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TEMPLETON DEVELOPING MARKETS VIP Fund

(a series of Franklin Templeton Variable Insurance Products Trust)

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS

The Board of Trustees of Franklin Templeton Variable Insurance Products Trust, (the “Trust”), on behalf of its above-listed seriesthe Templeton Developing Markets VIP Fund (the “Funds”“Fund”), has called a Special Meeting of Shareholders (the “Meeting”), of the Fund, which will be held at the offices of Franklin Templeton, Investments, One Franklin Parkway, San Mateo, California 94403-1906300 S.E. 2nd Street, Fort Lauderdale, Florida 33301-1923, on October 30, 2017,September 9, 2020, at 10:12:00 a.m.p.m., PacificEastern time.¹

During the Meeting, shareholders of the FundsFund will be asked to vote on the following Proposals:proposal:

1.         To approve a change in the Fund’s classification from a diversified to a non-diversified fund.

The shares of the FundsFund are sold to (i) separate accounts of certain insurance companies (the “Participating Insurance Companies”) to fund benefits payable under certain variable annuity contracts and variable life insurance policies (“Variable Contracts”)

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issued by the Participating Insurance Companies; and (ii) certain qualified plans; and (iii) certain funds of funds.plans. The Participating Insurance Companies, as the shareholders of record of the Funds,Fund, hereby solicit and agree to vote at the Meeting, to the extent required, the shares of the FundsFund that are held in separate accounts in accordance with timely instructions received from owners of the Variable Contracts.

By Order of the Board of Trustees,

Lori A. Weber

September 11, 2017

Please sign and promptly return all of the voting instruction form(s)form in the enclosed self-addressed envelope regardless of the number of shares attributable to your Variable Contract.Contract, so it is received prior to the Meeting on September 9, 2020 for your vote to be counted.

If you have any questions or wish to obtain directions to be able to attend the Meeting and vote in person, please call AST Fund Solutions, LLC, our proxy solicitor, toll free at 800-829-6554.

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(800) 755-3105.

TEMPLETON DEVELOPING MARKETS vip Fund

(a “Fund”) that are series of Franklin Templeton Variable Insurance Products Trust)

PROXY STATEMENT

¿INFORMATION ABOUT VOTING

Who is asking for my vote?

The Board of Trustees of Franklin Templeton Variable Insurance Products Trust (the “Trust”) listed above will be held, on October 30, 2017, to vote on several important proposals that affect the Funds. Please read the enclosed materials and cast your vote on the proxy card(s) or voting instruction form(s).

Voting your shares immediately will help minimize additional solicitation expenses and prevent the need to call you to solicit your vote.

The proposals for the Trust and each Fund have been carefully reviewed by the Trust’s Board of Trustees (the “Board”). The Trusteesbehalf of the Trust, most of whom are not affiliated with Franklin Templeton Investments, are responsible for looking after your interests as a shareholder of a Fund. The Board believes these proposals, as they relate to the Trust and each Fund, are in the best interests of shareholders. The Board unanimously recommends that you vote FOR each proposal.

Voting is quick and easy. Everything you need is enclosed. To cast your vote, simply complete the proxy card(s) or voting instruction form(s) enclosed in this package. If your variable contract has amounts allocated to two or more Funds, you will receive a voting instruction form for each such Fund. Be sure to complete, sign and return each card/form before mailing it (them) in the postage-paid envelope.

We welcome your comments. If you have any questions or would like to quickly vote your shares, please call AST Fund Solutions, LLC, our proxy solicitor, toll-free at 800-829-6554. Agents are available 9:00 a.m. – 10:00 p.m., Eastern time, Monday through Friday, and 10:00 a.m. – 4:00 p.m., Eastern time, Saturday. Thank you for your participation in this important initiative.

The following Q&A is provided to assist you in understanding the proposals that affect your Fund(s). The proposals are described in greater detail in the proxy statement. We appreciate your trust in Franklin Templeton Investments and look forward to continuing to help you achieve your financial goals.

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Important information to help you understand and vote on the proposals

Below is a brief overview of the proposals to be voted upon. The proxy statement provides more information on which proposals are to be voted upon by each Fund’s shareholders. Your vote is important, no matter how large or small your holdings may be.

On what issues am I being asked to vote?

Shareholders are being asked to vote on the following proposals:

Has the Board approved the proposals?

Yes. The Board has unanimously approved each of the proposals and recommends that you vote to approve those proposals as they apply to your Fund(s).

What role does the Board play?

The Board has the responsibility for looking after the interests of the Funds’ shareholders. As such, the Board has an obligation to serve the best interests of shareholders in providing oversight of each Fund, including approving policy changes. In addition, the Board, among other things, reviews a Fund’s performance, oversees a Fund’s activities, and reviews contractual arrangements with a Fund’s service providers.

What is the affiliation of the Board and Franklin Templeton Investments?

The Board is currently, and is proposed to continue to be, composed of over 75% “independent” trustees and two “interested” trustees. Trustees are determined to be “interested” by virtue of, among other things, their affiliation with the Franklin Templeton funds or with Franklin Templeton Investments as fund management. Independent trustees have no affiliation with Franklin Templeton Investments and are compensated by the Trust.

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What is the purpose of the Manager of Managers Structure?

Shareholders of each Fund, other than Franklin Founding Funds Allocation VIP Fund and Franklin VolSmart Allocation VIP Fund, are being asked to approve the use of a “manager of managers” structure that would permit the Fund’s investment manager, subject to Board approval, to appoint and replace subadvisers that are affiliated with Franklin Templeton Investments, and subadvisers that are not affiliated with Franklin Templeton Investments, without obtaining prior shareholder approval (the “Manager of Managers Structure”). The Manager of Managers Structure would enable each Fund to operate with greater efficiency in the future by allowing the Fund to use both affiliated and unaffiliated subadvisers best suited to its needs without incurring the expense and potential delays that could be associated with obtaining shareholder approvals.

How will the Manager of Managers Structure affect my Fund?

The use of the Manager of Managers Structure will not change the fees paid to the investment manager by a Fund or the fees paid by the Fund’s shareholders. If the proposal is approved for a Fund, and the Board and the Fund’s investment manager believe that the use of one or more subadvisers would be in the best interests of the Fund, the Fund’s shareholders generally would not be asked to approve hiring a subadviser for the Fund, assuming the conditions of the Manager of Managers Order are met. Rather, a Fund’s investment manager, with the approval of the Board, including a majority of the Independent Trustees, would be able to appoint subadvisers and make appropriate changes to the subadvisory agreements without seeking shareholder approval. The Fund would, however, inform shareholders of the hiring of any new subadviser within 90 days after the hiring of the subadviser.

The investment managers for the Funds currently do not intend to use the Manager of Managers Structure for the Funds because near-term changes to the portfolio management structure for the Funds are not anticipated, other than as described in Proposals 3 and 4 below. However, if the Manager of Managers Structure is approved by shareholders of the Templeton Developing Markets VIP Fund the Board would be able to approve a subadviser for the Fund, regardless of whether the Fund’s shareholders approve the subadvisory agreement described in Proposal 4 in the proxy statement. The Board determined to seek shareholder approval of the Manager of Managers Structure for each Fund in connection with this special shareholder meeting, which was otherwise called for purposes of voting on other matters described in the proxy statement, to avoid additional meeting and proxy solicitation costs in the future.

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Why is a new investment management agreement with FAI being recommended?

Franklin Advisory Services, LLC (“FASL”) currently serves as the investment manager for the Rising Dividends Fund. As part of a restructuring of FASL’s personnel within the Franklin Templeton Investments organization, the current portfolio managers of the Rising Dividends Fund, Donald G. Taylor and Nicholas P.B. Getaz, along with research and trading personnel (the “Rising Dividends Team”), are relocating from FASL to FAI, both of which are wholly owned subsidiaries of Franklin Resources, Inc. In order for Messrs. Taylor and Getaz to continue to manage the Rising Dividends Fund as portfolio managers of FAI following their transfer from FASL to FAI, FAI would need to become the new investment manager for the Rising Dividends Fund pursuant to a new investment management agreement, which requires the approval of the Rising Dividends Fund’s shareholders. Fund management believes that relocating the Rising Dividends Team to FAI will promote better integration of the Team within the Franklin Equity Group, a unit of Franklin Templeton Investments offering expertise in managing growth and hybrid/balanced equity strategies, by fostering the sharing of resources and investment ideas.

In connection with the relocation of the Rising Dividends Team to FAI, the Board is recommending that shareholders of the Rising Dividends Fund approve a new investment management agreement between the Trust, on behalf of the Rising Dividends Fund, and FAI, so that Messrs. Taylor and Getaz can continue to manage the Rising Dividends Fund following their transfer from FASL to FAI.

What effect, if any, will the approval of the proposed new investment management agreement with FAI have on the Rising Dividends Fund’s management fees?

The approval of the proposed new investment management agreement with FAI for the Rising Dividends Fund will have no impact on the amount of management fees paid by the Fund or the Fund’s shareholders. The proposed investment management agreement with FAI will have the same fee schedule as the Rising Dividends Fund’s current investment management agreement with FASL.

Why is a new subadvisory agreement with FTIML being recommended?

The current investment manager of the Developing Markets Fund is Templeton Asset Management, a wholly owned subsidiary of Franklin Resources, Inc. (“Franklin Resources”). The Fund does not currently have a subadviser. A new subadvisory agreement with FTIML, which is also a wholly owned subsidiary of Franklin Resources, is being recommended in order to allow Carlos Hardenberg, Director of

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the Frontier Markets Strategy for Templeton Emerging Markets Group and a portfolio manager of FTIML, to serve as a portfolio manager for the Developing Markets Fund. As Director of the Frontier Markets Strategy, Mr. Hardenberg is responsible for the design, implementation and ongoing refinement of the Frontier Markets Strategy across Franklin Templeton Investment’s individual portfolios. Mr. Hardenberg is responsible for setting the overall strategy for his respective area, providing guidance and thought leadership, coordinating appropriate resources and coverage, and leveraging the group’s expertise to add value across products within the strategy. Mr. Hardenberg also collaborates with the Developing Markets Fund’s lead portfolio manager on Templeton Emerging Markets Group’s Global Emerging Markets Strategies.

What effect, if any, will the approval of the proposed new subadvisory agreement with FTIML have on the Developing Markets Fund’s management fees?

The approval of the proposed new subadvisory agreement with FTIML for the Developing Markets Fund will have no impact on the amount of management fees paid by the Fund or the Fund’s shareholders because FTIML’s fees will be deducted from the fees the Fund’s investment manager currently receives from the Fund.

What is the fundamental investment restriction regarding investments in commodities?

The Investment Company Act of 1940 (the “1940 Act”) requires every investment company to adopt a fundamental investment restriction governing investments in commodities. A “fundamental” investment restriction may be modified only by a vote of a majority of the investment company’s outstanding voting securities (as defined in the 1940 Act).

The Funds’ current fundamental investment restrictions regarding investments in commodities are substantially similar, though not identical, and they are detailed in Exhibit D to the proxy statement.

What will be the effect of the amended fundamental investment restriction regarding investments in commodities?

Since the initial adoption of this restriction for the Funds, the financial markets and regulatory requirements regarding commodities and commodity interests have evolved. New types of financial instruments have become available as potential investment opportunities, including commodity-linked instruments. The Funds’ investment managers believe that it is in the Funds’ best interests to amend the current fundamental investment restrictions in order to provide the Funds with the flexibility to adapt to continuously changing regulation and to react to changes in the financial markets and the development of new investment opportunities and instruments, in accordance with each Fund’s investment goal and subject to oversight by the Board. Under the proposed restriction, if current applicable law were to change, the Funds would be able to conform to any such new law without shareholders taking further action.

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The Board and the Funds’ investment managers do not anticipate that the proposed amended fundamental investment restriction regarding investments in commodities would involve additional material risk to any Fund or affect the way any Fund is currently managed or operated. The Board determined to seek shareholder approval of the amended fundamental restriction regarding investments in commodities for each Fund in connection with this special shareholder meeting, which was otherwise called for purposes of voting on other matters described in the proxy statement, to avoid additional meeting and proxy solicitation costs in the future.

Who is AST Fund Solutions, LLC?

AST Fund Solutions, LLC (the “Solicitor”) is a company that has been engaged by the Trust, on behalf of the Funds, to assist in the solicitation of proxies. The Solicitor is not affiliated with the Funds or with Franklin Templeton Investments. In order to hold a shareholder meeting, a certain percentage of a Fund’s shares (often referred to as “quorum”) must be represented at the meeting. If a quorum is not attained, the meeting must adjourn to a future date. Insurance companies may retain the Solicitor themselves to solicit voting instructions from contract owners; that solicitation could include multiple mailings and phone calls to remind variable contract owners to cast their votes by returning their voting instruction forms so that the special shareholder meeting does not have to be adjourned or postponed.

How many votes am I entitled to cast?

As a shareholder, you are entitled to one vote for each share (and a proportionate fractional vote for each fractional share) attributable to your variable annuity or variable life insurance contract on the record date. The record date is August 21, 2017.

How do I vote my shares?

You can vote your shares by completing and signing the enclosed proxy card(s) or voting instruction form(s) and mailing it (them) in the enclosed postage-paid envelope. If eligible, you may also vote using a touch-tone telephone by calling the toll-free number printed on your proxy card(s) or voting instruction form(s) and following the recorded instructions, or through the Internet by visiting the web site printed on your proxy card(s) or voting instruction form(s) and following the on-line instructions. You can also vote your shares in person at the special meeting of shareholders. If you need any assistance, or have any questions regarding the proposals or how to vote your shares, please call the Solicitor toll-free at 800-829-6554.

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How do I sign the proxy card(s)?

Individual Accounts: Shareholders should sign exactly as their names appear on the account registration shown on the proxy card(s) or voting instruction form(s).

Joint Accounts: Either owner may sign, but the name of the person signing should conform exactly to a name appearing on the account registration as shown on the proxy card(s) or voting instruction form(s).

All Other Accounts: The person signing must indicate his or her capacity. For example, a trustee for a trust or other entity should sign, “Ann B. Collins, Trustee.”

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PROXY STATEMENT

TABLE OF CONTENTS

PROXY STATEMENT

Who is asking for my vote?

The Board of Trustees (the “Board” or the “Trustees”) of Franklin Templeton Variable Insurance Products Trust (the “Trust”“Fund”), in connection with a Special Meeting of Shareholders of the funds of the Trust listed above (collectively, the “Funds” and individually, a “Fund”),Fund to be held on October 30, 2017September 9, 2020 (the “Meeting”), has requested that shareholdersyour vote on several mattersan important proposal (the “Proposals” or, each, a “Proposal”).²Shares of the FundsFund are sold to (i) separate accounts of certain insurance companies (the “Participating Insurance Companies”) to fund benefits payable under certain variable annuity or variable life insurance contracts (“Variable Contracts”) issued by the Participating Insurance Company; and (ii) certain qualified plans; and (iii) certain funds of funds.plans. As an owner of a Variable Contract, you have the right to instruct the Participating Insurance Company how to vote shares of the Fund or Funds attributable to your Variable Contract. Therefore, each Participating Insurance Company hereby solicits voting instructions from the owners of the Variable Contracts issued by such Company with respect to the shares of the FundsFund attributable to such Variable Contracts.

For the limited purpose of this proxy statement, the terms “shareholder,“shareholder(s),” “you” and “your” refer to Variable Contract owners, as beneficial owners of Fund shares, and to the Participating Insurance Companies as direct owners of Fund shares, as well as any other direct shareholders of the Funds,Fund, unless the context otherwise requires.

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Who is eligible to vote?

Shareholders of record at the close of business on August 21, 2017,June 19, 2020 are entitled to be present and to vote at the Meeting or any adjourned Meeting. Each share of record of athe Fund is entitled to one vote (and a proportionate fractional vote for each fractional share) on each matter relating to that Fund presentedthe Proposal at the Meeting. The Notice of Special Meeting of Shareholders, the proxy cards,card, the voting instruction form(s)form and the proxy statement were first mailed to shareholders of record on or about September 11, 2017.July 20, 2020.

On what issues am I being asked to vote?

Shareholders are being asked to vote on the following Proposals:Proposal to change the Fund’s classification from a diversified fund to a non-diversified fund. 

How does the Board of Trustees of the Trust recommend that I vote?

The Board of Trustees of the Trust (the “Board”) unanimously recommends that you vote:vote FOR the proposal to change the Fund’s diversification classification from a diversified fund to a non-diversified fund. 

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How do I ensure that my vote is accurately recorded?

You may attend the Meeting and vote in person or you may complete and return the enclosed proxy card/voting instruction form.

In light of the COVID-19 pandemic, we are urging all shareholders to take advantage of voting by mail, by telephone or through the Internet (separate instructions are listed on the enclosed voting instruction form or proxy card to vote by telephone or through the Internet). Additionally, while we anticipate that the Meeting will occur as-planned on September 9, 2020, there is a possibility that, due to the COVID-19 pandemic, the Meeting may be postponed or the location or approach may need to be changed, including the possibility of holding a virtual meeting for the health and safety of all Meeting participants. Should this occur, we will notify you by issuing a press release and filing an announcement with the Securities and Exchange Commission as definitive additional soliciting material. If you plan to attend the Meeting in person, please note that we will be holding the Meeting in accordance with any recommended and required social distancing and safety guidelines, as applicable.

For Variable Contract Owners: Voting instruction forms that are properly signed, dated and received by the applicable Participating Insurance Company will be voted as specified. If you specify a vote on any of the Proposals 1 through 5,Proposal, your Participating Insurance Company will vote those shares attributable to your Variable Contract as you indicate. Any shares of athe Fund for which signed voting instructions forms are received but without specified instructions will be voted FOR the Proposal(s).Proposal in accordance with the Trustees’ recommendations. Any shares of athe Fund for which no voting instructions are received generally will be voted by the Participating Insurance Company in proportion to those shares for which timely instructions are received. The effect of this proportional voting is that Variable Contract owners representing a small number of Fund shares may determine the outcome of the vote on athe Proposal. Variable Contract owners should contact their Participating Insurance Company for information about any applicable deadline for providing voting instructions to such Participating Insurance Company. Please see your Variable Contract prospectus for information on how to contact your Participating Insurance Company.

For Direct Owners (and not Variable Contract Owners): Proxy cards that are properly signed, dated and received at or prior to the Meeting will be voted as specified. If you specify a vote on all of the Proposals,Proposal, your proxy will be voted as you indicate. If you specify a vote on one or more Proposal(s) but not all of the Proposal(s), your proxy will be voted as specified on such Proposal(s) and, on the Proposal(s) for which no vote is specified, your proxy will be voted FOR all of the Proposals. If you simply sign, date and return the proxy card, but do not specify a vote on any of the Proposals on which you are entitled to vote,Proposal, your proxy will be voted FOR all of the Proposals on which you are entitled to vote.Proposal in accordance with the Trustees’ recommendations.

May I revoke my voting instructions/proxy?

If you are a Variable Contact owner, you may revoke your voting instructions by sending a written notice to the applicable Participating Insurance Company expressly revoking your instructions, by signing and forwarding to the Participating Insurance Company later-dated voting instructions, or otherwise giving notice of revocation at the Meeting. Variable Contract owners should contact their Participating Insurance Company for further information on how to revoke previously given voting instructions, including any applicable deadlines. Please see your Variable Contract prospectus for information on how to contact your Participating Insurance Company.

If you are a direct owner of Fund shares, you may revoke your proxy at any time before it is voted by forwarding a written revocation or a later-dated proxy card to the TrustFund that is received by the TrustFund at or prior to the Meeting, or by attending the

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Meeting and voting in person. Eligible shareholders who intend to attend the Meeting in person will need to bring proof of share ownership, such as a shareholder statement or letter from a custodian or broker-dealer confirming ownership, as of August 21, 2017,June 19, 2020, and a valid picture identification, such as a driver’s license or passport, for admission at the Meeting. Shareholders without proof of ownership and identification will not be admitted.

Who will pay proxy solicitation costs?

The costs of soliciting proxies, including the fees of a proxy soliciting agent, will be borne approximately 95% by the Trust and 5% byFund, regardless of whether shareholders approve the Funds’ investment managers or their affiliates.Proposal. For more information, please see “FURTHER INFORMATION ABOUT VOTING AND THE MEETING – Solicitation of Proxies.”

¿PROPOSAL:  TO CHANGE THE FUND’S classification from a diversified to a non-diversified fund

How are nominees for Trustee selected?

Background

The Board has a Nominating Committee comprised of John B. Wilson (Chair), Harris J. Ashton, Mary C. Choksi, Edith E. Holiday, J. Michael Luttig, and Larry D. Thompson. None of the members of the Nominating Committee is an “interested person” of the Trust, as defined by the Investment Company Act of 1940 (“1940 Act”) requires each investment company to classify itself as amended (the “1940 Act”). Trustees who areeither a “diversified” or “non-diversified” fund and recite in its registration statement its classification. If a fund is “diversified,” it may not interested personspurchase the securities of any one issuer if, at the time of purchase, with respect to 75% of the Trust are referred to asfund’s total assets, more than 5% of its total assets would be invested in the “Independent Trustees,” and Trustees who are interested personssecurities of that issuer, or the fund would own or hold more than 10% of the Trust are referredoutstanding voting securities of that issuer.  Up to 25% of a fund’s total assets may be invested without regard to these limitations. These limitations do not apply to securities issued or guaranteed as to principal or interest by the “Interested Trustees.”

U.S. government or any of its agencies or instrumentalities, or to the securities of other investment companies.  A non-diversified fund is any fund that does not meet the diversification requirements of the 1940 Act.  

The Nominating CommitteeFund is responsible for selecting candidates to servecurrently classified as Trustees fora “diversified” fund and has the Trust and recommending such candidates: (a) for selection and nomination as Independent Trustees byfollowing fundamental investment restriction regarding diversification: 

[The Fund may not:]  Purchase the incumbent Independent Trustees andsecurities of any one issuer (other than the full Board; and (b) for selection and nomination as Interested Trustees by the full Board. In considering a candidate’s qualifications, the Nominating Committee generally considers the potential candidate’s educational background, businessU.S. government or professional experience, and reputation. In addition, the Nominating Committee has established as minimum qualifications for Board membership as an Independent Trustee: (1) that such candidate be independentany of its agencies or instrumentalities or securities of other investment companies, whether registered or excluded from relationships with the Trust’s investment manager(s) and other principal service providers, both within the terms and the spiritregistration under Section 3(c) of the statutory independence requirements specified under the 1940 Act and the rules thereunder; (2) thatAct) if immediately after such candidate demonstrate an ability and willingness to make the considerable time commitment, including personal attendance at Board meetings, believed necessary to his or her function as an effective Board member; and (3) that such candidate have no continuing relationship as a director, officer or board member of any open-end or closed-end investment company other(a) more than those within the Franklin Templeton Investments fund complex or a closed-end business development company primarily investing in non-public entities. The Nominating

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Committee has not adopted any specific policy on the issue of diversity, but will take this into account, among other factors, in its consideration of new candidates for the Board.

When the Board has or expects to have a vacancy, the Nominating Committee receives and reviews information on individuals qualified to be recommended to the full Board as nominees for election as Trustees, including any recommendations by “Qualifying Fund Shareholders” (as defined below). Such individuals are evaluated based upon the criteria described above. To date, the Nominating Committee has been able to identify, and expects to continue to be able to identify, from its own resources, an ample number of qualified candidates. The Nominating Committee, however, will review recommendations from Qualifying Fund Shareholders to fill vacancies on the Board if these recommendations are submitted in writing and addressed to the Nominating Committee at the Trust’s offices and are presented with appropriate background material concerning the candidate that demonstrates his or her ability to serve as a Trustee, including as an Independent Trustee,5% of the Trust. A Qualifying Fund Shareholder is a shareholder who: (i) has continuously owned of record, or beneficially through a financial intermediary, sharesvalue of the Trust having a net asset value of not lessFund’s total assets would be invested in such issuer or (b) more than two hundred and fifty thousand dollars ($250,000) during the twenty-four (24) month period prior to submitting the recommendation; and (ii) provides a written notice to the Nominating Committee containing the following information: (a) the name and address10% of the Qualifying Fund Shareholder making the recommendation; (b) the numberoutstanding voting securities of shares of the Trust which are owned of record and beneficially by the Qualifying Fund Shareholder and the length of time that such shares have been soissuer would be owned by the Qualifying Fund, Shareholder; (c)except that up to 25% of the value of the Fund’s total assets may be invested without regard to such 5% and 10% limitations.

The Fund’s classification as a description of all arrangements“diversified” fund and understandings between such Qualifyingits current fundamental investment policy on diversification set forth above may not be changed or eliminated without shareholder approval. The Fund Shareholder and any other person or persons (naming such person or persons) pursuant tohas been classified as a “diversified” fund since its inception. However, the asset class in which the recommendation is being made; (d)Fund invests, the name, age, date of birth, business address and residence addressdeveloping markets equity asset class, has experienced fundamental changes that have made it difficult for the Fund to pursue its existing investment strategy while maintaining its diversification status. Over the course of the person or personslast ten years, the developing markets equity asset class has become increasingly dominated by certain large companies as a result of new companies being recommended; (e) such other information regarding each person recommended by such Qualifying Fund Shareholder as would be required to be included in a proxy statement filed pursuantadded to the proxy rules of the U.S. Securities and Exchange Commission (“SEC”) had the nominee been nominated by the Board; (f) whether the Qualifying Fund Shareholder making the recommendation believes the person recommended would or would not be an “interested person” of the Trust, as defined in the 1940 Act; and (g) the written consent of each person recommended to serve as a Trustee if so nominated and elected/appointed.

The Nominating Committee may amend these procedures from time to time, including the procedures relating to the evaluation of nominees and the process for submitting recommendations to the Nominating Committee.

The Board has adopted and approved a formal written charter for the Nominating Committee (the “Charter”). A copy of the Charter is attached to this proxy statement as Exhibit A.

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Who are the nominees for Trustee of the Trust?

Shareholders of the Trust are being asked to vote for the election of the Trustees who will oversee management of the Trust (including the Funds). The nominees (each a “Nominee,” and collectively, the “Nominees”) for election to the Board as Independent Trustees are Harris J. Ashton, Terrence J. Checki, Mary C. Choksi, Edith E. Holiday, J. Michael Luttig, Larry D. Thompson and John B. Wilson. The Nominees for election to the Board as Interested Trustees are Gregory E. Johnson and Rupert H. Johnson, Jr. Each Nominee, other than Terrence J. Checki, is presently a member of the Board that currently oversees the Trust and the Funds. In addition, seven of the nine Nominees currently are or will be Independent Trustees if elected by shareholders.

If elected, each Nominee will hold office until the next meeting of shareholders at which Trustees are elected and until his or her successor shall be elected and qualified, or until his or her earlier death, resignation or removal.

All of the Nominees, with the exception of Terrence J. Checki, currently serve on one or more boards of trustees/directors of the funds within the Franklin Templeton Investments fund complex.

The Interested Trustees hold director and/or officer positions with, or are stockholders of, Franklin Resources, Inc. (“Franklin Resources”) and its affiliates. Franklin Resources is a publicly owned holding company, a principal stockholder of which is Rupert H. Johnson, Jr., who beneficially owned approximately 19.06% of its outstanding shares as of June 30, 2017. The shares deemed to be beneficially owned by Rupert H. Johnson, Jr. include certain shares held by a private charitable foundation for which he is a trustee or by his spouse, for both of which he disclaims beneficial ownership. Franklin Resources, a globaldeveloping markets investment management organization operating as Franklin Templeton Investments, is primarily engaged, through various subsidiaries, in providing investment management, share distribution, transfer agent and administrative services to a family of investment companies. Franklin Resources is a New York Stock Exchange (“NYSE”) listed holding company (NYSE: BEN). Rupert H. Johnson, Jr. is the uncle of Gregory E. Johnson, both Nominees for Interested Trustee of the Trust. There are no other family relationships among the officers, Trustees or Nominees.

Each Nominee currently is available and has consented to serve if elected. If any of the Nominees should become unavailable, the designated proxy holders will vote in their discretion for another person or persons who may be nominated to serve as Trustee(s).

Set forth in the table below are the Nominees who are standing for election by shareholders of the Trust for the first time and the person(s) who initially recommended them for consideration as nominees for Board membership. All of these Nominees, except Mr. Checki, are currently Trustees and were appointed to the Board by the then current Trustees.

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Information regarding the Nominees appears below, including information on the business activities of the Nominees during the past five years and beyond. In addition to personal qualities, such as integrity, the role of an effective Board member inherently requires the ability to comprehend, discuss and critically analyze materials and issues presented in exercising judgments and reaching informed conclusions relevant to his or her duties and fiduciary obligations. The Board believes that the specific background of each Nominee evidences such ability and is appropriate to his or her serving on the Board. As indicated below, Harris J. Ashton has served as a chief executive officer of NYSE-listed public corporations; Larry D. Thompson and Edith E. Holiday each have legal backgrounds, including high level legal positions with departments of the U.S. Government; Mary C. Choksi has an extensive background in asset management, including founding an investment management firm; J. Michael Luttig has fifteen years of judicial experience as a Federal Appeals Court Judge and eleven years of experience as Executive Vice President and General Counsel of a major public company; John B. Wilson has served as President of International for a Fortune 150 company, chief operating officer of an NYSE-listed public corporation, chief financial officer of a NASDAQ-listed public corporation and a partner of a global strategy consulting firm; Terrence J. Checki has served as a senior executive of a Federal Reserve Bank and has vast experience evaluating economic forces and their impacts on markets, including emerging markets; and Gregory E. Johnson and Rupert H. Johnson, Jr. are both high ranking executive officers of Franklin Templeton Investments.

Listed below with the business activities of the Nominees are their names and years of birth, their positions and length of service with the Trust, and the number of portfolios in the Franklin Templeton Investments fund complex that they oversee or are proposed to oversee.

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Nominees for Independent Trustee:

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10

Nominees for Interested Trustee:

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How often does the Board meet and what are Trustees paid?

The role of the Board is to provide general oversight of the Trust’s business and to ensure that the Trust and its Funds are operated for the benefit of all Fund shareholders. The Board met eight times during the prior fiscal year, and the Board generally anticipates meeting at least eight times during the current fiscal year, and will meet more frequently as necessary. The Board also oversees the services furnished to the Trust and the Funds by the investment managers to the Funds (together, the “Investment Managers”) and various other service providers.

All of the current Independent Trustees serve as board members of other Franklin Templeton funds, many of which hold meetings at different dates and times. The Board members and management believe that having the same individuals serving on the boards of multiple Franklin Templeton funds enhances the ability of each fund to obtain, at a relatively modest cost to each separate fund, the services of high caliber, experienced and knowledgeable independent trustees who can bring their experience and talents to, and effectively oversee the management of, several funds.

Each Nominee for Trustee currently in office attended at least 75% of the aggregate of the total number of meetings of the Board and the total number of meetings held by all committees of the Board on which the Nominee serves during the Trust’s most recent fiscal year. During the fiscal year ended December 31, 2016, there were three meetings of the Audit Committee and one meeting of the Nominating Committee. The Trust does not currently have a formal policy regarding Trustees’ attendance at annual shareholders’ meetings. The Trust did not hold, and was not required to hold, an annual meeting at which Trustees were elected during its last fiscal year.

The Independent Trustees serve on the boards of trustees of 26 investment companies in the Franklin Templeton Investments fund complex, for which each Independent Trustee currently is paid a $247,000 annual retainer fee, together with a $7,000 per meeting fee for attendance at each regularly scheduled board meeting, a portion of which is allocated to the Trust. To the extent held, compensation may also be paid for attendance at specially held board meetings. The Trust’s lead Independent Trustee is paid an annual supplemental retainer of $25,000 for services to the Trust and such other investment companies, a portion of which is allocated to the Trust. Board members who serve on the Audit Committee of the Trust and certain other funds receive a flat fee of $3,000 per Committee meeting attended in person and $2,000 per telephonic meeting, a portion of which is allocated to the Trust. John B. Wilson, who serves as chairman of the Audit Committee of the Trust and certain other funds, receives an additional fee of $50,000 per year, a portion of which is allocated to the Trust. Members of the Audit Committee are not separately compensated for any Committee meeting held on the day of a regularly scheduled Board meeting.

Independent Trustees are also reimbursed for expenses incurred in connection with attending board meetings by each fund in Franklin Templeton Investments for which they serve as a board member. The Interested Trustees and certain officers of the Trust

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who are shareholders of Franklin Resources are not compensated by the Trust for their services, but may be deemed to receive indirect remuneration due to their participation in management fees and other fees received by the Investment Managers and their affiliates from the Franklin Templeton funds. The Investment Managers or their affiliates pay the salaries and expenses of the officers and the Interested Trustees. No pension or retirement benefits are accrued as part of Fund expenses.

The table below indicates the amount each Independent Trustee received from (i) the Trust, for the Trust’s fiscal year ended December 31, 2016, and (ii) all funds in the Franklin Templeton Investments fund complex as a whole during the twelve months ended May 31, 2017,universe, as well as the estimated annual benefits, if any, upon retirement.

Board members historically have followed a policy of having substantial investments in one or more of the Franklin Templeton funds, as is consistent with their individual financial goals. In February 1998, this policy was formalized through the adoption of a requirement that each Board member annually invest one-third of

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fees received for serving as a trustee of a Franklin fund (excluding Committee fees) in shares of one or more Franklin funds until the value of such investments equals or exceeds five times the annual retainer and regular Board meeting fees paid to such Board member. Investments in the name of family members or entities controlled byFund’s asset class. In other words, these companies now represent a board member constitute fund holdings of such Board member for purposes of this policy, and a three year phase-in period applies to such investment requirements for newly elected Board members. In implementing such policy, a Board member’s fund holdings existing on February 27, 1998 are valued as of such date with subsequent investments valued at cost.

The following table provides the dollar range of equity securities of the Trust and its Funds that are overseen or to be overseen by the Nominees that are beneficially owned by them as of May 31, 2017. The aggregate dollar range of equity securities in all U.S. registered funds in the Franklin Templeton Investment fund complex overseen or to be overseen by the Board member, other than Mr. Checki, as of May 31, 2017, was over $100,000 for each Nominee.

Nominees for Independent Trustees:

Nominees for Interested Board Members:

Who are the Executive Officers of the Trust?

Officers of the Trust are appointed by and serve at the pleasure of the Board. Listed below for the Executive Officers of the Trust are their names, years of birth and addresses, as well as their positions and length of service with the Trust, and principal occupations during at least the past five years.

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15

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What are the Standing Committees of the Board?

In addition to the Nominating Committee, the Board has a standing Audit Committee.

Audit Committee

The Trust’s Audit Committee is responsible for the appointment, compensation and retention of the Trust’s independent registered public accounting firm (“independent auditors”), including evaluating their independence, recommending the selection of the Trust’s auditors to the full Board and meeting with such auditors to consider and review matters relating to the Trust’s financial reports and internal auditing. The Audit Committee is comprised of: Mary C. Choksi, Edith E. Holiday, J. Michael Luttig, Larry D. Thompson and John B. Wilson (Chair). All of the members of the Audit Committee are Independent Trustees.

Selection of Auditors. The Audit Committee and the Board have selected the firm of PricewaterhouseCoopers LLP (“PwC”) as the independent auditors for the Trust’s current fiscal year. Representatives of PwC are not expected to be present at the Meeting, but will have the opportunity to make a statement if they wish, and will be available should any matter arise requiring their presence.

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Audit Fee Information

Audit Fees. The aggregate fees paid for professional services rendered by PwC for the audit of the Funds’ annual financial statements or for services that are normally provided by PwC in connection with statutory and regulatory filings or engagements were $876,835 for the fiscal year ended December 31, 2016, and $897,776 for the fiscal year ended December 31, 2015.

Audit-Related Fees. The aggregate fees paid for assurance and related services rendered by PwC to the Trust that are reasonably related to the performance of the audit or review of the Funds’ financial statements and not reported under “Audit Fees” above were $4,682 for the fiscal year ended December 31, 2016, and $4,590 for the fiscal year ended December 31, 2015. The services for which these fees were paid included attestation services.

In addition, the Audit Committee pre-approves PwC’s engagement for audit-related services to be provided to the Investment Managers and any entity controlling, controlled by, or under common control with the Investment Managers that provides ongoing services to the Funds, which engagements relate directly to the operations and financial reporting of the Funds. For the fiscal years ended December 31, 2016 and 2015, there were no fees paid to PwC for such services.

Tax Fees. There were no fees paid for professional services rendered by PwC to the Funds for tax compliance, tax advice or tax planning services (together, “tax services”) for the fiscal years ended December 31, 2016 and 2015.

In addition, the Audit Committee pre-approves PwC’s engagement for tax services to be provided to the Investment Managers and any entity controlling, controlled by, or under common control with the Investment Managers that provides ongoing services to the Funds, which engagements relate directly to the operations and financial reporting of the Trust and the Funds. In the fiscal years ended December 31, 2016 and 2015, there were no fees paid to PwC for such services.

All Other Fees. The aggregate fees paid for products and services provided by PwC to the Funds, other than the services reported above, were $0 for the fiscal year ended December 31, 2016, and $8,791 for the fiscal year ended December 31, 2015. The services for which these fees were paid included review of materials provided to the Board in connection with the investment management contract renewal process.

In addition, the Audit Committee pre-approves PwC’s engagement for other services to be provided to the Investment Managers and any entity controlling, controlled by, or under common control with the Investment Managers that provides ongoing services to the Trust and the Funds, which engagements relate directly to the operations and financial reporting of the Funds. For the fiscal years ended December 31, 2016 and 2015, there were no fees paid to PwC for such services.

Aggregate Non-Audit Fees. The aggregate fees paid for non-audit services rendered by PwC to the Funds and to the Investment Managers and to any entity controlling, controlled by, or under common control with the Investment Managers

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that provide ongoing services to the Funds were $349,307 for the fiscal year ended December 31, 2016, and $595,846 for the fiscal year ended December 31, 2015. The services for which these fees were paid included review of materials provided to the Board in connection with the investment management contract renewal process and derivatives assessments, review of system processes related to fixed income securities, and compliance examination for Investment Advisors Act Rules 204-2 and 206-4(2).

The Audit Committee has considered whether the provision of the non-audit services, including tax-related services, that were rendered to the Investment Managers and to any entity controlling, controlled by, or under common control with the Investment Managers that provides ongoing services to the Funds is compatible with maintaining PwC’s independence.

Audit Committee Pre-Approval Policies and Procedures. As of the date of this proxy statement, the Audit Committee has not adopted written pre-approval policies and procedures within the meaning of Regulation S-X. As a result, all such services described above and provided by PwC must be pre-approved by the Audit Committee or by a designated member of the Audit Committee.

What is the Board’s Role in Risk Oversight?

The Board, as a whole, considers risk management issues as part of its general oversight responsibilities throughout the year at regular Board meetings, through regular reports that have been developed by management, in consultation with the Board and its counsel. These reports address certain investment, valuation and compliance matters. The Board also may receive special written reports or presentations on a variety of risk issues, either upon the Board’s request or upon the Investment Managers’ initiatives. In addition, the Audit Committee meets regularly with the Investment Managers’ internal audit group to review reports on its examination of functions and processes within Franklin Templeton Investments that affect the Trust and the Funds, and reviews and discusses the Trust’s and the Funds’ processes with respect to risk assessment and risk management.

With respect to investment risk, the Board receives regular written reports describing and analyzing the investment performance of the Funds. In addition, the portfolio managers of the Funds meet regularly with the Board to discuss portfolio performance, including investment risk. To the extent that a Fund changes a particular investment strategy that could have a material impact on the Fund’s risk profile, the Board generally is consulted with respect to such change. To the extent that a Fund invests in certain complex investments, including derivatives, the Board receives periodic reports containing information about exposure of the Fund to such investments. In addition, each Investment Manager’s investment risk personnel meet regularly with the Board to discuss a variety of issues, including the impact on a Fundlarge percentage of the investment universe in particular securities or instruments, such as derivatives and commodities.which the Fund invests. 

With respectDue to valuation, the Trust’s administrator provides regular written reportsthese structural changes to the BoardFund’s investment universe, the Fund is not able to take as large of positions in these companies that enable the Board to monitor the number of fair valued securities in a particular Fund, the reasons for the fair valuation and the methodology used to arrive at the fair value. Such reports also include information concerning illiquid securities within a Fund’s portfolio. The Board also reviews dispositional analysis information on the sale of securities that require special valuation considerations such as illiquid or fair valued securities. In addition, the Audit Committee reviews valuation procedures and results with the Trust’s independent auditors in connection with such Committee’s review of the results of the audit of the Trust’s year-end financial statements.

With respect to compliance risks, the Board receives regular compliance reports prepared by each Investment Manager’s compliance group and meets regularly with the Trust’s Chief Compliance Officer (“CCO”) to discuss compliance issues, including compliance risks. In accordance with SEC rules, the Independent Trustees meet regularly in executive session with the CCO, and the CCO prepares and presents an annual written compliance report to the Board. The Board adopts compliance policies and procedures for the Trust and approves such procedures for the Trust’s service providers. The compliance policies and procedures are specifically designed to detect and prevent violations of the federal securities laws.

The Investment Managers periodically provide an enterprise risk management presentation to the Board to describe the way in which risk is managed on a complex-wide level. Such presentation covers such areas as investment risk, reputational risk, operational risk, personnel risk, and business continuity risk.

What is the leadership structure of the Board?

Seventy-five percent or more of Board members consist of Independent Trustees who are not deemed to be “interested persons” by reason of their relationship with the Trust’s management or otherwise as provided under the 1940 Act. While the Chairman of the Board is an interested person, the Board is also served by a lead Independent Trustee. The lead Independent Trustee, together with independent counsel, reviews proposed agendas for Board meetings and generally acts as liaison with Trust management with respect to questions and issues raised by the Independent Trustees. The lead Independent Trustee also presides at separate meetings of Independent Trustees held in advance of each scheduled Board meeting where various matters, including those being considered at such Board meeting, are discussed. It is believed such structure and activities assure that proper consideration is given at Board meetings to matters deemed important to the Trust, the Funds and their shareholders.

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What is the Required Vote on Proposal 1?

For Proposal 1, the Nominees will be elected to the Board by the affirmative vote of a plurality of votes cast collectively by the shareholders of all of the Funds of the Trust, regardless of the results of the votes cast by the shareholders of each individual Fund. This means that the Nominees receiving the largest number of votes will be elected to fill the available positions, and a Nominee may be elected even if he or she receives the affirmative vote of less than a majority of the outstanding shares of the Trust voting.

THE BOARD UNANIMOUSLY RECOMMENDS
A VOTE “FOR” THE ELECTION OF EACH
OF THE NOMINEES TO THE BOARD.

(For purposes of Proposal 2, the term “Fund” shall refer to each Fund except Franklin

Founding Funds Allocation VIP Fund and Franklin VolSmart Allocation VIP Fund.)

Background

Pursuant to an investment management agreement between the Trust, on behalf of each Fund, and its Investment Manager, the Investment Manager believes is responsiblebeneficial for among other items, managing the assetsFund’s portfolio because it is limited in doing so to maintain its diversified status. (For a diversified fund, all investments greater than 5% in any one issuer may not exceed, in the aggregate, 25% of the Fund and making decisions with respect to the investment offund’s assets.) Thus, changing the Fund’s assets and purchases and sales of investment securities on behalf of the Fund, subjectclassification to the supervision of the Board.

Each Fund’s Investment Manager is directly or indirectly wholly or majority owned by Franklin Resources. Many of Franklin Resources’ subsidiaries that provide investment management services (together, the “Investment Manager Affiliates,” and each, an “Investment Manager Affiliate”) are organized under the laws of different jurisdictions throughout the world for sales, client servicing and tax purposes. Franklin Resources operates the Investment Manager Affiliates on a unified basis. For example, the Investment Manager Affiliates generally share order management systems, investment operations support and many compliance policies and procedures. While each Investment Manager Affiliate has its own personnel and resources, including portfolio managers and analysts, and offers specialized management services to clients, the Investment Manager Affiliates generally share support personnel, such as with respect to tax, legal and accounting matters. Depending on the strategy for a particular Fund, the Fund’s Investment Manager may wish to use the portfolio management and trading expertise of personnel employed by an Investment Manager Affiliate in other global locations, thereby providing to Fund shareholders the full benefit of the global

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resources of Franklin Resources. Alternatively, a Fund’s Investment Manager may wish tonon-diversified would provide the Fund with the skill and expertise of a subadviserflexibility to pursue its investment strategy given that is not affiliated in any way with Franklin Resources or the Investment Manager.

Provisions of the 1940 Act that apply to the Funds require that investment management agreements between funds and their investment managers (including subadvisers) be approved by shareholders. The SEC, however, has issued an exemptive order (the “Order”) to FAI, a wholly owned subsidiary of Franklin Resources, that permits FAI, and any Investment Manager Affiliates (such as certain of the Funds’ Investment Managers) and any existing or future registered open-end investment company or series advised by FAI or the Investment Manager Affiliates to hire certain new subadvisers without obtaining shareholder approval (the “Managerbelieves the high level of Managers Structure”). Underconcentration in the Order,Fund’s asset class will remain for the hiringforeseeable future. As a non-diversified fund, the Fund could invest a greater portion of new subadvisers remains subject to the approval of the Board, including a majority of the Independent Trustees, as well as certain other conditions. The Order would allow a Fund’s Investment Manager to hire, without shareholder approval, new subadvisers that are affiliated with the Investment Manager (e.g., the Investment Manager and the subadviser are both wholly owned by the same corporate parent), and new subadvisers that are not affiliated with the Investment Managerits assets in any way. Under the Order,one issuer and could invest overall in a Fund must disclose to itssmaller number of issuers than a diversified fund.

Therefore, shareholders the aggregate fees paid by the Investment Manager to affiliated subadvisers and to unaffiliated subadvisers and the fee paid to each affiliated subadviser. Before a Fund may rely on the Order, the Fund’s use of the Manager of Managers Structure must be approved by a “majority of the outstanding voting securities” of the Fund, as defined in the 1940 Act and discussed below.

Why am I being asked to vote on this Proposal?

The Board determined to seek shareholder approval of the Manager of Managers Structure in reliance on the Order in connection with the Meeting, which otherwise was called to elect Trustees and to vote on other matters described in this proxy statement, in order to avoid additional meeting and proxy solicitation costs in the future, in the event that a Fund’s Investment Manager, with the approval of the Board, including a majority of the Independent Trustees, determines that the use of the Manager of Managers Structure is in the best interests of the Fund. The process of seeking shareholder approval of the Manager of Managers Structure in the future could cause delays in executing changes that the Board and Investment Manager have determined are in the best interests of a Fund. Seeking shareholder approval typically involves additional expenses, such as hiring a proxy solicitor.

Any new fund launched by Franklin Templeton Investments typically will allow for the Manager of Managers Structure. However, because each Fund was launched before the Order was received, shareholder approval is now required for a Fund to use the Manager of Managers Structure in reliance on the Order.

The Investment Managers for the Funds currently do not intend to use the Manager of Managers Structure for such Funds because near-term changes to the portfolio management structure for the Funds are not anticipated, other than as described in

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Proposals 3 and 4 below. However, as noted above, Franklin Resources is a global investment management organization with offices and Investment Manager Affiliates located around the world. From time to time, a portfolio manager may relocate from one Investment Manager Affiliate to another in order to gain further experience, or a Fund’s Investment Manager may believe it would be beneficial to the Fund to have access to the investment management expertise of another Investment Manager Affiliate. If a Fund were permitted to rely on the Order, such investment management changes could be effected with Board approval, but without the time and expense associated with obtaining shareholder approval. For example, as discussed in Proposal 4 below, shareholders of the Templeton Developing Markets VIP Fund are being asked to approve a new subadvisory agreement for the Fund, in orderProposal to allow Carlos Hardenberg, Director of Frontier Markets Strategy of Templeton Emerging Markets Group and a portfolio manager of FTIML, an Investment Manager Affiliate,change the Fund’s classification from “diversified” to join“non-diversified,” which includes eliminating its current fundamental investment restriction regarding diversification.

What effect will changing the Templeton Developing Markets VIP Fund’s existing portfolio management team. status from “diversified” to “non-diversified” have on the Fund?

If the Templeton Developing Markets VIP Fund had been authorized to use the Manager of Managers Structure, shareholder approval of the subadvisory agreement forProposal is approved by shareholders, the Fund would not be necessary.

How will the Manager of Managers Structure Operate?

Under the Manager of Managers Structure, the Investment Manager of each Fund will be permitted to appoint and replace subadvisers formaintain a portfolio that complies with non-diversification status. However, the Fund andwould limit its investments greater than 5% in any one issuer to enter into and approve amendmentsno more than 50% of its assets (rather than the 25% limit imposed upon diversified funds) to subadvisory agreements without first obtaining shareholder approval. However,continue to comply with the Board, including a majoritytax diversification requirements of Subchapter M of the Independent Trustees, must approve any new subadviserInternal Revenue Code. The 1940 Act diversification requirements are similar to, but, are separate and any new or amended subadvisory agreement. In addition, ifapart from the Manager of Managers Structure is approveddiversification requirements that the Fund complies with to quality for a Fund, that Fund’s investment management agreement will be amended to allow for subadvisory agreements that are not approved by shareholders.

Under the Manager of Managers Structure, a Fund’s Investment Manager would have the overall responsibility, subject to oversight by the Board, to oversee the subadvisers and recommend their hiring, termination and replacement. Specifically, the Order requires a Fund’s Investment Manager to, subject to the review and approvalspecial tax treatment as set forth in Subchapter M of the Board, including a majority of the Independent Trustees: (a) setInternal Revenue Code. The Proposal does not in any way affect the Fund’s overall investment strategy; (b) evaluate, select and recommend subadvisersability to manage all orcomply with Subchapter M.

Because a non-diversified fund generally invests a greater portion of the Fund’s assets; and (c) implement procedures reasonably designed to ensure that each subadviser complies with the Fund’s investment goal, policies and restrictions. In addition, subject to the review by the Board, the Fund’s Investment Manager is required to: (a) when appropriate, allocate and reallocate the Fund’sits assets among multiple subadvisers; and (b) monitor and evaluate the performance of the subadvisers. The replacement of a Fund’s Investment Manager or the imposition of material changes to the Fund’s investment management agreement would, however, require prior shareholder approval.

If a Fund’s Investment Manager, with the approval of the Board, including a majority of the Independent Trustees, determines that the use of the Manager of Managers Structure is in the best interests of the Fund, the Manager of Managers

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Structure would without obtaining shareholder approval: (1) enable a new subadviser to commence providing services to the Fund more quickly and with less potential expense to the Fund; (2) permit the Fund’s Investment Manager to allocate and reallocate the Fund’s assets among itself and one or more subadvisers; and (3) permit the Board to approve material changes to a subadvisory agreement.

Under the Manager of Managers Structure, upon receiving approval of the Board, including a majority of the Independent Trustees, subadvisers selected by a Fund’s Investment Manager could immediately manage the Fund’s assets. The Fund would, however, inform shareholders of the hiring of any new subadviser within 90 days after hiring the subadviser.

How does this Proposal affect my fees as a shareholder of a Fund?

Approval of this Proposal will not affect your fees as a shareholder of a Fund. The Manager of Managers Structure will not at any time entail an increase in the investment management fees paid by a Fund. Further shareholder approval would be necessary to increase the investment management fees that are payable by a Fund, which is not contemplated.

How does this Proposal affect my right to vote on subadvisory agreements?

If Proposal 2 is approved for a Fund, and the Board and the Fund’s Investment Manager believe that the usesecurities of one or more subadvisers wouldissuers and/or invests overall in a smaller number of issuers than a diversified fund, a non-diversified may be subject to additional risks.  Specifically, the Fund may be more sensitive to a single economic, business, political, regulatory or other occurrence or to the financial results of a single issuer than a more diversified fund might be, which may result in greater fluctuation in the best interestsvalue of the Fund, the Fund’s shareholders generally would not be asked to approve hiring a subadviser for the Fund, assuming that the conditions of the Order are met. Rather, a Fund’s Investment Manager, with the approval of the Board, including a majority of the Independent Trustees, would be able to appoint subadvisers and make appropriate changes to the subadvisory agreements without seeking shareholder approval. The Fund would, however, inform shareholders of the hiring of any new subadviser within 90 days after the hiring of the subadviser.shares.

Why did the Board approve the Manager of Managers Structure?

The Board, including a majority of the Independent Trustees, approved the Manager of Managers Structure and is recommending that shareholders approve the Manager of Managers Structure in reliance on the Order at the Meeting in order to avoid additional meeting and proxy solicitation costs in the future, in the event that a Fund’s Investment Manager, with the approval of the Board, including a majority of the Independent Trustees, determines that it is in the best interests of the Fund to use the Manager of Managers Structure.

What is the required vote on Proposal 2?the Proposal?

The Proposal 2 will be voted on by shareholders of each Fund, other than the Franklin Founding Funds Allocation VIP Fund and the Franklin VolSmart Allocation VIP Fund. For Proposal 2, before a Fund may rely on the Order, the operation of the Fund using the Manager of Managers Structure must be approved by the affirmative vote of a “majority of the outstanding voting securities” of the Fund, which is defined in

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the 1940 Act as the lesser of: (A) 67% or more of the voting securities of the Fund present at the Meeting, if the holders of more than 50% of the outstanding voting securities of suchthe Fund are present or represented by proxy; or (B) more than 50% of the outstanding voting securities of such Fund (a “1940 Act Majority Vote”). If Proposal 2 is approved by shareholders of the Templeton Developing Markets VIP Fund, the Board would be able to approve a subadviser for the Fund under the Manager of Managers Structure, regardless of whether the Fund’s shareholders approve the subadvisory agreement described in Proposal 4 below.

Fund.

If Proposal 2 is not approved by a Fund’s shareholders, then the Fund’s Investment Manager generally would only be able to enter into new or amended subadvisory agreements with shareholder approval, potentially causing delay and expense in making a change deemed beneficial to the Fund and its shareholders by the Board and the Fund’s Investment Manager.

THE BOARD UNANIMOUSLY RECOMMENDS
A VOTE “FOR” PROPOSAL 2.

The Board, on behalf of the Franklin Rising Dividends VIP Fund (the “Rising Dividends Fund”), unanimously recommends that shareholders of the Rising Dividends Fund vote to approve a new investment management agreement with FAI.

Why is FAI recommended to serve as the Rising Dividends Fund’s investment manager?

Franklin Advisory Services, LLC (“FASL”) is the Fund’s current investment manager and has served as the investment manager for the Rising Dividends Fund since July 1996, prior to which time the Rising Dividends Fund’s investment manager was FAI. Donald G. Taylor, CPA, President and Chief Investment Officer of FASL, has been a portfolio manager of the Rising Dividends Fund since 1996, and the lead portfolio manager of the Rising Dividends Fund since 1999. Nicholas P.B. Getaz, CFA, Portfolio Manager and Research Analyst of FASL, has been a portfolio manager of the Rising Dividends Fund since 2014.

Franklin Templeton Investments has determined that a restructuring of FASL’s personnel within the Franklin Templeton Investments organization would allow more resources to be made available for the management of those funds managed or subadvised by FASL. As part of this restructuring, Messrs. Taylor and Getaz, along with research and trading personnel (the “Rising Dividends Team”), are relocating from FASL to FAI, both of which are wholly owned subsidiaries of Franklin Resources. Management believes that relocating the Rising Dividends Team to FAI will promote better integration of the Rising Dividends Team within the Franklin Equity Group, a

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unit of Franklin Templeton Investments offering expertise in managing growth and hybrid/balanced equity strategies, by fostering the sharing of resources and investment ideas.

In order for Messrs. Taylor and Getaz to continue managing the Rising Dividends Fund following their transfer to FAI, FAI would need to become the new investment manager for the Fund pursuant to a new investment management agreement (the “New IM Agreement”). Pursuant to Section 15 of the 1940 Act, a new investment management agreement requires the approval of the Rising Dividends Fund’s shareholders. Therefore, shareholders of the Rising Dividends Fund are being asked to approve the New IM Agreement. The form of New IM Agreement is included as Exhibit B to this proxy statement.

Fund management believes that it is in the best interests of the Rising Dividends Fund’s shareholders for Mr. Taylor to continue to serve as the lead portfolio manager of the Fund, and for Mr. Getaz to continue to provide portfolio management support to Mr. Taylor, after their transfer from FASL to FAI. As noted above, having Messrs. Taylor and Getaz become employees of FAI will further their integration into the Franklin Equity Group.

There is no proposed change in the level of investment management fees to be paid by the Rising Dividends Fund or its shareholders, and the transfer of Messrs. Taylor and Getaz to FAI will not impact the portfolio management services that currently are provided to the Fund. Management does not believe that the approval of the New IM Agreement will affect how the Rising Dividends Fund is managed or the Fund’s investment goal, principal investment strategies or the principal risks associated with an investment in the Fund. If the New IM Agreement is approved by the Rising Dividends Fund’s shareholders, it is expected that Messrs. Taylor and Getaz will become employees of FAI, and FAI would begin managing the Rising Dividends Fund on or about December 1, 2017.

Additional information about FASL

FASL, located at 101 John F. Kennedy Parkway, Short Hills, New Jersey 07078 is organized as a limited liability company in the State of Delaware, and is registered as an investment adviser with the SEC.

FASL serves as the Rising Dividends Fund’s investment manager pursuant to an investment management agreement dated May 1, 2007 (the “Current IM Agreement”). The Board most recently voted to renew the Current IM Agreement on April 18, 2017. The Current IM Agreement was last submitted to the Rising Dividends Fund’s sole initial shareholder on April 27, 2007, in connection with the redomestication of the Trust from a Massachusetts business trust to a Delaware statutory trust, which was approved by the Trust’s shareholders at a meeting held on March 21, 2007, and reconvened on April 3, 2007.

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For the fiscal year ended December 31, 2016, the amount of investment management fees paid by the Rising Dividends Fund to FASL was $9,998,652, after taking account of FASL’s agreement to reduce its fees to reflect reduced services resulting from the Fund’s investment in a Franklin Templeton money fund. Before any such waiver, the Rising Dividends Fund’s investment management fees totaled $10,110,214.

FASL is a wholly owned subsidiary of Franklin/Templeton Distributors, Inc., and an indirect wholly owned subsidiary of Franklin Resources, which is a publicly held corporation. The principal executive officer of FASL is Donald G. Taylor, President and Chief Investment Officer, with a business address of 101 John F. Kennedy Parkway, Short Hills, New Jersey 07078.

Additional information about FAI

FAI, with its principal offices at One Franklin Parkway, San Mateo, CA 94403-1906, is organized as a California corporation, and is registered as an investment adviser with the SEC. As of June 30, 2017, FAI, together with its affiliates, managed approximately $742 billion in assets, and has been in the investment management business since 1947. FAI is a wholly owned subsidiary of Franklin Resources. The following table sets forth the name and principal occupation of the principal executive officer and each director of FAI. The business address of the principal executive officer and each director in the table below is One Franklin Parkway, San Mateo, CA 94403-1906. Mr. Rupert H. Johnson, Jr. is the Chairman of the Board and a Trustee of the Trust, and Edward B. Jamieson is the President and Chief Executive Officer – Investment Management of the Trust.

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Are there any material differences between the New IM Agreement and the Current IM Agreement?

The terms of the New IM Agreement and the terms of the Current IM Agreement are substantively the same. However, certain outdated provisions in the Current IM Agreement have been removed, and the New IM Agreement includes several provisions now routinely included in investment management agreements used across the Franklin Templeton Investments fund complex. More specifically, the New IM Agreement was modified to:

None of these modifications is intended to reflect new or different levels of services to or investment management fees payable by the Rising Dividends Fund. Rather, such modifications memorialize existing services and obligations.

What are the material terms of the New IM Agreement?

Below is a summary of the material terms of the New IM Agreement. The following discussion is qualified in its entirety by reference to the form of the New IM Agreement attached as Exhibit B to this proxy statement.

Services. FAI will manage the Rising Dividends Fund’s assets subject to and in accordance with the Rising Dividends Fund’s investment goals and policies, the terms of the New IM Agreement, and any directions which the Board may issue from time

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to time. FAI will make all determinations with respect to the investment of the Rising Dividends Fund’s assets and the purchase and sale of the Rising Dividends Fund’s investment securities, and will take such steps as may be necessary to implement the same.

FAI also will be responsible for providing or procuring, at its own expense (unless otherwise agreed to by the parties), the following services to the Rising Dividends Fund to the extent that any such services are not otherwise provided by any other service provider to the Rising Dividends Fund: (a) providing office space, equipment and supplies appropriate for the effective administration of the Rising Dividends Fund as contemplated in the New IM Agreement; (b) providing trading desk facilities; (c) authorizing expenditures on behalf of the Rising Dividends Fund; (d) supervising preparation of periodic reports to Fund shareholders, notices of distributions and attending to routine shareholder communications; (e) coordinating and supervising the daily pricing and valuation of the Rising Dividends Fund’s investment portfolio; (f) providing fund accounting services, including preparing and supervising publication of daily net asset value quotations and other financial data; (g) monitoring and coordinating relationships with unaffiliated service providers; (h) supervising the Rising Dividends Fund’s compliance with recordkeeping requirements under the federal securities, state and foreign laws and regulations and maintaining books and records for the Rising Dividends Fund; (i) preparing and filing of domestic and foreign tax reports and monitoring the Rising Dividends Fund’s compliance with all applicable tax laws and regulations; (j) establishing, maintaining and monitoring the Rising Dividends Fund’s compliance program with respect to the federal securities, state and foreign laws and regulations applicable to the operation of investment companies; the Rising Dividends Fund’s investment goals, policies and restrictions; and the Code of Ethics and other policies applicable to the Rising Dividends Fund; (k) preparing regulatory reports; (l) preparing and arranging for the filing of registration statements and other documents with the SEC and other federal, state and foreign or other regulatory authorities; (m) maintaining a review and certification program and internal controls and procedures in accordance with the Sarbanes Oxley Act of 2002, as applicable; and (n) providing executive, clerical and other personnel needed to carry out the above responsibilities. As FASL does under the Current IM Agreement, FAI will engage Franklin Templeton Services, LLC (“FT Services”) to provide such services to the Rising Dividends Fund.

Management Fees. Pursuant to the New IM Agreement, the annual rate of the fee payable to FAI by the Rising Dividends Fund is identical to the annual rate of the fee paid by the Rising Dividends Fund under the Current IM Agreement to FASL, and shall be based upon the following annual rate, as a percentage of the Rising Dividends Fund’s average daily net assets:

0.750% of the value of net assets up to and including $500 million;
0.625% of the value of net assets over $500 million up to and including $1 billion;
0.500% of the value of net assets over $1 billion up to and including $5 billion; and
0.490% of the value of net assets in excess of $5 billion.

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Fund Expenses. The New IM Agreement includes a general list of expenses that are payable by the Rising Dividends Fund. The obligations of the Rising Dividends Fund and the investment manager with respect to Fund expenses would remain unchanged.

Brokerage. Under the New IM Agreement, FAI will seek to obtain the best net price and execution when placing trades for the Rising Dividends Fund. The role and obligations of the Rising Dividends Fund’s investment manager with respect to seeking best execution would remain unchanged. The New IM Agreement recognizes that FAI may place orders on behalf of the Rising Dividends Fund with a broker who charges a commission for that transaction which is in excess of the amount of commissions that another broker would have charged for effecting that transaction, provided that the excess commission is reasonable in relation to the value of “brokerage and research services” provided by that broker, as such services are defined in Section 28(e) of the Securities Exchange Act of 1934, as amended.

Proxy Voting. The New IM Agreement provides that all decisions on proxy voting with respect to the Rising Dividends Fund’s portfolio securities will be made by FAI, unless the Board determines otherwise. However, the role and obligations of the Rising Dividends Fund’s investment manager with respect to proxy voting would remain unchanged. Both FASL and FAI have adopted proxy voting guidelines that are substantially identical, which have been approved by the Board.

Delegation. The New IM Agreement includes a new provision that reflects the ability of the Rising Dividends Fund to operate in a Manager of Managers Structure whereby the Fund’s investment manager would be able to hire and replace subadvisers without shareholder approval, including FAI’s obligation to supervise any subadviser. As discussed above, the use of the Manager of Managers Structure was previously approved by the Board, and is being submitted for the approval of the Rising Dividends Fund’s shareholders at the Meeting.

Limitation of Liability. The New IM Agreement provides that in the absence of FAI’s willful misfeasance, bad faith, gross negligence, or reckless disregard of obligations or duties under the New IM Agreement, FAI will not be subject to liability to the Rising Dividends Fund for any act or omission in providing investment management services. The same limitation of liability of the investment manager is provided in the Current IM Agreement.

Indemnification. As noted above, the New IM Agreement includes a revised indemnification provision that describes FAI’s obligation to indemnify the Trust, the Rising Dividends Fund, and their officers and Trustees for losses or expenses resulting from the willful misfeasance, bad faith, gross negligence, or reckless disregard by FAI of its obligations or duties under the New IM Agreement.

Continuance. If shareholders of the Rising Dividends Fund approve the New IM Agreement, the New IM Agreement will continue in effect until two years from the date of its execution, unless earlier terminated. The New IM Agreement is thereafter renewable annually for successive periods of twelve (12) months by a vote of a

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majority of the Independent Trustees, cast in person at a meeting called for the purpose of voting on such approval, and either the vote of (a) a “majority of outstanding voting securities” of the Rising Dividends Fund (as defined by the 1940 Act, and described above under “What is the required vote on Proposal 2?”), or (b) a majority of the Board as a whole.

Termination. The New IM Agreement may be terminated by either party at any time, without payment of any penalty, on sixty (60) days’ written notice to the other party, provided that termination by the Rising Dividends Fund is approved by a majority of the Board or by a “majority of the outstanding voting securities” of the Rising Dividends Fund (as defined by the 1940 Act, and described below under “What is the required vote on Proposal 3?”).

What fees were paid by the Rising Dividends Fund to affiliates of FASL and FAI during the most recent fiscal year?

Information regarding the fees paid by the Rising Dividends Fund to affiliates of FASL and FAI during the Fund’s most recently completed fiscal year is provided below, under “ADDITIONAL INFORMATION ABOUT THE TRUST.”

What did the Board consider when it approved the New IM Agreement?

At a meeting held on May 23, 2017 (the “May Board Meeting”), the Board, including a majority of the Independent Trustees, reviewed and approved, and recommended to shareholders the approval of, the New IM Agreement between FAI and the Trust, on behalf of the Rising Dividends Fund, for an initial two year period effective on or about December 1, 2017. The Independent Trustees received advice from and met separately with Independent Trustee counsel in considering whether to approve the New IM Agreement.

The Board reviewed and considered information provided by FAI at the May Board Meeting. The Board also considered a form of the New IM Agreement, which is consistent with the agreements used across the Franklin Templeton Investments organization, as well as the Code of Ethics and Insider Trading Compliance Policies and Procedures that applied to the employees of FAI. The Board discussed with Franklin Templeton Investments the reasons for its request that the Board approve the New IM Agreement, including the benefits of the current portfolio management team, who would become employees of FAI, having access to additional resources. The Board reviewed and considered all of the factors it deemed relevant in approving the New IM Agreement, including, but not limited to: (i) the nature, extent, and quality of the services to be provided by FAI; and (ii) the costs of the services, which are to remain unchanged. The Board also considered that the change in the investment manager for the Rising Dividends Fund facilitates a restructuring of the Fund’s current investment manager, FASL, and the relocation of substantially all of the Rising Dividends Fund’s current portfolio management team from FASL to FAI. In determining that the New IM Agreement is fair and reasonable, the Board also

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noted that the New IM Agreement is substantially the same as the Fund’s Current IM Agreement with FASL and does not reflect a substantially new or different level of services to or fees payable by the Rising Dividends Fund.

Nature, Extent and Quality of Services. The Board considered information regarding the nature, extent and quality of investment management services to be provided by FAI and its affiliates to the Rising Dividends Fund and its shareholders. In particular, the Board took into account that the Rising Dividends Fund will have the same investment goals, principal investment policies, and service provider arrangements (except with respect to FAI) and other key factors. The Board discussed the fact that the same portfolio management team would serve the Rising Dividends Fund but that there would be benefits to having them join the investment professionals at FAI with a similar investment style. This realignment would promote greater collaboration through the sharing of resources and investment ideas. It also noted FAI’s experience as manager of other funds and accounts, including those within the Franklin Templeton Investments organization; the personnel, operations, financial condition, and investment management capabilities, methodologies and resources of FAI and FAI’s capabilities, as demonstrated by, among other things, its policies and procedures designed to prevent violations of the federal securities laws, which had previously been approved by the Board in connection with its oversight of other funds in the Franklin Templeton Investments organization.

Following consideration of such information, the Board was satisfied with the nature, extent and quality of services to be provided by FAI and its affiliates to the Rising Dividends Fund and its shareholders.

Fund Performance. The Board noted that, in connection with the restructuring of FASL, substantially all of the Rising Dividends Fund’s current portfolio management team would be relocated from FASL to FAI. The Board considered the track record of such portfolio management team in managing the Rising Dividends Fund, which was reviewed most recently by the Board in April 2017 as part of the annual contract renewal process (the “2017 Contract Renewal Process”). With that, and the additional resources available to the portfolio management team by joining FAI, the Board was confident in the abilities of such portfolio management team to continue the investment approach of the Rising Dividends Fund and to provide quality services to the Fund and its shareholders.

Comparative Fees and Expenses. The Board reviewed and considered information regarding the investment management fee to be charged by FAI. The Board noted that the management fee to be paid by the Rising Dividends Fund under the New IM Agreement is identical to the management fee the Fund currently pays FASL, which fee was found to be acceptable in connection with the April 2017 Contract Renewal Process. The Board concluded that the proposed investment management fee is fair and reasonable.

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Management Profitability and Economies of Scale. The Board determined that its conclusions regarding profitability and economies of scale reached in connection with the April 2017 Contract Renewal Process of the Current IM Agreement with FASL that would continue in effect until the date the New IM Agreement becomes effective had not changed as a result of the proposed retention of FAI in connection with the restructuring of FASL.

Conclusion. Based on its review, consideration and evaluation of all factors it believed relevant, including the above-described factors and conclusions, the Board unanimously approved the New IM Agreement for an initial two year period effective on or about December 1, 2017.

What is the required vote on Proposal 3?

Proposal 3 must be approved by the affirmative 1940 Act Majority Vote of shareholders of the Rising Dividends Fund.

If Proposal 3 is not approved by shareholders, of the Rising Dividends Fund, it is expected that the FundFund’s classification as a diversified fund and its related fundamental investment restriction will continue to operate under the Current IM Agreement and the Board will consider what steps to take with respect to the ongoing management of the Fund.remain in effect.

THE BOARD UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS OF THE RISING DIVIDENDS FUND
VOTE “FOR” PROPOSAL 3.
the PROPOSAL.

¿ADDITIONAL INFORMATION ABOUT THE FUND

The Board, on behalfInvestment Manager. The principal address of the Templeton Developing Markets VIP Fund (the “Developing Markets Fund”), unanimously recommends that shareholders of the Developing Markets Fund vote to approve a new Subadvisory Agreement between Templeton Asset Management Ltd. (“TAML”), as investment manager for the Developing Markets Fund, and FTIML (the “FTIML Subadvisory Agreement”).

Background

Templeton Emerging Markets Group is a unit of Franklin Templeton Investments with over 50 portfolio managers, analysts and other investment professionals across various Investment Manager Affiliates dedicated to emerging and frontier markets. Franklin Templeton Investments recently began initiating a series of new portfolio manager assignments within Templeton Emerging Markets Group that are designed to align portfolio management teams across its fund offerings, to recognize the investment leadership roles that key individuals have been playing in their specific strategies, and to further formalize their contribution and responsibility in the management of specific portfolios.

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As part of this initiative, on April 3, 2017, Chetan Sehgal, CFA, Director of Global Emerging Markets and Small Cap Strategies of Templeton Emerging Markets Group and a portfolio manager of TAML, began serving as the lead portfolio manager for the Developing Markets Fund. In addition, Franklin Templeton Investments recommended adding Carlos Hardenberg, Director of Frontier Markets Strategy of Templeton Emerging Markets Group and a portfolio manager of FTIML, to the Developing Markets Fund’s portfolio management team.

Why is FTIML recommended to serve as the Developing Markets Fund’s subadviser?

FTIML is recommended to serve as the Developing Markets Fund’s subadviser in order to allow Mr. Hardenberg to serve as a portfolio manager for the Developing Markets Fund.

Mr. Hardenberg has served in an investment leadership role with regard to the Frontier Markets Strategy since its inception in 2008, and was named Director of the Frontier Markets Strategy on January 1, 2016. As Director of the Frontier Markets Strategy, Mr. Hardenberg is responsible for the design, implementation and ongoing refinement of the Frontier Markets Strategy across Franklin Templeton Investments’ individual portfolios. Mr. Hardenberg also collaborates on Franklin Templeton Investments’ Global Emerging Markets Strategies and serves as the portfolio manager for the Templeton Emerging Markets Investment Trust PLC.

Fund management believes it is in the best interests of the Developing Markets Fund’s shareholders for Mr. Hardenberg, a portfolio manager with FTIML, to serve as a portfolio manager for the Developing Markets Fund. Mr. Hardenberg has been working closely with Mr. Sehgal on the Global Emerging Markets Strategies, while retaining oversight of the Frontier Markets Strategy. Mr. Sehgal will continue in his role as lead portfolio manager of the Developing Markets Fund, with Mr. Hardenberg collaborating with Mr. Sehgal in this capacity.

In order for Mr. Hardenberg to serve as a portfolio manager for the Developing Markets Fund, shareholders of the Fund are being asked to approve the FTIML Subadvisory Agreement. The form of FTIML Subadvisory Agreement is included as Exhibit C to this proxy statement.

The addition of FTIML as a subadviser to the Developing Markets Fund will have no impact on the amount of investment management fees that are paid by the Fund or Fund shareholders because FTIML’s fees will be deducted from the fees that TAML receives from the Developing Markets Fund. Further shareholder approval would be necessary to increase the management fees that are payable by the Developing Markets Fund, which is not contemplated. The approval of the FTIML Subadvisory Agreement for the Developing Markets Fund will not affect how the Fund is managed or the Fund’s investment goal, principal investment strategies or the principal risks associated with an investment in the Fund.

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Additional Information about TAML

TAML, with its principal offices at 7 Temasek Boulevard, Suntec Tower One, #38-03, Singapore 038987, is the investment manager, for the Fund. TAML is organized as a public company limited by shares incorporated in Singapore, and is registered as an investment adviser with the SEC.

TAML serves as the Developing Markets Fund’s investment manager pursuant to an amended and restated investment management agreement dated May 1, 2014. The Board most recently voted to renew the investment management agreement for the Developing Markets Fund on April 18, 2017. The investment management agreement for the Developing Markets Fund was last submitted to the Developing Markets Fund’s sole initial shareholder on April 27, 2007 in connection with the redomestication of the Trust from a Massachusetts business trust to a Delaware statutory trust, which was approved by the Trust’s shareholders at a meeting held on March 21, 2007, and reconvened on April 3, 2007.

For the fiscal year ended December 31, 2016, the amount of investment management fees paid to TAML by the Developing Markets Fund was $3,593,021, after taking account of TAML’s agreement to waive its fees and reduce its fees to reflect reduced services resulting from the Fund’s investment in a Franklin Templeton money fund. Before any such waiver, the Developing Markets Fund’s investment management fees totaled $3,651,393.

TAML is a wholly owned subsidiary of Franklin Templeton Capital Holdings Private Limited, and an indirect wholly owned subsidiary of Franklin Resources. The following table sets forth the name and principal occupation of the principal executive officers and each director of TAML. Unless otherwise noted, the business address of the principal executive officers and each director in the table below is 7 Temasek Boulevard, Suntec Tower One, #38-03, Singapore 038987.

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Additional Information about FTIML

FTIML, with its principal offices at Cannon Place, 78 Cannon Street, London, England EC4N 6HL, is organized as The Investment Manager has a Private Limited Companybranch office in England, and is registered asHong Kong. Pursuant to an investment adviser withmanagement agreement, the SEC.

On May 23, 2017,Investment Manager manages the Board voted to approveinvestment and reinvestment of the FTIML Subadvisory Agreement and to submit the FTIML Subadvisory Agreement to the Developing Markets Fund’s shareholders for approval.

FTIMLassets. The Investment Manager is a wholly owned subsidiary of Franklin Templeton Global Investors Limited, and an indirect wholly owned subsidiary of Resources, Inc. (“Franklin Resources. The following table sets forth the name and principal occupation of the principal executive officer and each director of FTIML. Unless otherwise noted, the business address of the principal executive officer and each director in the table below is Cannon Place, 78 Cannon Street, London, England EC4N 6HL.

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What are the material terms of the FTIML Subadvisory Agreement?

Below is a summary of the material terms of the FTIML Subadvisory Agreement. The following discussion is qualified in its entirety by reference to the form of FTIML Subadvisory Agreement attached as Exhibit C to this proxy statement.

Resources”).

Services. Subject to the overall policies, direction and review of the Board and subject to the instructions and supervision of TAML, FTIML will provide certain investment advisory services with respect to securities and investments and cash equivalents in the Developing Markets Fund.

Subadvisory Fees.The addition of FTIML as a subadviser to the Developing Markets Fund and FTIML’s provision of subadvisory services to the Fund will have no impact on the amount of investment management fees that are paid by the Fund or the fees paid by Fund shareholders because the fees that are received by FTIML will be paid directly by TAML. Further, shareholder approval would be necessary to increase the management fees that are payable by the Developing Markets Fund, which is not contemplated. The approval of the FTIML Subadvisory Agreement will not affect how the Developing Markets Fund is managed or the Fund’s investment goal, principal investment strategies or the principal risks associated with an investment in the Fund.Administrator.

Under the FTIML Subadvisory Agreement, TAML would pay FTIML a subadvisory fee of 50% of the “net investment advisory fee” paid by the Developing Markets Fund to TAML. The net investment advisory fee is defined in the FTIML Subadvisory Agreement to equal (i) 96% of an amount equal to the total investment management fee payable to TAML, minus any fees and/or expenses of the Developing Markets Fund waived and/or reimbursed by TAML, minus (ii) any fees payable by TAML to FT Services for fund administrative services.

Payment of Expenses. During the term of the FTIML Subadvisory Agreement, FTIML will pay all expenses incurred by it in connection with the services to be provided by it under the FTIML Subadvisory Agreement, other than the cost of securities (including brokerage commissions, if any) purchased by the Developing Markets Fund.

Brokerage. FTIML will seek to obtain the most favorable price and execution available when placing trades for the Developing Markets Fund’s portfolio transactions. The FTIML Subadvisory Agreement recognizes that FTIML may place orders on behalf of the Developing Markets Fund with a broker who charges a commission for that transaction which is in excess of the amount of commissions that another broker would have charged for effecting that transaction, in recognition of the brokerage and research services that such broker provides, in accordance with the Developing Markets Fund’s policies and procedures, the terms of the Developing Markets Fund’s investment management agreement, the Developing Markets Fund’s prospectus and Statement of Additional Information, and applicable law.

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Limitation of Liability. The FTIML Subadvisory Agreement provides that in the absence of willful misfeasance, bad faith, gross negligence, or reckless disregard of its obligations or duties under such agreement on the part of FTIML, neither FTIML nor any of its directors, officers, employees or affiliates will be subject to liability to TAML, the Developing Markets Fund, or to any shareholder of the Developing Markets Fund for any error of judgment or mistake of law or any other act or omission in the course of, or connected with, rendering services thereunder or for any losses that may be sustained in the purchase, holding or sale of any security by the Fund.

Continuance. If shareholders of the Developing Markets Fund approve the FTIML Subadvisory Agreement, the FTIML Subadvisory Agreement will continue in effect for two years from the date of its execution, unless earlier terminated. The FTIML Subadvisory Agreement is thereafter renewable annually for successive periods of twelve (12) months by a vote of a majority of the Trust’s Independent Trustees, cast in person at a meeting called for the purpose of voting on such approval, and either (a) a 1940 Act Majority Vote of the Developing Markets Fund’s shareholders, or (b) a majority of the Board as a whole.

Termination. The FTIML Subadvisory Agreement may be terminated (i) at any time, without payment of any penalty, by the Board upon written notice to TAML and FTIML, or by a 1940 Act Majority Vote of the Developing Markets Fund’s shareholders, or (ii) by TAML or FTIML upon not less than sixty (60) days’ written notice to the other party.

What other investment companies are managed or subadvised by FTIML?

Following is a list of funds that are managed or subadvised by FTIML that have investment objectives and strategies similar to the Developing Markets Fund.

Under the 1940 Act, a fund must have a fundamental investment restriction governing investments in “commodities.” The 1940 Act does not prohibit a fund from investing in commodities. The Funds’ current fundamental investment restrictions regarding commodities are substantially similar, though not identical, and are detailed in Exhibit D to this proxy statement.

The Funds’ Investment Managers and the Board are recommending that each Fund amend its current fundamental investment restriction regarding investments in commodities to provide the Fund with the flexibility to adapt to continuously changing regulation and to react to changes in the financial markets and the development of new investment opportunities and instruments, in accordance with the Fund’s investment goal and subject to oversight by the Board. Since the adoption of the Funds’ current fundamental investment restrictions regarding commodities, the financial markets and related regulation by the SEC, the U.S. Commodity Futures Trading Commission (“CFTC”) and other governmental agencies have evolved, and new types of financial instruments have become available as potential investment opportunities, including commodity-linked instruments. Under the proposed restriction, if current applicable law were to change, the Funds would be able to conform to any such new law without shareholders taking further action.

The proposed standardized fundamental investment restriction regarding investments in commodities is as follows:

[The Fund may not:] Purchase or sell commodities, except to the extent permitted by the 1940 Act or any rules, exemptions or interpretations thereunder that may be adopted, granted or issued by the SEC.

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What effect will amending the current commodities restriction have on the Funds?

The proposed fundamental investment restriction would clarify the ability of each Fund to engage in transactions involving currencies and other derivative transactions, such as futures contracts, forward contracts, commodity options and swaps, subject to oversight by the Fund’s Board. Notwithstanding the potential flexibility provided by the proposed fundamental investment restriction, each Fund is subject to limitations established from time to time by the Board regarding the use of derivatives. In addition, the Investment Managers, with respect to the applicable Funds, currently rely on CFTC Rule 4.5 for an exclusion from commodity pool operator registration. The Investment Managers intend to continue to limit each Fund’s use of commodity interests to the trading limitations set forth in such rule, as well as other applicable laws and regulations. It is not anticipated that the adoption of the proposed investment restriction would involve additional material risk to any Fund or affect the way any Fund is currently managed or operated.

What is the required vote on Proposal 5?

To approve Proposal 5, a Fund must receive the affirmative 1940 Act Majority Vote of its shareholders. If Proposal 5 is not approved by a Fund’s shareholders, the Fund’s current fundamental investment restriction regarding commodities will remain in effect.

THE BOARD UNANIMOUSLY RECOMMENDS
A VOTE “FOR” PROPOSAL 5.

The Investment Managers. The current Investment Managers and any subadviser(s) of the Funds and their principal addresses are listed on Exhibit E to this proxy statement. Pursuant to an investment management agreement with the Trust, on behalf of each Fund, the Investment Manager for a Fund (along with any subadviser) manages the investment and reinvestment of that Fund’s assets. Each Investment Manager and subadviser is a direct or indirect, wholly owned or majority owned subsidiary of Franklin Resources.

The Administrator. Pursuant to an administration agreement or subcontract for fund administration services with each Fund’sthe Investment Manager, Franklin Templeton Services, LLC (“FT ServicesServices”) provides certain administrative functions for the Funds.Fund. FT Services, with its principal address at One Franklin Parkway, San Mateo, California 94403-1906, is an indirect, wholly owned subsidiary of Franklin Resources and an affiliate of the Investment ManagersManager and the Trust’sFund’s principal underwriter. The fee for administrative services provided byJPMorgan Chase & Co., 270 Park Avenue, New York, NY 10017, has an agreement with FT Services is paid by the Investment Manager of each Fund, other than Franklin Founding Funds Allocation VIP Fund, based on the Fund’s average daily net assets, and is not an additional expense ofto provide certain sub-administrative services for the Fund.

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During the fiscal year ended December 31, 2016, with respect to the Rising Dividends Fund and the Developing Markets Fund, the applicable Investment Manager paid FT Services administrative fees of $1,809,860 and $425,741, respectively, for services provided to the Funds.

FT Services will continue to provide administrative services to the Funds after the Meeting.

The Underwriter. The principal underwriter for the FundsFund is Franklin/Franklin Templeton Distributors, Inc. (“FT Distributors”), with its principal address at One Franklin Parkway, San Mateo, California 94403-1906. As principal underwriter, FT Distributors receives (i) underwriting commissions in connection with the sale or redemption of Fund shares and (ii) 12b-1 fees pursuant to separate Rule 12b-1 plans adopted by the Board, which fees are used for, among other things, advertising expenses and the costs of printing sales material and prospectuses used to offer shares.

For the fiscal year ended December 31, 2016, the aggregate amount of Rule 12b-1 fees received by FT Distributors from the Class 2 and Class 4 shares of the Rising Dividends Fund and the Developing Markets Fund were $3,721,697 and $539,583, respectively, substantially all of which fees were paid to insurance companies.

No payments were made by the Class 5 shares of the Rising Dividends Fund or the Developing Markets Fund during the fiscal year ended December 31, 2016.

FT Distributors does not receive compensation from the Funds for acting as the principal underwriter for the Class 1 shares of the Rising Dividends Fund and the Developing Markets Fund.

FT Distributors will continue to act as the principal underwriter for the Trust after the Meeting.

The Transfer Agent. The transfer agent and shareholder servicing agent for the FundsFund is Franklin Templeton Investor Services, LLC (“FTIS”), located at 3344 Quality Drive, Rancho Cordova, California 95670-7313.

FTIS, pursuant to the terms of an agreement, performs shareholder servicing for the Rising Dividends Fund and Developing Markets Fund and is not paid by either Fund for these services.

FTIS will continue to act as the transfer agent and shareholder servicing agent for the Trust and the Funds after the Meeting.

The Custodians.Custodian. The custodian for each Fund, other than the Developing Markets Fund, the Templeton Foreign VIP Fund and the Templeton Growth VIP Fund, is The Bank of New York Mellon, Mutual Funds Division, 100 Church Street, New York, New York 10286. The custodian for the Developing Markets Fund, the Templeton Foreign VIP Fund and the Templeton Growth VIP Fund is JPMorgan Chase Bank, 270 Park Avenue, New York, New York 10017-2070.

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Other Matters.The Trust’sFund’s audited financial statements and annual report for its fiscal year ended December 31, 2016,2019, and any subsequent semi-annual report to shareholders, are available free of charge. To obtain a copy, please contact your financial advisor, the Participating Insurance Company offering your Variable Contract, call (800) DIAL BEN^® ((800) 342-5236) or forward a written request to Franklin Templeton Investor Services, LLC, P.O. Box 33030, St. Petersburg, Florida 33733-8030.

Outstanding Shares and Principal Shareholders.The outstanding shares and classes of eachthe Fund as of May 31, 2017 are set forth in Exhibit F.June 19, 2020 were as follows:

The names and addresses of shareholders that owned beneficially or of record 5% or more of the outstanding shares of the Fund are set forth in Exhibit A. From time to time, the number of shares held in “street name” accounts of various securities dealers for the benefit of their clients may exceed 5% of the total shares outstanding of any class of the Funds are set forth in Exhibit G.Fund. To the knowledge of the Trust’sFund’s management, as of May 31, 2017,the Record Date, there were no other shareholders,entities, except as set forth in Exhibit GA, owning beneficially or of record more than 5% of the outstanding shares of any class of the Funds.Fund.