May I revoke my 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 Fund that is received by the Fund at or prior to the Meeting, or by attending theMeeting 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 November 1, 2018,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 50% by the Fund, and 50% by FAV. However, in lightregardless of whether shareholders approve the current expense waivers that are in place for the Fund, FAV or an affiliate will ultimately pay the Fund’s portion of the expenses.Proposal. For more information, please see “FURTHER INFORMATION ABOUT VOTING AND THE MEETING – Solicitation of Proxies.”

¿         THE PROPOSALS

PROPOSAL 1:           TO APPROVE A NEW INVESTMENT MANAGEMENT AGREEMENT WITH FRANKLIN ADVISERS, INC.

The Board unanimously recommends that the shareholders of the Fund approve a new Investment Management Agreement with FAV.

Background

            The Fund is currently structure as a “fund of funds” meaning that it seeks to achieve its investment goals by investing its assets in a combination of the Franklin Income VIP Fund (33 1/3%), Franklin Mutual Shares VIP Fund (33 1/3%) and Templeton Growth VIP Fund (33 1/3%) (the “Underlying Funds”). The Fund makes equal allocations to each of the Underlying Funds on a fixed percentage basis. The administrator rebalances the Fund’s investments in the Underlying Funds periodically and may recommend to the Fund’s Board additional or different Underlying Funds for investment (without the approval of shareholders). These Underlying Funds, in turn, invest primarily in U.S. and foreign equity securities, and, to a lesser extent, fixed income and money market securities, each following a value oriented approach.

How will the Fund be managed after the Repositioning?

 If the New IM Agreement is approved by shareholders, Management anticipates converting the Fund’s current fund of funds structure to a direct investment fund with an actively managed dynamic allocation strategy. The repositioned Fund would typically maintain overall target net asset weightings of 60% in equity investments and 40% in fixed income investments, with the ability to vary from each of these weightings by 5% under normal market conditions. The Fund also expects to maintain non-U.S. exposure generally in the range of 10% to 30% of its net assets, with a maximum emerging markets exposure target of 5%. Both the equity portion of the Fund and the fixed income portion could have non-U.S. exposure.  FAV would serve as investment manager of the Fund, and FAV and various FT Subadvisers would manage investment strategy sleeves of the Fund in a “manager of managers” structure. 

            The Franklin Templeton Multi-Asset Solutions team of FAV would manage the Fund by employing a portfolio construction process and making tactical adjustments to it from time to time, including using derivatives for efficiency in executing these “overlay” adjustments at the Fund level. The primary purpose of the overlay adjustments would be to manage risk exposures, e.g., to reduce equity market exposure during times of extreme market volatility without impacting management of the underlying strategies. FAV would also make and adjust allocations among the sleeves, allocations between equity and fixed income, and between U.S. and non-U.S. investments. Overall, the repositioned Fund is expected to have a greater allocation to fixed income than the current Fund, as well as a higher allocation to U.S. investments.  Management believes that the overall risk profile of the Fund would not change materiallylarge companies as a result of the Repositioning, and may decrease moderately under normal market conditions.

            The strategy sleeves would include U.S. Smart Beta Equity, Franklin Total Return, Franklin Growth Strategy, Templeton Foreign,² Franklin International Growth,³ Franklin U.S. Government Securities, Franklin Rising Dividends, Investment Grade Corporate⁴ and Templeton Global Bond.  Unless indicated, the individual strategy sleeves would be managed by FAV.  Allocationsnew companies being added to the individually managed sleeves are anticipated to range typically between 5% to 20%, but would vary with market conditions; however, no sleeve would constitutedeveloping markets investment universe, as well as the significant outperformance of some of these companies, which has resulted in a majorityhigher level of concentration of these companies in the Fund’s asset class. In other words, these companies now represent a large percentage of the Fund’s assets.  Additional information regarding each sleeve is includedinvestment universe inExhibit B. 

            As noted above, Management believes the changes would: (1) continue to provide broad asset allocation, but would do so using the latest active allocation and monitoring processes; (2) enable which the Fund invests. 

Due to be more widely distributed across insurance company platforms and reducethese structural changes to the Fund’s overall expenses; and (3) allowinvestment universe, the Fund is not able to take as large of positions in these companies that the Investment Manager believes is beneficial for the Fund’s portfolio managersbecause 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’s assets.) Thus, changing the Fund’s classification to non-diversified would provide the Fund with the flexibility to pursue its investment strategy given that the Investment Manager believes the high level of concentration in the Fund’s asset class will remain for the foreseeable future. As a non-diversified fund, the Fund could invest a greater degreeportion of diversification across asset classesits assets in any one issuer and strategies, better tailor the Fund’s portfolio to achieve its investment goals, and reduce the volatilitycould invest overall in a smaller number of the Fund’s returns. [If Proposal 1 is not approved by shareholders of the Fund, it is expected that the Fund will continue to operate under its Current Admin Agreement and the repositioning would not occur.]  The Board would need to consider what steps to take with respect to the ongoing management of the Fund.

If the New IM Agreement is approved by shareholders, how will the Fund’s expenses change?

            In connection with the Repositioning, the Board is recommending that shareholders approve the New IM Agreement, which includes an investment management fee of 0.55% of the average daily net assets of the Fund.  As of August 31, 2018, the net assets of the Fund were $923 million.  Pursuant to the Current Admin Agreement, the Fund pays FT Services an administrative fee of 0.10% of the average daily net assets of the Fund.  The aggregate amount of administrative fees paid by the Fund to FT Services for the fiscal year ended December 31, 2017 was $1,018,274.  The New IM Agreement includes investment advisory services as well as administrative services, and, accordingly, if shareholders approve the New IM Agreement, the Current Admin Agreement between the Fund and FT Services would be terminated. 

            Had the Repositioning been in effect for the fiscal year ended December 31, 2017, the aggregate amount of investment management fees, excluding waivers, payable to FAV from the Fund would have been $[ ]; amounting to an increase to the management fees, after accounting for the termination of the Current Admin Agreement and the administrative fees being paid through the New IM Agreement, of [ ]% of the average net assets for the Fund.  Although the management fees would have been higher if the Repositioning had been in effect, the Fund’s indirect expenses, in the form of acquired fund expenses, would have been reduced in an amount greater than the increased investment management fees, as illustrated in the table below.

            The contractual fee waiver currently in place limits common expenses (i.e., a combination of administration fees and other expenses but excluding Rule 12b-1 fees, acquired fund expenses and certain non-routine expenses or costs, including those related to litigation, indemnification, reorganizations and liquidations) for each class of the Fund to 0.10%.  The current fee waiver is due to expire April 30, 2019. Notably this current fee waiver does not apply to the acquired fund expenses, meaning the Fund must also bear indirectly the full cost of acquired fund expenses. In contrast, in connection with the Repositioning, FAV has contractually agreed to waive fees and reimburses expenses so that the total annual operating expenses of the Fund (not including Rule 12b-1 fees,but including acquired fund expenses) do not exceed 0.57%.

[The following tables compare the current fees and expenses (as of September 30, 2018) of the Fund as a percentage of daily net assets to the estimated expenses on a pro forma basis assuming completion of the Repositioning:]

* Currently, FT Services has contractually agreed to waive or assume certain expenses so that common expenses (excluding Rule 12b‑1 fees, acquired fund fees and expenses and certain non-routine expenses) do not exceed 0.10% until April 30, 2019.  If the New IM Agreement is approved, Management will waive fees and reimburses expenses so that the total annual operating expenses of the Fund (not including Rule 12b-1 fees, but including acquired fund fees and expenses) do not exceed 0.57%.

diversified 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 FAV.  FT Services serves as the Fund’s administrator pursuant to the Current Admin Agreement dated April 17, 2012. The Trust’s Board most recently voted to renew the Current Admin Agreement on April 17, 2018.

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

The New IM Agreement and Current Admin Agreement for the Fund are substantially similar with respect to the provision of administrative services, except for non-material revisions to conform the descriptions of such services with the latest forms of investment management agreements used across the FTI fund complex and the removal of provisions regarding monitoring and rebalancing the Fund’s allocation to Underlying Funds in light of the Repositioning.  The remaining material differences relate to the provision of investment advisory services that would be provided to the Fund as a result of the transition from a fund of funds to a direct investment structure.  These provisions are common in the latest forms of investment management agreements used across the FTI fund complex and are described in more detail below, including a provision to reflect the ability of the Fund to operate in a “manager of managers” structure, which is subject to shareholder approval and discussed in Proposal 3.  If the New IM Agreement is approved by shareholders but the manager of managers structure discussed in Proposal 3 is not, the provisions of the New IM Agreement would generally require the approval of the Fund’s shareholders for the investment manager to enter into new or amended subadvisory agreements.

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 IM Agreement attached asExhibit Ato this proxy statement.

Services.  The investment management services for which FAV is responsible for providing to the Fund in the New IM Agreement are new.  FAV would be responsible for managingeffect will changing the Fund’s assets subjectstatus from “diversified” to and in accordance with“non-diversified” have on the Fund’s investment goals and policies, the terms of the Agreement, and any directions which the Board may issue from time to time.  In addition, FAV would make all determinations with respect to the investment of the Fund’s assets and the purchase and sale of the Fund’s investment securities, and will take such steps as may be necessary to implement the same. Further, FAV, its officers and employees would be responsible under the IM Agreement to make available and provide accounting and statistical information required by the Fund in the preparation of registration statements,reports and other documents required by federal and state securities laws and with such information as the Fund may reasonably request for use in the preparation of such documents or of other materials necessary or helpful for the underwriting and distribution of the Fund’s shares.

FAV also will be responsible during the term of the New IM Agreement, as it is under the Current Admin Agreement, to provide or procure, as applicable, at its own expense (unless otherwise agreed to by the parties), the following administrative services to the Fund to the extent that any such services are not otherwise provided by any subadviser or other service provider to the Fund:  (a) providing office space, equipment and supplies appropriate for the effective administration of the Fund; (b) providing trading desk facilities; (c) authorizing expenditures on behalf of the 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 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 Fund’s compliance with recordkeeping requirements under the federal securities, state and foreign laws and regulations and maintaining books and records for the Fund; (i) preparing and filing of domestic and foreign tax reports and monitoring the Fund’s compliance with all applicable tax laws and regulations; (j) establishing, maintaining and monitoring the Fund’s compliance program with respect to the federal securities, state and foreign laws and regulations applicable to the operation of investment companies; the Fund’s investment goals, policies and restrictions; and the Code of Ethics and other policies applicable to the 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.

Management Fees.Fund? Pursuant to the New IM Agreement, the annual rate of the fee payable to FAV by the Fund under the New IM Agreement would be 0.55% of the Fund’s average daily net assets for investment management and administrative services, whereas the Fund currently pays FT Services 0.10% of the Fund’s average daily net assets for administrative services. 

If the New IM AgreementProposal is approved by shareholders, the Fund’s Current Admin Agreement will be terminated.

Fund Expenses. The New IM Agreement includeswould maintain a general listportfolio that complies with non-diversification status. However, the Fund would limit its investments greater than 5% in any one issuer to no more than 50% of expenses that are payable byits assets (rather than the Fund.

Brokerage. In light25% limit imposed upon diversified funds) to continue to comply with the tax diversification requirements of Subchapter M of the new investment management servicesInternal Revenue Code. The 1940 Act diversification requirements are similar to, but, are separate and apart from the diversification requirements that would be provided under the New IM Agreement, FAV will seekFund complies with to obtain the best net price and executionquality for the Fund. The New IM Agreement recognizes that FAV may place orders on behalfspecial tax treatment as set forth in Subchapter M of the FundInternal Revenue Code. The Proposal does not in any way affect the Fund’s ability to comply with a broker who charges a commission for that transactionSubchapter M.

Non-diversified funds are more sensitive to economic, business, political or other changes affecting such or similar issuers or securities, which ismay result in excess of the amount of commissions that another broker would have charged for effecting that transaction, provided that the excess commission is reasonablegreater fluctuation in relation to the value of “brokerage and research services” provided by that broker.

Proxy Voting. In light of the transition to direct investments, the New IM Agreement provides that all decisions on proxy voting with respect to the Fund’s portfolio securities will be made by FAV, unless the Board determines otherwise.

Delegation. The New IM Agreement includes a provision that reflects the ability of the Fund to operate in a “manager of managers” structure, as discussed in Proposal 3, and delegate services to one or more subadvisers.

Limitation of Liability. In the absence of willful misfeasance, bad faith, gross negligence, or reckless disregard of obligations or duties under the New IM Agreement on the part of FAV, FAV shall not be subject to liability to the Trust or the Fund or to any shareholder of the Fund for any 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. The same limitation of liability with respect to FT Services’ provision of administrative services is included in the Current Admin Agreement.

Continuance. If shareholders of the Fund approve the New IM Agreement, such agreement shall become effective on the date written and shall continue in effect for[two (2)] years thereafter, unless sooner terminated as provided under the New IM Agreement and shall continue in effect thereafter for periods not exceeding one (1) year so long as such continuation is approved at least annually (i) by a vote of a majority of the outstanding voting securities of the Fund or by a vote of the Board, and (ii) by a vote of a majority of the Trustees of the Trust who are not parties to the New IM Agreement (other than as Trustees of the Trust) or “interested persons” of any such party, cast in person at a meeting called for the purpose of voting on the New IM Agreement.

Termination. Both the New IM Agreement and the Current Admin Agreement may at any time be terminated without the payment of any penalty by the vote of the Board on 60 days’ written notice.  The New IM Agreement may also be terminated without payment of any penalty by vote of a majority of the outstanding voting securities of the Fund (as defined by the 1940 Act) on 60 days’ written notice to FAV; shall immediately terminate with respect to the Fund in the event of its assignment; and may be terminated by FAV on 60 days’ written notice to the Fund.shares.

What other investment companies are managed or subadvised by FAV?

Following is a list of funds that are managed by FAV that have investment objectives and strategies similar to the Fund.

What fees were paid by the Fund to affiliates of FAV during the most recent fiscal year?

Information regarding the fees paid by the Fund to affiliates of FAV during the Fund’s most recently completed fiscal year is provided below under “ADDITIONAL INFORMATION ABOUT THE FUND.”

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

[To be included in definitive]

What is the required vote on Proposal 1?the Proposal?

The New IM AgreementProposal must be approved by the affirmative vote of a “majority of the outstanding voting securities” of the Fund, aswhich is defined in and required by the 1940 Act. The vote of a “majority of the outstanding voting securities” of the Fund is definedAct as the affirmative vote of the lesser ofof: (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 the Fund are present or represented by proxy; or (B) more than 50% of the outstanding voting securities of the Fund (the “1940 Act Vote”).Fund.

When will

If the Proposal take effect?

 If the shareholders of the Fund approve the Proposal, the Portfolio will effect the Repositioning on or about May 1, 2019, to coincide with the annual update of the registration statement for the Fund. If Proposal 1 is not approved by shareholders, of the Fund, it is expected that the FundFund’s classification as a diversified fund and its related fundamental investment restriction will continue to operate under its Current Admin Agreement and the repositioning of the Fund will not takeremain in effect.  The Board would then need to consider what steps to take with respect to the ongoing management of the Fund.

THE BOARD UNANIMOUSLY RECOMMENDS THAT

SHAREHOLDERS VOTE “FOR” PROPOSAL 1.the PROPOSAL.

PROPOSAL 2:            TO APPROVE NEW SUBADVISORY AGREEMENTS withGlobal Advisors and FT Institutional (THIS PROPOSAL INVOLVES SEPARATE VOTES ON SUB-PROPOSALS 2(A), 2(b) AND 2(C))

            The Board, on behalf of the Fund, unanimously recommends, in conjunction with the approval of Proposal 1, that shareholders of the Fund vote to approve one (1) new Subadvisory Agreement between FAV, as investment manager for the Fund, and Global Advisors (the “Global Subadvisory Agreement”), and vote to approve two (2) new Subadvisory Agreements between FAV, as investment manager for the Fund, and FT Institutional (the “FT Subadvisory Agreements”).

Background

            As noted above, Management proposed, and the Board approved, the Repositioning.  If approved by shareholders, FAV would serve as investment manager of the Fund and manage investment strategy sleeves of the Fund alongside various FT Subadvisers in a “manager of managers” structure.  Certain sleeves within the repositioned Fund would be managed by FAV, while others would be managed by FT Subadvisers pursuant to subadvisory agreements between FAV and the respective FT Subadviser. The Fund would pay FAV an overall investment management fee of 0.55% of the Fund’s average daily net assets for its management of the Fund.  For a strategy sleeve managed by FAV, the Fund would not pay any additional investment management fees or separate subadvisory fees to FAV. For a strategy sleeve managed by an FT Subadviser, the FT Subadviser would be compensated from the investment management fee paid by the Fund to FAV. Management is proposing that three new subadvisory agreements be approved in connection with the repositioning of the Fund. The names of the strategy sleeves, the proposed FT Subadviser and the proposed subadvisory fee rates are set forth in the table below.

Why are Global Advisors and FT Institutional recommended to serve as the Fund’s subadvisers?

            Global Advisors and FT Institutional are recommended to serve as the Fund’s subadvisers in order to allow them to manage investment strategy sleeves of the Fund alongside FAV in a “manager of managers” structure.  Additional information regarding the specific sleeves and their management is provided below:

Sub-Proposal 2(a): Templeton Foreign Strategy (Global Advisors):  The strategy seeks long-term capital growth by investing predominantly in foreign securities which are predominantly equity securities of companies located outside of the U.S., including developing markets.  The strategy is managed by Tucker Scott, Norman Boersma, Heather Arnold, Christopher James Peel and Herbert J. Arnett Jr. 

Sub-Proposal 2(b): Franklin International Growth Strategy (FT Institutional):  The strategy seeks capital appreciation by investing predominantly in the equity securities of mid-and large capitalization companies outside the U.S. with long-term growth potential.  The strategy is managed by Don Huber and John Remmert.

Sub-Proposal 2(c): Investment Grade Corporate Strategy (FT Institutional):    The strategy seeks as high a level of current income as is consistent with prudent investing, while seeking preservation of capital, by investing predominantly in investment grade corporate debt securities and investments. The strategy may invest a significant part of its net assets in foreign securities, including those in developing markets, and a portion of its net assets in non-U.S. dollar denominated securities.  The strategy is managed by Marc Kremer and Shawn Lyons. 

            Management believes it is in the best interests of the Fund’s shareholders for Global Advisors and FT Institutional to manage the sleeves of the Fund discussed above.  In order for Global Advisors and FT Institutional to serve as subadvisors for the Fund, shareholders of the Fund are being asked to approve the Global Subadvisory Agreement and FT Subadvisory Agreements. A form of subadvisory agreement is included as Exhibit C to this proxy statement.  The only differences between the Global and FT Subadvisory Agreements are the subadvisory fee rates for the different strategy sleeves as noted in the table above. 

            The addition of Global Advisors and FT Institutional as subadvisers to the Fund will have no impact on the amount of investment management fees that are paid by the Fund or Fund shareholders (other than the increase discussed in Proposal 1) because Global Advisors’ and FT Institutional’s fees will be deducted from the fees that FAV receives from the Fund.  If Proposal 1 is not approved by shareholders of the Fund, it is expected that the Fund will continue to operate under its Current Admin Agreement and the repositioning of the Fund, including the Global Subadvisory Agreement and FT Subadvisory Agreements, will not take effect.  The Board would then need to consider what steps to take with respect to the ongoing management of the Fund.

Additional Information about FAV

            Information regarding FAV, the investment manager proposed for the Fund, is described above in Proposal 1. 

Additional Information about Global Advisors

            Global Advisors, with its principal offices at Cannon Place, Lyford Cay, Nassau, Bahamas, is organized as a Bahamian corporation, and is registered as an investment adviser with the SEC. On October 23, 2018, the Board voted to approve the Global Subadvisory Agreement and to submit the Global Subadvisory Agreement to the Fund’s shareholders for approval.

            Global Advisors is a wholly-owned subsidiary of Templeton Global Holdings Limited, and an indirect 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 Global Advisors. Unless otherwise noted, the business address of the principal executive officer and each director in the table below is Lyford Cay, Nassau, Bahamas.

Additional Information about FT Institutional

            FT Institutional, with its principal offices at 280 Park Avenue, New York, New York 10017, is organized as a Delaware limited liability company, and is registered as an investment adviser with the SEC. On October 23, 2018, the Board voted to approve each FT Subadvisory Agreement and to submit each FT Subadvisory Agreement to the Fund’s shareholders for approval.

            FT Institutional 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 FT Institutional. Unless otherwise noted, the business address of the principal executive officer and each director in the table below is 280 Park Avenue, New York, New York 10017.

What are the material terms of the Global and FT Subadvisory Agreements?

Below is a summary of the material terms of each Subadvisory Agreement. The following discussion is qualified in its entirety by reference to the form of Subadvisory Agreement attached as Exhibit C to this proxy statement. The only differences between the Global and FT Subadvisory Agreements are the subadvisory fee rates for the different strategy sleeves as noted in the table below. 

Services. Subject to the overall policies, direction and review of the Board and subject to the instructions and supervision of FAV, Global Advisors and FT Institutional, pursuant to their respective Subadvisory Agreements, will provide certain investment advisory services with respect to securities and investments and cash equivalents in the Fund.

Subadvisory Fees. Global Advisors’ and FT Institutional’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(other than the increase discussed in Proposal 1)because the fees that are received by Global Advisors and FT Institutional with respect to each applicable Subadvisory Agreement will be paid directly by FAV.If Proposal 1 is not approved by shareholders of the Fund, it is expected that the Fund will continue to operate under its Current Admin Agreement and the repositioning of the Fund, including the Global Subadvisory Agreement and FT Subadvisory Agreements, will not take effect.  The Board would then need to consider what steps to take with respect to the ongoing management of the Fund.

            Under each Subadvisory Agreement, FAV would pay Global Advisors or FT Institutional a subadvisory fee based on a percentage of the average daily net assets allocated to the subadviser for the specific strategy sleeve.The names of the strategy sleeves, subadvisers and proposed subadvisory fee rates are set forth in the table below.

Payment of Expenses. During the term of each Subadvisory Agreement, Global Advisors and FT Institutional will each pay all expenses incurred by it in connection with the services to be provided by it under the applicable Subadvisory Agreement, other than the cost of securities (including brokerage commissions, if any) purchased by the Fund.

Brokerage. Global Advisors and FT Institutional will each seek to obtain the most favorable price and execution available when placing trades for the Fund’s portfolio transactions. The Global and FT Subadvisory Agreements each recognize that Global Advisors and FT Institutional may place orders on behalf of the 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 Fund’s policies and procedures, the terms of the Fund’s proposed New IM Agreement, the Fund’s prospectus and Statement of Additional Information, and applicable law.

            Limitation of Liability. Each 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 Global Advisors or FT Institutional, neither Global Advisors or FT Institutional nor any of its directors, officers, employees or affiliates will be subject to liability to FAV, the Fund, or to any shareholder of the 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 Fund approve a Subadvisory Agreement, the Subadvisory Agreement will continue in effect for two years from the date of its execution, unless earlier terminated. The applicable 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 Fund’s shareholders, or (b) a majority of the Board as a whole.

Termination. Each Subadvisory Agreement may be terminated (i) at any time, without payment of any penalty, by the Board upon written notice to FAV and Global Advisors or FT Institutional, as applicable, or by a 1940 Act Majority Vote of the Fund’s shareholders, or (ii) by FAV, Global Advisors or FT Institutional, as applicable, upon not less than sixty (60) days’ written notice to the other party.

What other investment companies are managed or subadvised by Global Advisors and FT Institutional?

            Following is a list of funds that are managed or subadvised by Global Advisors and FT Institutionalthat have investment objectives and strategies similar to the strategy sleeve proposed for the Fund.

What fees were paid by the Fund to affiliates of FAV, Global Advisors and FT Institutional during the most recent fiscal year?

            Information regarding the fees paid by the Fund to affiliates of FAV, Global Advisors and FT Institutional during the Fund’s most recently completed fiscal year is provided below, under “ADDITIONAL INFORMATION ABOUT THE FUND.”

What did the Board consider when it approved the Subadvisory Agreements?

[To be included in definitive]

What is the required vote on Proposal 2?

            Proposal 2 consists of three Sub-Proposals.  Sub-Proposals 2(a), 2(b) and 2(c) will each be voted on separately by the shareholders of the Fund. Each Sub-Proposal and corresponding Subadvisory Agreement must be approved by the affirmative 1940 Act Majority Vote of shareholders of the Fund. If approved for the Fund, each Subadvisory Agreement is anticipated to become effective on or about May 1, 2019, to coincide with the annual update of the registration statement for the Fund. If Proposal 1 is not approved by shareholders of the Fund, it is expected that the Fund will continue to operate under its Current Admin Agreement and the repositioning of the Fund will not take effect.  The Board would then need to consider what steps to take with respect to the ongoing management of the Fund.

            If any of Sub-Proposals 2(a), 2(b) or 2(c) are not approved by shareholders of the Fund, the Board will consider what further actions to take, which may include, if Proposal 3 is approved by shareholders, hiring Global Advisors or FT Institutional as a subadviser and providing notice of such hiring to the Fund’s shareholders pursuant to the Order.

THE BOARD UNANIMOUSLY RECOMMENDS THAT

SHAREHOLDERS VOTE “FOR” EACH OF

SUB-PROPOSAL 2(a), SUB-PROPOSAL 2(b)

and SUB-PROPOSAL 2(c)

PROPOSAL 3:            TO APPROVE THE USE OF A “MANAGER OF MANAGERS” STRUCTURE WHEREBY the FUND’S INVESTMENT MANAGER WOULD BE ABLE TO HIRE AND REPLACE SUBADVISERS WITHOUT SHAREHOLDER APPROVAL

Background

Pursuant to the New IM Agreement submitted for shareholder approval in Proposal 1, FAV would be responsible for, among other items, managing the assets of the Fund and making decisions with respect to the investment of the Fund’s assets and purchases and sales of investment securities on behalf of the Fund, subject to the supervision of the Trust’s Board.

FAV is wholly-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, 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 resources of Franklin Resources. Alternatively, the Fund’s investment manager may wish to provide the Fund with the skill and expertise of a subadviser that is not affiliated in any way with Franklin Resources or the Fund’s investment manager.

The provisions of the 1940 Act that apply to the Fund 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 FAV that permits FAV, and any Investment Manager Affiliates and any existing or future registered open-end investment company or series advised by FAV or the Investment Manager Affiliates to hire certain new subadvisers without obtaining shareholder approval, subject to the approval of the investment company’s board of trustees, including a majority of the independent trustees (the “Independent Trustees”), and certain other conditions. The Order would allow the 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 Franklin Resources), and new subadvisers that are not affiliated with the investment manager in any way (the “Manager of Managers Structure”). Before the Fund may rely on the Order, the Fund’s use of the Manager of Managers Structure must be approved by a 1940 Act Vote.

Why am I being asked to vote on this Proposal?

The Board determined to seek shareholder approval of the Manager of Managers Structure for the Fund in connection with the Meeting, which otherwise was called to vote on the New IM Agreement, in order to avoid additional meeting and proxy solicitation costs in the future, in the event that the 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. In addition, as discussed in Proposals 1 and 2, Management proposed repositioning the Fund to allow FAVto manage investment strategy sleeves of the Fund alongside various FT Subadvisers in a “manager of managers” structure.  The process of seeking shareholder approval in the future to add an FT Subadviser to manage a sleeve of the Fund could cause delays in executing changes that the Board and investment manager have determined are in the best interests of the Fund. Seeking shareholder approval, as being done in Proposal 2, typically involves additional expenses, such as hiring a proxy solicitor.

Under the Manager of Managers Structure, upon receiving approval of the Board, including a majority of the Fund’s Independent Trustees, subadvisers selected by the 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. Any new fund launched by FTI typically will allow for the Manager of Managers Structure.

The investment manager for the Fund currently does not intend to use the Manager of Managers Structure to add subadvisers for the Fund unlessany of Sub-Proposals 2(a), 2(b) and 2(c) are not approved by shareholders of the Fund.  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 if the Fund’s investment manager believes it would be beneficial to the Fund to have access to the investment management expertise of another Investment Manager Affiliate to manage a sleeve of the Fund after the Repositioning.  If the 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 2, shareholders of the Fund are being asked to approve three new subadvisory agreements for the Fund.   If the Fund had been authorized to use the Manager of Managers Structure, shareholder approval of the subadvisory agreements with Global Advisors and FT Institutional would not be necessary.

How will the Manager of Managers Structure operate?

Under the Manager of Managers Structure, the investment manager of the Fund will be permitted to appoint and replace subadvisers for the Fund and to enter into and approve amendments to subadvisory agreements without first obtaining shareholder approval. However, the Board of the Fund, including a majority of the Independent Trustees, must approve any new subadviser and any new or amended subadvisory agreement.

Under the Manager of Managers Structure, the 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 the Fund’s investment manager, subject to the review and approval of the Board, including a majority of the Independent Trustees, to: (a) set the Fund’s overall investment strategy; (b) evaluate, select and recommend subadvisers to manage all or a portion of the Fund’s assets; and (c) implement procedures reasonably designed to ensure that each subadviser complies with the Fund’s investment goals, 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’s assets among multiple subadvisers; and (b) monitor and evaluate the performance of the subadvisers. The replacement of the Fund’s investment manager or material changes to the Fund’s investment management agreement would, however, require prior shareholder approval.

If the Fund’s investment manager, with the approval of the Board, including a majority of the Fund’s Independent Trustees, determines that the use of the Manager of Managers Structure is in the best interest of the Fund, the Manager of Managers Structure would without obtaining shareholder approval: (1) enable a new subadviser to commence providing services to the Fund more quickly and with lesspotential 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.

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

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

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

If Proposal 3 is approved for the Fund, and the Board and 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 that the conditions of the Order are met. Rather, the 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.

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 at the Meeting in order to avoid additional meeting and proxy solicitation costs in the future, in the event that the 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 appoint additional subadvisers, particularly in light of the Repositioning of the Fund.

What is the required vote on Proposal 3?

For Proposal 3, before the Fund may rely on the Order, the operation of the Fund using the Manager of Managers Structure must be approved by the 1940 Act Vote of the Fund’s shareholders.

If Proposal 3 is not approved by the 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.

THE BOARD UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE “FOR” PROPOSAL 3.

Outstanding Shares and Principal Shareholders.The outstanding shares and classes of the Fund as of November 1, 2018 (the “Record Date”), are set forth inExhibit D.June 19, 2020 were as follows:

Quorum. The holders of 40% of the outstanding shares of the Fund, entitled to vote, present in person or represented by proxy, constitutes a quorum at the Meeting for purposes of acting upon the Proposals.Proposal. The shares whose proxies reflect an abstention on any item will all be counted as shares present and entitled to vote for purposes of determining whether the required quorum of shares exists.

Submission of a proposal by a shareholder does not guarantee that the proposal will be included in the Fund’s proxy statement or presented at the meeting.

No business other than the mattersmatter described above is expected to come before the Meeting, but should any other matter requiring a vote of shareholders properly come before the Meeting, including any questions as to an adjournment or postponement of the Meeting, the persons designated as proxies named on the enclosed proxy card will vote on such matters in accordance with the views of management, to the extent permitted under applicable federal securities laws, state law, and the Fund’s governing instruments, including proposals for which management of the Fund did not have timely notice, as set forth in the SEC’s proxy rules.management.

(b)  The Manager, subject to and in accordance with any directions which the Trust’s Board of Trustees may issue from time to time, shall place, in the name of the Fund, orders for the execution of the Fund’s securities transactions. When placing such orders, the Manager shall seek to obtain the best net price and execution for the Fund, but this requirement shall not be deemed to obligate the Manager to place any order solely on the basis of obtaining the lowest commission rate if the other standards set forth in this section have been satisfied. The parties recognize that there are likely to be many cases in which different brokers are equally able to provide such best price and execution and that, in selecting among such brokers with respect to particular trades, it is desirable to choose those brokers who furnish research, statistical, quotations and other information to the Fund and the Manager in accordance with the standards set forth below. Moreover, to the extent that it continues to be lawful to do so, the Manager may place orders with a broker who charges a commission for that transaction which is in excess of the amount of commission 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” (as defined in Section 28(e)(3) of the Securities Exchange Act of 1934) provided by that broker.

Accordingly, the Trust and the Manager agree that the Manager shall select brokers for the execution of the Fund’s transactions from among:

(i)   Those brokers and dealers who provide quotations and other services to the Fund, specifically including the quotations necessary to determine the Fund’s net assets, in such amount of total brokerage as may reasonably be required in light of such services; and

(ii)  Those brokers and dealers who supply research, statistical and other data to the Manager which the Manager may lawfully and appropriately use in its investment management capacity, which relate directly to securities, actual or potential, of the Fund, or which place the Manager in a better position to make decisions in connection with the management of the Fund’s assets and securities, whether or not such data may also be useful to the Manager in managing other portfolios or advising other clients, in such amount of total brokerage as may reasonably be required.

(c)  When the Manager has determined that the Fund should tender securities pursuant to a “tender offer solicitation,” Franklin/Templeton Distributors, Inc. (“Distributors”) shall be designated as the “tendering dealer” so long as it is legally permitted to act in such capacity under the federal securities laws and rules thereunder and the rules of any securities exchange or association of which Distributors may be a member. Neither the Manager nor Distributors shall be obligated to make any additional commitments of capital, expense or personnel beyond that already committed (other than normal periodic fees or payments necessary to maintain its corporate existence and membership in the Financial Industry Regulatory Authority) as of the date of this Agreement. This Agreement shall not obligate the Manager or Distributors (i) to act pursuant to the foregoing requirement under any circumstances in which they might reasonably believe that liability might be imposed upon them as a result of so acting, or (ii) to institutelegal or other proceedings to collect fees which may be considered to be due from others to it as a result of such a tender, unless the Trust on behalf of the Fund shall enter into an agreement with the Manager and/or Distributors to reimburse them for all such expenses connected with attempting to collect such fees, including legal fees and expenses and that portion of the compensation due to their employees which is attributable to the time involved in attempting to collect such fees.

(d)  The Manager shall render regular reports to the Trust, not more frequently than quarterly, of how much total brokerage business has been placed by the Manager, on behalf of the Fund, with brokers falling into each of the categories referred to above and the manner in which the allocation has been accomplished.

(e)  The Manager agrees that no investment decision will be made or influenced by a desire to provide brokerage for allocation in accordance with the foregoing, and that the right to make such allocation of brokerage shall not interfere with the Manager’s paramount duty to obtain the best net price and execution for the Fund.

(f)  Decisions on proxy voting shall be made by the Manager unless the Board of Trustees determines otherwise. Pursuant to its authority, the Manager shall have the power to vote, either in person or by proxy, all securities in which the Fund may be invested from time to time, and shall not be required to seek or take instructions from the Fund with respect thereto. The Manager shall not be expected or required to take any action other than the rendering of investment-related advice with respect to lawsuits involving securities presently or formerly held in the Fund, or the issuers thereof, including actions involving bankruptcy. In the case of class action suits involving issuers held in the Fund, the Manager may include information about the Fund for purposes of participating in any settlements.

B.  Provision of Information Necessary for Preparation of Securities Registration Statements, Amendments and Other Materials. The Manager, its officers and employees will make available and provide accounting and statistical information required by the Fund in the preparation of registration statements, reports and other documents required by federal and state securities laws and with such information as the Fund may reasonably request for use in the preparation of such documents or of other materials necessary or helpful for the underwriting and distribution of the Fund’s shares.

C.  Administrative Services. The Manager agrees, during the term of this Agreement, to provide or procure, as applicable, at its own expense (unless otherwise agreed to by the parties), the following services to the Fund to the extent that any such services are not otherwise provided by any subadviser or other service provider to the Fund: (a) providing office space, equipment and supplies appropriate for the effective administration of the Fund as contemplated in this Agreement; (b) providing trading desk facilities; (c) authorizing expenditures on behalf of the 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 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 Fund’s compliance with recordkeeping requirements under the federal securities, state and foreign laws and regulations and maintaining books and records for the Fund; (i) preparing and filing of domestic and foreign tax reports and monitoring the Fund’s compliance with all applicable tax laws and regulations; (j) establishing, maintaining and monitoring the Fund’s compliance program with respect to the federal securities, state and foreign laws and regulations applicable to the operation of investment companies; the Fund’s investment goals, policies and restrictions; and the Code of Ethics and other policies applicable to the Fund; (k) preparing regulatory reports; (l) preparing and arranging for the filing of registration statements and other documents with the U.S. Securities and Exchange Commission and other federal, state andforeign 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.

Nothing in this Agreement shall obligate the Trust or the Fund to pay any compensation to the officers of the Trust who are officers, directors, stockholders or employees of the Manager or its affiliates. Nothing in this Agreement shall obligate the Manager to pay for the services of third parties, including attorneys, auditors, printers, pricing services or others, engaged directly by the Trust to perform services on behalf of the Fund.

D. Other Obligations and Services. The Manager shall make its officers and employees available to the Board of Trustees and officers of the Trust for consultation and discussions regarding the administration and management of the Fund and its investment activities.

E.  Delegation of Services. The Manager may, at its expense, select and contract with one or more investment advisers registered under the Advisers Act (each, a “Sub-Adviser”) to perform, and thereby delegates to any such Sub-Adviser, some of the services for the Fund for which it is responsible under Section 2.A. of this Agreement or as the Manager may otherwise determine to be necessary or appropriate to seek to implement the Fund’s investment goals and strategies, subject to the approval of the Board of Trustees, including a majority of the Trustees who are not “interested persons” of the Trust, and the approval of the Fund’s shareholders, if required. The Manager will compensate any Sub-Adviser for its services to the Fund. The Manager will evaluate and select the Sub-Advisers and will make recommendations to the Board of Trustees about the hiring, termination and replacement of a Sub-Adviser and will oversee, monitor and review the Sub-Advisers and their performance and their compliance with the Fund’s investment policies and restrictions. The Manager may also terminate the services of any Sub-Adviser at any time in its sole discretion, and shall at such time assume the responsibilities of such Sub-Adviser unless and until a successor Sub-Adviser is selected and the requisite approval of the Fund’s shareholders, if any is required, is obtained. Notwithstanding any delegation pursuant to this paragraph, the Manager will continue to have overall responsibility for the management and investment of the assets and responsibility for all advisory services furnished by any Sub-Adviser and will supervise each Sub-Adviser in its performance of its duties for the Fund. The Manager will also retain sole responsibility for all services described in Section 2.A. of this Agreement and not expressly delegated to one or more Sub-Advisers.

The Manager may, at its expense, also delegate to one or more entities some or all of the services for the Fund for which the Manager is responsible under Section 2.C. of this Agreement. The Manager will be responsible for the compensation, if any, of any such entities for such services to the Fund, unless otherwise agreed to by the parties. Notwithstanding any delegation pursuant to this paragraph, the Manager will continue to have overall responsibility and liability for all such services provided to the Fund under this Agreement and will supervise each such entity in its performance of its duties for the Fund. The Manager will also retain sole responsibility for all services described in Section 2.C. of this Agreement and not expressly delegated to one or more such entities.

3.  Expenses of the Fund. It is understood that the Fund will pay all of its own expenses other than those expressly assumed by the Manager herein, which expenses payable by the Fund shall include:

A.  Fees and expenses paid to the Manager as provided herein;

B.   Expenses of all audits by independent public accountants;

C.   Expenses of transfer agent, registrar, custodian, dividend disbursing agent and shareholder record-keeping services, including the expenses of issue, repurchase or redemption of its shares;

D.  Expenses of obtaining quotations for calculating the value of the Fund’s net assets;

E.   Salaries and other compensations of executive officers of the Trust who are not officers, directors, stockholders or employees of the Manager or its affiliates;

F.   Taxes levied against the Fund;

G.  Brokerage fees and commissions in connection with the purchase and sale of securities for the Fund;

H.  Costs, including the interest expense, of borrowing money;

I.    Costs incident to meetings of the Board of Trustees and shareholders of the Fund, reports to the Fund’s shareholders, the filing of reports with regulatory bodies and the maintenance of the Fund’s and the Trust’s legal existence;

J.    Legal fees, including the legal fees related to the registration and continued qualification of the Fund’s shares for sale;

K.  Trustees’ fees and expenses to trustees who are not directors, officers, employees or stockholders of the Manager or any of its affiliates;

L.   Costs and expense of registering and maintaining the registration of the Fund and its shares under federal and any applicable state laws; including the printing and mailing of prospectuses to its shareholders;

M.  Trade association dues;

N.  The Fund’s pro rata portion of fidelity bond, errors and omissions, and trustees and officer liability insurance premiums; and

O.  The Fund’s portion of the cost of any proxy voting service used on its behalf.

4.  Compensation of the Manager. The Fund shall pay a management fee in cash to the Manager based upon a percentage of the value of the Fund’s average daily net assets, calculated as set forth below, as compensation for the services rendered and obligations assumed by the Manager, during the preceding month, on the first business day of the month in each year.

A.  For purposes of calculating such fee, the value of the net assets of the Fund shall be determined in the same manner that the Fund uses to compute the value of its net assets in connection with the determination of the net asset value of its shares, all as set forth more fully in the Fund’s current prospectus and statement of additional information. The rate of the management fee payable by the Fund shall be calculated daily at the annual rate of 0.55% of the value of its net assets.

B.   The management fee payable by the Fund shall be reduced or eliminated to the extent that Distributors has actually received cash payments of tender offer solicitation fees less certain costs and expenses incurred in connection therewith. The Manager may waive all or a portion of its fees provided for hereunder and such waiver shall be treated as a reduction in purchase price of its services. TheManager shall be contractually bound hereunder by the terms of any publicly announced waiver of its fee, or any limitation of the Fund’s expenses, as if such waiver or limitation were fully set forth herein.

C.   If this Agreement is terminated prior to the end of any month, the accrued management fee shall be paid to the date of termination.

5.  Activities of the Manager. The services of the Manager to the Fund hereunder are not to be deemed exclusive, and the Manager and any of its affiliates shall be free to render similar services to others. Subject to and in accordance with the Agreement and Declaration of Trust and By-Laws of the Trust and Section 10(a) of the 1940 Act, it is understood that trustees, officers, agents and shareholders of the Trust are or may be interested in the Manager or its affiliates as directors, officers, agents or stockholders; that directors, officers, agents or stockholders of the Manager or its affiliates are or may be interested in the Trust as trustees, officers, agents, shareholders or otherwise; that the Manager or its affiliates may be interested in the Fund as shareholders or otherwise; and that the effect of any such interests shall be governed by said Agreement and Declaration of Trust, By-Laws and the 1940 Act.

6.  Performance of Services in Accordance with Regulatory Requirements; Furnishing of Books and Records. In performing the services set forth in this Agreement, the Manager:

A.  shall conform with the 1940 Act and all rules and regulations thereunder, with all other applicable federal, state and foreign laws and regulations, with any applicable procedures adopted by the Trust’s Board of Trustees, and with the provisions of the Trust’s Registration Statement filed on Form N-1A, as supplemented or amended from time to time;

B.   will make available to the Trust, promptly upon request, any of the Fund’s books and records as are maintained under this Agreement, and will furnish to regulatory authorities having the requisite authority any such books and records and any information or reports in connection with the Manager’s services under this Agreement that may be requested in order to ascertain whether the operations of the Trust are being conducted in a manner consistent with applicable laws and regulations.

7.  Liabilities of the Manager.

A.  In the absence of willful misfeasance, bad faith, gross negligence, or reckless disregard of obligations or duties hereunder on the part of the Manager, the Manager shall not be subject to liability to the Trust or the Fund or to any shareholder of the Fund for any act or omission in the course of, or connected with, rendering services hereunder or for any losses that may be sustained in the purchase, holding or sale of any security by the Fund.

B.   The Manager shall indemnify and hold harmless the Trust, the Fund and its officers and Trustees against any and all losses, claims, damages and liabilities (including reasonable legal and other expenses and amounts paid in settlement) incurred in any action, suit, proceeding or investigation (whether instituted or threatened) by reason of or arising out of the willful misfeasance, bad faith, gross negligence, or reckless disregard by the Manager of its obligations or duties hereunder.

C.   No provision of this Agreement shall be construed to protect any trustee or officer of the Trust, or director or officer of the Manager, from liability in violation of Sections 17(h) and (i) of the 1940 Act.

8.  Renewal and Termination.

A.  This Agreement shall become effective on the date written below and shall continue in effect for two (2) years thereafter, unless sooner terminated as hereinafter provided, and shall continue in effect thereafter for periods not exceeding one (1) year so long as such continuation is approved at least annually (i) by a vote of a majority of the outstanding voting securities of the Fund or by a vote of the Board of Trustees of the Trust, and (ii) by a vote of a majority of the Trustees of the Trust who are not parties to the Agreement (other than as Trustees of the Trust) or “interested persons” of any such party, cast in person at a meeting called for the purpose of voting on the Agreement.

B.   This Agreement:

(i)   may at any time be terminated without the payment of any penalty either by vote of the Board of Trustees of the Trust or by vote of a majority of the outstanding voting securities of the Fund on 60 days’ written notice to the Manager;

(ii)  shall immediately terminate with respect to the Fund in the event of its assignment; and

(iii) may be terminated by the Manager on 60 days’ written notice to the Fund.

C.   As used in this Paragraph, the terms “assignment,” “interested person” and “vote of a majority of the outstanding voting securities” shall have the meanings set forth for any such terms in the 1940 Act.

D.  Any notice under this Agreement shall be given in writing, addressed and delivered, or mailed post-paid, to the other party at any office of such party.

9.  Severability. If any provision of this Agreement shall be held or made invalid by a court decision, statute, rule or otherwise, the remainder of this Agreement shall not be affected thereby.

10.Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of California.

11.Limitation of Liability. Each party acknowledges and agrees that all obligations of the Trust under this Agreement are binding only with respect to the assets of the Fund; that any liability of the Trust under this Agreement with respect to the Trust, or in connection with the matters contemplated herein with respect to the Fund, shall be discharged only out of the assets of the Fund; that no other series of the Trust shall be liable with respect to this Agreement or in connection with the matters contemplated herein; and the Manager shall not seek satisfaction of any such obligation or liability from the shareholders of the Trust, the trustees, officers, employees or agents of the Trust, or from any other series of the Trust.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed and effective on [____________], 2019.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

on behalf ofFranklin Founding Funds Allocation VIP Fund

By:

Name:

Title:

FRANKLIN ADVISERS, INC.

By:

Name:

Title:

A-8

Exhibit B

Portfolio Sleeves

            The expected strategy sleeves after the Repositioning are set forth below.  Allocations to the individually managed sleeves are anticipated to range typically between 5% to 20%, but would vary with market conditions; however, no sleeve would constitute a majority of the Fund’s assets.  Unless indicated, the individual strategy sleeves would be managed by FAV. 

U.S. Smart Beta Equity Strategy.  The strategy seeks long-term capital appreciation by investing substantially in U.S. equities using a proprietary, systematic model to screen, weight and select securities from a broad-market U.S. equity index. The strategy uses a multi-factor model, which includes low volatility as a consideration as well as factors such as quality and value.  The strategy is managed by Chandra Seethamraju and Tom Nelson. 

Franklin Total Return Strategy.  The strategy seeks to provide high current income consistent with preservation of capital while capital appreciation over the long term is a secondary focus. The strategy invests predominantly in investment grade debt securities and investments with a focus on government and corporate debt securities and mortgage- and asset-backed securities.  The strategy is managed by Roger Bayston, Kent Burns, David Yuen and Michael Materasso. 

Franklin Growth Strategy. The strategy seeks long-term capital appreciation by investing substantially in the equity securities of companies that are leaders in their industries, and which the managers believe are suitable for a buy-and-hold strategy.  The strategy is managed by Serena Perin Vinton, John Anderson and Robert Rendler. 

Templeton Foreign Strategy.⁵  The strategy seeks long-term capital growth by investing predominantly in foreign securities which are predominantly equity securities of companies located outside of the U.S., including developing markets.  The strategy is managed by Tucker Scott, Norman Boersma, Heather Arnold, Christopher James Peel and Herbert J. Arnett Jr. 

Franklin International Growth Strategy.⁶  The strategy seeks capital appreciation by investing predominantly in the equity securities of mid-and large capitalization companies outside the U.S. with long-term growth potential.  The strategy is managed by Don Huber and John Remmert. 

Franklin U.S. Government Securities Strategy. The strategy seeks income by investing substantially in Government National Mortgage Association securities, or Ginnie Maes. These securities carry a guarantee backed by the full faith and credit of the U.S. government as to timely payment of principal and interest.  The strategy is managed by Roger Bayston and Paul Varunok. 

Franklin Rising Dividends Strategy.  The strategy seeks long-term capital appreciation by investing predominantly in companies of any size that have paid consistently rising dividends.  The strategy is managed by Donald Taylor and Nicholas Getaz. 

Investment Grade Corporate Strategy.⁷  The strategy seeks as high a level of current income as is consistent with prudent investing, while seeking preservation of capital, by investing predominantly in investment grade corporate debt securities and investments. The strategy may invest a significant part of its net assets in foreign securities, including those in developing markets, and a portion of its net assets in non-U.S. dollar denominated securities.  The strategy is managed by Marc Kremer and Shawn Lyons. 

Templeton Global Bond Strategy.  The Fund would access this strategy by investing directly in Class 1 shares of the Templeton Global Bond VIP Fund (the “Global Bond VIP Fund”) managed by Michael Hasenstab.  The Global Bond VIP Fund seeks current income with capital appreciation and growth of income, by investing at least 80% of its net assets in bonds of governments, government related entities and government agencies located anywhere in the world.  The Global Bond VIP Fund regularly enters into various currency-related and other transactions involving derivative instruments.  The Global Bond VIP Fund is managed by Michael Hasenstab.  This is a small allocation that may be a tactical, temporary position; as such, investment in a fund is preferable to launching a subadvised strategy sleeve of the Fund.

Exhibit C

FORM OF

SUBADVISORY AGREEMENT

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

On behalf of

Franklin Founding Funds Allocation VIP Fund

THIS SUB-ADVISORY AGREEMENT (the “Agreement”), made as of the [__] day of [______] 2019, by and between FRANKLIN ADVISERS, INC., a California corporation (“FAV”), and [Subadviser], a [_______________________] (“[Subadviser]”).

W I T N E S S E T H

WHEREAS, FAV and [SUBADVISER] are each registered as an investment adviser under the Investment Advisers Act of 1940, as amended (the “Advisers Act”), and are engaged in the business of supplying investment management services, as an independent contractor;

WHEREAS, FAV, pursuant to an investment management agreement (“Investment Management Agreement”), has been retained to render investment management services to the Franklin Founding Funds Allocation VIP Fund (the “Fund”), a series of Franklin Templeton Variable Insurance Products Trust (the “Trust”), an investment management company registered with the U.S. Securities and Exchange Commission (the “SEC”) pursuant to the Investment Company Act of 1940, as amended (the “1940 Act”); and

WHEREAS, FAV desires to retain [SUBADVISER] to render investment advisory, research and related services to the Fund pursuant to the terms and provisions of this Agreement, and [SUBADVISER] is interested in furnishing said services.

NOW, THEREFORE, in consideration of the covenants and the mutual promises hereinafter set forth, the parties hereto, intending to be legally bound hereby, mutually agree as follows:

1.         FAV hereby retains [SUBADVISER], and [SUBADVISER] hereby accepts such engagement, to furnish certain investment advisory services with respect to the assets of the Fund, as more fully set forth herein.

(a)        Subject to the overall policies, direction and review of the Trust’s Board of Trustees (the “Board”) and to the instructions and supervision of FAV, [SUBADVISER] agrees to provide certain investment advisory services with respect to securities and investments and cash equivalents in the Fund. FAV will continue to have full responsibility for all investment advisory services provided to the Fund, including determining the manner in which any voting rights, rights to consent to corporate action and any other rights pertaining to the investment securities within the Fund shall be exercised.

(b)        Both [SUBADVISER] and FAV may place all purchase and sale orders on behalf of the Fund.

(c)        Unless otherwise instructed by FAV or the Board, and subject to the provisions of this Agreement and to any guidelines or limitations specified from time to time by FAV or by theBoard, [SUBADVISER] shall report daily all transactions effected by [SUBADVISER] on behalf of the Fund to FAV and to other entities as reasonably directed by FAV or the Board.

(d)        For the term of this Agreement, [SUBADVISER] shall provide the Board at least quarterly, in advance of the regular meetings of the Board, a report of its activities hereunder on behalf of the Fund and its proposed strategy for the next quarter, all in such form and detail as requested by the Board. Any team members shall also be available to attend such meetings of the Board as the Board may reasonably request.

(e)        In performing its services under this Agreement, [SUBADVISER] shall adhere to the Fund’s investment objective, policies and restrictions as contained in the Fund’s Prospectus and Statement of Additional Information, and in the Trust’s Agreement and Declaration of Trust, and to the investment guidelines most recently established by FAV and shall comply with the provisions of the 1940 Act and the rules and regulations of the SEC thereunder in all material respects and with the provisions of the United States Internal Revenue Code of 1986, as amended, which are applicable to regulated investment companies.

(f)        In carrying out its duties hereunder, [SUBADVISER] shall comply with all reasonable instructions of the Fund or FAV in connection therewith.

2.         In performing the services described above, [SUBADVISER] shall use its best efforts to obtain for the Fund the most favorable price and execution available. Subject to prior authorization of appropriate policies and procedures by the Board, [SUBADVISER] may, to the extent authorized by law and in accordance with the terms of the Fund’s Investment Management Agreement, Prospectus and Statement of Additional Information, cause the Fund to pay a broker who provides brokerage and research services an amount of commission for effecting a portfolio investment transaction in excess of the amount of commission another broker would have charged for effecting that transaction, in recognition of the brokerage and research services that such broker provides, viewed in terms of either the particular transaction or [SUBADVISER]’s overall responsibilities with respect to accounts managed by [SUBADVISER]. [SUBADVISER] may use for the benefit of its other clients any such brokerage and research services that [SUBADVISER] obtains from brokers or dealers. To the extent authorized by applicable law, [SUBADVISER] shall not be deemed to have acted unlawfully or to have breached any duty created by this Agreement or otherwise solely by reason of such action.

3.         (a)        FAV shall pay to [SUBADVISER] a monthly fee in U.S. dollars equal to[__]% of the net assets of the Fund managed by [SUBADVISER] in the [_____] investment strategy sleeve, calculated daily, as compensation for the services rendered and obligations assumed by [SUBADVISER] during the preceding month. 

The subadvisory fee under this Agreement shall be payable on the first business day of the first month following the effective day of this Agreement and shall be reduced by the amount of any advance payments made by FAV relating to the previous month.

(b)        If this Agreement is terminated prior to the end of any month, the monthly fee shall be prorated for the portion of any month in which this Agreement is in effect which is not a complete month according to the proportion which the number of calendar days in the month during which the Agreement is in effect bears to the total number of calendar days in the month, and shall be payable within 10 days after the date of termination.

4.         It is understood that the services provided by [SUBADVISER] are not to be deemed exclusive. FAV acknowledges that [SUBADVISER] may have investment responsibilities, renderinvestment advice to, or perform other investment advisory services to other investment companies and clients, which may invest in the same type of securities as the Fund (collectively, “Clients”). FAV agrees that [SUBADVISER] may give advice or exercise investment responsibility and take such other action with respect to such Clients which may differ from advice given or the timing or nature of action taken with respect to the Fund. In providing services, [SUBADVISER] may use information furnished by others to FAV and [SUBADVISER] in providing services to other such Clients.

5.         [SUBADVISER] agrees to use its best efforts in performing the services to be provided by it pursuant to this Agreement.

6.         During the term of this Agreement, [SUBADVISER] will pay all expenses incurred by it in connection with the services to be provided by it under this Agreement other than the cost of securities (including brokerage commissions, if any) purchased for the Fund. The Fund and FAV will be responsible for all of their respective expenses and liabilities.

7.         [SUBADVISER] shall, unless otherwise expressly provided and authorized, have no authority to act for or represent FAV or the Fund in any way, or in any way be deemed an agent for FAV or the Fund.

8.         [SUBADVISER] will treat confidentially and as proprietary information of the Fund all records and other information relative to the Fund and prior, present or potential shareholders, and will not use such records and information for any purpose other than performance of its responsibilities and duties hereunder, except after prior notification to and approval in writing by the Fund, which approval shall not be unreasonably withheld and may not be withheld where [SUBADVISER] may be exposed to civil or criminal contempt proceedings for failure to comply when requested to divulge such information by duly constituted authorities, or when so requested by the Fund.

9.         This Agreement shall become effective as of the date first written above and shall continue in effect for two years. If not sooner terminated, this Agreement shall continue in effect for successive periods not exceeding 12 months each thereafter, provided that each such continuance shall be specifically approved at least annually by the vote of a majority of the Trust’s Board of Trustees who are not parties to this Agreement or “interested persons” (as defined in the 1940 Act) of any such party, cast in person at a meeting called for the purpose of voting on such approval, and either the vote of (a) a majority of the outstanding voting securities of the Fund, as defined in the 1940 Act, or (b) a majority of the Trust’s Board of Trustees as a whole.

10.       (a)        Notwithstanding the foregoing, this Agreement may be terminated (i) at any time, without the payment of any penalty, by the Board upon written notice to FAV and [SUBADVISER], or by vote of a majority of the outstanding voting securities of the Fund, as defined in the 1940 Act, or (ii) by FAV or [SUBADVISER] upon not less than sixty (60) days’ written notice to the other party.

(b)        This Agreement shall terminate automatically in the event of any assignment thereof, as defined in the 1940 Act, and in the event of any termination or assignment of the Investment Management Agreement between FAV and the Fund. (“Assignment” has the meaning set forth in the 1940 Act.)

11.       (a)        In the absence of willful misfeasance, bad faith, gross negligence, or reckless disregard of its obligations or duties hereunder on the part of [SUBADVISER], neither [SUBADVISER] nor any of its directors, officers, employees or affiliates shall be subject to liability to FAV, the Trust or the Fund or to any shareholder of the Fund for any error of judgment or mistake of law or any other act oromission in the course of, or connected with, rendering services hereunder or for any losses that may be sustained in the purchase, holding or sale of any security by the Fund.

(b)        Notwithstanding paragraph 11(a), to the extent that FAV is found by a court of competent jurisdiction, or the SEC or any other regulatory agency, to be liable to the Fund or any shareholder (a “liability”) for any acts undertaken by [SUBADVISER] pursuant to authority delegated as described in Paragraph 1(a), [SUBADVISER] shall indemnify FAV and each of its affiliates, officers, directors and employees (each a “Franklin Indemnified Party”) harmless from, against, for and in respect of all losses, damages, costs and expenses incurred by a Franklin Indemnified Party with respect to such liability, together with all legal and other expenses reasonably incurred by any such Franklin Indemnified Party, in connection with such liability.

(c)        No provision of this Agreement shall be construed to protect any director or officer of FAV or [SUBADVISER] from liability in violation of Sections 17(h) or (i), respectively, of the 1940 Act.

12.       In compliance with the requirements of Rule 31a-3 under the 1940 Act, [SUBADVISER] hereby agrees that all records which it maintains for the Fund are the property of the Fund and further agrees to surrender promptly to the Fund, or to any third party at the Fund’s direction, any of such records upon the Fund’s request. [SUBADVISER] further agrees to preserve for periods prescribed by Rule 31a-2 under the 1940 Act the records required to be maintained by Rule 31a-1 under the 1940 Act.

13.       Upon termination of [SUBADVISER]’s engagement under this Agreement or at the Fund’s direction, [SUBADVISER] shall forthwith deliver to the Fund, or to any third party at the Fund’s direction, all records, documents and books of accounts which are in the possession or control of [SUBADVISER] and relate directly and exclusively to the performance by [SUBADVISER] of its obligations under this Agreement; provided, however, that [SUBADVISER] shall be permitted to keep such records or copies thereof for such periods of time as are necessary to comply with applicable laws, in which case [SUBADVISER] shall provide the Fund or a designated third party with copies of such retained documents unless providing such copies would contravene such rules, regulations and laws.

Termination of this Agreement or [SUBADVISER]’s engagement hereunder shall be without prejudice to the rights and liabilities created hereunder prior to such termination.

14.       If any provision of this Agreement shall be held or made invalid by a court decision, statute, rule or otherwise, in whole or in part, the other provisions hereof shall remain in full force and effect. Invalid provisions shall, in accordance with the intent and purpose of this Agreement, be replaced by such valid provisions which in their economic effect come as closely as legally possible to such invalid provisions.

15.       Any notice or other communication required to be given pursuant to this Agreement shall be in writing and given by personal delivery, pre-paid registered mail or nationally-recognized overnight delivery service, or by facsimile transmission and shall be effective upon receipt. Notices and communications shall be given:

(i)         to [_________________]

[_________________]

[_________________]

[_________________]

(ii)        to [SUBADVISER]:

[_________________]

[_________________]

[_________________]

16.       This Agreement shall be interpreted in accordance with and governed by the laws of the State of California.

17.       [SUBADVISER] acknowledges that it has received notice of and accepts the limitations of the Trust’s liability as set forth in its Agreement and Declaration of Trust. [SUBADVISER] agrees that the Trust’s obligations hereunder shall be limited to the assets of the Fund; that no other series of the Trust shall be liable with respect to this Agreement or in connection with the matters contemplated herein; and that [SUBADVISER] shall not seek satisfaction of any such obligation from any shareholders of the Trust, the Fund nor from any trustee, officer, employee or agent of the Trust, or from any other series of the Trust.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their duly authorized officers.

FRANKLIN ADVISERS, INC.

By:

Name:

Title:

[SUBADVISER]

By:

Name:

Title:

Exhibit D

OUTSTANDING SHARES AND CLASSES OF THE FUND

AS OFNovember 1, 2018

Exhibit E

PRINCIPAL HOLDERS OF FUND SHARES AS OF JUNE 19November 1, 2018, 2020

As of November 1, 2018,June 19, 2020, the following shareholders owned beneficially 5% or more of the outstanding shares of the Fund. For purposes of the 1940 Act, any person who owns, directly or through one or more controlled companies, more than 25% of the voting securities of a company is presumed to “control” such company. Accordingly, to the extent that a shareholder identified in the following table as the beneficial owner and holder of record of more than 25% of the outstanding voting securities of the Fund and has voting and/or investment power, the shareholder may be presumed to control the Fund.