, Mexico and Turkey.

Portfolio Notes

Templeton Global Income Securities Fund attempted to maximize its total return,
including income, during the period by allocating about 80%-85% of its assets
to intermediate- and long-term investment grade bonds and about 15%-20% of its
assets to the highest quality and most liquid bonds we found in the emerging
markets. We believe that this balance offers the opportunity for higher
long-term returns at the cost of modestly higher short-term volatility.

TGI-2
<PAGE>

The Fund's geographic allocation changed slightly during the period. North
American markets decreased from 23.8% to 18.4% of total net assets, with
Canadian exposure increasing slightly and the U.S. allocation decreasing 4.0%.
We increased the European allocation slightly to 49.5%, adjusting the
underlying country mix to decrease our exposure to Sweden, and add to positions
in Denmark, Germany and Italy. The Fund's Australia/New Zealand and Japanese
allocations remained relatively unchanged. Meanwhile, we took advantage of the
premium on Mexican assets, following the country's debt upgrade, to sell
Mexican securities and add to positions in Argentina, Brazil and Venezuela.
This left the Fund's Latin American exposure at 14.6% on June 30, 2000.

The Fund's emerging markets exposure continued to have a relatively low
duration with respect to the J.P. Morgan EMBI+, thereby reducing its
sensitivity to interest-rate movements and market uncertainty.(3) At period's
end, the Fund's bonds were U.S. dollar-denominated sovereign Eurobonds, with
fixed coupons issued by countries we believe to have strong repayment capacity.
We also continued to emphasize Latin America, because we feel the region has
improving fundamentals.

Looking forward, we believe that global inflationary pressures will continue to
increase in the near term and world economic growth will remain strong
throughout the year. In such a challenging environment for bonds, investing in
a fully diversified global fixed income portfolio can reduce risks of declines
in any particular market or sector.

(3) Source: J.P. Morgan. The J.P. Morgan Emerging Markets Bond Index Plus
(EMBI+) tracks total returns for external debt instruments in the emerging
markets. Included in the index are U.S. dollar and other external currency
denominated Brady bonds, loans, Eurobonds, and local markets instruments. It
provides investors with a definition of the market for emerging markets
external-currency debt, a list of the traded instruments, and a compilation of
their terms. The EMBI+ includes 49 instruments from 14 countries, with a total
face value of $175 billion and a market capitalization of $98 billion.

TGI-3
<PAGE>

Templeton Global Income
Securities Fund - Class 1

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.

PERFORMANCE SUMMARY AS OF 6/30/00

Templeton Global Income Securities Fund - Class 1 delivered a +0.15% cumulative
total return for the six-month period ended 6/30/00. Total return of Class 1
shares represents the cumulative or average annual change in value, assuming
reinvestment of dividends and capital gains. Average returns smooth out
variations in returns, which can be significant; they are not the same as
year-by-year results.

<TABLE>
<CAPTION>
Templeton Global Income Securities Fund - Class 1
Periods ended 6/30/00
Since
Inception
1-Year 5-Year 10-Year (1/24/89)
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Average Annual Total Return -0.46% +3.80% +5.40% +5.96%
Cumulative Total Return -0.46% +20.51% +69.25% +93.86%
</TABLE>

Past performance does not guarantee future results.

TGI-4
<PAGE>

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

TEMPLETON GLOBAL INCOME SECURITIES FUND

Financial Highlights

<TABLE>
<CAPTION>
Class 1
-----------------------------------------------------------------------------------
Six Months Ended Year Ended December 31,
June 30, 2000 ----------------------------------------------------------------
(unaudited) 1999 1998 1997 1996 1995
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per share operating performance
(for a share outstanding throughout the period)
Net asset value, beginning of period ........... $11.07 $12.87 $12.97 $13.61 $13.46 $12.19
-------------------------------------------------------------------------------
Income from investment operations:
Net investment income(c)....................... .34 .68 1.07 1.05 1.02 .29
Net realized and unrealized gains (losses) .... (.32) (1.42) (.19) (.73) .17 1.47
-------------------------------------------------------------------------------
Total from investment operations ............... .02 (.74) .88 .32 1.19 1.76
-------------------------------------------------------------------------------
Less distributions from net investment income .. (.02) (1.06) (.98) (.96) (1.04) (.49)
-------------------------------------------------------------------------------
Net asset value, end of period ................. $11.07 $11.07 $12.87 $12.97 $13.61 $13.46
===============================================================================
Total return(b)................................. .15% (5.79%) 7.08% 2.55% 9.56% 14.68%

Ratios/supplemental data
Net assets, end of period (000's) .............. $90,505 $90,537 $150,941 $185,016 $221,722 $243,194
Ratios to average net assets:
Expenses ...................................... 72%(a) .65% .63% .62% .61% .64%
Net investment income ......................... 6.21%(a) 5.65% 6.86% 7.03% 7.30% 7.59%
Portfolio turnover rate ........................ 14.15% 80.76% 84.17% 181.61% 140.96% 152.89%
</TABLE>

(a)Annualized
(b)Total 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.
(c)Based on average shares outstanding effective year ended December 31, 1999.

TGI-5
<PAGE>

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

TEMPLETON GLOBAL INCOME SECURITIES FUND

Financial Highlights (continued)

<TABLE>
<CAPTION>
Class 2
-----------------------------------------
Six Months Ended
June 30, 2000 Year Ended
(unaudited) December 31, 1999(c)
-----------------------------------------
<S> <C> <C>
Per share operating performance
(for a share outstanding throughout the period)
Net asset value, beginning of period .................. $11.04 $12.93
---------------------------
Income from investment operations:
Net investment income(d).............................. .32 .60
Net realized and unrealized losses ................... (.31) (1.44)
---------------------------
Total from investment operations ...................... .01 (.84)
---------------------------
Less distributions from net investment income ......... (.02) (1.05)
---------------------------
Net asset value, end of period ........................ $11.03 $11.04
===========================
Total return(b)........................................ .06% (6.53%)

Ratios/supplemental data
Net assets, end of period (000's) ..................... $1,150 $443
Ratios to average net assets:
Expenses ............................................. .97%(a) .91%(a)
Net investment income ................................ 6.05%(a) 5.36%(a)
Portfolio turnover rate ............................... 14.15% 80.76%
</TABLE>

(a)Annualized
(b)Total 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.
(c)For the period January 6, 1999 (effective date) to December 31, 1999.
(d)Based on average shares outstanding.

See notes to financial statements.

TGI-6
<PAGE>

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

TEMPLETON GLOBAL INCOME SECURITIES FUND

Statement of Investments, June 30, 2000 (unaudited)

<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT* VALUE
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Long Term Investments 96.4%
Argentina 3.6%
Republic of Argentina:
11.75%, 4/07/09 ........................................................... $ 1,645,000 $ 1,536,019
11.375%, 3/15/10 .......................................................... 1,880,000 1,717,850
------------
3,253,869
------------
Australia 4.6%
New South Wales Treasury Corp., 144A, 7.00%, 4/01/04 ...................... 4,900,000 AUD 3,014,840
Queensland Treasury Corp., 6.50%, 6/14/05 ................................. 1,930,000 AUD 1,167,252
------------
4,182,092
------------
Belgium 3.6%
Kingdom of Belgium, 7.75%, 10/15/04 ....................................... 3,113,000 EUR 3,258,946
------------
Brazil 5.0%
Government of Brazil:
FRN, 7.4375%, 4/15/09 ..................................................... 1,680,000 1,407,000
14.50%, 10/15/09 .......................................................... 2,950,000 3,155,025
------------
4,562,025
------------
Bulgaria 3.1%
Republic of Bulgaria, FRN, 7.0625%, 7/28/11 ............................... 3,580,000 2,837,150
------------
Canada 2.2%
Government of Canada:
8.75%, 12/01/05 ........................................................... 1,247,000 CAD 947,533
7.00%, 12/01/06 ........................................................... 1,478,000 CAD 1,051,777
------------
1,999,310
------------
Colombia .2%
Republic of Colombia, 9.75%, 4/23/09 ...................................... 160,000 141,824
------------
Denmark 4.1%
Kingdom of Denmark:
7.00%, 12/15/04 ........................................................... 18,150,000 DKK 2,441,915
5.00%, 8/15/05 ............................................................ 10,885,000 DKK 1,354,751
------------
3,796,666
------------
Germany 17.9%
Federal Republic of Germany:
3.25%, 2/17/04 ............................................................ 6,493,000 EUR 5,866,006
4.50%, 7/04/09 ............................................................ 11,588,000 EUR 10,542,321
------------
16,408,327
------------
India
(a) Essar Steel Ltd., FRN, 7.635%, 7/20/99 .................................... 50,000 25,250
------------
Italy 7.9%
Buoni Poliennali del Tesoro:
10.50%, 7/15/00 ........................................................... 2,884,406 EUR 2,764,578
7.75%, 11/01/06 ........................................................... 4,183,293 EUR 4,497,109
------------
7,261,687
------------
Japan 5.4%
International Bank for Reconstruction & Development, 5.25%, 3/20/02 ....... 482,100,000 JPY 4,942,886
------------
Mexico 1.2%
United Mexican States, 11.50%, 5/15/26 .................................... 885,000 1,063,106
------------
New Zealand 3.1%
Government of New Zealand, 7.00%, 7/15/09 ................................. 6,040,000 NZD 2,889,070
------------
</TABLE>

TGI-7
<PAGE>

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

TEMPLETON GLOBAL INCOME SECURITIES FUND

Statement of Investments, June 30, 2000 (unaudited) (cont.)

<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT* VALUE
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Long Term Investments (cont.)
Spain 3.1%
Bonos y Oblig del Estado, 3.25%, 1/31/05 ..................... 3,238,000 EUR $ 2,853,161
------------
Sweden 1.0%
Kingdom of Sweden, 6.00%, 2/09/05 ............................ 8,000,000 SEK 937,759
------------
Turkey .7%
Republic of Turkey, 12.375%, 6/15/09 ......................... 635,000 674,688
------------
United Kingdom 8.9%
United Kingdom:
6.50%, 12/07/03 .............................................. 3,600,000 GBP 5,553,386
7.50%, 12/07/06 .............................................. 1,550,000 GBP 2,584,155
------------
8,137,541
------------
United States 16.2%
U.S. Treasury Bond:
6.125%, 11/15/27 ............................................. 412,000 410,841
5.25%, 11/15/28 .............................................. 10,370,000 9,180,696
U.S. Treasury Note:
4.50%, 1/31/01 ............................................... 3,500,000 3,461,721
7.25%, 8/15/04 ............................................... 1,772,000 1,831,805
------------
14,885,063
------------
Venezuela 4.6%
Republic of Venezuela:
144A, 9.125%, 6/18/07 ........................................ 2,240,000 1,780,800
9.25%, 9/15/27 ............................................... 3,755,000 2,475,951
------------
4,256,751
------------
Total Long Term Investments before Repurchase Agreement (Cost $97,868,855) 88,367,171
------------
(b) Repurchase Agreement (Cost $780,000) .8%
Deutsche Bank AG, 6.80%, 7/03/00 (Maturity Value $780,442)
Collateralized by U.S. Treasury Notes and Bonds .............. 780,000 780,000
------------
Total Investments (Cost $98,648,855) 97.2%.................... 89,147,171
Net Equity in Forwards Contracts ............................. (23,607)
Other Assets, less Liabilities 2.8% .......................... 2,531,449
------------
Total Net Assets 100.0% ...................................... $ 91,655,013
============
</TABLE>

Currency Abbreviations:

AUD--Australian Dollar
CAD --Canadian Dollar
DKK --Danish Krone
EUR --European Unit
GBP --British Pound
JPY --Japanese Yen
NZD --New Zealand Dollar
SEK --Swedish Krona

*The principal amount is stated in U.S. dollars unless otherwise indicated.
(a)Represents bonds in default.
(b)At June 30, 2000, all repurchase agreements held by the Fund had been entered
into on that date.

See notes to financial statements.

TGI-8
<PAGE>

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

TEMPLETON GLOBAL INCOME SECURITIES FUND

Financial Statements

Statement of Assets and Liabilities
June 30, 2000 (unaudited)

<TABLE>
<S> <C>
Assets:
Investments in securities:
Cost .......................................................... $ 98,648,855
============
Value ......................................................... 89,147,171
Cash ........................................................... 942,969
Receivables:
Capital shares sold ........................................... 55,185
Interest ...................................................... 2,055,954
Unrealized gain on forward exchange contracts (Note 6) ......... 6,444
------------
Total assets ................................................. 92,207,723
------------
Liabilities:
Payables:
Investment securities purchased ............................... 287,510
Capital shares redeemed ....................................... 163,172
Affiliates .................................................... 48,518
Unrealized loss on forward exchange contracts (Note 6) ......... 30,051
Other liabilities .............................................. 23,459
------------
Total liabilities ............................................ 552,710
------------
Net assets, at value ........................................ $ 91,655,013
============
Net assets consist of:
Undistributed net investment income ............................ $ 2,796,359
Net unrealized depreciation .................................... (9,537,403)
Accumulated net realized loss .................................. (7,688,172)
Capital shares ................................................. 106,084,229
------------
Net assets, at value ........................................ $ 91,655,013
============
Class 1:
Net assets, at value ........................................... $ 90,504,841
============
Shares outstanding ............................................. 8,172,441
============
Net asset value and offering price per share ................... $ 11.07
============
Class 2:
Net assets, at value ........................................... $ 1,150,172
============
Shares outstanding ............................................. 104,253
============
Net asset value and offering price per share ................... $ 11.03
============
</TABLE>

See notes to financial statements.

TGI-9
<PAGE>

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

TEMPLETON GLOBAL INCOME SECURITIES FUND

Financial Statements (continued)

Statement of Operations
for the six months ended June 30, 2000 (unaudited)

<TABLE>
<S> <C>
Interest income ......................................................... $ 2,996,010
============
Expenses:
Management fees (Note 3) ............................................... 275,535
Distribution fees - Class 2 (Note 3) ................................... 838
Custodian fees ......................................................... 18,039
Reports to shareholders ................................................ 4,030
Professional fees (Note 3) ............................................. 10,842
Trustees' fees and expenses ............................................ 125
Other .................................................................. 2,517
------------
Total expenses ........................................................ 311,926
------------
Net investment income ................................................ 2,684,084
------------
Realized and unrealized gains (losses):
Net realized loss from:
Investments ........................................................... (157,670)
Foreign currency transactions ......................................... (48,209)
------------
Net realized loss .................................................... (205,879)
Net unrealized appreciation (depreciation) on:
Investments ............................................................ (2,194,928)
Translation of assets and liabilities denominated in foreign currencies 155,403
------------
Net unrealized depreciation ........................................... (2,039,525)
------------
Net realized and unrealized loss ........................................ (2,245,404)
------------
Net increase in net assets resulting from operations .................... $ 438,680
============
</TABLE>

See notes to financial statements.

TGI-10
<PAGE>

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

TEMPLETON GLOBAL INCOME SECURITIES 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, 1999
-------------------------------------
<S> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income .................................................................. $ 2,684,084 $ 6,655,075
Net realized loss from investments and foreign currency transactions ................... (205,879) (6,055,260)
Net unrealized depreciation on investments and translation of assets and liabilities
denominated in foreign currencies .................................................... (2,039,525) (8,370,208)
-------------------------------
Net increase (decrease) in net assets resulting from operations ....................... 438,680 (7,770,393)
Distributions to shareholders from:
Net investment income:
Class 1 ............................................................................... (116,818) (9,277,104)
Class 2 ............................................................................... (812) (19,727)
-------------------------------
Total distributions to shareholders ..................................................... (117,630) (9,296,831)
Capital share transactions: (Note 2)
Class 1 ............................................................................... (338,968) (43,358,906)
Class 2 ............................................................................... 693,020 465,304
-------------------------------
Total capital share transactions ........................................................ 354,052 (42,893,602)
Net increase (decrease) in net assets ................................................. 675,102 (59,960,826)
Net assets:
Beginning of period ..................................................................... 90,979,911 150,940,737
-------------------------------
End of period ........................................................................... $ 91,655,013 $ 90,979,911
===============================
Undistributed net investment income included in net assets:
End of period ........................................................................... $ 2,796,359 $ 229,905
===============================
</TABLE>

See notes to financial statements.

TGI-11
<PAGE>

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

TEMPLETON GLOBAL INCOME SECURITIES FUND

Notes to Financial Statements (unaudited)

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

The Templeton Global Income Securities Fund (the Fund) is a separate,
non-diversified series of the Franklin Templeton Variable Insurance Products
Trust (the Trust), which is an open-end investment company registered under the
Investment Company Act of 1940. Shares of the Fund are sold only to insurance
company separate accounts to fund the benefits of variable life insurance
policies or variable annuity contracts. As of June 30, 2000, 72% of the Fund's
shares were sold through one insurance company. The Fund seeks high current
income, with capital appreciation as a secondary goal. The portfolio invests in
debt securities of governments and their political subdivisions and agencies,
supranational organizations and companies of any nation, including emerging
markets. The portfolio may also invest in lower-rated "junk bonds."

The following summarizes the Fund's significant accounting policies.

a. Security Valuation

b. Foreign Currency Translation

Portfolio securities and other assets and liabilities denominated in foreign
currencies are translated into U.S. dollars based on the exchange rate of such
currencies against U.S. dollars on the date of valuation. Purchases and sales
of securities and income items denominated in foreign currencies are translated
into U.S. dollars at the exchange rate in effect on the transaction date. When
the Fund purchases or sells foreign securities the Fund will customarily enter
into a foreign exchange contract to minimize foreign exchange risk from the
trade date to the settlement date of such transactions.

Realized foreign exchange gains or losses arise from sales of foreign
currencies, currency gains or losses realized between the trade and settlement
dates on securities transactions, and the difference between the recorded
amounts of dividends, interest, and foreign withholding taxes and the U.S.
dollar equivalent of the amounts actually received or paid. Net unrealized
foreign exchange gains and losses arise from changes in foreign exchange rates
on foreign denominated assets and liabilities other than investments in
securities held at the end of the reporting period.

c. Forward Exchange Contracts

d. Income Taxes

TGI-12
<PAGE>

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

TEMPLETON GLOBAL INCOME SECURITIES FUND

Notes to Financial Statements (unaudited) (continued)

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (cont.)

e. Security Transactions, Investment Income, Expenses and Distributions

f. Indexed Securities

The Fund may invest in debt instruments in which the principal and/or interest
is dependent on other factors such as yield curves, currency exchange rates or
commodity prices. The Fund's objective in holding these securities, commonly
called indexed securities or structured notes, is to tailor its investments to
the specific risk and returns it wishes to assume while avoiding unwanted risk
or change in the Fund's exposure to a particular foreign exchange rate or the
spread between two foreign exchange rates.

g. Accounting Estimates

2. SHARES OF BENEFICIAL INTEREST

The Fund offers two classes of shares: Class 1 and Class 2. Each class of
shares differs by its distribution fees, voting rights on matters affecting a
single class, and its exchange privilege.

TGI-13
<PAGE>

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

TEMPLETON GLOBAL INCOME SECURITIES FUND

Notes to Financial Statements (unaudited) (continued)

2. SHARES OF BENEFICIAL INTEREST (cont.)

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 ...................................... 150,065 $ 1,611,401 755,763 $ 9,398,931
Shares issued on merger (Note 7) ................. 1,620,086 17,464,656 -- --
Shares issued on reinvestment of distributions ... 10,838 116,818 815,256 9,277,104
Shares redeemed .................................. (1,788,206) (19,531,843) (5,116,543) (62,034,941)
------------------------------------------------------------
Net decrease ..................................... (7,217) $ (338,968) (3,545,524) $ (43,358,906)
============================================================
Class 2 Shares:
Shares sold ...................................... 14,333 $ 156,866 40,368 $ 470,374
Shares issued on merger (Note 7) ................. 70,754 759,809 -- --
Shares issued on reinvestment of distributions ... 76 812 1,764 19,727
Shares redeemed .................................. (20,987) (224,467) (2,055) (24,797)
------------------------------------------------------------
Net increase ..................................... 64,176 $ 693,020 40,077 $ 465,304
============================================================
</TABLE>

(a)For the period January 6, 1999 (effective date) to December 31, 1999 for
Class 2.

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
Templeton Investment Counsel, Inc. (TICI) 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 based on the average net
assets of the Fund as follows:

Annualized Fee Rate Daily Net Assets
-------------------------------------------------------------------------
.625% First $100 million
.50% Over $100 million, up to and including $250 million
.45% Over $250 million, up to and including $10 billion

Fees are further reduced on net assets over $10 billion.

Under a subadvisory agreement, TICI provides subadvisory services to the Fund
and receives fees from Advisers based on the average daily net assets of the
Fund.

Under an agreement with Advisers, FT Services provides administrative services
to the Fund. The fee is paid by the Fund's investment manager based on average
daily net assets, and is not an additional expense of the Fund.

The Fund reimburses Distributors up to .25% per year of its average daily net
assets of Class 2, for costs incurred in marketing the Fund's shares.

Investor Services, under terms of an agreement, performs shareholder servicing
for the Fund and is not paid by the Fund for the services.

TGI-14
<PAGE>

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST
TEMPLETON GLOBAL INCOME SECURITIES FUND

Notes to Financial Statements (unaudited) (continued)

3. TRANSACTIONS WITH AFFILIATES (cont.)

Included in professional fees are legal fees of $236 that were paid to a law
firm in which a partner of that firm was an officer of the Fund.

4. INCOME TAXES

As of December 31, 1999, Franklin Templeton Variable Insurance Products Trust
(FTVIPT) - Templeton Global Income Securities Fund had tax basis capital
losses. The capital loss carryovers of the FTVIPT - Templeton Global Income
Securities Fund include December 31, 1999 capital loss carryovers of $2,367,359
acquired as a result of the reorganization with the Templeton Variable Products
Series Fund (TVP) - Templeton Bond Fund (See note 7). The capital loss
carryovers are available to offset future realized capital gains to the extent
provided in the Internal Revenue Code and regulations thereunder.

Capital loss carryover expiring in:
2002 .............................. $ 1,294,963
2003 .............................. 1,605,323
2007 .............................. 5,595,723
-----------
$ 8,496,009
===========

At December 31, 1999, the Fund had deferred capital losses and deferred
currency losses of $1,407,836 occurring subsequent to October 31, 1999. For tax
purposes, such loss will be reflected in the year ending December 31, 2000.

The cost of securities for income tax purposes is the same as that shown in the
Statement of Investments. At June 30, 2000, the net unrealized depreciation
based on the cost of investments for income tax purposes was as follows:

Unrealized appreciation ............. $ 128,972
Unrealized depreciation ............. (9,630,656)
------------
Net unrealized depreciation ......... $ (9,501,684)
============

5. INVESTMENT TRANSACTIONS

Purchases and sales of securities (excluding short-term securities) for the
period ended June 30, 2000 aggregated $11,819,718 and $26,678,045,
respectively.

6. FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK

The Fund has been a party to financial instruments with off-balance-sheet risk,
primarily forward exchange contracts, in order to minimize the impact on the
funds from adverse changes in the relationship between the U.S. dollar and
foreign currencies and interest rates. These instruments involve market risk in
excess of the amount recognized on the Statement of Assets and Liabilities.
Some of these risks have been minimized by offsetting contracts. Risks arise
from the possible inability of counterparties to meet the terms of their
contracts, future movement in currency values and interest rates and contract
positions that are not exact offsets. The contract amount indicates the extent
of the Fund's involvement in such contracts.

A forward exchange contract is an agreement between two parties to exchange
different currencies at a specific rate at an agreed future date. At June 30,
2000, the Fund has outstanding forward exchange contracts for the sale or
purchase of currencies as set out below. The contracts are reported in the
financial statements at the Fund's net equity, as measured by

TGI-15
<PAGE>

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

TEMPLETON GLOBAL INCOME SECURITIES FUND

Notes to Financial Statements (unaudited) (continued)

6. FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK (cont.)

the difference between the forward exchange rates at the reporting date and the
forward exchange rates at the day of entry into the contract.

<TABLE>
<CAPTION>
In Unrealized
Contracts to Sell Exchange for Settlement Date Gain (Loss)
----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
48,100,000 Japanese Yen U.S. $ 463,391 7/26/00 U.S. $ 6,444

Contracts to Sell
--------------------------------------------------------------
294,520,000 Japanese Yen U.S. $2,786,377 7/19/00 U.S. $ (7,679)
--------
Net unrealized loss on offsetting forward exchange contracts (22,372)
--------
Unrealized loss on forward exchange contracts (30,051)
--------
Net unrealized loss on forward exchange contracts U.S. $(23,607)
========
</TABLE>

7. CREDIT RISK

The Fund has investments in excess of 10% of its total net assets in Germany,
such concentration may subject the Fund more significantly to economic changes
occurring within this country.

8. MERGER

On May 1, 2000, the Franklin Templeton Variable Insurance Products Trust
(FTVIPT) - Templeton Global Income Securities Fund acquired the net assets of
the Templeton Variable Products Series Fund (TVP) - Templeton Bond Fund
pursuant to a plan of reorganization approved by TVP - Templeton Bond Fund's
shareholders. The merger was accomplished by a tax-free exchange of 1,620,086
Class 1 shares and 70,754 Class 2 shares of the FTVIPT - Templeton Global
Income Securities Fund (valued at $10.78 per share and $10.74 per share,
respectively) for the net assets of the TVP - Templeton Bond Fund which
aggregated $18,224,465, including $1,980,489 of unrealized depreciation. The
merger was accounted for as a pooling-of-interests without restatement for
financial reporting purposes. The combined net assets of the FTVIPT - Templeton
Global Income Securities Fund immediately after the merger were $94,683,176.

TGI-16

<PAGE>

[FRANKLIN TEMPLETON INVESTMENTS LOGO]

FRANKLIN(R) TEMPLETON(R)
INVESTMENTS

100 Fountain Parkway
St. Petersburg, Florida 33716-1205

SEMIANNUAL REPORT

INSURANCE ISSUER
Phoenix Home Life Mutual Insurance Co.

TIP DISTRIBUTOR
WS Griffith and Co., Inc.

SERVICE CENTER
Variable Annuity Operations
800/243-4840

INVESTMENT MANAGERS
Franklin Mutual Advisers, LLC
Templeton Investment Counsel, Inc.
Templeton Asset Management, Ltd., Singapore
Templeton Global Advisors Limited
Phoenix Investment Counsel, Inc.

TRUST DISTRIBUTOR
Franklin Templeton Distributors, Inc.

This report must be preceded or accompanied by the current Templeton Investment
Plus (TIP) prospectus which includes the Franklin Templeton Variable Insurance
Products Trust and The Phoenix Edge Series Fund prospectuses, which contain more
detailed information, including sales charges and risks of an investment in TIP.
Please read the prospectuses carefully before investing or sending your money.
These reports and prospectuses do not constitute an offering in any jurisdiction
in which such offering may not lawfully be made. To ensure the highest quality
of service, telephone calls to or from our service department may be monitored,
recorded and accessed. These calls can be determined by the presence of a
regular beeping tone.

OL2958S 08/00 [RECYCLED LOGO] Printed on recycled paper