TEMPLETON IMMEDIATE VARIABLE ANNUITY SEPARATE ACCOUNT
N-30D, 1999-09-02
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SEMI-ANNUAL REPORT
JUNE 30, 1999
===============================================================================


TEMPLETON IMMEDIATE VARIABLE ANNUITY

   0   TIVA Separate Account
   0   Templeton Variable
       Products Series Fund -
        Templeton Stock Fund - Class 1




[LOGO (R)]
FRANKLIN(R) TEMPLETON(R)
===============================================================================




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 higher
degree of risks.  For example,  U.S. 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 rise  and  fall  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
funds,  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 funds may be right for you.


PAGE



TABLE OF CONTENTS

<TABLE>
<S>                                                                            <C>
Letter to Contract Owners. .................................................       2

Manager's Discussion .......................................................    TS-1

Performance ................................................................    TS-4

Financial Highlights........................................................    TS-5

Statement of Investments....................................................    TS-7

Financial Statements .......................................................    TS-11

Notes to Financial Statements ..............................................   TS-14

Tax Designation ............................................................   TS-17

Templeton Immediate Variable Annuity
Separate Account Financials ...............................................    SA-1
</TABLE>


Please retain this document with your current prospectus for reference.


PAGE

                       THIS PAGE INTENTIONALLY LEFT BLANK

PAGE



LETTER TO CONTRACT OWNERS

Dear Contract Owner:

We are pleased to bring you this semiannual report of the Templeton Immediate
Variable Annuity for the six months ended June 30, 1999.

During the reporting period, the U.S. economy grew at an impressive pace;
inflation remained benign; and domestic stock market indices, led by large
capitalization, blue chip, technology, and Internet-related stocks, reached
record levels. Many Asian and South American markets recovered substantially
from the financial crises of recent years, but European stock markets provided
mixed results.

In the U.S., on March 29 the Dow Jones(R)  Industrial  Average broke through the
10000  barrier  for the  first  time,  and went on to close at 10970 on June 30,
1999,  up 20.44% for the six months under  review./1/  During this period,  some
investors  who had seemed to prefer the  perceived  safety of liquid,  blue chip
stocks,  began to display renewed interest in the relatively low  price/earnings
ratios of small cap  stocks,  and the Russell  2000(R)  Index rose 9.28% for the
period./2/ In April and May, value stocks, after  underperforming  growth stocks
for two  years,  appeared  to  return  to life.  Although  there  has been  some
rebalancing  of growth  versus value,  there has not yet been a wholesale  shift
away from the favorites of the past year

European equities delivered mixed performances, partly due to accelerated
cross-border investment facilitated by the euro's introduction. The stock
markets of Belgium, Switzerland, and Italy fell 19.06%, 13.05%, and 10.77%
respectively, while those of Finland, Norway, and Sweden rose 23.76%, 20.03%,
and 14.99%, respectively. Other western European markets posted generally flat
returns for the period, with the United Kingdom's rising 3.32% and Germany's
falling 4.71%./3/

- ------------------------
1 Source: Standard & Poor's(R) Micropal. Dow Jones industrial Average's total
return is calculated by Wilshire Associates Inc.

2 Source: Standard & Poor's(R) Micropal. The Russell 2000(R) Index measures 2000
U.S. companies with small market capitalizations.

3 Source:  Bel20 Index;  Swiss Market Index;  Helsinki General Index;  Stockholm
General Index; Total Share Index.





2

PAGE


During the reporting period, stock markets in many emerging-market countries
roared back to life, as investors poured money into South American and Asian
equities. Mexico's Bolsa Index appreciated 56.50% as measured in U.S. dollars,
while Indonesia's Jakarta Composite Index and South Korea's Seoul Composite
Index surged 102.91% and 67.51%, respectively./4/

Of course, security prices always have been and always will be subject to
volatility. No one can predict exactly how financial markets will perform, and
since bad years can be mixed with good years, it is important for investors to
exercise patience, and focus not on short-term market movements, but on their
long-term investment goals.

We appreciate your participation in the Templeton Immediate Variable Annuity and
look forward to serving your investment needs in the years to come.


Sincerely,


/s/CHUCK JOHNSON
- --------------------------
Charles E. Johnson
President
Templeton Variable Products Series Fund


/s/RICHARD P. AUSTIN
- --------------------------
Richard P. Austin
President
Templeton Funds Annuity Company


[BEGIN CALLOUT]

YEAR 2000  READINESS  DISCLOSURE-  HOW  FRANKLIN  TEMPLETON  IS TACKLING THE Y2K
PROBLEM

FRANKLIN  TEMPLETON  FORMED A COMPANY-WIDE  TEAM IN 1996 TO IDENTIFY AND CORRECT
PROBLEMS  RELATED TO THE DATE CHANGEOVER AFTER DECEMBER 31, 1999. ALL BUT ONE OF
OUR  MISSION-CRITICAL  SYSTEMS  ARE  CERTIFIED  AS YEAR 2000  COMPLIANT  AND ARE
OPERATING IN  PRODUCTION,  AS OF JULY 15, 1999.  WE INTEND TO HAVE OUR REMAINING
MISSION-  CRITICAL  SYSTEM,  A REPLACEMENT  FOR AN EXISTING  SALES AND MARKETING
SYSTEM, CERTIFIED BY THE END OF SEPTEMBER 1999.

THE Y2K TEAM IS ALSO UPGRADING,  TESTING, AND CERTIFYING  REMAINING  NONCRITICAL
SYSTEMS,  AS WELL AS INTEGRATING  AND TESTING LINKS WITH MANY EXTERNAL  PARTIES.
OUR DEDICATED,  BUSINESS CONTINUITY TEAM IS BUILDING CONTINGENCY PLANS WORLDWIDE
IN THE EVENT OF YEAR 2000 FAILURES.

EARLIER THIS YEAR, WE  SUCCESSFULLY  COMPLETED A SERIES OF  SECURITIES  INDUSTRY
ASSOCIATION  NATIONWIDE TESTS OF TRANSACTIONS WITH OTHER BUSINESS PARTNERS UNDER
SIMULATED YEAR 2000 CONDITIONS. THIS SUMMER WE ALSO SUCCESSFULLY PARTICIPATED IN
INDUSTRY-WIDE  TESTING OF OUR INTERFACES WITH MAJOR DEALERS AND REAL-TIME MARKET
DATA SERVICES.

YOU CAN LEARN MORE ABOUT  FRANKLIN  TEMPLETON'S  Y2K PROJECT BY VISITING OUR WEB
SITE AT WWW.FRANKLINTEMPLETON.COM.
[END CALLOUT]


- -------------------------------
4 Source: Bolsa Index; Jakarta Composite Index; Seoul Composite Index.
Indices include reinvested dividends and interest. An index is an unmanaged
group of securities used to measure market performance. One cannot invest
directly in an index, nor is an index representative of the Fund portfolios.



                                                                           3





PAGE



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PAGE

                                                         TEMPLETON STOCK FUND

- --------------------------------------------------------------------------------
INVESTMENT GOAL AND PRINCIPAL INVESTMENTS: TEMPLETON STOCK FUND SEEKS CAPITAL
GROWTH. THE FUND INVESTS PRIMARILY IN EQUITY SECURITIES OF COMPANIES IN VARIOUS
NATIONS THROUGHOUT THE WORLD, INCLUDING THE U.S. AND EMERGING MARKETS.
- --------------------------------------------------------------------------------
This semiannual report covers the six months ended June 30, 1999. During this
time, economic restructuring contributed to impressive gains in many Asian and
Latin American equity markets. Despite investor concerns about the possibility
of rising interest rates, U.S. equities also delivered substantial returns. On
the other hand, Europe provided mixed results, as a steady decline in the euro
helped accentuate losses in U.S. dollar terms for some equity markets there.
Thanks largely to our substantial investments in Latin America and Asia, the
fund outperformed its benchmark, the Morgan Stanley Capital International
(MSCI) World Index.(1)

ASIA

During the six months under review, many Asian stock markets delivered strong
returns, as numerous currencies stabilized. In Japan, several companies
announced corporate restructuring plans which were well received by investors,
contributing to the strong performance of its equity market. Although we have
underweighted Japan relative to the MSCI World Index during the last few years,
we increased our Japanese exposure during the reporting period through
purchases such as Nippon Telephone & Telegraph Corp., one of the world's
largest telecommunications companies, and investment bank Nomura Securities Co.
Ltd. Hong Kong's market was also an outstanding performer, and the value of our
positions in HSBC Holdings PLC, the large, UK-based Asian banking conglomerate,
and Hutchison Whampoa Ltd., the large real estate and telecom company,
appreciated significantly.



(1) Source: Standard & Poor's/registered trademark/ Micropal. The MSCI World
Index includes approximately 1,500 companies representing the stock markets of
22 countries, including the U.S., Canada, the United Kingdom, and Japan. The
index is unmanaged and includes reinvested dividends. One cannot invest directly
in an index.

GEOGRAPHIC DISTRIBUTION

Templeton Stock Fund
Based On Total Net Assets
6/30/99

[PIE CHART]

Europe                   42.0%
North America            27.6%
Asia                     12.8%
Latin America             7.4%
Australia/New
  Zealand                 6.2%
Middle East/Africa        0.8%
Short-Term
Investments &
Other Net Assets          3.2%



                                                                           TS-1
PAGE


LATIN AMERICA

Following Brazil's devaluation of its real in January, the appointment of
Arminio Fraga as President of Brazil's central bank helped rebuild confidence
in the country, causing most Latin American stock and bond markets to improve
dramatically. Attempting to take advantage of rising stock prices in the area,
we sold our shares of companies such as YPF Sociedad Anonima, ADR and Brazil's
Banco Bradesco SA, ADR. During the six months under review, our Latin American
position decreased from 9.4% to 7.4%.

EUROPE

Many European equity markets suffered as a slowdown of exports to Asia and
Latin America fundamentally impacted European businesses, and the war in
Yugoslavia dampened investor enthusiasm throughout Western Europe. However,
confident about the long-term potential of our European holdings, we continued
to be overweight in Europe relative to the MSCI World Index. And although the
general performance of our European holdings was not impressive, our position
in Telecom Italia SpA, di Risp appreciated substantially as Italy-based
Olivetti made a hostile takeover bid for the company.

NORTH AMERICA

On June 30, our U.S. weighting was substantially below that of its benchmark
MSCI World Index because we believed that U.S. stocks were generally
overvalued. Attempting to take advantage of these high valuations, we sold
shares of Intel Corp. and Fannie Mae.


TOP 10 COUNTRIES
REPRESENTED IN THE FUND
Templeton Stock Fund
6/30/99
                   % OF TOTAL
COUNTRY            NET ASSETS
- -----------------------------
United States         21.2%
United Kingdom         9.2%
France                 8.1%
Japan                  6.1%
Australia              5.8%
Netherlands            5.5%
Hong Kong              5.3%
Canada                 4.0%
Germany                3.9%
Sweden                 3.3%


TS-2

PAGE

Looking forward, we are enthusiastic about the outlook for global equity
markets, and are confident our value approach should enable us to provide
attractive, long-term returns for shareholders. However, we are concerned about
possible inflation. High unemployment in Europe could prompt increased
government spending there, forcing central banks to raise interest rates to
curb the inflationary effects of such spending. And, if strong demand put
pressure on prices, rising U.S. interest rates could stifle market growth
there.

Please remember, this discussion reflects our views, opinions, and portfolio
holdings as of June 30, 1999, the end of the reporting period. However, market
and economic conditions are changing constantly, which may affect our
strategies and the fund's portfolio composition. Although past performance is
not predictive of future results, these insights may help you understand our
investment and management philosophy.

It is important to remember that foreign securities investments involve special
risks, including changes in currency values, market price swings, and economic,
social, and political developments in the countries where the portfolios are
invested. Emerging markets involve similar but heightened risks related to
their smaller size and lesser liquidity. These risks are discussed in the
fund's prospectus.

We thank you for investing in Templeton Stock Fund and welcome your comments or
suggestions.

Sincerely,

/s/MARK R. BEVERIDGE
- ---------------------------
Mark R. Beveridge, CFA, CIC
Portfolio Manager
Templeton Stock Fund



TOP 10 EQUITY HOLDINGS
Templeton Stock Fund
6/30/99

COMPANY,
INDUSTRY,                     % OF TOTAL
COUNTRY                       NET ASSETS
- ----------------------------------------
Motorola Inc.
Electrical & Electronics,
United States                     2.6%

Sony Corp.
Appliances &
Household Durables,
Japan                             2.1%

Koninklijke Philips
Electronics NV
Electrical & Electronics,
Netherlands                       1.9%

Alcatel SA
Electrical & Electronics,
France                            1.7%

Antec Corp.
Electrical & Electronics,
United States                     1.7%

Nortel Networks Corp.
Telecommunications,
Canada                            1.6%

Georgia-Pacific Corp.
Forest Products & Paper,
United States                     1.6%

Fannie Mae
Financial Services,
United States                     1.5%

News Corp. Ltd.
Broadcasting, Australia           1.5%

Zurich Allied AG
Insurance, Switzerland            1.5%



For a complete list of portfolio holdings, please see the fund's Statement of
Investments.
                                                                           TS-3
PAGE

TEMPLETON STOCK FUND
CLASS 1

PERFORMANCE SUMMARY

Total return 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 Stock Fund -- Class 1
 Periods ended 6/30/99
                                                                                       SINCE
                                                                                    INCEPTION
                              6-MONTH        1-YEAR        5-YEAR       10-YEAR     (8/31/88)
- -----------------------------------------------------------------------------------------------
<S>                          <C>           <C>           <C>           <C>           <C>
Cumulative Total Return         12.64%         3.09%        97.27%       239.29%       266.79%

Average Annual
Total Return                    12.64%         3.09%        14.56%        13.00%        12.73%

Value of $10,000
Investment                   $  11,264     $  10,309     $  19,727     $  23,929     $ 36,679


<CAPTION>
                               6/30/95       6/30/96       6/30/97       6/30/98       6/30/99
- -----------------------------------------------------------------------------------------------
One-Year Total Return           15.07%        21.32%        27.06%         7.88%         3.09%
</TABLE>

[BEGIN CALLOUT]
EXPENSES:  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 Contract  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.  Past expense
reductions by the manager increased returns.
[END CALLOUT]


[BEGIN CALLOUT]
Since markets can go down as well as up,  investment  return and principal value
will  fluctuate  with market  conditions,  currency  volatility  and the social,
economic and political  climates of countries  where the fund invests.  Emerging
markets  involve  heightened  risks related to the same factors,  in addition to
those associated with their relatively small size and lesser liquidity.  You may
have a gain or loss when you sell your shares.
[END CALLOUT]

Past performance cannot predict or guarantee future results.

TS-4

PAGE

TEMPLETON VARIABLE PRODUCTS SERIES FUND

TEMPLETON STOCK FUND

Financial Highlights
<TABLE>
<CAPTION>
                                                                                   CLASS 1
                                                 --------------------------------------------------------------------------------
                                                   SIX MONTHS ENDED                      YEAR ENDED DECEMBER 31,
                                                    JUNE 30, 1999     -----------------------------------------------------------
                                                    (UNAUDITED) +        1998       1997         1996         1995         1994
                                                 --------------------------------------------------------------------------------
<S>                                                  <C>              <C>         <C>          <C>          <C>          <C>
PER SHARE OPERATING PERFORMANCE
(For a share outstanding throughout the period)
Net asset value, beginning of period ............    $ 21.07          $  23.19    $  22.88     $  20.83     $  16.94     $  17.53
                                                 --------------------------------------------------------------------------------
Income from investment operations:
 Net investment income ..........................        .17               .39         .47          .41          .40          .26
 Net realized and unrealized gains (losses) .....       2.15               .04        2.11         3.88         3.80         (.64)
                                                 --------------------------------------------------------------------------------
Total from investment operations ................       2.32               .43        2.58         4.29         4.20         (.38)
                                                 --------------------------------------------------------------------------------
Less distributions from:
 Net investment income ..........................       (.37)             (.49)       (.40)        (.40)        (.27)        (.21)
 Net realized gains .............................      (1.74)            (2.06)      (1.87)       (1.84)        (.04)          --
                                                 --------------------------------------------------------------------------------
Total distributions .............................      (2.11)            (2.55)      (2.27)       (2.24)        (.31)        (.21)
                                                 --------------------------------------------------------------------------------
Net asset value, end of period ..................    $ 21.28          $  21.07    $  23.19     $  22.88     $  20.83     $  16.94
                                                 ================================================================================
Total return* ...................................     12.64%             1.26%      11.88%       22.48%       25.24%      (2.20)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's) ...............   $620,428          $646,865    $732,248     $644,366     $498,777     $378,849
Ratios to average net assets:
 Expenses .......................................       .83%**            .89%        .81%         .65%         .66%         .73%
 Net investment income ..........................      1.67%**           1.65%       2.05%        2.06%        2.18%        1.81%
Portfolio turnover rate .........................     15.28%            37.27%      25.82%       23.40%       33.93%        5.10%
</TABLE>

 * TOTAL RETURN DOES NOT INCLUDE DEDUCTIONS AT THE CONTRACT LEVEL FOR COST OF
   INSURANCE CHARGES, PREMIUM LOAD, ADMINISTRATIVE CHARGES, MORTALITY AND
   EXPENSE RISK CHARGES OR OTHER CHARGES THAT MAY BE INCURRED UNDER THE
   VARIABLE  ANNUITY CONTRACT FOR WHICH THE FUND SERVES AS AN UNDERLYING
   INVESTMENT  VEHICLE. TOTAL RETURN IS NOT ANNUALIZED.

** ANNUALIZED.

 + BASED ON AVERAGE WEIGHTED SHARES OUTSTANDING.


                                                                           TS-5
PAGE

TEMPLETON VARIABLE PRODUCTS SERIES FUND

TEMPLETON STOCK FUND

Financial Highlights (continued)

<TABLE>
<CAPTION>
                                                                                 CLASS 2
                                                         ---------------------------------------------------------
                                                              SIX MONTHS ENDED           YEAR ENDED DECEMBER 31,
                                                                JUNE 30, 1999            -------------------------
                                                                (UNAUDITED)++            1998            1997+
                                                         ---------------------------------------------------------
<S>                                                      <C>                            <C>           <C>
PER SHARE OPERATING PERFORMANCE
(For a share outstanding throughout the period)
Net asset value, beginning of period ................    $20.99                           $23.15        $21.62
                                                         ---------------------------------------------------------
Income from investment operations:
 Net investment income ..............................       .15                              .40           .06
 Net realized and unrealized gains (losses) .........      2.14                             (.03)         1.47
                                                         ---------------------------------------------------------
Total from investment operations ....................      2.29                              .37          1.53
                                                         ---------------------------------------------------------
Less distributions from:
 Net investment income ..............................      (.33)                            (.47)           --
 Net realized gains .................................     (1.74)                           (2.06)           --
                                                         ---------------------------------------------------------
Total distributions .................................     (2.07)                           (2.53)           --
                                                         ---------------------------------------------------------
Net asset value, end of period ......................    $21.21                           $20.99        $23.15
                                                         =========================================================
Total return* .......................................    12.46%                             .99%         7.08%

RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's) ...................   $27,435                          $25,593       $16,414
Ratios to average net assets:
 Expenses ...........................................     1.08%**                          1.14%         1.14%**
 Net investment income ..............................     1.46%**                          1.37%          .75%**
Portfolio turnover rate .............................    15.28%                           37.27%        25.82%
</TABLE>

 * TOTAL RETURN DOES NOT INCLUDE DEDUCTIONS AT THE CONTRACT LEVEL FOR COST OF
   INSURANCE CHARGES, PREMIUM LOAD, ADMINISTRATIVE CHARGES, MORTALITY AND
   EXPENSE RISK CHARGES OR OTHER CHARGES THAT MAY BE INCURRED UNDER THE
   VARIABLE ANNUITY CONTRACT FOR WHICH THE FUND SERVES AS AN UNDERLYING
   INVESTMENT  VEHICLE. TOTAL RETURN IS NOT ANNUALIZED.
** ANNUALIZED.
 + FOR THE PERIOD MAY 1, 1997 (EFFECTIVE DATE) TO DECEMBER 31, 1997.
++ BASED ON AVERAGE WEIGHTED SHARES OUTSTANDING.


                              See Notes to Financial Statements.

TS-6

PAGE

TEMPLETON VARIABLE PRODUCTS SERIES FUND

TEMPLETON STOCK FUND

STATEMENT OF INVESTMENTS, JUNE 30, 1999 (UNAUDITED)

<TABLE>
<CAPTION>
                                                                    COUNTRY          SHARES          VALUE
- -------------------------------------------------------------------------------------------------------------
<S>  <C>                                                       <C>                <C>            <C>
     COMMON STOCKS 93.4%
     AEROSPACE & MILITARY TECHNOLOGY 1.2%
     Boeing Co. ............................................     United States       182,500      $ 8,064,219
     Raytheon Co., A .......................................     United States           230           15,841
                                                                                                  -----------
                                                                                                    8,080,060
                                                                                                  -----------
     APPLIANCES & HOUSEHOLD DURABLES 2.3%
     Guangdong Kelon Electrical Holdings. Ltd., H ..........         China         1,123,000        1,309,878
     Sony Corp. ............................................         Japan           124,100       13,379,916
                                                                                                  -----------
                                                                                                   14,689,794
                                                                                                  -----------
     AUTOMOBILES 3.9%
     Fiat SpA ..............................................         Italy         1,307,680        4,156,203
     Ford Motor Co. ........................................     United States       117,000        6,603,188
     Volkswagen AG .........................................        Germany          102,400        6,607,371
     Volvo AB, B ...........................................        Sweden           269,200        7,804,964
                                                                                                  -----------
                                                                                                   25,171,726
                                                                                                  -----------
     BANKING 5.5%
     Australia & New Zealand Banking Group Ltd. ............       Australia         542,900        3,991,975
 *   Banca Nazionale Del Lavoro SpA ........................         Italy         1,781,960        5,619,505
     Banque Nationale de Paris .............................        France            62,054        5,170,633
     Deutsche Bank AG, Br. .................................        Germany          100,700        6,137,331
     HSBC Holdings PLC .....................................       Hong Kong         153,404        5,595,331
 *   Thai Farmers Bank Public Co. Ltd., fgn. ...............       Thailand        1,492,300        4,613,483
     Unidanmark AS, A ......................................        Denmark           69,100        4,611,791
                                                                                                  -----------
                                                                                                   35,740,049
                                                                                                  -----------
     BROADCASTING & PUBLISHING 1.4%
     News Corp. Ltd., ADR ..................................       Australia         112,400        3,969,125
     Television Broadcasts Ltd. ............................       Hong Kong       1,023,000        4,799,319
                                                                                                  -----------
                                                                                                    8,768,444
                                                                                                  -----------
     BUSINESS & PUBLIC SERVICES 2.5%
     Kurita Water Industries Ltd. ..........................         Japan           387,000        6,938,120
     Lex Service PLC .......................................    United Kingdom       221,020        2,032,804
     Waste Management Inc. .................................     United States       135,917        7,305,539
                                                                                                  -----------
                                                                                                   16,276,463
                                                                                                  -----------
     CHEMICALS 1.3%
     Akzo Nobel NV .........................................      Netherlands        195,200        8,213,014
                                                                                                  -----------
     DATA PROCESSING & REPRODUCTION 2.1%
 *   3Com Corp. ............................................     United States       215,800        5,759,163
 *   Newbridge Networks Corp. ..............................        Canada           274,200        7,883,250
                                                                                                  -----------
                                                                                                   13,642,413
                                                                                                  -----------
     ELECTRICAL & ELECTRONICS 9.0%
 *   ABB Ltd. ..............................................        Sweden            79,406        7,425,049
     Alcatel SA ............................................        France            78,835       11,097,223
 *   Antec Corp. ...........................................     United States       345,500       11,077,594
     Koninklijke Philips Electronics NV ....................      Netherlands        121,532       11,987,765
     Motorola Inc. .........................................     United States       175,800       16,657,050
                                                                                                  -----------
                                                                                                   58,244,681
                                                                                                  -----------
     ELECTRONIC COMPONENTS & INSTRUMENTS 2.4%
     Hewlett-Packard Co. ...................................     United States        85,000        8,542,500
     Intel Corp. ...........................................     United States       121,400        7,223,300
                                                                                                  -----------
                                                                                                   15,765,800
                                                                                                  -----------
</TABLE>

                                                                            TS-7

PAGE

TEMPLETON VARIABLE PRODUCTS SERIES FUND

TEMPLETON STOCK FUND

STATEMENT OF INVESTMENTS, JUNE 30, 1999 (UNAUDITED) (CONT.)



<TABLE>
<CAPTION>
                                                                        COUNTRY          SHARES           VALUE
- ------------------------------------------------------------------------------------------------------------------
<S>  <C>                                                           <C>                <C>            <C>
     COMMON STOCKS (CONT.)
     ENERGY SOURCES 4.2%
     Norsk Hydro ASA ...........................................        Norway           185,300      $  6,990,676
     Perez Companc SA, B .......................................       Argentina         415,400         2,388,789
     Societe Elf Aquitaine SA, Br. .............................        France            61,320         8,998,490
 *   Total Fina SA, B ..........................................        France            67,497         8,707,719
                                                                                                      ------------
                                                                                                        27,085,674
                                                                                                      ------------
     FINANCIAL SERVICES 6.1%
     AXA SA ....................................................        France            57,091         6,964,902
     Fannie Mae ................................................     United States       144,200         9,859,675
     ING Groep NV ..............................................      Netherlands        157,637         8,534,539
     Lend Lease Corp. Ltd. .....................................       Australia         485,500         6,665,824
     Nomura Securities Co. Ltd. ................................         Japan           623,000         7,293,382
                                                                                                      ------------
                                                                                                        39,318,322
                                                                                                      ------------
     FOOD & HOUSEHOLD PRODUCTS 1.0%
     Archer-Daniels Midland Co. ................................     United States       434,170         6,702,499
                                                                                                      ------------
     FOREST PRODUCTS & PAPER 3.1%
 *   Asia Pulp & Paper Co. Ltd., ADR ...........................       Indonesia          29,000           279,125
     Carter Holt Harvey Ltd. ...................................      New Zealand      1,155,252         1,383,499
     Georgia-Pacific Corp. .....................................     United States       214,800        10,176,150
     Stora Enso OYJ, R .........................................        Finland          427,800         4,588,141
     Stora Enso OYJ, R, fgn. ...................................        Finland          313,540         3,392,811
                                                                                                      ------------
                                                                                                        19,819,726
                                                                                                      ------------
     HEALTH & PERSONAL CARE 5.6%
     Astrazeneca PLC ...........................................    United Kingdom       152,291         5,928,996
     Medeva PLC ................................................    United Kingdom     2,761,300         4,526,579
     Novartis AG ...............................................      Switzerland          2,236         3,264,968
     Nycomed Amersham PLC ......................................    United Kingdom       791,920         5,633,219
     Rhone-Poulenc SA, A .......................................        France           170,002         7,768,164
 *   Skyepharma PLC ............................................    United Kingdom     5,109,873         3,986,928
     Teva Pharmaceutical Industries Ltd., ADR ..................        Israel           107,400         5,262,600
                                                                                                      ------------
                                                                                                        36,371,454
                                                                                                      ------------
     INDUSTRIAL COMPONENTS 2.5%
     Goodyear Tire & Rubber Co. ................................     United States        99,000         5,822,438
     Granges AB ................................................        Sweden           379,525         6,428,088
     Yamato Kogyo Co. Ltd. .....................................         Japan           539,000         3,923,158
                                                                                                      ------------
                                                                                                        16,173,684
                                                                                                      ------------
     INSURANCE 7.5%
     Ace Ltd. ..................................................        Bermuda          176,500         4,986,125
     AXA China Region Ltd. .....................................       Hong Kong       3,440,000         2,748,861
     HIH Insurance Ltd. ........................................       Australia       2,303,465         2,851,125
     Muenchener Rueckversicherungs-Gesellschaft ................        Germany           13,445         2,533,156
 *   Muenchener Rueckversicherungs-Gesellschaft, 144A ..........        Germany           13,445         2,509,585
 *   Muenchener Rueckversicherungs-Gesellschaft, wts. ..........        Germany              419            13,395
     Partnerre Ltd. ............................................        Bermuda          144,400         5,396,950
     Reliastar Financial Corp. .................................     United States       204,700         8,955,625
     Torchmark Corp. ...........................................     United States       113,400         3,869,775
     XL Capital Ltd., A ........................................        Bermuda           92,100         5,203,650
     Zurich Allied AG ..........................................      Switzerland         17,000         9,666,795
                                                                                                      ------------
                                                                                                        48,735,042
                                                                                                      ------------
     LEISURE & TOURISM .6%
     Kuoni Reisen Holding AG, B ................................      Switzerland          1,065         4,106,957
                                                                                                      ------------
</TABLE>

TS-8

PAGE

TEMPLETON VARIABLE PRODUCTS SERIES FUND

TEMPLETON STOCK FUND

STATEMENT OF INVESTMENTS, JUNE 30, 1999 (UNAUDITED) (CONT.)

<TABLE>
<CAPTION>
                                                                           COUNTRY          SHARES          VALUE
- --------------------------------------------------------------------------------------------------------------------
<S>  <C>                                                              <C>                <C>           <C>
     COMMON STOCKS (CONT.)
     MACHINERY & ENGINEERING 1.9%
     Invensys PLC .................................................    United Kingdom     1,621,958     $  7,682,582
     New Holland NV ...............................................      Netherlands        259,400        4,442,225
                                                                                                        ------------
                                                                                                          12,124,807
                                                                                                        ------------
     MERCHANDISING 3.5%
     Home Depot Inc. ..............................................     United States       102,800        6,624,175
     Marks & Spencer PLC ..........................................    United Kingdom     1,067,200        6,156,729
     Safeway PLC ..................................................    United Kingdom     1,305,220        5,220,510
     Storehouse ...................................................    United Kingdom     2,067,800        4,449,020
                                                                                                        ------------
                                                                                                          22,450,434
                                                                                                        ------------
     METALS & MINING 1.8%
     Ispat International NV, A, Reg D .............................      Netherlands        228,000        2,522,250
     WMC Ltd. .....................................................       Australia       2,183,784        9,380,963
                                                                                                        ------------
                                                                                                          11,903,213
                                                                                                        ------------
     MULTI-INDUSTRY 4.0%
     Alfa SA de CV, A .............................................        Mexico         1,743,100        7,286,958
     Cheung Kong Holdings Ltd. ....................................       Hong Kong         815,000        7,247,852
     DESC SA de CV DESC, B ........................................        Mexico         4,018,300        4,419,486
     DESC SA de CV DESC, C ........................................        Mexico               800              897
     Hutchison Whampoa Ltd. .......................................       Hong Kong         802,100        7,262,355
                                                                                                        ------------
                                                                                                          26,217,548
                                                                                                        ------------
     REAL ESTATE .7%
     National Health Investors Inc. ...............................     United States       187,700        4,281,906
                                                                                                        ------------
     TELECOMMUNICATIONS 10.6%
     Cia de Telecomunicaciones de Chile SA, ADR ...................         Chile           117,300        2,903,175
     Hong Kong Telecommunications Ltd. ............................       Hong Kong       2,504,000        6,502,974
 *   Korea Telecom Corp., ADR .....................................      South Korea         88,900        3,556,000
 *   Mastec Inc. ..................................................     United States       340,323        9,614,125
     Nippon Telegraph & Telephone Corp. ...........................         Japan               675        7,863,103
     Nortel Networks Corp. ........................................        Canada           120,460       10,457,434
 *   Telecom Italia SpA ...........................................         Italy           763,200        7,913,763
     Telecomunicacoes Brasileiras SA, ADR .........................        Brazil            41,800        3,769,838
 *   Telefonica SA ................................................         Spain           142,300        6,854,525
     Telefonos de Mexico SA (Telmex), ADR .........................        Mexico           117,500        9,495,469
                                                                                                        ------------
                                                                                                          68,930,406
                                                                                                        ------------
     TRANSPORTATION 4.3%
     Air New Zealand Ltd., B ......................................      New Zealand        700,100        1,446,833
     British Airways PLC ..........................................    United Kingdom       928,000        6,414,174
     Canadian National Railway Co. ................................        Canada           113,800        7,690,345
     Firstgroup PLC ...............................................    United Kingdom       592,500        3,236,046
     Mayne Nickless Ltd., A .......................................       Australia       1,388,800        4,752,513
     Peninsular & Oriental Steam Navigation Co. ...................    United Kingdom       294,200        4,426,309
                                                                                                        ------------
                                                                                                          27,966,220
                                                                                                        ------------
     UTILITIES ELECTRICAL & GAS 4.4%
     Centrais Eletricas Brasileiras SA (Eletrobras), ADR ..........        Brazil           514,400        4,901,843
     Evn AG .......................................................        Austria           58,920        8,615,918
     Iberdrola SA, Br. ............................................         Spain           486,500        7,410,132
     Veba AG ......................................................        Germany          129,600        7,644,756
                                                                                                        ------------
                                                                                                          28,572,649
                                                                                                        ------------
     TOTAL COMMON STOCKS (COST $448,405,493) ......................                                      605,352,985
                                                                                                        ------------
</TABLE>

                                                                            TS-9

PAGE

TEMPLETON VARIABLE PRODUCTS SERIES FUND

TEMPLETON STOCK FUND

STATEMENT OF INVESTMENTS, JUNE 30, 1999 (UNAUDITED) (CONT.)

<TABLE>
<CAPTION>
                                                                                 COUNTRY          SHARES           VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<S>     <C>                                                                  <C>             <C>              <C>
        PREFERRED STOCKS 2.8%
        Banco Itau SA, pfd. ................................................      Brazil          6,309,400    $  3,276,208
        Embotelladora Andina SA, B, ADR, pfd. ..............................      Chile             302,900       4,619,225
        News Corp. Ltd., pfd. ..............................................    Australia           265,309       2,021,251
        News Corp. Ltd., ADR, pfd. .........................................    Australia           117,000       3,692,812
  *     Telecomunicacoes Brasileiras SA (Telebras), ADR, pfd. ..............      Brazil             41,800           2,613
        Telesp Participacoes SA, ADR, pfd. .................................      Brazil            205,300       4,696,237
                                                                                                               ------------
        TOTAL PREFERRED STOCKS (COST $14,628,445)...........................                                     18,308,346
                                                                                                               ------------
<CAPTION>
                                                                                               PRINCIPAL
                                                                                               AMOUNT**
                                                                                               ------------
        BONDS (COST $3,911,844) .6%
        AXA SA, cvt., 144A, 2.50%, 1/01/14 .................................      France          3,445,200 EUR   3,574,026
                                                                                                               ------------
        SHORT TERM INVESTMENT (COST $3,578,903) .6%
        Fannie Mae, 4.71%, 7/13/99 .........................................  United States       3,585,000       3,579,253
                                                                                                               ------------
        TOTAL BEFORE REPURCHASE AGREEMENT (COST $470,524,685)...............                                    630,814,610
                                                                                                               ------------
    (A) REPURCHASE AGREEMENT (COST $10,028,000) 1.5%
        Paine Webber Group Inc., 4.80%, 7/01/99 (Maturity Value $10,029,337)
        Collateralized by U.S. Treasury Notes and Bonds ....................  United States      10,028,000      10,028,000
                                                                                                               ------------
        TOTAL INVESTMENTS (COST $480,552,685) 98.9%.........................                                    640,842,610
        OTHER ASSETS, LESS LIABILITIES 1.1% ................................                                      7,020,893
                                                                                                               ------------
        TOTAL NET ASSETS 100.0% ............................................                                   $647,863,503
                                                                                                               ============
</TABLE>

CURRENCY ABBREVIATION:
EUR--European Unit

  * NON INCOME PRODUCING.
 ** SECURITIES DENOMINATED IN U.S. DOLLARS UNLESS OTHERWISE INDICATED.
(A) AT JUNE 30, 1999, ALL REPURCHASE AGREEMENTS HELD BY THE FUND HAD BEEN
    ENTERED INTO ON THAT DATE.

                              See Notes to Financial Statements.

TS-10


PAGE

TEMPLETON VARIABLE PRODUCTS SERIES FUND

TEMPLETON STOCK FUND

Financial Statements

STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1999 (UNAUDITED)

<TABLE>
<S>                                                                                     <C>
Assets:
 Investments in securities, at value (cost $470,524,685) ...........................    $630,814,610
 Repurchase agreement, at value and cost ...........................................      10,028,000
 Cash ..............................................................................       1,491,932
 Receivables: ......................................................................
  Investment securities sold .......................................................         120,620
  Fund shares sold .................................................................       3,225,239
  Dividends and interest ...........................................................       2,928,716
                                                                                        ------------
   Total assets ....................................................................     648,609,117
                                                                                        ------------
Liabilities:
 Payables to affiliates ............................................................         423,469
 Deferred tax liability (Note 1e) ..................................................          61,431
 Accrued expenses ..................................................................         260,714
                                                                                        ------------
   Total liabilities ...............................................................         745,614
                                                                                        ------------
Net assets, at value ...............................................................    $647,863,503
                                                                                        ============
Net assets consist of:
 Undistributed net investment income ...............................................    $  5,532,631
 Net unrealized appreciation .......................................................     160,228,494
 Accumulated net realized gain .....................................................      12,660,493
 Beneficial shares .................................................................     469,441,885
                                                                                        ------------
Net assets, at value ...............................................................    $647,863,503
                                                                                        ============
CLASS 1:
 Net asset value per share ($620,428,154/29,158,278 shares outstanding)                 $      21.28
                                                                                        ============
CLASS 2:
 Net asset value per share ($27,435,349/1,293,337 shares outstanding)..                 $      21.21
                                                                                        ============
</TABLE>

                       See Notes to Financial Statements.

                                                                          TS-11
PAGE

TEMPLETON VARIABLE PRODUCTS SERIES FUND

TEMPLETON STOCK FUND

Financial Statements (continued)

STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1999 (UNAUDITED)


<TABLE>
<S>                                                              <C>             <C>
Investment Income:
 (net of foreign taxes of $752,149)
 Dividends ...................................................    $ 7,766,878
 Interest ....................................................        193,686
                                                                  -----------
   Total investment income ...................................                    $ 7,960,564

Expenses:
 Management fees (Note 4) ....................................      2,219,871
 Administrative fees (Note 4) ................................        307,861
 Distribution fees - Class 2 (Note 4) ........................         30,831
 Custodian fees ..............................................         47,000
 Reports to shareholders .....................................         56,000
 Professional fees ...........................................         13,400
 Other .......................................................            551
                                                                  -----------
   Total expenses ............................................                      2,675,514
                                                                                  -----------
    Net investment income ....................................                      5,285,050
                                                                                  -----------
Realized and unrealized gains (losses):
 Net realized gain (loss) from:
  Investments ................................................     17,509,630
  Foreign currency transactions ..............................       (447,977)
                                                                  -----------
   Net realized gain .........................................                     17,061,653
 Net unrealized appreciation (depreciation) on: ..............
  Investments ................................................     53,008,541
  Deferred taxes (Note 1e) ...................................        (61,431)
                                                                  -----------
   Net unrealized appreciation ...............................                     52,947,110
                                                                                  -----------
Net realized and unrealized gain .............................                     70,008,763
                                                                                  -----------
Net increase in net assets resulting from operations .........                    $75,293,813
                                                                                  ===========
</TABLE>

                       See Notes to Financial Statements.

TS-12

PAGE

TEMPLETON VARIABLE PRODUCTS SERIES FUND

TEMPLETON STOCK FUND


Financial Statements (continued)


STATEMENT OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
                                                                      SIX MONTHS ENDED
                                                                       JUNE 30, 1999         YEAR ENDED
                                                                        (UNAUDITED)       DECEMBER 31, 1998
                                                                     --------------------------------------
<S>                                                                  <C>                 <C>
Increase (decrease) in net assets:
 Operations:
  Net investment income ..........................................     $   5,285,050       $  12,029,676
  Net realized gain from investments and
   foreign currency transactions .................................        17,061,653          47,568,957
  Net unrealized appreciation (depreciation) on
   investments and deferred taxes ................................        52,947,110         (47,396,839)
                                                                       ---------------------------------
    Net increase in net assets resulting from operations .........        75,293,813          12,201,794

 Distributions to shareholders from:
  Net investment income:
   Class 1 .......................................................       (10,783,247)        (15,083,722)
   Class 2 .......................................................          (372,246)           (357,002)
  Net realized gains: ............................................
   Class 1 .......................................................       (49,890,492)        (63,413,199)
   Class 2 .......................................................        (1,972,049)         (1,560,086)

 Fund share transactions (Note 3):
   Class 1 .......................................................       (38,177,474)        (19,220,136)
   Class 2 .......................................................         1,307,186          11,228,384
                                                                       ---------------------------------
    Net decrease in net assets ...................................       (24,594,509)        (76,203,967)

Net assets:
 Beginning of period .............................................       672,458,012         748,661,979
                                                                       ---------------------------------
 End of period ...................................................     $ 647,863,503       $ 672,458,012
                                                                       =================================
Undistributed net investment income included in net assets:
 End of period ...................................................     $   5,532,631       $  11,403,074
                                                                       =================================
</TABLE>

                       See Notes to Financial Statements.

                                                                          TS-13
PAGE

TEMPLETON VARIABLE PRODUCTS SERIES FUND

TEMPLETON STOCK FUND

Notes to Financial Statements (unaudited)

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

Templeton Stock Fund (the Fund) is a separate, diversified series of Templeton
Variable Products Series Fund (the Trust), which is an open-end investment
company registered under the Investment Company Act of 1940. The Fund seeks
capital growth through a policy of investing primarily in common stocks issued
by companies, large and small, in various nations throughout the world. 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 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.

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.

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 all of its taxable income.

D.  SECURITY TRANSACTIONS, INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS:

Security transactions are accounted for on trade date. Realized gains and
losses on security transactions are determined on a specific identification
basis. Certain income from foreign securities is recorded as soon as
information is available to the Fund. Interest income and estimated expenses
are accrued daily. Dividend income and distributions to shareholders are
recorded on the ex-dividend date.

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.

Common expenses incurred by the Trust are allocated among the funds comprising
the Trust 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.

TS-14

PAGE

TEMPLETON VARIABLE PRODUCTS SERIES FUND

TEMPLETON STOCK FUND

Notes to Financial Statements (unaudited) (continued)

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONT.)

E.  DEFERRED TAXES:

Deferred taxes are recorded for estimated tax liabilities inherent in the
Fund's portfolio securities which may arise from subsequent sales of those
securities and asset repatriations from countries that impose such taxes.

F.  ACCOUNTING ESTIMATES:

The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of the
financial statements and the amounts of income and expense during the reporting
period. Actual results could differ from those estimates.

2. MERGER OF TEMPLETON VARIABLE ANNUITY FUND

On May 8, 1998, the Fund acquired all of the net assets of Templeton Variable
Annuity Fund (Variable Annuity Fund) pursuant to a plan of reorganization
approved by Variable Annuity Fund's shareholders. The merger was accomplished
by a tax-free exchange of 699,965 Class 1 shares of the Fund (valued at $23.84
per share) for the net assets of the Variable Annuity Fund which aggregated
$16,687,175, including $4,980,981 of unrealized appreciation. The combined net
assets of the Fund immediately after the merger were $839,071,006.

3. BENEFICIAL SHARES

The Fund offers two classes of shares: Class 1 and Class 2 shares. The shares
differ by their distribution fees, voting rights on matters affecting a single
class, and the exchange privilege of each class.

At June 30, 1999, 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, 1999                   DECEMBER 31, 1998
                                                -------------------------------------------------------------------
                                                     SHARES           AMOUNT           SHARES           AMOUNT
CLASS 1 SHARES:                                 -------------------------------------------------------------------
<S>                                             <C>             <C>               <C>             <C>
Shares sold ...................................     1,741,664    $   35,858,579       2,562,174    $   50,875,104
Shares issued on reinvestment of distributions      3,313,694        60,673,739       3,523,201        78,496,920
Shares redeemed ...............................    (6,596,718)     (134,709,792)     (6,963,562)     (148,592,160)
                                                -----------------------------------------------------------------
Net decrease ..................................    (1,541,360)   $  (38,177,474)       (878,187)   $  (19,220,136)
                                                =================================================================
</TABLE>

<TABLE>
<CAPTION>
                                                      SIX MONTHS ENDED                YEAR ENDED
                                                       JUNE 30, 1999               DECEMBER 31, 1998
                                                ----------------------------------------------------------
                                                   SHARES         AMOUNT         SHARES         AMOUNT
CLASS 2 SHARES:                                 ----------------------------------------------------------
<S>                                             <C>          <C>             <C>           <C>
Shares sold ...................................    177,010    $  3,646,716       641,741    $ 14,204,072
Shares issued on reinvestment of distributions     128,314       2,344,295        86,200       1,917,088
Shares redeemed ...............................   (231,393)     (4,683,825)     (217,530)     (4,892,776)
                                                --------------------------------------------------------
Net increase ..................................     73,931    $  1,307,186       510,411    $ 11,228,384
                                                ========================================================
</TABLE>


                                                                          TS-15
PAGE

TEMPLETON VARIABLE PRODUCTS SERIES FUND

TEMPLETON STOCK FUND

Notes to Financial Statements (unaudited) (continued)

4. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES

Certain officers of the Trust are also officers or directors of Templeton
Investment Counsel, Inc. (TICI), Franklin Templeton Services, Inc. (FT
Services) and Franklin/Templeton Distributors, Inc. (Distributors), the Fund's
investment manager, administrative manager and principal underwriter,
respectively.

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


     ANNUALIZED
     FEE RATE    AVERAGE DAILY NET ASSETS
     ---------------------------------------------------------------
          0.75%       First $200 million
     0.675%      Over $200 million, up to and including $1.3 billion
     0.60%       Over $1.3 billion


The Fund pays its allocated share of an administrative fee to FT Services based
on the Trust's aggregate average daily net assets as follows:


     ANNUALIZED
     FEE RATE    AVERAGE DAILY NET ASSETS
     ---------------------------------------------------------------
     0.15%       First $200 million
     0.135%      Over $200 million, up to and including $700 million
     0.10%       Over $700 million, up to and including $1.2 billion
     0.075%      Over $1.2 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.

5. INCOME TAXES

The cost of securities for income tax purposes is the same as that shown in the
Statement of Investments. At June 30, 1999, the net unrealized appreciation
based on the cost of investments for income tax purposes was as follows:


          Unrealized appreciation .............  $ 197,503,259
          Unrealized depreciation .............    (37,213,334)
                                                 -------------
          Net unrealized appreciation .........  $ 160,289,925
                                                 =============

6. INVESTMENT TRANSACTIONS

Purchases and sales of securities (excluding short-term securities) for the six
months ended June 30, 1999 aggregated $95,753,233 and $210,548,151,
respectively.

TS-16

PAGE

TEMPLETON VARIABLE PRODUCTS SERIES FUND

TEMPLETON STOCK FUND

Notes to Financial Statements (unaudited) (continued)

6. INVESTMENT TRANSACTIONS (CONT.)

Tax Designation

At December 31, 1998, more than 50% of the Templeton Stock Fund 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 to them.

The following table provides a breakdown by country of foreign source income
and foreign taxes paid to Class 1 and Class 2 shareholders in March 1999.

<TABLE>
<CAPTION>
                                         CLASS 1                                CLASS 2
                         ------------------------------------------------------------------------------
                             FOREIGN TAXES      FOREIGN SOURCE       FOREIGN TAXES      FOREIGN SOURCE
COUNTRY                   WITHHELD PER SHARE   INCOME PER SHARE   WITHHELD PER SHARE   INCOME PER SHARE
- -------------------------------------------------------------------------------------------------------
<S>                             <C>                 <C>                 <C>                <C>
Argentina ..............        $0.0000             $0.0115             $0.0000            $0.0103
Australia ..............         0.0048              0.0380              0.0048             0.0342
Austria ................         0.0009              0.0042              0.0009             0.0038
Bermuda ................         0.0000              0.0033              0.0000             0.0030
Brazil .................         0.0085              0.0390              0.0085             0.0351
Canada .................         0.0009              0.0041              0.0009             0.0036
Chile ..................         0.0021              0.0060              0.0021             0.0054
Denmark ................         0.0009              0.0042              0.0009             0.0037
Ecuador ................         0.0000              0.0012              0.0000             0.0011
Finland ................         0.0015              0.0070              0.0015             0.0063
France .................         0.0076              0.0494              0.0076             0.0445
Germany ................         0.0011              0.0073              0.0011             0.0066
Hong Kong ..............         0.0000              0.0340              0.0000             0.0306
India ..................         0.0000              0.0051              0.0000             0.0046
Indonesia ..............         0.0001              0.0003              0.0001             0.0003
Israel .................         0.0002              0.0006              0.0002             0.0006
Italy ..................         0.0016              0.0073              0.0016             0.0065
Japan ..................         0.0005              0.0025              0.0005             0.0022
Malaysia ...............         0.0001              0.0003              0.0001             0.0002
Mexico .................         0.0000              0.0182              0.0000             0.0164
Netherlands ............         0.0060              0.0267              0.0060             0.0240
New Zealand ............         0.0016              0.0074              0.0016             0.0067
Norway .................         0.0026              0.0112              0.0026             0.0101
Singapore ..............         0.0011              0.0030              0.0011             0.0027
Spain ..................         0.0048              0.0221              0.0048             0.0199
Sweden .................         0.0042              0.0192              0.0042             0.0173
Switzerland ............         0.0036              0.0162              0.0036             0.0146
United Kingdom .........         0.0132              0.0577              0.0132             0.0519
                                ------------------------------------------------------------------
TOTAL ..................        $0.0679             $0.4070             $0.0679            $0.3662
                                ==================================================================
</TABLE>


                                                                          TS-17
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PAGE


TEMPLETON IMMEDIATE VARIABLE ANNUITY SEPARATE ACCOUNT
Financial Statements
- -------------------------------------------------------------------------------


STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1999 (UNAUDITED)

<TABLE>
<CAPTION>
<S>                                                                             <C>

Assets:
  Investment in Templeton Variable Products Series Fund - Stock Fund Class 1,
    at value (cost $3,231,873)...............................................   $2,971,360

Liabilities:
    Payable to Templeton Funds Annuity Company...............................       $8,208

Net assets...................................................................   $2,963,152
                                                                                ===========
Net assets attributable to annuitants - Annuity reserves (Note 1)............   $2,963,152
                                                                                ============

</TABLE>



                       See Notes to Financial Statements

                                                                            SA-1


PAGE

TEMPLETON IMMEDIATE VARIABLE ANNUITY SEPARATE ACCOUNT
FINANCIAL STATEMENTS (continued)
- --------------------------------------------------------------------------------



STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1999 (UNAUDITED)

Investment Income:
Income:
  Dividend distributions............................................ $  48,399
  Capital gains distributions.......................................   223,924
                                                                     ----------
    Total income....................................................   272,323
Expenses:
  Periodic charge (Note 2)..........................................    16,771
                                                                     ----------
Net investment income...............................................   255,552
                                                                     ----------
Realized and unrealized gain on investments:
  Net (loss) on investments.........................................   (19,125)
  Unrealized depreciation of investments for the year...............    86,274
                                                                     ----------
  Net gain on investments...........................................    67,149
                                                                     ----------
Net increase in net assets from operations..........................  $322,701
                                                                     =========


                       See Notes to Financial Statements.
SA-2

PAGE


TEMPLETON IMMEDIATE VARIABLE ANNUITY SEPARATE ACCOUNT
FINANCIAL STATEMENTS (continued)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------

STATEMENTS OF CHANGES IN NET ASSETS



                                              Six months ended
                                              June 30, 1999                        Year ended
                                               (unaudited)                      December 31, 1998
                                             --------------------             ---------------------
<S>                                          <C>                              <C>
Increase in net assets from operations:
   Net investment income                            $255,552                      $599,230
   Net realized (loss) on investments                (19,125)                      (29,394)
   Unrealized appreciation (depreciation)
      of investments for the year                     86,274                      (557,401)
                                                   ----------                    -----------
   Net increase in net assets
      from operations                                322,701                        12,435
                                                   ----------                    -----------
Annuity unit transactions:
   Proceeds from units sold                                0                             0
   Annuity payments                                 (122,732)                     (577,014)
Increase in annuity reserves
      for mortality experience (Note 1)                4,299                         3,054
                                                  -----------                    -----------
   Net increase (decrease) in net assets
     derived from  annuity unit transactions        (118,433)                     (573,960)
                                                  -----------                    ----------
         Total increase (decrease) in
         net assets                                  204,268                      (561,525)

Net Assets:
   Beginning of period                             2,758,884                     3,320,409
                                                  -----------                   ----------
   End of period                                   2,963,152                     2,758,884
                                                  ===========                   ==========
</TABLE>


                       See Notes to Financial Statements.

                                                                            SA-3

PAGE


TEMPLETON IMMEDIATE VARIABLE ANNUITY SEPARATE ACCOUNT
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
- ------------------------------------------------------------------------------

1.       SUMMARY OF ACCOUNTING POLICIES

     The Templeton Immediate Variable Annuity Separate Account (the Separate
     Account) was established on November 6, 1990 by resolution of the Board of
     Directors of Templeton Funds Annuity Company (the Company) and is
     registered under the Investment Company Act of 1940 as a unit investment
     trust. The Separate Account is sold exclusively for use with the Templeton
     Immediate Variable Annuity which is designed for distributing the benefits
     of tax deferred retirement plans and to provide annuity income from non-tax
     qualified accumulation. The Separate Account invests all its assets in the
     Templeton Variable Products Series Fund - Stock Fund Class 1. The following
     is a summary of significant accounting policies followed by the Separate
     Account in the preparation of its financial statements.

     A.  VALUATION OF SECURITIES:

         Investments in shares of the Fund are carried in the Statement of
         Assets and Liabilities at net asset value (market value).

     B.  DIVIDENDS:

         Dividend income and capital gain distributions are recorded as income
         on the ex-dividend date and reinvestment in additional shares of the
         Fund.

     C.  INCOME TAXES:

         Operations of the Separate Account from a part of the Company, which is
         taxed as a life insurance company under the Internal Revenue Code (the
         Code). Under current law, no federal income taxes are payable with
         respect to the Separate Account. Under the principles set forth in
         Internal Revenue Service Ruling 81-225 and Section 817(h) of the Code
         and regulations thereunder, the Company understands that it will be
         treated as owner of the assets invested in the Separate Account for
         federal income tax purposes, with the result that earnings and gains,
         if any, derived from those assets will not be included in an
         Annuitant's gross income until amounts are received pursuant to an
         Annuity.

     D.  ANNUITY RESERVES:

         Annuity reserves are computed according to the 1983a Blended Unisex
         Mortality Table, with a 50% male/female content. The assumed interest
         rate is 5%. Charges to annuity reserves for mortality experience are
         reimbursed to the Company if the reserves required are less than
         originally estimated. If additional reserves are required, the Company
         reimburses the Separate Account.


SA-4

PAGE


TEMPLETON IMMEDIATE VARIABLE ANNUITY SEPARATE ACCOUNT
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)(continued)
- ------------------------------------------------------------------------------
2.    PERIODIC CHARGE

      The Company assesses a Periodic Charge against the Separate Account, equal
      on an annual basis to 1.2% of Separate Account assets. The Periodic
      Charge, in the following amounts, compensates the Company for expenses of
      administering the Separate Account and for assuming the risks that
      mortality experience will be lower than the rate assumed and that expenses
      will be greater than what is assumed: 0.6% of average annual net assets to
      cover expense risk and 0.6% to cover the mortality risk. The Periodic
      Charge is guaranteed as to Annuities issued prior to the effective date of
      any change in the Periodic Charge.

3.     INVESTMENT

      During the period ended June 30, 1999, purchases and sales of Templeton
      Products Series Fund - Stock Fund Class 1 shares aggregated $272,323 and
      $128,227 respectively. Realized gains and losses are reported on an
      identified cost basis.

4.     CONCENTRATIONS OF CREDIT RISK

      Financial instruments which potentially subject the Separate Account to
      concentrations of credit risk consist of investments in the Templeton
      Variable Products Series Fund - Stock Fund Class 1. The Fund's investment
      securities are managed by professional investment managers within
      established guidelines. As of June 30, 1999, in management's opinion, the
      Separate Account had no significant concentration of credit risk.




                                                                            SA-5

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