Franklin Templeton Variable Insurance Products Trust N-CSRS Certified semi-annual shareholder report (management investment company)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM N-CSRS

CERTIFIED SHAREHOLDER REPORT OF REGISTERED

MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number 811-05583

Franklin Templeton

Variable Insurance Products Trust

(Exact name of registrant as specified in charter)

One Franklin Parkway,

San Mateo, CA 94403-1906

(Address of principal executive offices) (Zip code)

Craig S. Tyle,

One Franklin Parkway,

San Mateo, CA 94403-1906

(Name and address of agent for service)

Registrant’s telephone number, including area code: (650) 312-2000

Date of fiscal year end: 12/31        

Date of reporting period: 06/30/14        

Item 1. Reports to Stockholders.

Semiannual Report June 30, 2014

Franklin Templeton

Variable Insurance Products Trust

Franklin Templeton Variable Insurance

Products Trust Semiannual Report

Table of Contents
Important Notes to Performance Information	i
Fund Summaries
Franklin Flex Cap Growth VIP Fund (formerly, Franklin Flex Cap Growth Securities Fund)	FFC-1
Franklin Founding Funds Allocation VIP Fund (formerly, Franklin Templeton VIP Founding Funds Allocation Fund)	FFA-1
Franklin Global Real Estate VIP Fund (formerly, Franklin Global Real Estate Securities Fund)	FGR-1
Franklin Growth and Income VIP Fund (formerly, Franklin Growth and Income Securities Fund)	FGI-1
Franklin High Income VIP Fund (formerly, Franklin High Income Securities Fund)	FH-1
Franklin Income VIP Fund (formerly, Franklin Income Securities Fund)	FI-1
Franklin Large Cap Growth VIP Fund (formerly, Franklin Large Cap Growth Securities Fund)	FLG-1
Franklin Large Cap Value VIP Fund (formerly, Franklin Large Cap Value Securities Fund)	FLV-1
*Prospectus Supplements	FLV-6
Franklin Mutual Global Discovery VIP Fund (formerly, Mutual Global Discovery Securities Fund)	MGD-1
*Prospectus Supplement	MGD-7
Franklin Mutual Shares VIP Fund (formerly, Mutual Shares Securities Fund)	MS-1
*Prospectus Supplement	MS-7
Franklin Rising Dividends VIP Fund (formerly, Franklin Rising Dividends Securities Fund)	FRD-1
Franklin Small Cap Value VIP Fund (formerly, Franklin Small Cap Value Securities Fund)	FSV-1
*Prospectus Supplements	FSV-6
Franklin Small-Mid Cap Growth VIP Fund (formerly, Franklin Small-Mid Cap Growth Securities Fund)	FSC-1
Franklin Strategic Income VIP Fund (formerly, Franklin Strategic Income Securities Fund)	FSI-1
Franklin U.S. Government Securities VIP Fund (formerly, Franklin U.S. Government Fund)	FUS-1
*Statement of Additional Information Supplement	FUS-5
Templeton Developing Markets VIP Fund (formerly, Templeton Developing Markets Securities Fund)	TD-1
*Prospectus Supplement	TD-7
Templeton Foreign VIP Fund (formerly, Templeton Foreign Securities Fund)	TF-1
*Prospectus Supplement	TF-6
Templeton Global Bond VIP Fund (formerly, Templeton Global Bond Securities Fund)	TGB-1
Templeton Growth VIP Fund (formerly, Templeton Growth Securities Fund)	TG-1
Index Descriptions	I-1
Shareholder Information	SI-1

*Not part of the semiannual report. Retain for your records.

Not FDIC Insured | May Lose Value | No Bank Guarantee

MASTER CLASS – 2

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Important Notes to

Performance Information

Performance data is historical and cannot predict or guarantee future results. Principal value and investment return will fluctuate with market conditions, and you may have a gain or loss when you withdraw your money. Inception dates of the funds may have preceded the effective dates of the subaccounts, contracts, or their availability in all states.

When reviewing the index comparisons, please keep in mind that indexes have a number of inherent performance differentials over the funds. First, unlike the funds, which must hold a minimum amount of cash to maintain liquidity, indexes do not have a cash component. Second, the funds are actively managed and, thus, are subject to management fees to cover salaries of securities analysts or portfolio managers in addition to other expenses. Indexes are unmanaged and do not include any commissions or other expenses typically associated with investing in securities. Third, indexes often contain a different mix of securities than the fund to which they are compared. Additionally, please remember that indexes are simply a measure of performance and cannot be invested in directly.

i

Franklin Flex Cap Growth VIP Fund

(Formerly, Franklin Flex Cap Growth Securities Fund)

This semiannual report for Franklin Flex Cap Growth VIP Fund covers the period ended June 30, 2014.

Class 2 Performance Summary as of June 30, 2014

Franklin Flex Cap Growth VIP Fund – Class 2 delivered a +4.64% total return* for the six-month period ended June 30, 2014.

*The Fund has an expense reduction contractually guaranteed through at least 4/30/15 and a fee waiver associated with its investments in a Franklin Templeton money fund, contractually guaranteed through at least its current fiscal year-end. Fund investment results reflect the expense reduction and fee waiver, to the extent applicable; without these reductions, the results would have been lower.

Performance reflects the Fund’s Class 2 operating expenses, but does not include any contract fees, expenses or sales charges. If they had been included, performance would be lower. These charges and deductions, particularly for variable life policies, can have a significant effect on contract values and insurance benefits. See the contract prospectus for a complete description of these expenses, including sales charges.

Performance data represent past performance, which does not guarantee future results. Investment return and principal value will fluctuate, and you may have a gain or loss when you sell your shares. Current performance may differ from figures shown.

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FRANKLIN FLEX CAP GROWTH VIP FUND

Fund Goal and Main Investments: Franklin Flex Cap Growth VIP Fund seeks capital appreciation. Under normal market conditions, the Fund invests predominantly in equity securities of companies that the investment manager believes have the potential for capital appreciation.

Fund Risks: All investments involve risks, including possible loss of principal. Growth stock prices reflect projections of future earnings or revenues, and can, therefore, fall dramatically if the company fails to meet those projections. Smaller, midsized and relatively new or unseasoned companies can be particularly sensitive to changing economic conditions, and their prospects for growth are less certain than those of larger, more established companies. Historically, these securities have experienced more price volatility than larger company stocks, especially over the short term. To the extent the Fund focuses on particular countries, regions, industries, sectors or types of investment from time to time, it may be subject to greater risk of adverse developments in such areas of focus than a fund that invests in a wider variety of countries, regions, industries, sectors or investments. Foreign securities involve special risks, including currency fluctuations and economic and political uncertainties. The Fund is actively managed but there is no guarantee that the manager’s investment decisions will produce the desired results. The Fund’s prospectus also includes a description of the main investment risks.

Performance Overview

You can find the Fund’s six-month total return in the Performance Summary. In comparison, the Russell 1000^® Growth Index generated a +6.31% total return, and the Russell 3000^® Growth Index delivered a +5.98% total return, for the same period.¹

Economic and Market Overview

The U.S. economy showed some signs of recovery during the six-month period ended June 30, 2014, despite a first-quarter contraction in gross domestic product. Manufacturing activity expanded, and the unemployment rate declined to 6.1% in June 2014 from 6.7% in December 2013.² Except for a sharp increase in March, retail sales rose at a modest pace that missed consensus expectations. The housing market had some

weather-related weakness early in 2014, but home sales picked up in the spring and home prices were higher than a year ago.

The Federal Reserve Board (Fed) began reducing bond purchases by $10 billion a month in January 2014, based on largely positive economic and employment data in late 2013. Although economic data in early 2014 were soft, Fed Chair Janet Yellen kept the pace of asset-purchase tapering intact while adopting a more qualitative approach to rate-hike guidance. However, the Fed pledged to keep interest rates low for a considerable time after the asset-purchase program ends, depending on inflation and employment trends. In June, the Fed lowered projections for near- and long-term economic growth even as it maintained the pace of tapering.

Investors’ confidence grew as corporate profits rose and generally favorable economic data indicated continued recovery despite brief sell-offs when many investors reacted to the Fed’s statements, political instability in certain emerging markets and China’s slowing economy. U.S. stocks continued to gain for the six-months under review as the Standard & Poor’s^® 500 Index and Dow Jones Industrial Average reached all-time highs.³

Investment Strategy

We use fundamental, bottom-up research to seek companies meeting our criteria of growth potential, quality and valuation. In seeking sustainable growth characteristics, we look for companies we believe can produce sustainable earnings and cash flow growth, evaluating the long-term market opportunity and competitive structure of an industry to target leaders and emerging leaders. We define quality companies as those with strong and improving competitive positions in attractive markets. We also believe important attributes of quality are experienced and talented management teams as well as financial strength reflected in the capital structure, gross and operating margins, free cash flow generation and returns on capital employed. Our valuation analysis includes a range of potential outcomes based on an assessment of multiple scenarios. In assessing value, we consider whether security prices fully reflect the balance of the sustainable growth opportunities relative to business and financial risks.

1. Source: © 2014 Morningstar. One cannot invest directly in an index, and an index is not representative of the Fund’s portfolio. Please see Index Descriptions following the Fund Summaries.

2. Source: Bureau of Labor Statistics.

3. Please see Index Descriptions following the Fund Summaries.

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FRANKLIN FLEX CAP GROWTH VIP FUND

Manager’s Discussion

During the six months under review, most sectors represented in the Fund’s portfolio delivered positive returns and contributed to absolute performance. Relative to the Russell 3000 Growth Index, stock selection in health care, industrials and energy drove performance.⁴ In the health care sector, genetic research firm Illumina and generic pharmaceutical company Actavis were among the top performers. Illumina announced strong quarterly earnings, supported by healthy global demand for its sequencing products and services. The company raised its revenue and earnings guidance for fiscal year 2014. Actavis’s shares rallied after the company announced it would acquire Forest Laboratories to strengthen its specialty pharmaceuticals portfolio. Actavis also reported stronger-than-expected quarterly earnings, boosted by its acquisition of specialty drug maker Warner Chilcott in 2013.

In the industrials sector, key contributors included equipment rental company United Rentals and crane and foodservice equipment manufacturer The Manitowoc Co. United Rentals continued to deliver stronger-than-expected quarterly earnings, driven by growth in equipment rentals and sales. Manitowoc reported solid quarterly earnings, resulting from new product introductions, cost control measures and its foodservice division’s performance. Manitowoc’s stock price surged near period-end following news that an activist investment firm sought to break up the company, which indicated it would review the potential long-term benefits of separating its crane and foodservice businesses.

The energy sector performed well during the period as crude oil prices rose because of supply concerns stemming from geopolitical tensions in certain oil producing and transit regions. Within the sector, Diamondback Energy was a top contributor as the oil and gas exploration company reported solid quarterly earnings and raised its full-year 2014 production guidance. Further boosting its shares were a subsidiary’s initial public offering and market speculation that it could be an acquisition target of Spanish multinational oil and gas company Repsol. Key individual contributors also included an off-benchmark holding in Netherlands-based integrated circuit manufacturer NXP Semiconductors and positions in storage solutions provider SanDisk, a new holding this period, and apparel and footwear manufacturer Under Armour.

In contrast, key detractors from the Fund’s relative performance included stock selection in the consumer staples, financials, information technology (IT) and consumer discretionary

4. The health care sector comprises health care equipment and services; and pharmaceuticals, biotechnology and life sciences in the SOI. The industrials sector comprises capital goods, commercial and professional services, and transportation in the SOI.

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FRANKLIN FLEX CAP GROWTH VIP FUND

sectors.⁵ In consumer staples, Whole Foods Market hurt relative results as heightened competition in the organic food market led the natural and organic foods retailer to deliver disappointing fiscal second-quarter revenues and earnings and lower its fiscal year 2014 guidance. In the financials sector, Intercontinental Exchange, which owns Europe’s second-largest futures market, weighed on relative performance. The exchange and clearinghouse operator’s share price declined after the company released a higher second-quarter expense forecast and the European Union revised trading rules to increase competition among the region’s derivatives exchanges.

In the IT sector, global electronic payments company MasterCard and online professional networking operator LinkedIn hindered relative results. MasterCard’s share price declined after the company reported softer-than-expected fiscal year 2013 earnings. Investor concerns about the potential impact of U.S. economic sanctions on Russia further weighed on the stock. Russia accounted for about 2% of MasterCard’s global net revenues, and the country’s pending electronic payment rule changes could have a small negative effect on fiscal year 2014 results. Potentially offsetting this negative effect was MasterCard’s organic growth, including new branding and co-branding agreements. The company continued to repurchase its shares and delivered stronger-than-expected first-quarter 2014 revenues and earnings. Although LinkedIn reported solid fiscal year 2013 revenues and earnings, weaker-than-expected fiscal year 2014 guidance weighed on its stock price. The company delivered healthy first-quarter 2014 revenue growth, driven by strength in talent solutions and premium subscriptions segments, and raised its full-year 2014 revenue guidance. However, weaker-than-expected second-quarter guidance pressured its share price.

In the consumer discretionary sector, sports goods retailer Dick’s Sporting Goods and media company Discovery Communications detracted from relative returns. Dick’s Sporting Goods’ share price fell after the company reported disappointing first-quarter 2014 earnings results and lowered its fiscal year 2014 guidance amid weakness in its golf and hunting businesses. Discovery Communications reported lower-than-expected first-quarter 2014 profits as higher expenses offset robust revenue growth, especially in the international segment. Other key individual detractors included biopharmaceutical firm Celldex Therapeutics and hydrocarbon and gas production and storage equipment manufacturer Chart Industries.

Top 10 Holdings
6/30/14
Company Sector/Industry	% of Total Net Assets
Google Inc., A & C Software & Services		2.8%
Apple Inc. Technology Hardware & Equipment		2.6%
Actavis PLC Pharmaceuticals, Biotechnology & Life Sciences		2.4%
Ecolab Inc. Materials		2.0%
MasterCard Inc., A Software & Services		1.9%
Visa Inc., A Software & Services		1.6%
Facebook Inc., A Software & Services		1.6%
Amazon.com Inc. Retailing		1.5%
Gilead Sciences Inc. Pharmaceuticals, Biotechnology & Life Sciences		1.4%
NXP Semiconductors NV (Netherlands) Semiconductors & Semiconductor Equipment		1.4%

The dollar value, number of shares or principal amount, and names of all portfolio holdings are listed in the Fund’s Statement of Investments (SOI).

Thank you for your participation in Franklin Flex Cap Growth VIP Fund. We look forward to serving your future investment needs.

The foregoing information reflects our analysis, opinions and portfolio holdings as of June 30, 2014, the end of the reporting period. The way we implement our main investment strategies and the resulting portfolio holdings may change depending on factors such as market and economic conditions. These opinions may not be relied upon as investment advice or an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but the investment manager makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.

5. The consumer staples sector comprises food and staples retailing; and food, beverage and tobacco in the SOI. The financials sector comprises banks, diversified financials, insurance and real estate in the SOI. The IT sector comprises semiconductors and semiconductor equipment, software and services, and technology hardware and equipment in the SOI. The consumer discretionary sector comprises automobiles and components, consumer durables and apparel, consumer services, media and retailing in the SOI.

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FRANKLIN FLEX CAP GROWTH VIP FUND

Class 2 Fund Expenses

As an investor in a variable insurance contract (Contract) that indirectly provides for investment in an underlying mutual fund, you can incur transaction and/or ongoing expenses at both the Fund level and the Contract level.

• Transaction expenses can include sales charges (loads) on purchases, surrender fees, transfer fees and premium taxes.

• Ongoing expenses can include management fees, distribution and service (12b-1) fees, contract fees, annual maintenance fees, mortality and expense risk fees and other fees and expenses. All mutual funds and Contracts have some types of ongoing expenses.

The expenses shown in the table are meant to highlight ongoing expenses at the Fund level only and do not include ongoing expenses at the Contract level, or transaction expenses at either the Fund or Contract levels. While the Fund does not have transaction expenses, if the transaction and ongoing expenses at the Contract level were included, the expenses shown below would be higher. You should consult your Contract prospectus or disclosure document for more information.

The table shows Fund-level ongoing expenses and can help you understand these expenses and compare them with those of other mutual funds offered through the Contract. The table assumes a $1,000 investment held for the six months indicated. Please refer to the Fund prospectus for additional information on operating expenses.

Actual Fund Expenses

The first line (Actual) of the table provides actual account values and expenses. The “Ending Account Value” is derived from the Fund’s actual return, which includes the effect of ongoing Fund expenses, but does not include the effect of ongoing Contract expenses.

You can estimate the Fund-level expenses you incurred during the period by following these steps. Of course, your account value and expenses will differ from those in this illustration:

1. Divide your account value by $1,000.

If an account had an $8,600 value, then $8,600 ÷ $1,000 = 8.6.

2. Multiply the result by the number under the heading “Fund-Level Expenses Incurred During Period.”

If Fund-Level Expenses Incurred During Period were $7.50, then 8.6 × $7.50 = $64.50.

In this illustration, the estimated expenses incurred this period at the Fund level are $64.50.

Hypothetical Example for Comparison with Other Mutual Funds

Information in the second line (Hypothetical) of the table can help you compare ongoing expenses of the Fund with those of other mutual funds offered through the Contract. This information may not be used to estimate the actual ending account balance or expenses you incurred during the period. The hypothetical “Ending Account Value” is based on the Fund’s actual expense ratio and an assumed 5% annual rate of return before expenses, which does not represent the Fund’s actual return. The figure under the heading “Fund-Level Expenses Incurred During Period” shows the hypothetical expenses your account would have incurred under this scenario. You can compare this figure with the 5% hypothetical examples that appear in shareholder reports of other funds offered through a Contract.

Class 2	Beginning Account Value 1/1/14		Ending Account Value 6/30/14		Fund-Level Expenses Incurred During Period* 1/1/14–6/30/14
Actual		$1,000		$1,046.40		$4.77
Hypothetical (5% return before expenses)		$1,000		$1,020.13		$4.71

*Expenses are calculated using the most recent six-month annualized expense ratio, net of expense waivers, for the Fund’s Class 2 shares (0.94%), which does not include any ongoing expenses of the Contract for which the Fund is an investment option, multiplied by the average account value over the period, multiplied by 181/365 to reflect the one-half year period.

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FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Financial Highlights

Franklin Flex Cap Growth VIP Fund

	Six Months Ended June 30, 2014 (unaudited)			Year Ended December 31,
				2013			2012		2011			2010			2009
Class 2
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$18.11			$13.21			$12.09		$12.70			$10.93			$8.22
Income from investment operationsa:
Net investment income (loss)b		(0.05	)		(0.01	)		0.01		(0.02	)		(0.02	)		(—	)c
Net realized and unrealized gains (losses)		0.83			4.95	��		1.11		(0.59	)		1.79			2.71
Total from investment operations		0.78			4.94			1.12		(0.61	)		1.77			2.71
Less distributions from:
Net investment income		—			(—	)c		—		—			—			—
Net realized gains		(2.51	)		(0.04	)		—		—			—			—
Total distributions		(2.51	)		(0.04	)		—		—			—			—
Net asset value, end of period		$16.38			$18.11			$13.21		$12.09			$12.70			$10.93
Total returnd		4.64%			37.48%			9.26%		(4.80)%			16.19%			32.97%
Ratios to average net assetse
Expenses before waiver and payments by affiliates		1.18%			1.18%			1.18%		1.16%			1.18%			1.19%
Expenses net of waiver and payments by affiliates		0.94%			0.93%			0.93%		0.93%			0.93%			0.93%	f
Net investment income (loss)		(0.53)%			(0.09)%			0.09%		(0.14)%			(0.17)%			(0.01)%
Supplemental data
Net assets, end of period (000’s)		$172,678			$169,123			$159,122		$188,527			$227,774			$244,768
Portfolio turnover rate		22.55%			52.15%			43.50%		63.99%			60.00%			33.64%

^aThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.

^bBased on average daily shares outstanding.

^cAmount rounds to less than $0.01 per share.

^dTotal return does not include fees, charges or expenses imposed by the variable annuity and life insurance contracts for which the Franklin Templeton Variable Insurance Products Trust serves as an underlying investment vehicle. Total return is not annualized for periods less than one year.

^eRatios are annualized for periods less than one year.

^fBenefit of expense reduction rounds to less than 0.01%.

FFC-6 Semiannual Report   |    The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL HIGHLIGHTS

Franklin Flex Cap Growth VIP Fund (continued)

	Six Months Ended June 30, 2014 (unaudited)			Year Ended December 31,
				2013			2012			2011			2010			2009
Class 4
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$17.96			$13.12			$12.01			$12.63			$10.88			$8.21
Income from investment operationsa:
Net investment income (loss)b		(0.06	)		(0.03	)		(—	)c		(0.03	)		(0.03	)		(0.01	)
Net realized and unrealized gains (losses)		0.82			4.91			1.11			(0.59	)		1.78			2.69
Total from investment operations		0.76			4.88			1.11			(0.62	)		1.75			2.68
Less distributions from:
Net investment income		—			—			—			—			—			(0.01	)
Net realized gains		(2.51	)		(0.04	)		—			—			—			—
Total distributions		(2.51	)		(0.04	)		—			—			—			(0.01	)
Net asset value, end of period		$16.21			$17.96			$13.12			$12.01			$12.63			$10.88
Total returnd		4.56%			37.28%			9.24%			(4.91)%			16.08%			32.69%
Ratios to average net assetse
Expenses before waiver and payments by affiliates		1.28%			1.28%			1.28%			1.26%			1.28%			1.29%
Expenses net of waiver and payments by affiliates		1.04%			1.03%			1.03%			1.03%			1.03%			1.03%	f
Net investment income (loss)		(0.63)%			(0.19)%			(0.01)%			(0.24)%			(0.27)%			(0.11)%
Supplemental data
Net assets, end of period (000’s)		$260,633			$251,339			$216,607			$270,598			$263,746			$218,798
Portfolio turnover rate		22.55%			52.15%			43.50%			63.99%			60.00%			33.64%

^aThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.

^bBased on average daily shares outstanding.

^cAmount rounds to less than $0.01 per share.

^dTotal return does not include fees, charges or expenses imposed by the variable annuity and life insurance contracts for which the Franklin Templeton Variable Insurance Products Trust serves as an underlying investment vehicle. Total return is not annualized for periods less than one year.

^eRatios are annualized for periods less than one year.

^fBenefit of expense reduction rounds to less than 0.01%.

The accompanying notes are an integral part of these financial statements.    |   Semiannual Report FFC-7

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Statement of Investments, June 30, 2014 (unaudited)

Franklin Flex Cap Growth VIP Fund
		Shares		Value
	Common Stocks 98.3%
	Automobiles & Components 1.1%
	BorgWarner Inc.		50,000	$	3,259,500
a	Tesla Motors Inc.		6,000		1,440,360
					4,699,860
	Banks 2.8%
a	Signature Bank		37,500		4,731,750
a	SVB Financial Group		37,500		4,373,250
a	Talmer Bancorp Inc., A		90,000		1,241,100
a	Texas Capital Bancshares Inc.		30,000		1,618,500
					11,964,600
	Capital Goods 9.3%
	Acuity Brands Inc.		12,500		1,728,125
a	Chart Industries Inc.		27,500		2,275,350
a	Colfax Corp.		50,000		3,727,000
	Cummins Inc.		8,000		1,234,320
a	DigitalGlobe Inc.		70,000		1,946,000
a	HD Supply Holdings Inc.		40,000		1,135,600
	Honeywell International Inc.		46,500		4,322,175
a,b	The Keyw Holding Corp.		83,150		1,045,195
	The Manitowoc Co. Inc.		90,000		2,957,400
a	NOW Inc./DE		5,000		181,050
	Pall Corp.		40,000		3,415,600
	Precision Castparts Corp.		20,000		5,048,000
a	Proto Labs Inc.		27,500		2,252,800
	Rockwell Automation Inc.		19,000		2,378,040
	Roper Industries Inc.		22,000		3,212,220
a	United Rentals Inc.		31,500		3,298,995
					40,157,870
	Commercial & Professional Services 1.9%
a	IHS Inc., A		16,600		2,252,122
	Nielsen NV		45,000		2,178,450
a	Stericycle Inc.		19,530		2,312,743
a	Verisk Analytics Inc., A		22,500		1,350,450
					8,093,765
	Consumer Durables & Apparel 3.9%
a	GoPro Inc., A		7,540		305,747
a	Kate Spade & Co.		30,000		1,144,200
a,b	Lululemon Athletica Inc.		28,000		1,133,440
a	Michael Kors Holdings Ltd.		45,000		3,989,250
	NIKE Inc., B		55,000		4,265,250
a,b	TRI Pointe Homes Inc.		85,000		1,336,200
a	Under Armour Inc., A		80,000		4,759,200
					16,933,287
	Consumer Services 3.8%
a	Buffalo Wild Wings Inc.		12,500		2,071,375
a	Chipotle Mexican Grill Inc.		3,400		2,014,534
a	Chuy’s Holdings Inc.		28,570		1,037,091
a	Hilton Worldwide Holdings Inc.		50,000		1,165,000
	Las Vegas Sands Corp.		41,500		3,163,130
a,b	Noodles & Co.		50,000		1,719,500

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FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Flex Cap Growth VIP Fund (continued)

		Shares		Value
	Common Stocks (continued)
	Consumer Service (continued)
	Wynn Resorts Ltd.		25,000	$	5,189,000
					16,359,630
	Diversified Financials 3.5%
a	Affiliated Managers Group Inc.		14,500		2,978,300
	Discover Financial Services		60,000		3,718,800
	Evercore Partners Inc.		25,000		1,441,000
	Financial Engines Inc.		23,440		1,061,363
	Intercontinental Exchange Inc.		11,000		2,077,900
	T. Rowe Price Group Inc.		46,500		3,925,065
					15,202,428
	Energy 6.0%
	Anadarko Petroleum Corp.		40,000		4,378,800
a	Diamondback Energy Inc.		27,000		2,397,600
a	Eclipse Resources Corp.		49,350		1,240,166
a	FMC Technologies Inc.		35,000		2,137,450
	National Oilwell Varco Inc.		20,000		1,647,000
	Noble Energy Inc.		28,500		2,207,610
a	Oasis Petroleum Inc.		60,000		3,353,400
	Oceaneering International Inc.		25,000		1,953,250
a	Rice Energy Inc.		65,000		1,979,250
	Schlumberger Ltd.		40,000		4,718,000
					26,012,526
	Food & Staples Retailing 0.8%
a	Sprouts Farmers Markets LLC		12,000		392,640
	Whole Foods Market Inc.		77,500		2,993,825
					3,386,465
	Food, Beverage & Tobacco 1.4%
a	Boston Beer Inc., A		8,000		1,788,160
	Mead Johnson Nutrition Co., A		23,500		2,189,495
a	Monster Beverage Corp.		31,000		2,201,930
					6,179,585
	Health Care Equipment & Services 3.2%
a	Cerner Corp.		50,000		2,579,000
a	DaVita HealthCare Partners Inc.		38,100		2,755,392
a	DexCom Inc.		27,500		1,090,650
a	Envision Healthcare Holdings Inc.		100,000		3,591,000
	McKesson Corp.		20,000		3,724,200
					13,740,242
	Insurance 0.2%
	Aflac Inc.		17,500		1,089,375
	Materials 4.4%
	Cytec Industries Inc.		57,500		6,061,650
	Ecolab Inc.		77,000		8,573,180
	Praxair Inc.		32,500		4,317,300
					18,952,130

Semiannual Report FFC-9

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Flex Cap Growth VIP Fund (continued)

		Shares		Value
	Common Stocks (continued)
	Media 4.7%
a	Charter Communications Inc., A		25,000	$	3,959,500
a	Discovery Communications Inc., C		38,000		2,758,420
a	Imax Corp. (Canada)		50,000		1,424,000
a	Sirius XM Holdings Inc.		950,000		3,287,000
	Twenty-First Century Fox Inc., B		110,000		3,765,300
	The Walt Disney Co.		60,000		5,144,400
					20,338,620
	Pharmaceuticals, Biotechnology & Life Sciences 10.5%
a	Actavis PLC		46,500		10,371,825
a	Alnylam Pharmaceuticals Inc.		38,000		2,400,460
a	Biogen Idec Inc.		17,500		5,517,925
	Bristol-Myers Squibb Co.		70,000		3,395,700
a	Celgene Corp.		54,000		4,637,520
a	Celldex Therapeutics Inc.		130,000		2,121,600
a	Gilead Sciences Inc.		74,000		6,135,340
a	Illumina Inc.		25,000		4,463,500
a	Karyopharm Therapeutics Inc.		22,500		1,047,375
	Perrigo Co. PLC		18,640		2,716,966
a	Quintiles Transnational Holdings Inc.		46,500		2,477,985
a	Revance Therapeutics Inc.		7,500		255,000
					45,541,196
	Real Estate 0.9%
	American Tower Corp.		43,500		3,914,130
	Retailing 7.0%
a	Amazon.com Inc.		20,000		6,495,600
a,b	The Container Store Group Inc.		14,650		406,977
	Dick’s Sporting Goods Inc.		45,000		2,095,200
	GNC Holdings Inc., A		35,000		1,193,500
a	HomeAway Inc.		60,000		2,089,200
a	Liberty Ventures, A		35,000		2,583,000
	Lithia Motors Inc.		20,000		1,881,400
a	LKQ Corp.		45,000		1,201,050
a	Lumber Liquidators Holdings Inc.		19,000		1,443,050
a	Netflix Inc.		7,500		3,304,500
a	The Priceline Group Inc.		5,000		6,015,000
	Tractor Supply Co.		28,500		1,721,400
					30,429,877
	Semiconductors & Semiconductor Equipment 4.1%
a	Cavium Inc.		50,000		2,483,000
	Microchip Technology Inc.		90,000		4,392,900
a	Nanometrics Inc.		50,000		912,500
a	NXP Semiconductors NV (Netherlands)		92,500		6,121,650
	Xilinx Inc.		85,000		4,021,350
					17,931,400
	Software & Services 16.4%
a	Alliance Data Systems Corp.		11,500		3,234,375
a	ANSYS Inc.		27,500		2,085,050
a	Bottomline Technologies Inc.		32,500		972,400

FFC-10 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Flex Cap Growth VIP Fund (continued)

		Shares		Value
	Common Stocks (continued)
	Software & Services (continued)
a	BroadSoft Inc.		50,000	$	1,319,500
a	CoStar Group Inc.		13,000		2,056,210
a	Demandware Inc.		25,000		1,734,250
a	Electronic Arts Inc.		60,000		2,152,200
a	Facebook Inc., A		100,000		6,729,000
a,b	FireEye Inc.		15,000		608,250
a	FleetCor Technologies Inc.		29,000		3,822,200
a	Fortinet Inc.		60,000		1,507,800
a	Global Eagle Entertainment Inc.		70,000		868,000
	Google Inc., A		10,900		6,372,903
a	Google Inc., C		10,000		5,752,800
a	Guidewire Software Inc.		25,000		1,016,500
a	LinkedIn Corp., A		11,500		1,971,905
	MasterCard Inc., A		112,500		8,265,375
a	NetSuite Inc.		20,000		1,737,600
a	Pandora Media Inc.		45,000		1,327,500
a	Salesforce.com Inc.		55,000		3,194,400
a	ServiceNow Inc.		22,500		1,394,100
a	Splunk Inc.		18,000		995,940
a	Twitter Inc.		65,000		2,663,050
	Visa Inc., A		32,500		6,848,075
a	Workday Inc.		16,000		1,437,760
a	Yelp Inc.		16,000		1,226,880
					71,294,023
	Technology Hardware & Equipment 6.5%
	Apple Inc.		122,500		11,383,925
a	Palo Alto Networks Inc.		20,000		1,677,000
	QUALCOMM Inc.		70,000		5,544,000
	SanDisk Corp.		31,000		3,237,330
a	Stratasys Ltd.		18,000		2,045,340
a	Trimble Navigation Ltd.		55,000		2,032,250
a,b	Ubiquiti Networks Inc.		54,000		2,440,260
					28,360,105
	Telecommunication Services 0.7%
a	SBA Communications Corp.		28,000		2,864,400
	Transportation 5.2%
	Canadian Pacific Railway Ltd. (Canada)		20,000		3,622,800
	Expeditors International of Washington Inc.		27,010		1,192,762
a	Genesee & Wyoming Inc.		32,500		3,412,500
a	Hub Group Inc., A		72,500		3,654,000
	Kansas City Southern		22,500		2,418,975
a	Kirby Corp.		15,000		1,757,100
a	Spirit Airlines Inc.		45,000		2,845,800
	Union Pacific Corp.		36,000		3,591,000
					22,494,937
	Total Common Stocks (Cost $267,220,308)				425,940,451

Semiannual Report FFC-11

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Flex Cap Growth VIP Fund (continued)

		Shares		Value
	Short Term Investments 3.7%
	Money Market Funds (Cost $7,679,231) 1.8%
a,c	Institutional Fiduciary Trust Money Market Portfolio		7,679,231	$	7,679,231
d	Investments from Cash Collateral Received for Loaned Securities 1.9%
	Money Market Funds (Cost $8,306,925) 1.9%
e	BNY Mellon Overnight Government Fund, 0.082%		8,306,925		8,306,925
	Total Investments (Cost $283,206,464) 102.0%				441,926,607
	Other Assets, less Liabilities (2.0)%				(8,615,368	)
	Net Assets 100.0%			$	433,311,239

^aNon-income producing.

^bA portion or all of the security is on loan at June 30, 2014. See Note 1(b).

^cSee Note 3(e) regarding investments in the Institutional Fiduciary Trust Money Market Portfolio.

^dSee Note 1(b) regarding securities on loan.

^eThe rate shown is the annualized seven-day yield at period end.

FFC-12 Semiannual Report   |    The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Financial Statements

Statement of Assets and Liabilities

June 30, 2014 (unaudited)

	Franklin Flex Cap Growth VIP Fund
Assets:
Investments in securities:
Cost - Unaffiliated issuers	$	275,527,233
Cost - Sweep Money Fund (Note 3e)		7,679,231
Total cost of investments	$	283,206,464
Value - Unaffiliated issuers	$	434,247,376
Value - Sweep Money Fund (Note 3e)		7,679,231
Total value of investments (Includes securities loaned in the amount of $8,140,558)		441,926,607
Receivables:
Investment securities sold		285,242
Capital shares sold		284,961
Dividends and interest		159,890
Other assets		194
Total assets		442,656,894
Liabilities:
Payables:
Investment securities purchased		368,334
Capital shares redeemed		163,803
Management fees		234,539
Distribution fees		216,024
Payable upon return of securities loaned		8,306,925
Accrued expenses and other liabilities		56,030
Total liabilities		9,345,655
Net assets, at value	$	433,311,239
Net assets consist of:
Paid-in capital	$	245,879,262
Distributions in excess of net investment income		(1,235,254	)
Net unrealized appreciation (depreciation)		158,720,143
Accumulated net realized gain (loss)		29,947,088
Net assets, at value	$	433,311,239
Class 2:
Net assets, at value	$	172,677,808
Shares outstanding		10,543,560
Net asset value and maximum offering price per share	$	16.38
Class 4:
Net assets, at value	$	260,633,431
Shares outstanding		16,074,342
Net asset value and maximum offering price per share	$	16.21

The accompanying notes are an integral part of these financial statements.    |   Semiannual Report FFC-13

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL STATEMENTS

Statement of Operations

for the six months ended June 30, 2014 (unaudited)

	Franklin Flex Cap Growth VIP Fund
Investment income:
Dividends	$	726,001
Income from securities loaned		131,379
Total investment income		857,380
Expenses:
Management fees (Note 3a)		1,891,266
Distribution fees: (Note 3c)
Class 2		212,066
Class 4		435,988
Custodian fees (Note 4)		1,762
Reports to shareholders		35,049
Professional fees		19,825
Trustees’ fees and expenses		812
Other		5,642
Total expenses		2,602,410
Expenses waived/paid by affiliates (Note 3e and 3f)		(509,776	)
Net expenses		2,092,634
Net investment income (loss)		(1,235,254	)
Realized and unrealized gains (losses):
Net realized gain (loss) from investments		30,818,423
Net change in unrealized appreciation (depreciation) on investments		(10,744,417	)
Net realized and unrealized gain (loss)		20,074,006
Net increase (decrease) in net assets resulting from operations	$	18,838,752

FFC-14 Semiannual Report   |    The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL STATEMENTS

Statements of Changes in Net Assets

	Franklin Flex Cap Growth VIP Fund
	Six Months Ended June 30, 2014 (unaudited)			Year Ended December 31, 2013
Increase (decrease) in net assets:
Operations:
Net investment income (loss)	$	(1,235,254	)	$	(590,415	)
Net realized gain (loss) from investments		30,818,423			60,105,842
Net change in unrealized appreciation (depreciation) on investments		(10,744,417	)		67,788,666
Net increase (decrease) in net assets resulting from operations		18,838,752			127,304,093
Distributions to shareholders from:
Net investment income:
Class 2		—			(6,555	)
Net realized gains:
Class 2		(23,244,460	)		(449,397	)
Class 4		(34,835,360	)		(654,813	)
Total distributions to shareholders		(58,079,820	)		(1,110,765	)
Capital share transactions: (Note 2)
Class 2		19,343,498			(41,676,643	)
Class 4		32,747,296			(39,784,837	)
Total capital share transactions		52,090,794			(81,461,480	)
Net increase (decrease) in net assets		12,849,726			44,731,848
Net assets:
Beginning of period		420,461,513			375,729,665
End of period	$	433,311,239		$	420,461,513
Distributions in excess of net investment income included in net assets:
End of period	$	(1,235,254	)	$	—

The accompanying notes are an integral part of these financial statements.    |   Semiannual Report FFC-15

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Notes to Financial Statements (unaudited)

Franklin Flex Cap Growth VIP Fund

1. Organization and Significant Accounting Policies

Franklin Templeton Variable Insurance Products Trust (Trust) is registered under the Investment Company Act of 1940, as amended, (1940 Act) as an open-end management investment company, consisting of twenty separate funds and applies the specialized accounting and reporting guidance in U.S. Generally Accepted Accounting Principles (U.S. GAAP). The Franklin Flex Cap Growth VIP Fund (Fund) is included in this report. The financial statements of the remaining funds in the Trust are presented separately. Shares of the Fund are generally sold only to insurance company separate accounts to fund the benefits of variable life insurance policies or variable annuity contracts. At June 30, 2014, 78.46% of the Fund’s shares were held through one insurance company. Investment activities of these insurance company separate accounts could have a material impact on the Fund. The Fund offers two classes of shares: Class 2 and Class 4. Each class of shares differs by its distribution fees, voting rights on matters affecting a single class and its exchange privilege.

Effective May 1, 2014, the Franklin Flex Cap Growth Securities Fund was renamed the Franklin Flex Cap Growth VIP Fund.

The following summarizes the Fund’s significant accounting policies.

a. Financial Instrument Valuation

The Fund’s investments in financial instruments are carried at fair value daily. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. The Fund calculates the net asset value (NAV) per share at the close of the New York Stock Exchange (NYSE), generally at 4 p.m. Eastern time (NYSE close) on each day the NYSE is open for trading. Under compliance policies and procedures approved by the Trust’s Board of Trustees (the Board), the Fund’s administrator has responsibility for oversight of valuation, including leading the cross-functional Valuation and Liquidity Oversight Committee (VLOC). The VLOC provides administration and oversight of the Fund’s valuation policies and procedures, which are approved annually by the Board. Among other things, these procedures allow the Fund to utilize independent pricing services, quotations from securities and financial instrument dealers, and other market sources to determine fair value.

Equity securities listed on an exchange or on the NASDAQ National Market System are valued at the last quoted sale price

or the official closing price of the day, respectively. Foreign equity securities are valued as of the close of trading on the foreign stock exchange on which the security is primarily traded or as of the NYSE close, whichever is earlier. The value is then converted into its U.S. dollar equivalent at the foreign exchange rate in effect at the NYSE close on the day that the value of the security is determined. Over-the-counter securities are valued within the range of the most recent quoted bid and ask prices. Securities that trade in multiple markets or on multiple exchanges are valued according to the broadest and most representative market. Certain equity securities are valued based upon fundamental characteristics or relationships to similar securities. Investments in open-end mutual funds and non-registered money market funds are valued at the closing net asset value.

The Fund has procedures to determine the fair value of financial instruments for which market prices are not reliable or readily available. Under these procedures, the VLOC convenes on a regular basis to review such financial instruments and considers a number of factors, including significant unobservable valuation inputs, when arriving at fair value. The VLOC primarily employs a market-based approach which may use related or comparable assets or liabilities, recent transactions, market multiples, book values, and other relevant information for the investment to determine the fair value of the investment. An income-based valuation approach may also be used in which the anticipated future cash flows of the investment are discounted to calculate fair value. Discounts may also be applied due to the nature or duration of any restrictions on the disposition of the investments. Due to the inherent uncertainty of valuations of such investments, the fair values may differ significantly from the values that would have been used had an active market existed. The VLOC employs various methods for calibrating these valuation approaches including a regular review of key inputs and assumptions, transactional back-testing or disposition analysis, and reviews of any related market activity.

b. Securities Lending

The Fund participates in an agency based securities lending program. The Fund receives cash collateral against the loaned securities in an amount equal to at least 102% of the fair value of the loaned securities. Collateral is maintained over the life of the loan in an amount not less than 100% of the fair value of loaned securities, as determined at the close of fund business each day; any additional collateral required due to changes in

FFC-16 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Flex Cap Growth VIP Fund (continued)

security values is delivered to the Fund on the next business day. The collateral is invested in a non-registered money fund as indicated on the Statement of Investments. The Fund receives income from the investment of cash collateral, in addition to lending fees and rebates paid by the borrower. The Fund bears the market risk with respect to the collateral investment, securities loaned, and the risk that the agent may default on its obligations to the Fund. The securities lending agent has agreed to indemnify the Fund in the event of default by a third party borrower.

c. Income and Deferred Taxes

It is the Fund’s policy to qualify as a regulated investment company under the Internal Revenue Code. The Fund intends to distribute to shareholders substantially all of its taxable income and net realized gains to relieve it from federal income and if applicable, excise taxes. As a result, no provision for U.S. federal income taxes is required.

The Fund may be subject to foreign taxation related to income received, capital gains on the sale of securities and certain foreign currency transactions in the foreign jurisdictions in which it invests. Foreign taxes, if any, are recorded based on the tax regulations and rates that exist in the foreign markets in which the Fund invests. When a capital gain tax is determined to apply the Fund records an estimated deferred tax liability in an amount that would be payable if the securities were disposed of on the valuation date.

The Fund recognizes the tax benefits of uncertain tax positions only when the position is “more likely than not” to be sustained upon examination by the tax authorities based on the technical merits of the tax position. As of June 30, 2014, and for all open tax years, the Fund has determined that no liability for unrecognized tax benefits is required in the Fund’s financial statements related to uncertain tax positions taken on a tax return (or expected to be taken on future tax returns). Open tax years are those that remain subject to examination and are based on each tax jurisdiction statute of limitation.

d. Security Transactions, Investment Income, Expenses and Distributions

Security transactions are accounted for on trade date. Realized gains and losses on security transactions are determined on a

specific identification basis. Dividend income is recorded on the ex-dividend date. Distributions to shareholders are recorded on the ex-dividend date and are determined according to income tax regulations (tax basis). Distributable earnings determined on a tax basis may differ from earnings recorded in accordance with accounting principles generally accepted in the United States of America. These differences may be permanent or temporary. Permanent differences are reclassified among capital accounts to reflect their tax character. These reclassifications have no impact on net assets or the results of operations. Temporary differences are not reclassified, as they may reverse in subsequent periods.

Common expenses incurred by the Trust are allocated among the funds based on the ratio of net assets of each fund to the combined net assets of the Trust. Fund specific expenses are charged directly to the fund that incurred the expense.

Realized and unrealized gains and losses and net investment income, not including class specific expenses, are allocated daily to each class of shares based upon the relative proportion of net assets of each class. Differences in per share distributions, by class, are generally due to differences in class specific expenses.

e. Accounting Estimates

The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the amounts of income and expenses during the reporting period. Actual results could differ from those estimates.

f. Guarantees and Indemnifications

Under the Trust’s organizational documents, its officers and trustees are indemnified by the Trust against certain liabilities arising out of the performance of their duties to the Trust. Additionally, in the normal course of business, the Trust, on behalf of the Fund, enters into contracts with service providers that contain general indemnification clauses. The Trust’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Trust that have not yet occurred. Currently, the Trust expects the risk of loss to be remote.

Semiannual Report FFC-17

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Flex Cap Growth VIP Fund (continued)

2. Shares of Beneficial Interest

At June 30, 2014, there were an unlimited number of shares authorized (without par value). Transactions in the Fund’s shares were as follows:

	Six Months Ended June 30, 2014						Year Ended December 31, 2013
	Shares			Amount			Shares			Amount
Class 2 Shares:
Shares sold		902,608		$	16,488,181			1,113,999		$	16,865,422
Shares issued in reinvestment of distributions		1,454,597			23,244,460			30,996			455,952
Shares redeemed		(1,153,222	)		(20,389,143	)		(3,846,981	)		(58,998,017	)
Net increase (decrease)		1,203,983		$	19,343,498			(2,701,986	)	$	(41,676,643	)
Class 4 Shares:
Shares sold		794,036		$	14,170,794			1,584,158		$	24,181,871
Shares issued on reinvestment of distributions		2,201,982			34,835,359			44,850			654,813
Shares redeemed		(915,095	)		(16,258,857	)		(4,145,079	)		(64,621,521	)
Net increase (decrease)		2,080,923		$	32,747,296			(2,516,071	)	$	(39,784,837	)

3. Transactions With Affiliates

Franklin Resources, Inc. is the holding company for various subsidiaries that together are referred to as Franklin Templeton Investments. Certain officers and trustees of the Fund are also officers and/or directors of the following subsidiaries:

Subsidiary	Affiliation
Franklin Advisers, Inc. (Advisers)	Investment manager
Franklin Templeton Services, LLC (FT Services)	Administrative manager
Franklin Templeton Distributors, Inc. (Distributors)	Principal underwriter
Franklin Templeton Investor Services, LLC (Investor Services)	Transfer agent

a. Management Fees

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

Annualized Fee Rate	Net Assets
1.000%	Up to and including $100 million
0.900%	Over $100 million, up to and including $250 million
0.850%	Over $250 million, up to and including $10 billion
0.800%	Over $10 billion, up to and including $12.5 billion
0.775%	Over $12.5 billion, up to and including $15 billion
0.750%	In excess of $15 billion

b. Administrative Fees

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

FFC-18 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Flex Cap Growth VIP Fund (continued)

c. Distribution Fees

The Board has adopted distribution plans for Class 2 and Class 4 shares pursuant to Rule 12b-1 under the 1940 Act. Under the Fund’s compensation distribution plans, the Fund pays Distributors for costs incurred in connection with the servicing, sale and distribution of the Fund’s shares up to 0.35% per year of its average daily net assets of each class. Some distribution fees are not charged on shares held by affiliates. The Board has agreed to limit the current rate to 0.25% per year for Class 2. The plan year, for purposes of monitoring compliance with the maximum annual plan rates, is February 1 through January 31.

d. Transfer Agent Fees

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

e. Investment in Institutional Fiduciary Trust Money Market Portfolio

The Fund invests in the Institutional Fiduciary Trust Money Market Portfolio (Sweep Money Fund), an affiliated open-end management investment company. Management fees paid by the Fund are waived on assets invested in the Sweep Money Fund, in an amount not to exceed the management and administrative fees paid directly or indirectly by the Sweep Money Fund, as noted on the Statement of Operations. Prior to January 1, 2014, the waiver was accounted for as a reduction to management fees.

f. Waiver and Expense Reimbursements

Advisers has contractually agreed in advance to waive or limit its fees and to assume as its own expense certain expenses otherwise payable by the Fund so that the expenses (excluding distribution fees, and acquired fund fees and expenses) for Class 2 and Class 4 of the Fund do not exceed 0.71% based on the average net assets of each class (other than certain non-routine expenses or costs, including those relating to litigation, indemnification, reorganizations, and liquidations) until April 30, 2015. Prior to May 1, 2014, expenses were limited to 0.68%.

4. Expense Offset Arrangement

The Fund has entered into an arrangement with its custodian whereby credits realized as a result of uninvested cash balances are used to reduce a portion of the Fund’s custodian expenses. During the period ended June 30, 2014, there were no credits earned.

5. Income Taxes

At June 30, 2014, the cost of investments and net unrealized appreciation (depreciation) for income tax purposes were as follows:

Cost of investments	$283,895,172
Unrealized appreciation	$161,493,993
Unrealized depreciation	(3,462,558)
Net unrealized appreciation (depreciation)	$158,031,435

Differences between income and/or capital gains as determined on a book basis and a tax basis are primarily due to differing treatments of wash sales.

6. Investment Transactions

Purchases and sales of investments (excluding short term securities) for the period ended June 30, 2014, aggregated $94,598,343 and $111,072,701, respectively.

Semiannual Report FFC-19

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Flex Cap Growth VIP Fund (continued)

7. Credit Facility

The Fund, together with other U.S. registered and foreign investment funds (collectively, Borrowers), managed by Franklin Templeton Investments, are borrowers in a joint syndicated senior unsecured credit facility totaling $1.5 billion (Global Credit Facility) which matures on February 13, 2015. This Global Credit Facility provides a source of funds to the Borrowers for temporary and emergency purposes, including the ability to meet future unanticipated or unusually large redemption requests.

Under the terms of the Global Credit Facility, the Fund shall, in addition to interest charged on any borrowings made by the Fund and other costs incurred by the Fund, pay its share of fees and expenses incurred in connection with the implementation and maintenance of the Global Credit Facility, based upon its relative share of the aggregate net assets of all of the Borrowers, including an annual commitment fee of 0.07% based upon the unused portion of the Global Credit Facility. These fees are reflected in other expenses on the Statement of Operations. During the period ended June 30, 2014, the Fund did not use the Global Credit Facility.

8. Fair Value Measurements

The Fund follows a fair value hierarchy that distinguishes between market data obtained from independent sources (observable inputs) and the Fund’s own market assumptions (unobservable inputs). These inputs are used in determining the value of the Fund’s financial instruments and are summarized in the following fair value hierarchy:

• Level 1 – quoted prices in active markets for identical financial instruments

• Level 2 – other significant observable inputs (including quoted prices for similar financial instruments, interest rates, prepayment speed, credit risk, etc.)

• Level 3 – significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of financial instruments)

The input levels are not necessarily an indication of the risk or liquidity associated with financial instruments at that level.

For movements between the levels within the fair value hierarchy, the Fund has adopted a policy of recognizing the transfers as of the date of the underlying event which caused the movement.

A summary of inputs used as of June 30, 2014, in valuing the Fund’s assets carried at fair value, is as follows:

	Level 1		Level 2		Level 3		Total
Assets:
Investments in Securities:
Equity Investmentsa,b	$	425,940,451	$	—	$	—	$	425,940,451
Short Term Investments		7,679,231		8,306,925		—		15,986,156
Total Investments in Securities	$	433,619,682	$	8,306,925	$	—	$	441,926,607

^aIncludes common stocks.

^bFor detailed categories, see the accompanying Statement of Investments.

9. New Accounting Pronouncements

In June 2014, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) No. 2014-11, Transfers and Servicing (Topic 860), Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures. The ASU changes the accounting for certain repurchase agreements and expands disclosure requirements related to repurchase agreements, securities lending, repurchase-to-maturity and similar transactions. The ASU is effective for interim and annual reporting periods beginning after December 15, 2014. Management is currently evaluating the impact, if any, of applying this provision.

FFC-20 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Flex Cap Growth VIP Fund (continued)

10. Subsequent Events

The Fund has evaluated subsequent events through the issuance of the financial statements and determined that no events have occurred that require disclosure.

Semiannual Report FFC-21

Franklin Founding Funds Allocation VIP Fund

(Formerly, Franklin Templeton VIP Founding Funds Allocation Fund)

We are pleased to bring you Franklin Founding Funds Allocation VIP Fund’s semiannual report for the period ended June 30, 2014.

Class 2 Performance Summary as of June 30, 2014

Franklin Founding Funds Allocation VIP Fund – Class 2 delivered a +7.56% total return* for the six-month period ended June 30, 2014.

*The Fund has an expense reduction contractually guaranteed through at least 4/30/15 and a fee waiver associated with its investments in a Franklin Templeton money fund, guaranteed through at least its current fiscal year-end. Fund investment results reflect the expense reduction and fee waiver, to the extent applicable; without these reductions, the results would have been lower.

Performance reflects the Fund’s Class 2 operating expenses, but does not include any contract fees, expenses or sales charges. If they had been included, performance would be lower. These charges and deductions, particularly for variable life policies, can have a significant effect on contract values and insurance benefits. See the contract prospectus for a complete description of these expenses, including sales charges.

Performance data represent past performance, which does not guarantee future results. Investment return and principal value will fluctuate, and you may have a gain or loss when you sell your shares. Current performance may differ from figures shown.

Semiannual Report FFA-1

FRANKLIN FOUNDING FUNDS ALLOCATION VIP FUND

Fund Goals and Main Investments: Franklin Founding Funds Allocation VIP Fund seeks capital appreciation, with income as a secondary goal. Under normal market conditions, the Fund invests equal portions in Class 1 shares of Franklin Income VIP Fund, Franklin Mutual Shares VIP Fund and Templeton Growth VIP Fund.

Fund Risks: All investments involve risks, including possible loss of principal. Because the Fund invests in underlying funds that may engage in a variety of investment strategies involving certain risks, the Fund may be subject to these same risks. Stock prices fluctuate, sometimes rapidly and dramatically, due to factors affecting individual companies, particular industries or sectors, or general market conditions. Bonds are affected by changes in interest rates and the creditworthiness of their issuers. Bond prices generally move in the opposite direction of interest rates. Thus, as prices of bonds adjust to a rise in interest rates, the Fund’s share price may decline. Higher yielding, lower rated corporate bonds entail a greater degree of credit risk compared to investment-grade securities. Foreign investing carries additional risks such as currency and market volatility and political or social instability, risks that are heightened in developing countries. Value securities may not increase in price as anticipated or may decline further in value. The Fund’s prospectus also includes a description of the main investment risks.

Performance Overview

You can find the Fund’s six-month total return in the Performance Summary. In comparison, the Standard & Poor’s^® 500 Index (S&P 500^®) generated a +7.14% total return and the MSCI World Index produced a +6.52% total return for the same period.¹

Economic and Market Overview

The U.S. economy showed some signs of recovery during the six-month period ended June 30, 2014, despite a first-quarter contraction in gross domestic product. Manufacturing activity expanded, and the unemployment rate declined to 6.1% in June 2014 from 6.7% in December 2013.² Except for a sharp increase in March, retail sales rose at a modest pace that missed consensus expectations. The housing market had some weather-related weakness early in 2014, but home sales picked up in the spring and home prices were higher than a year ago.

*The asset allocation is based on the Statement of Investments (SOI), which classifies each underlying fund into a broad asset class.

The dollar value, number of shares or principal amount, and names of all portfolio holdings are listed in the Fund’s SOI.

The Federal Reserve Board (Fed) began reducing bond purchases by $10 billion a month in January 2014, based on earlier largely positive economic and employment data. Although economic data in early 2014 were soft, Fed Chair Janet Yellen kept the pace of asset-purchase tapering intact while adopting a more qualitative approach to rate-hike guidance. However, the Fed pledged to keep interest rates low for a considerable time after the asset-purchase program ends, depending on inflation and employment trends. In June, the Fed lowered projections for near- and long-term economic growth even as it maintained the pace of tapering.

The global economy grew moderately during the six months under review as many developed markets continued to recover and many emerging markets recorded continued growth. Major developed market central banks reaffirmed their accommodative monetary policies in an effort to support the ongoing recovery. In emerging markets, some central banks cut interest rates to boost economic growth, while others raised rates to control inflation and currency depreciation.

The U.K. economy grew relatively well in the first half of 2014, supported by the services and manufacturing sectors. In the second quarter, a preliminary estimate registered expansion at precrisis levels. The Japanese economy grew strongly during the first quarter of 2014 as consumption rose ahead of a sales tax increase in April. The Bank of Japan kept its monetary policy unchanged as it maintained an upbeat inflation forecast

1. Source: © 2014 Morningstar. One cannot invest directly in an index, and an index is not representative of the Fund’s portfolio. Please see Index Descriptions following the Fund Summaries.

2. Source: Bureau of Labor Statistics.

FFA-2 Semiannual Report

FRANKLIN FOUNDING FUNDS ALLOCATION VIP FUND

and reiterated that the economy continued to recover moderately, despite challenges resulting from the sales tax increase. Japan’s growth weakened, however, in the second quarter. Although out of recession, the eurozone experienced deflationary risks and weak employment trends. The region’s first-quarter economic growth was softer than many observers had expected. In the second quarter, concerns arose about the potential negative impacts to growth from the crisis in Ukraine and tension in the Middle East. Toward period-end, the European Central Bank reduced its main interest rate and, for the first time, set a negative deposit rate.

Stocks in developed markets advanced overall during the period amid a generally accommodative monetary policy environment, continued strength in corporate earnings and signs of an economic recovery. Global government and corporate bonds delivered solid performance as interest rates in many developed market countries remained low. Gold prices rose during the period, and oil prices increased amid supply concerns related to geopolitical tensions. The U.S. dollar was relatively flat compared to most currencies.

Investment Strategy

The Fund normally invests its assets in an equally weighted combination of Class 1 shares of Franklin Income VIP Fund, Franklin Mutual Shares VIP Fund and Templeton Growth VIP Fund. These underlying funds, in turn, invest in a variety of U.S. and foreign equity securities and, to a lesser extent, fixed income and money market securities. As market conditions affect the underlying funds, we rebalance the Fund’s allocations seeking to maintain equal weightings of approximately 33 ¹⁄₃% of total net

assets in each underlying fund whenever the actual allocations exceed plus or minus 3% of the fixed allocation percentages.

Manager’s Discussion

The Fund’s performance can be attributed largely to its allocation among the underlying funds and their investments in domestic and foreign equities, fixed income securities, and short-term investments and other net assets.

During the six months under review, Franklin Income VIP Fund – Class 1 and Franklin Mutual Shares VIP Fund – Class 1 outperformed the S&P 500, while Templeton Growth VIP Fund – Class 1 underperformed the MSCI World Index.

Thank you for your participation in Franklin Founding Funds Allocation VIP Fund. We look forward to serving your future investment needs.

The foregoing information reflects our analysis, opinions and portfolio holdings as of June 30, 2014, the end of the reporting period. The way we implement our main investment strategies and the resulting portfolio holdings may change depending on factors such as market and economic conditions. These opinions may not be relied upon as investment advice or an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but the investment manager makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.

Semiannual Report FFA-3

FRANKLIN FOUNDING FUNDS ALLOCATION VIP FUND

Class 2 Fund Expenses

As an investor in a variable insurance contract (Contract) that indirectly provides for investment in an underlying mutual fund, you can incur transaction and/or ongoing expenses at both the Fund level and the Contract level.

• Transaction expenses can include sales charges (loads) on purchases, surrender fees, transfer fees and premium taxes.

• Ongoing expenses can include management fees, distribution and service (12b-1) fees, contract fees, annual maintenance fees, mortality and expense risk fees and other fees and expenses. All mutual funds and Contracts have some types of ongoing expenses.

The expenses shown in the table are meant to highlight ongoing expenses at the Fund level only and do not include ongoing expenses at the Contract level, or transaction expenses at either the Fund or Contract levels. While the Fund does not have transaction expenses, if the transaction and ongoing expenses at the Contract level were included, the expenses shown below would be higher. You should consult your Contract prospectus or disclosure document for more information.

The table shows Fund-level ongoing expenses and can help you understand these expenses and compare them with those of other mutual funds offered through the Contract. The table assumes a $1,000 investment held for the six months indicated. Please refer to the Fund prospectus for additional information on operating expenses.

Actual Fund Expenses

The first line (Actual) of the table provides actual account values and expenses. The “Ending Account Value” is derived from the Fund’s actual return, which includes the effect of ongoing Fund expenses, but does not include the effect of ongoing Contract expenses.

You can estimate the Fund-level expenses you incurred during the period by following these steps. Of course, your account value and expenses will differ from those in this illustration:

1. Divide your account value by $1,000.

If an account had an $8,600 value, then $8,600 ÷ $1,000 = 8.6.

2. Multiply the result by the number under the heading “Fund-Level Expenses Incurred During Period.”

If Fund-Level Expenses Incurred During Period were $7.50, then 8.6 × $7.50 = $64.50.

In this illustration, the estimated expenses incurred this period at the Fund level are $64.50.

Hypothetical Example for Comparison with Other Mutual Funds

Information in the second line (Hypothetical) of the table can help you compare ongoing expenses of the Fund with those of other mutual funds offered through the Contract. This information may not be used to estimate the actual ending account balance or expenses you incurred during the period. The hypothetical “Ending Account Value” is based on the Fund’s actual expense ratio and an assumed 5% annual rate of return before expenses, which does not represent the Fund’s actual return. The figure under the heading “Fund-Level Expenses Incurred During Period” shows the hypothetical expenses your account would have incurred under this scenario. You can compare this figure with the 5% hypothetical examples that appear in shareholder reports of other funds offered through a Contract.

Class 2	Beginning Account Value 1/1/14		Ending Account Value 6/30/14		Fund-Level Expenses Incurred During Period* 1/1/14–6/30/14		Fund-Level Expenses Incurred During Period** 1/1/14–6/30/14
Actual		$1,000		$1,075.60		$1.80		$5.15
Hypothetical (5% return before expenses)		$1,000		$1,023.06		$1.76		$5.01

*Expenses are calculated using the most recent six-month annualized expense ratio excluding expenses of the underlying funds, net of expense waivers, for the Fund’s Class 2 shares (0.35%), which does not include any ongoing expenses of the Contract for which the Fund is an investment option, multiplied by the average account value over the period, multiplied by 181/365 to reflect the one-half year period.

**Expenses are calculated using the most recent six-month annualized expense ratio including expenses of the underlying funds, net of expense waivers, for the Fund’s Class 2 shares (1.00%), which does not include any ongoing expenses of the Contract for which the Fund is an investment option, multiplied by the average account value over the period, multiplied by 181/365 to reflect the one-half year period.

FFA-4 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Financial Highlights

Franklin Founding Funds Allocation VIP Fund

	Six Months Ended June 30, 2014 (unaudited)			Year Ended December 31,
				2013			2012			2011			2010			2009
Class 1
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$7.47			$8.55			$7.63			$7.73			$7.15			$5.61
Income from investment operationsa:
Net investment incomeb,c		0.17			0.30			0.26			0.25			0.24			0.26
Net realized and unrealized gains (losses)		0.40			1.42			0.90			(0.35	)		0.52			1.46
Total from investment operations		0.57			1.72			1.16			(0.10	)		0.76			1.72
Less distributions from:
Net investment income		(0.23	)		(1.15	)		(0.24	)		—	d		(0.18	)		(0.18	)
Net realized gains		(0.01	)		(1.65	)		—			—			—	d		—
Total distributions		(0.24	)		(2.80	)		(0.24	)		—	d		(0.18	)		(0.18	)
Net asset value, end of period		$7.80			$7.47			$8.55			$7.63			$7.73			$7.15
Total returne		7.61%			24.14%			15.56%			(1.28)%			10.64%			30.47%
Ratios to average net assetsf
Expenses before waiver and payments by affiliatesg		0.11%			0.11%			0.11%			0.11%			0.11%			0.12%
Expenses net of waiver and payments by affiliatesg		0.10%			0.10%			0.10%			0.10%			0.10%			0.10%
Net investment incomec		4.44%			3.67%			4.06%			3.44%			3.04%			4.16%
Supplemental data
Net assets, end of period (000’s)		$1,151			$952			$767			$470			$437			$629
Portfolio turnover rate		0.84%			3.91%			28.46%	h		58.42%			17.81%			4.23%

^aThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.

^bBased on average daily shares outstanding.

^cRecognition of net investment income by the Fund is affected by the timing of declaration of dividends by the Underlying Funds in which the Fund invests.

^dAmount rounds to less than $0.01 per share.

^eTotal return does not include fees, charges or expenses imposed by the variable annuity and life insurance contracts for which the Franklin Templeton Variable Insurance Products Trust serves as an underlying investment vehicle. Total return is not annualized for periods less than one year.

^fRatios are annualized for periods less than one year.

^gDoes not include expenses of the Underlying Funds in which the Fund invests. The weighted average indirect expenses of the Underlying Funds was 0.65% for the period ended June 30, 2014.

^hExcludes the value of portfolio securities delivered as a result of a redemption in-kind.

The accompanying notes are an integral part of these financial statements.    |   Semiannual Report FFA-5

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL HIGHLIGHTS

Franklin Founding Funds Allocation VIP Fund (continued)

	Six Months Ended June 30, 2014 (unaudited)			Year Ended December 31,
				2013			2012			2011			2010			2009
Class 2
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$7.42			$8.51			$7.59			$7.71			$7.14			$5.61
Income from investment operationsa:
Net investment incomeb,c		0.16			0.27			0.25			0.23			0.21			0.26
Net realized and unrealized gains (losses)		0.40			1.42			0.89			(0.35	)		0.52			1.44
Total from investment operations		0.56			1.69			1.14			(0.12	)		0.73			1.70
Less distributions from:
Net investment income		(0.21	)		(1.13	)		(0.22	)		—	d		(0.16	)		(0.17	)
Net realized gains		(0.01	)		(1.65	)		—			—			—	d		—
Total distributions		(0.22	)		(2.78	)		(0.22	)		—	d		(0.16	)		(0.17	)
Net asset value, end of period		$7.76			$7.42			$8.51			$7.59			$7.71			$7.14
Total returne		7.56%			23.77%			15.33%			(1.54)%			10.25%			30.25%
Ratios to average net assetsf
Expenses before waiver and payments by affiliatesg		0.36%			0.36%			0.36%			0.36%			0.36%			0.37%
Expenses net of waiver and payments by affiliatesg		0.35%			0.35%			0.35%			0.35%			0.35%			0.35%
Net investment incomec		4.19%			3.42%			3.81%			3.19%			2.79%			3.91%
Supplemental data
Net assets, end of period (000’s)		$580,673			$547,506			$472,686			$448,101			$488,057			$474,176
Portfolio turnover rate		0.84%			3.91%			28.46%	h		58.42%			17.81%			4.23%

^aThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.

^bBased on average daily shares outstanding.

^cRecognition of net investment income by the Fund is affected by the timing of declaration of dividends by the Underlying Funds in which the Fund invests.

^dAmount rounds to less than $0.01 per share.

^eTotal return does not include fees, charges or expenses imposed by the variable annuity and life insurance contracts for which the Franklin Templeton Variable Insurance Products Trust serves as an underlying investment vehicle. Total return is not annualized for periods less than one year.

^fRatios are annualized for periods less than one year.

^gDoes not include expenses of the Underlying Funds in which the Fund invests. The weighted average indirect expenses of the Underlying Funds was 0.65% for the period ended June 30, 2014.

^hExcludes the value of portfolio securities delivered as a result of a redemption in-kind.

FFA-6 Semiannual Report   |    The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL HIGHLIGHTS

Franklin Founding Funds Allocation VIP Fund (continued)

	Six Months Ended June 30, 2014 (unaudited)			Year Ended December 31,
				2013			2012			2011			2010			2009
Class 4
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$7.54			$8.49			$7.58			$7.71			$7.14			$5.62
Income from investment operationsa:
Net investment incomeb,c		0.16			0.26			0.30			0.24			0.19			0.23
Net realized and unrealized gains (losses)		0.40			1.43			0.83			(0.37	)		0.54			1.46
Total from investment operations		0.56			1.69			1.13			(0.13	)		0.73			1.69
Less distributions from:
Net investment income		(0.21	)		(0.99	)		(0.22	)		—	d		(0.16	)		(0.17	)
Net realized gains		(0.01	)		(1.65	)		—			—			—	d		—
Total distributions		(0.22	)		(2.64	)		(0.22	)		—	d		(0.16	)		(0.17	)
Net asset value, end of period		$7.88			$7.54			$8.49			$7.58			$7.71			$7.14
Total returne		7.38%			23.68%			15.17%			(1.67)%			10.24%			30.06%
Ratios to average net assetsf
Expenses before waiver and payments by affiliatesg		0.46%			0.46%			0.46%			0.46%			0.46%			0.47%
Expenses net of waiver and payments by affiliatesg		0.45%			0.45%			0.45%			0.45%			0.45%			0.45%
Net investment incomec		4.09%			3.32%			3.71%			3.09%			2.69%			3.81%
Supplemental data
Net assets, end of period (000’s)		$772,343			$676,781			$493,813			$2,860,928			$3,036,272			$1,424,479
Portfolio turnover rate		0.84%			3.91%			28.46%	h		58.42%			17.81%			4.23%

^aThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.

^bBased on average daily shares outstanding.

^cRecognition of net investment income by the Fund is affected by the timing of declaration of dividends by the Underlying Funds in which the Fund invests.

^dAmount rounds to less than $0.01 per share.

^eTotal return does not include fees, charges or expenses imposed by the variable annuity and life insurance contracts for which the Franklin Templeton Variable Insurance Products Trust serves as an underlying investment vehicle. Total return is not annualized for periods less than one year.

^fRatios are annualized for periods less than one year.

^gDoes not include expenses of the Underlying Funds in which the Fund invests. The weighted average indirect expenses of the Underlying Funds was 0.65% for the period ended June 30, 2014.

^hExcludes the value of portfolio securities delivered as a result of a redemption in-kind.

The accompanying notes are an integral part of these financial statements.    |   Semiannual Report FFA-7

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Statement of Investments, June 30, 2014 (unaudited)

Franklin Founding Funds Allocation VIP Fund
		Shares		Value
	Investments in Underlying Fundsa
	Domestic Equity 33.2%
	Franklin Mutual Shares VIP Fund, Class 1		18,936,414	$	448,982,373
	Domestic Hybrid 33.4%
	Franklin Income VIP Fund, Class 1		26,195,253		452,130,067
	Foreign Equity 32.7%
	Templeton Growth VIP Fund, Class 1		27,657,629		443,351,791
	Total Investments in Underlying Funds (Cost $926,822,104) 99.3%				1,344,464,231
	Other Assets, less Liabilities 0.7%				9,702,787
	Net Assets 100.0%			$	1,354,167,018

^aSee Note 3(d) regarding investments in Underlying Funds.

FFA-8 Semiannual Report   |    The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Financial Statements

Statement of Assets and Liabilities

June 30, 2014 (unaudited)

	Franklin Founding Funds Allocation VIP Fund
Assets:
Investments in Underlying Funds: (Note 3d)
Cost	$	926,822,104
Value	$	1,344,464,231
Cash		11,773,254
Receivables from capital shares sold		544,614
Other assets		557
Total assets		1,356,782,656
Liabilities:
Payables:
Capital shares redeemed		1,719,605
Administrative fees		110,625
Distribution fees		683,349
Accrued expenses and other liabilities		102,059
Total liabilities		2,615,638
Net assets, at value	$	1,354,167,018
Net assets consist of:
Paid-in capital	$	966,796,580
Undistributed net investment income		24,525,575
Net unrealized appreciation (depreciation)		417,642,127
Accumulated net realized gain (loss)		(54,797,264	)
Net assets, at value	$	1,354,167,018
Class 1:
Net assets, at value	$	1,151,029
Shares outstanding		147,549
Net asset value and maximum offering price per share	$	7.80
Class 2:
Net assets, at value	$	580,673,048
Shares outstanding		74,857,408
Net asset value and maximum offering price per share	$	7.76
Class 4:
Net assets, at value	$	772,342,941
Shares outstanding		97,977,361
Net asset value and maximum offering price per share	$	7.88

The accompanying notes are an integral part of these financial statements.    |   Semiannual Report FFA-9

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL STATEMENTS

Statement of Operations

for the six months ended June 30, 2014 (unaudited)

	Franklin Founding Funds Allocation VIP Fund
Investment income:
Dividends from Underlying Funds (Note 3d)	$	28,723,207
Expenses:
Administrative fees (Note 3a)		632,163
Distribution fees: (Note 3b)
Class 2		692,588
Class 4		1,243,310
Reports to shareholders		43,856
Professional fees		16,957
Trustees’ fees and expenses		2,017
Other		5,083
Total expenses		2,635,974
Expenses waived/paid by affiliates (Note 3e)		(67,947	)
Net expenses		2,568,027
Net investment income		26,155,180
Realized and unrealized gains (losses):
Net realized gain (loss) from sale of investments in Underlying Funds (Note 3d)		161,144
Net change in unrealized appreciation (depreciation) on investments in Underlying Funds		66,817,178
Net realized and unrealized gain (loss)		66,978,322
Net increase (decrease) in net assets resulting from operations	$	93,133,502

FFA-10 Semiannual Report   |    The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL STATEMENTS

Statements of Changes in Net Assets

	Franklin Founding Funds Allocation VIP Fund
	Six Months Ended June 30, 2014 (unaudited)			Year Ended December 31, 2013
Increase (decrease) in net assets:
Operations:
Net investment income	$	26,155,180		$	36,642,567
Net realized gain (loss) from Underlying Funds		161,144			3,163,496
Net change in unrealized appreciation (depreciation) on investments in Underlying Funds		66,817,178			190,487,276
Net increase (decrease) in net assets resulting from operations		93,133,502			230,293,339
Distributions to shareholders from:
Net investment income:
Class 1		(32,764	)		(113,893	)
Class 2		(15,578,364	)		(60,502,595	)
Class 4		(19,895,877	)		(59,385,848	)
Net realized gains:
Class 1		(924	)		(162,965	)
Class 2		(475,173	)		(88,234,067	)
Class 4		(618,180	)		(98,339,718	)
Total distributions to shareholders		(36,601,282	)		(306,739,086	)
Capital share transactions: (Note 2)
Class 1		152,758			268,891
Class 2		8,580,862			115,298,186
Class 4		63,663,182			218,850,531
Total capital share transactions		72,396,802			334,417,608
Net increase (decrease) in net assets		128,929,022			257,971,861
Net assets:
Beginning of period		1,225,237,996			967,266,135
End of period	$	1,354,167,018		$	1,225,237,996
Undistributed net investment income included in net assets:
End of period	$	24,525,575		$	33,877,400

The accompanying notes are an integral part of these financial statements.    |   Semiannual Report FFA-11

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Notes to Financial Statements (unaudited)

Franklin Founding Funds Allocation VIP Fund

1. Organization and Significant Accounting Policies

Franklin Templeton Variable Insurance Products Trust (Trust) is registered under the Investment Company Act of 1940, as amended, (1940 Act) as an open-end management investment company, consisting of twenty separate funds and applies the specialized accounting and reporting guidance in U.S. Generally Accepted Accounting Principles (U.S. GAAP). The Franklin Founding Funds Allocation VIP Fund (Fund) is included in this report. The financial statements of the remaining funds in the Trust are presented separately. The Fund invests primarily in other funds of the Trust (Underlying Funds). Shares of the Fund are generally sold only to insurance company separate accounts to fund the benefits of variable life insurance policies or variable annuity contracts. The Fund offers three classes of shares: Class 1, Class 2, and Class 4. Each class of shares differs by its distribution fees, voting rights on matters affecting a single class and its exchange privilege.

The accounting policies of the Underlying Funds are outlined in their respective shareholder reports. A copy of the Underlying Funds’ shareholder reports is available on the U.S. Securities and Exchange Commission (SEC) website at sec.gov or at the SEC’s Public Reference Room in Washington, D.C. The Underlying Funds’ shareholder reports are not covered by this report.

Effective May 1, 2014, the Franklin Templeton VIP Founding Funds Allocation Fund was renamed the Franklin Founding Funds Allocation VIP Fund.

The following summarizes the Fund’s significant accounting policies.

a. Financial Instrument Valuation

The Fund’s investments in financial instruments are carried at fair value daily. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. The Fund calculates the net asset value (NAV) per share at the close of the New York Stock Exchange (NYSE), generally at 4 p.m. Eastern time (NYSE close) on each day the NYSE is open for trading. Under compliance policies and procedures approved by the Trust’s Board of Trustees (the Board), the Fund’s administrator has responsibility for oversight of valuation, including leading the cross-functional Valuation and Liquidity Oversight Committee (VLOC). The VLOC provides administration and oversight of the Fund’s valuation policies

and procedures, which are approved annually by the Board. Among other things, these procedures allow the Fund to utilize independent pricing services, quotations from securities and financial instrument dealers, and other market sources to determine fair value. Investments in the Underlying Funds are valued at their closing net asset value each trading day.

b. Income Taxes

It is the Fund’s policy to qualify as a regulated investment company under the Internal Revenue Code. The Fund intends to distribute to shareholders substantially all of its taxable income and net realized gains to relieve it from federal income and if applicable, excise taxes. As a result, no provision for U.S. federal income taxes is required.

The Fund recognizes the tax benefits of uncertain tax positions only when the position is “more likely than not” to be sustained upon examination by the tax authorities based on the technical merits of the tax position. As of June 30, 2014, and for all open tax years, the Fund has determined that no liability for unrecognized tax benefits is required in the Fund’s financial statements related to uncertain tax positions taken on a tax return (or expected to be taken on future tax returns). Open tax years are those that remain subject to examination and are based on each tax jurisdiction statute of limitation.

c. Security Transactions, Investment Income, Expenses and Distributions

Security transactions are accounted for on trade date. Realized gains and losses on security transactions are determined on a specific identification basis. Estimated expenses are accrued daily. Dividend income and realized gain distributions by Underlying Funds are recorded on the ex-dividend date. Distributions to shareholders are recorded on the ex-dividend date and are determined according to income tax regulations (tax basis). Distributable earnings determined on a tax basis may differ from earnings recorded in accordance with accounting principles generally accepted in the United States of America. These differences may be permanent or temporary. Permanent differences are reclassified among capital accounts to reflect their tax character. These reclassifications have no impact on net assets or the results of operations. Temporary differences are not reclassified, as they may reverse in subsequent periods.

Common expenses incurred by the Trust are allocated among the funds based on the ratio of net assets of each fund to the

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FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Founding Funds Allocation VIP Fund (continued)

combined net assets of the Trust. Fund specific expenses are charged directly to the fund that incurred the expense.

The Fund indirectly bears its proportionate share of expenses from the Underlying Funds. Since the Underlying Funds have varied expense levels and the Fund may own different proportions of the Underlying Funds at different times, the amount of expenses incurred indirectly by the Fund will vary.

Realized and unrealized gains and losses and net investment income, not including class specific expenses, are allocated daily to each class of shares based upon the relative proportion of net assets of each class. Differences in per share distributions, by class, are generally due to differences in class specific expenses.

d. Accounting Estimates

The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions

that affect the reported amounts of assets and liabilities at the date of the financial statements and the amounts of income and expenses during the reporting period. Actual results could differ from those estimates.

e. Guarantees and Indemnifications

Under the Trust’s organizational documents, its officers and trustees are indemnified by the Trust against certain liabilities arising out of the performance of their duties to the Trust. Additionally, in the normal course of business, the Trust, on behalf of the Fund, enters into contracts with service providers that contain general indemnification clauses. The Trust’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Trust that have not yet occurred. Currently, the Trust expects the risk of loss to be remote.

2. Shares of Beneficial Interest

At June 30, 2014, there were an unlimited number of shares authorized (without par value). Transactions in the Fund’s shares were as follows:

	Six Months Ended June 30, 2014						Year Ended December 31, 2013
	Shares			Amount			Shares			Amount
Class 1 Shares:
Shares sold		28,555		$	218,952			24,967		$	213,393
Shares issued in reinvestment of distributions		4,341			33,688			41,633			276,858
Shares redeemed		(12,749	)		(99,882	)		(28,865	)		(221,360	)
Net increase (decrease)		20,147		$	152,758			37,735		$	268,891
Class 2 Shares:
Shares sold		5,098,393		$	38,795,902			9,475,437		$	72,686,096
Shares issued in reinvestment of distributions		2,082,171			16,053,537			22,467,774			148,736,662
Shares redeemed		(6,093,855	)		(46,268,577	)		(13,700,538	)		(106,124,572	)
Net increase (decrease)		1,086,709		$	8,580,862			18,242,673		$	115,298,186
Class 4 Shares:
Shares sold		9,238,126		$	71,557,762			14,101,836		$	107,566,000
Shares issued on reinvestment of distributions		2,616,589			20,514,057			23,436,191			157,725,566
Shares redeemed		(3,652,082	)		(28,408,637	)		(5,915,495	)		(46,441,035	)
Net increase (decrease)		8,202,633		$	63,663,182			31,622,532		$	218,850,531

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FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Founding Funds Allocation VIP Fund (continued)

3. Transactions With Affiliates

Franklin Resources, Inc. is the holding company for various subsidiaries that together are referred to as Franklin Templeton Investments. Certain officers and trustees of the Fund are also officers and/or directors/trustees of certain of the Underlying Funds and of the following subsidiaries:

Subsidiary	Affiliation
Franklin Templeton Services, LLC (FT Services)	Administrative manager
Franklin Templeton Distributors, Inc. (Distributors)	Principal underwriter
Franklin Templeton Investor Services, LLC (Investor Services)	Transfer agent

a. Administrative Fees

The Fund pays an administrative fee to FT Services of 0.10% per year of the average daily net assets of the Fund for administrative services including monitoring and rebalancing the percentage of the Fund’s investments in the Underlying Funds.

b. Distribution Fees

The Board has adopted distribution plans for Class 2 and Class 4 shares pursuant to Rule 12b-1 under the 1940 Act. Under the Fund’s compensation distribution plans, the Fund pays Distributors for costs incurred in connection with the servicing, sale and distribution of the Fund’s shares up to 0.35% per year of its average daily net assets of each class. Some distribution fees are not charged on shares held by affiliates. The Board has agreed to limit the current rate to 0.25% per year for Class 2. The plan year, for purposes of monitoring compliance with the maximum annual plan rates, is February 1 through January 31.

c. Transfer Agent Fees

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

d. Investments in Underlying Funds

The Fund invests primarily in the Underlying Funds which are managed by affiliates of the Fund’s administrative manager, FT Services. The Fund does not invest in the Underlying Funds for the purpose of exercising a controlling influence over the management or policies. Investments in Underlying Funds for the period ended June 30, 2014, were as follows:

Underlying Funds	Number of Shares Held at Beginning of Period		Gross Additions		Gross Reductions		Number of Shares Held at End of Period		Value at End of Period		Investment Income		Realized Capital Gain (Loss)		% of Underlying Fund Shares Outstanding Held at End of Period
Franklin Income VIP Fund, Class 1a		24,462,601		1,919,003		186,351		26,195,253	$	452,130,067	$	21,984,390	$	60,228		5.69%
Franklin Mutual Shares VIP Fund, Class 1b		18,485,942		675,408		224,936		18,936,414		448,982,373		—		78,472		8.19%
Templeton Growth VIP Fund, Class 1c		26,312,175		1,489,216		143,762		27,657,629		443,351,791		6,738,817		22,444		20.96%
Total									$	1,344,464,231	$	28,723,207	$	161,144

^aEffective May 1, 2014, the Franklin Income Securities Fund was renamed the Franklin Income VIP Fund.

^bEffective May 1, 2014, the Mutual Shares Securities Fund was renamed the Franklin Mutual Shares VIP Fund.

^cEffective May 1, 2014, the Templeton Growth Securities Fund was renamed the Templeton Growth VIP Fund.

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FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Founding Funds Allocation VIP Fund (continued)

e. Waiver and Expense Reimbursements

FT Services contractually agreed in advance to waive or limit its fees and to assume as its own expense certain expenses otherwise payable by the Fund so that the expenses (excluding distribution fees, and acquired fund fees and expenses) for each class of the Fund do not exceed 0.10% based on the average net assets of each class (other than certain non-routine expenses or costs, including those relating to litigation, indemnification, reorganizations, and liquidations) until April 30, 2015.

4. Expense Offset Arrangement

The Fund has entered into an arrangement with its custodian whereby credits realized as a result of uninvested cash balances are used to reduce a portion of the Fund’s custodian expenses. During the period ended June 30, 2014, there were no credits earned.

5. Income Taxes

At June 30, 2014, the cost of investments and net unrealized appreciation (depreciation) for income tax purposes were as follows:

Cost of investments	$981,768,613
Unrealized appreciation	$362,695,618
Unrealized depreciation	—
Net unrealized appreciation (depreciation)	$362,695,618

Differences between income and/or capital gains as determined on a book basis and a tax basis are primarily due to differing treatment of wash sales.

6. Investment Transactions

Purchases and sales of Underlying Funds (excluding short term securities) for the period ended June 30, 2014, aggregated $71,723,207 and $10,620,662, respectively.

7. Credit Facility

The Fund, together with other U.S. registered and foreign investment funds (collectively, Borrowers), managed by Franklin Templeton Investments, are borrowers in a joint syndicated senior unsecured credit facility totaling $1.5 billion (Global Credit Facility) which matures on February 13, 2015. This Global Credit Facility provides a source of funds to the Borrowers for temporary and emergency purposes, including the ability to meet future unanticipated or unusually large redemption requests.

Under the terms of the Global Credit Facility, the Fund shall, in addition to interest charged on any borrowings made by the Fund and other costs incurred by the Fund, pay its share of fees and expenses incurred in connection with the implementation and maintenance of the Global Credit Facility, based upon its relative share of the aggregate net assets of all of the Borrowers, including an annual commitment fee of 0.07% based upon the unused portion of the Global Credit Facility. These fees are reflected in other expenses on the Statement of Operations. During the period ended June 30, 2014, the Fund did not use the Global Credit Facility.

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FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Founding Funds Allocation VIP Fund (continued)

8. Fair Value Measurements

The Fund follows a fair value hierarchy that distinguishes between market data obtained from independent sources (observable inputs) and the Fund’s own market assumptions (unobservable inputs). These inputs are used in determining the value of the Fund’s financial instruments and are summarized in the following fair value hierarchy:

• Level 1 – quoted prices in active markets for identical financial instruments

• Level 2 – other significant observable inputs (including quoted prices for similar financial instruments, interest rates, prepayment speed, credit risk, etc.)

• Level 3 – significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of financial instruments)

The input levels are not necessarily an indication of the risk or liquidity associated with financial instruments at that level.

For movements between the levels within the fair value hierarchy, the Fund has adopted a policy of recognizing the transfers as of the date of the underlying event which caused the movement.

At June 30, 2014, all of the Fund’s investments in financial instruments carried at fair value were valued using Level 1 inputs. For detailed categories, see the accompanying Statement of Investments.

9. Subsequent Events

The Fund has evaluated subsequent events through the issuance of the financial statements and determined that no events have occurred that require disclosure.

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FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

TAX INFORMATION (UNAUDITED)

Franklin Founding Funds Allocation VIP Fund

During the fiscal year ended December 31, 2013, the Fund, a qualified fund of funds under Section 852(g)(2) of Internal Revenue Code (Code), received an allocation of foreign taxes paid from one or more of its underlying funds. As shown in the table below, the Fund hereby reports to shareholders the foreign source income and foreign taxes paid by underlying funds, pursuant to Section 853 of the Code. This written statement will allow shareholders of record on June 12, 2014, to treat their proportionate share of foreign taxes paid by the underlying funds as having been paid directly by them. The shareholder shall consider these amounts as foreign taxes paid in the tax year in which they receive the Fund distribution.

The following table provides a detailed analysis of foreign tax paid, and foreign source income as reported by the Fund, to Class 1, Class 2, and Class 4 shareholders of record.

Class	Foreign Tax Paid Per Share	Foreign Source Income Per Share
Class 1	$0.0057	$0.0504
Class 2	$0.0057	$0.0504
Class 4	$0.0057	$0.0504

Foreign Tax Paid Per Share (Column 1) is the amount per share available to you, as a tax credit (assuming you held your shares in the Fund for a minimum of 16 days during the 31-day period beginning 15 days before the ex-dividend date of the Fund’s distribution to which the foreign taxes relate), or, as a tax deduction.

Foreign Source Income Per Share (Column 2) is the amount per share of income dividends attributable to foreign securities held by the Fund, plus any foreign taxes withheld on these dividends.

Semiannual Report FFA-17

Franklin Global Real Estate VIP Fund

(Formerly, Franklin Global Real Estate Securities Fund)

This semiannual report for Franklin Global Real Estate VIP Fund covers the period ended June 30, 2014.

Class 2 Performance Summary as of June 30, 2014

Franklin Global Real Estate VIP Fund – Class 2 delivered a total return of +11.33% for the six-month period ended June 30, 2014.

Performance reflects the Fund’s Class 2 operating expenses, but does not include any contract fees, expenses or sales charges. If they had been included, performance would be lower. These charges and deductions, particularly for variable life policies, can have a significant effect on contract values and insurance benefits. See the contract prospectus for a complete description of these expenses, including sales charges.

Performance data represent past performance, which does not guarantee future results. Investment return and principal value will fluctuate, and you may have a gain or loss when you sell your shares. Current performance may differ from figures shown.

Semiannual Report FGR-1

FRANKLIN GLOBAL REAL ESTATE VIP FUND

Fund Goal and Main Investments: Franklin Global Real Estate VIP Fund seeks high total return. Under normal market conditions, the Fund invests at least 80% of its net assets in investments of companies located anywhere in the world that operate in the real estate sector.

Fund Risks: All investments involve risks, including possible loss of principal. The Fund concentrates in real estate securities, which involve special risks, such as declines in the value of real estate and increased susceptibility to adverse economic or regulatory developments affecting the sector. The Fund’s investments in REITs involve additional risks; since REITs typically are invested in a limited number of projects or in a particular market segment, they are more susceptible to adverse developments affecting a single project or market segment than more broadly diversified investments. Foreign investing, especially in emerging markets, involves additional risks such as currency and market volatility, as well as political and social instability. The Fund is actively managed but there is no guarantee that the manager’s investment decisions will produce the desired results. The Fund’s prospectus also includes a description of the main investment risks.

What is a REIT?

A REIT is a type of real estate company that is dedicated to owning and usually operating income-producing real estate properties such as apartments, hotels, industrial properties, office buildings or shopping centers. Equity REITs generally receive income from rents received, are generally operated by experienced property management teams and typically concentrate on a specific geographic region or property type.

Performance Overview

You can find the Fund’s six-month total return in the Performance Summary. In comparison, the FTSE EPRA/NAREIT Developed Index posted a +12.21% total return for the same period.¹

Economic and Market Overview

The U.S. economy showed some signs of recovery during the six-month period ended June 30, 2014, despite a first-quarter contraction in gross domestic product. Manufacturing activity expanded, and the unemployment rate declined to 6.1% in June 2014 from 6.7% in December 2013.² Except for a sharp

increase in March, retail sales rose at a modest pace that missed consensus expectations. The housing market had some weather-related weakness early in 2014, but home sales picked up in the spring and home prices were higher than a year ago.

The Federal Reserve Board (Fed) began reducing bond purchases by $10 billion a month in January 2014, based on earlier largely positive economic and employment data. Although economic data in early 2014 were soft, Fed Chair Janet Yellen kept the pace of asset-purchase tapering intact while adopting a more qualitative approach to rate-hike guidance. However, the Fed pledged to keep interest rates low for a considerable time after the asset-purchase program ends, depending on inflation and employment trends. In June, the Fed lowered projections for near- and long-term economic growth even as it maintained the pace of tapering.

The global economy grew moderately during the six months under review as many developed markets continued to recover and many emerging markets recorded continued growth. Major developed market central banks reaffirmed their accommodative monetary policies in an effort to support the ongoing recovery. In emerging markets, some central banks cut interest rates to boost economic growth, while others raised rates to control inflation and currency depreciation.

The U.K. economy grew relatively well in the first half of 2014, supported by the services and manufacturing sectors. In the second quarter, a preliminary estimate registered expansion at precrisis levels. The Japanese economy grew strongly during the first quarter of 2014 as consumption rose ahead of a sales tax increase in April. The Bank of Japan kept its monetary policy unchanged as it maintained an upbeat inflation forecast and reiterated that the economy continued to recover moderately, despite challenges resulting from the sales tax increase. Japan’s growth weakened, however, in the second quarter. Although out of recession, the eurozone experienced deflationary risks and weak employment trends. The region’s first-quarter economic growth was softer than many observers had expected. In the second quarter, concerns arose about the potential negative impacts to growth from the crisis in Ukraine and tension in the Middle East. Toward period-end the European Central Bank reduced its main interest rate and, for the first time, set a negative deposit rate.

1. Source: © 2014 Morningstar. One cannot invest directly in an index, and an index is not representative of the Fund’s portfolio. Please see Index Descriptions following the Fund Summaries.

2. Source: Bureau of Labor Statistics.

FGR-2 Semiannual Report

FRANKLIN GLOBAL REAL ESTATE VIP FUND

Stocks in developed markets advanced overall during the period amid a generally accommodative monetary policy environment, continued strength in corporate earnings and signs of an economic recovery. Global government and corporate bonds delivered solid performance as interest rates in many developed market countries remained low. Gold prices rose during the period, and oil prices increased amid supply concerns related to geopolitical tensions. The U.S. dollar was relatively flat compared to most currencies.

Global Real Estate Market Overview

Overall, global real estate markets rose during the six months under review. According to the FTSE EPRA/NAREIT Developed Index, in U.S. dollar terms, Italy, Greece and Spain led global real estate markets. France, Australia and the Netherlands also posted robust results. In contrast, some markets represented in the index lost value, including China and Japan.

Investment Strategy

We seek to limit price volatility by investing across markets and property types and seek to provide a consistently high level of income in our pursuit of high total return. When selecting investments for the Fund’s portfolio, we apply a “bottom-up” stock selection process that incorporates macro-level views in the evaluation process. Our portfolio construction process combines bottom-up analysis of individual stock and real estate market fundamentals and top-down macro overlays to provide country/regional, property type, and company size perspectives in identifying international/local cyclical and thematic trends that highlight investment opportunities.

Manager’s Discussion

During the six months under review, key contributors to the Fund’s performance relative to the FTSE EPRA/NAREIT Developed Index included stock selection in the residential sector. Shares of U.S.-based apartment management company Essex Property Trust benefited from very strong fundamentals in west coast apartment markets, particularly the San Francisco Bay Area and Seattle. Revenue for the first quarter of 2014 compared with the year-ago period was well above guidance and expectations and was the highest in its peer group. In addition, Essex closed its acquisition of BRE Properties (also a Fund holding) in April, with the communication around integration and synergies better than expected, in our view.

Security selection in the office space sector, with holdings such as mid-capitalization office REIT Kilroy Realty, also enhanced relative performance over the period. In our view, Kilroy is a dominant office landlord in the U.S. west coast with a portfolio concentrated in San Diego, West Los Angeles, San Francisco and Seattle. The stock’s robust performance during the reporting period largely reflected strong office fundamentals across its west coast markets. The company has grown rapidly as it successfully expanded to San Francisco and Seattle where

Semiannual Report FGR-3

FRANKLIN GLOBAL REAL ESTATE VIP FUND

Top 10 Countries
6/30/14
	% of Total Net Assets
U.S.		48.7%
Japan		13.4%
Hong Kong		7.4%
U.K.		6.7%
Australia		5.8%
France		4.8%
Singapore		4.1%
Germany		1.9%
Canada		1.8%
Sweden		1.5%

Top 10 Holdings
6/30/14
Company Sector/Industry, Country	% of Total Net Assets
Simon Property Group Inc. Retail REITs, U.S.		5.2%
Mitsui Fudosan Co. Ltd. Diversified Real Estate Activities, Japan		4.9%
Unibail-Rodamco SE Retail REITs, France		3.5%
Mitsubishi Estate Co. Ltd. Diversified Real Estate Activities, Japan		3.1%
Vornado Realty Trust Diversified REITs, U.S.		2.2%
Prologis Inc. Industrial REITs, U.S.		2.1%
Public Storage Specialized REITs, U.S.		2.0%
Host Hotels & Resorts Inc. Hotel & Resort REITs, U.S.		2.0%
Ventas Inc. Health Care REITs, U.S.		2.0%
Equity Residential Residential REITs, U.S.		1.9%

The dollar value, number of shares or principal amount, and names of all portfolio holdings are listed in the Fund’s Statement of Investments.

tenant demand remained quite strong. Kilroy also has a sizable development pipeline which, in our view, should continue to support future earnings growth when these developments come on line.

Other contributors included Japanese industrial property manager Nippon Prologis REIT, shares of which performed well over the past six months. The REIT was listed in February 2013 and has doubled its asset size after the first year of listing. We believe that with pipeline support from sponsor Prologis, also a Fund holding, the company is in a good position to make accretive acquisitions and keep growth momentum intact. It recently had the best quality logistics facilities among Japanese REITs, in our opinion, and rents were expected to rise due to strong demand from e-commerce and third-party logistics operators.

In contrast, key detractors from the Fund’s relative performance included stock selection in the diversified sector with holdings such as Mitsubishi Estate and The Wharf Holdings. Japan-based Mitsubishi Estate lost value during the first half of 2014. Despite improved market conditions, profit growth from its office portfolio was less than expected due to longer lease terms and a lack of new projects. Investors were disappointed by further delays in earnings growth after the company announced subdued guidance. The company expected lower profits from the condominium segment owing to rising construction costs and land prices.

The Wharf Holdings is a leading retail landlord in Hong Kong with residential development projects and an investment portfolio in China. The stock struggled during the past six months given the slowdown of Hong Kong retail sales growth, which was affected by moderating economic growth in China and less spending in high-end segments. The stock was also negatively impacted by market concerns over the Chinese government’s potential to curb mainland Chinese visitor arrivals.

Stock selection in the hotels, resorts and cruise lines sector also weighed on relative performance with an off-benchmark investment in Starwood Hotel & Resorts Worldwide proving especially detrimental. Starwood performed poorly during the reporting period following strong outperformance last year. Starwood had significant global exposure compared to other hotel companies, and thus the stock became increasingly more volatile over the past six months, largely reflecting increased economic and geopolitical risks, especially in emerging

FGR-4 Semiannual Report

FRANKLIN GLOBAL REAL ESTATE VIP FUND

markets. Additionally, investor sentiment for the company further deteriorated given the lack of visibility about the company’s share-buyback and asset sales program.

Thank you for your participation in Franklin Global Real Estate VIP Fund. We look forward to serving your future investment needs.

The foregoing information reflects our analysis, opinions and portfolio holdings as of June 30, 2014, the end of the reporting period. The way we implement our main investment strategies and the resulting portfolio holdings may change depending on factors such as market and economic conditions. These opinions may not be relied upon as investment advice or an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but the investment manager makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.

Semiannual Report FGR-5

FRANKLIN GLOBAL REAL ESTATE VIP FUND

Class 2 Fund Expenses

As an investor in a variable insurance contract (Contract) that indirectly provides for investment in an underlying mutual fund, you can incur transaction and/or ongoing expenses at both the Fund level and the Contract level.

• Transaction expenses can include sales charges (loads) on purchases, surrender fees, transfer fees and premium taxes.

• Ongoing expenses can include management fees, distribution and service (12b-1) fees, contract fees, annual maintenance fees, mortality and expense risk fees and other fees and expenses. All mutual funds and Contracts have some types of ongoing expenses.

The expenses shown in the table are meant to highlight ongoing expenses at the Fund level only and do not include ongoing expenses at the Contract level, or transaction expenses at either the Fund or Contract levels. While the Fund does not have transaction expenses, if the transaction and ongoing expenses at the Contract level were included, the expenses shown below would be higher. You should consult your Contract prospectus or disclosure document for more information.

The table shows Fund-level ongoing expenses and can help you understand these expenses and compare them with those of other mutual funds offered through the Contract. The table assumes a $1,000 investment held for the six months indicated. Please refer to the Fund prospectus for additional information on operating expenses.

Actual Fund Expenses

The first line (Actual) of the table provides actual account values and expenses. The “Ending Account Value” is derived from the Fund’s actual return, which includes the effect of ongoing Fund expenses, but does not include the effect of ongoing Contract expenses.

You can estimate the Fund-level expenses you incurred during the period by following these steps. Of course, your account value and expenses will differ from those in this illustration:

1. Divide your account value by $1,000.

If an account had an $8,600 value, then $8,600 ÷ $1,000 = 8.6.

2. Multiply the result by the number under the heading “Fund-Level Expenses Incurred During Period.”

If Fund-Level Expenses Incurred During Period were $7.50, then 8.6 × $7.50 = $64.50.

In this illustration, the estimated expenses incurred this period at the Fund level are $64.50.

Hypothetical Example for Comparison with Other Mutual Funds

Information in the second line (Hypothetical) of the table can help you compare ongoing expenses of the Fund with those of other mutual funds offered through the Contract. This information may not be used to estimate the actual ending account balance or expenses you incurred during the period. The hypothetical “Ending Account Value” is based on the Fund’s actual expense ratio and an assumed 5% annual rate of return before expenses, which does not represent the Fund’s actual return. The figure under the heading “Fund-Level Expenses Incurred During Period” shows the hypothetical expenses your account would have incurred under this scenario. You can compare this figure with the 5% hypothetical examples that appear in shareholder reports of other funds offered through a Contract.

Class 2	Beginning Account Value 1/1/14		Ending Account Value 6/30/14		Fund-Level Expenses Incurred During Period* 1/1/14–6/30/14
Actual		$1,000		$1,113.30		$7.07
Hypothetical (5% return before expenses)		$1,000		$1,018.10		$6.76

*Expenses are calculated using the most recent six-month annualized expense ratio for the Fund’s Class 2 shares (1.35%), which does not include any ongoing expenses of the Contract for which the Fund is an investment option, multiplied by the average account value over the period, multiplied by 181/365 to reflect the one-half year period.

FGR-6 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Financial Highlights

Franklin Global Real Estate VIP Fund

	Six Months Ended June 30, 2014 (unaudited)			Year Ended December 31,
				2013			2012		2011			2010			2009
Class 1
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$14.29			$14.66			$11.47		$13.12			$11.16			$10.84
Income from investment operationsa:
Net investment incomeb		0.12			0.24			0.25		0.21			0.38			0.30
Net realized and unrealized gains (losses)		1.52			0.13			2.94		(0.83	)		1.94			1.36
Total from investment operations		1.64			0.37			3.19		(0.62	)		2.32			1.66
Less distributions from net investment income and net foreign currency gains		(0.11	)		(0.74	)		—		(1.03	)		(0.36	)		(1.34	)
Net asset value, end of period		$15.82			$14.29			$14.66		$11.47			$13.12			$11.16
Total returnc		11.46%			2.61%			27.81%		(5.45)%			21.24%			19.41%
Ratios to average net assetsd
Expenses before waiver and payments by affiliates		1.10%			1.10%			1.11%		1.12%			1.11%			1.11%
Expenses net of waiver and payments by affiliates		1.10%			1.10%			1.07%		0.98%			0.86%			0.76%	e
Net investment income		1.65%			1.62%			1.92%		1.64%			3.24%			3.13%
Supplemental data
Net assets, end of period (000’s)		$36,539			$34,276			$38,329		$33,670			$40,430			$38,486
Portfolio turnover rate		9.44%			21.29%			22.29%		28.95%			76.52%			87.34%

^aThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.

^bBased on average daily shares outstanding.

^cTotal return does not include fees, charges or expenses imposed by the variable annuity and life insurance contracts for which the Franklin Templeton Variable Insurance Products Trust serves as an underlying investment vehicle. Total return is not annualized for periods less than one year.

^dRatios are annualized for periods less than one year.

^eBenefit of expense reduction rounds to less than 0.01%.

The accompanying notes are an integral part of these financial statements.    |   Semiannual Report FGR-7

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL HIGHLIGHTS

Franklin Global Real Estate VIP Fund (continued)

	Six Months Ended June 30, 2014 (unaudited)			Year Ended December 31,
				2013			2012		2011			2010			2009
Class 2
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$13.93			$14.27			$11.20		$12.83			$10.92			$10.61
Income from investment operationsa:
Net investment incomeb		0.10			0.20			0.21		0.17			0.34			0.27
Net realized and unrealized gains (losses)		1.48			0.13			2.86		(0.81	)		1.90			1.33
Total from investment operations		1.58			0.33			3.07		(0.64	)		2.24			1.60
Less distributions from net investment income and net foreign currency gains		(0.07	)		(0.67	)		—		(0.99	)		(0.33	)		(1.29	)
Net asset value, end of period		$15.44			$13.93			$14.27		$11.20			$12.83			$10.92
Total returnc		11.33%			2.32%			27.41%		(5.65)%			20.97%			19.08%
Ratios to average net assetsd
Expenses before waiver and payments by affiliates		1.35%			1.35%			1.36%		1.37%			1.36%			1.36%
Expenses net of waiver and payments by affiliates		1.35%			1.35%			1.32%		1.23%			1.11%			1.01%	e
Net investment income		1.40%			1.37%			1.67%		1.39%			2.99%			2.88%
Supplemental data
Net assets, end of period (000’s)		$344,319			$328,825			$344,044		$292,356			$352,854			$345,445
Portfolio turnover rate		9.44%			21.29%			22.29%		28.95%			76.52%			87.34%

^aThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.

^bBased on average daily shares outstanding.

^cTotal return does not include fees, charges or expenses imposed by the variable annuity and life insurance contracts for which the Franklin Templeton Variable Insurance Products Trust serves as an underlying investment vehicle. Total return is not annualized for periods less than one year.

^dRatios are annualized for periods less than one year.

^eBenefit of expense reduction rounds to less than 0.01%.

FGR-8 Semiannual Report   |    The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Statement of Investments, June 30, 2014 (unaudited)

Franklin Global Real Estate VIP Fund
		Country		Shares/ Warrants		Value
	Common Stocks and Other Equity Interests 98.6%
	Diversified Real Estate Activities 13.3%
	CapitaLand Ltd.		Singapore		971,262	$	2,493,112
	Hang Lung Properties Ltd.		Hong Kong		788,248		2,430,714
	Mitsubishi Estate Co. Ltd.		Japan		479,360		11,834,355
	Mitsui Fudosan Co. Ltd.		Japan		554,857		18,709,753
	Sun Hung Kai Properties Ltd.		Hong Kong		380,533		5,224,047
	Sun Hung Kai Properties Ltd., wts., 4/22/16		Hong Kong		31,644		41,319
	Tokyo Tatemono Co. Ltd.		Japan		550,815		5,094,651
	The Wharf Holdings Ltd.		Hong Kong		650,906		4,703,048
							50,530,999
	Diversified REITs 13.1%
a	Activia Properties Inc., 144A		Japan		198		1,741,454
	American Assets Trust Inc.		United States		70,939		2,450,942
	British Land Co. PLC		United Kingdom		412,931		4,963,918
	Canadian REIT		Canada		59,414		2,562,192
a,b	Hulic REIT Inc., 144A		Japan		1,235		1,961,517
	Kenedix Office Investment Corp.		Japan		695		3,780,119
	Land Securities Group PLC		United Kingdom		377,481		6,691,996
a,b	Lar Espana Real Estate Socimi SA, 144A		Spain		80,084		1,041,875
	Liberty Property Trust		United States		29,106		1,103,991
	Mirvac Group		Australia		2,402,537		4,045,584
	Spirit Realty Capital Inc.		United States		102,100		1,159,856
	Stockland		Australia		969,206		3,547,486
	Suntec REIT		Singapore		1,585,730		2,302,307
	Vornado Realty Trust		United States		78,768		8,406,909
	Wereldhave N.V.		Netherlands		23,000		2,138,670
	WP Carey Inc.		United States		31,426		2,023,834
							49,922,650
	Health Care REITs 5.5%
	HCP Inc.		United States		104,141		4,309,355
	Health Care REIT Inc.		United States		88,464		5,544,039
	Sabra Health Care REIT Inc.		United States		62,526		1,795,121
	Senior Housing Properties Trust		United States		71,282		1,731,440
	Ventas Inc.		United States		117,387		7,524,507
							20,904,462
	Home Improvement Retail 0.2%
	The Home Depot Inc.		United States		10,820		875,987
	Hotel & Resort REITs 4.0%
	CDL Hospitality Trusts		Singapore		696,478		983,276
	Hoshino Resorts REIT Inc.		Japan		98		846,454
	Host Hotels & Resorts Inc.		United States		342,967		7,548,704
	Pebblebrook Hotel Trust		United States		109,022		4,029,453
	Sunstone Hotel Investors Inc.		United States		118,827		1,774,087
							15,181,974
	Hotels, Resorts & Cruise Lines 1.1%
	Melia Hotels International SA		Spain		78,881		968,431
b	NH Hoteles SA		Spain		109,081		646,073
	Starwood Hotels & Resorts Worldwide Inc.		United States		32,054		2,590,604
							4,205,108

Semiannual Report FGR-9

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Global Real Estate VIP Fund (continued)

		Country		Shares/ Warrants		Value
	Common Stocks and Other Equity Interests (continued)
	Industrial REITs 6.2%
	Ascendas REIT		Singapore		722,308	$	1,332,618
a	Ascendas REIT, 144A		Singapore		159,961		295,119
	First Industrial Realty Trust Inc.		United States		58,300		1,098,372
	Goodman Group		Australia		984,768		4,691,354
	Mapletree Logistics Trust		Singapore		1,978,530		1,848,945
	Nippon Prologis REIT Inc.		Japan		784		1,827,953
a	Nippon Prologis REIT Inc., 144A		Japan		903		2,105,410
	Prologis Inc.		United States		197,664		8,122,014
	STAG Industrial Inc.		United States		99,852		2,397,447
							23,719,232
	Office REITs 10.7%
	Alexandria Real Estate Equities Inc.		United States		44,507		3,455,524
	Boston Properties Inc.		United States		57,180		6,757,532
	Brandywine Realty Trust		United States		177,846		2,774,398
	Coresite Realty Corp.		United States		17,287		571,681
	Derwent London PLC		United Kingdom		84,299		3,864,523
	Digital Realty Trust Inc.		United States		33,743		1,967,892
	Douglas Emmett Inc.		United States		82,167		2,318,753
	Great Portland Estates PLC		United Kingdom		386,126		4,255,158
	Highwoods Properties Inc.		United States		62,117		2,605,808
	Japan Real Estate Investment Corp.		Japan		524		3,051,774
	Kilroy Realty Corp.		United States		63,918		3,980,813
	SL Green Realty Corp.		United States		48,693		5,327,501
							40,931,357
	Real Estate Development 2.3%
	China Overseas Land & Investment Ltd.		China		518,657		1,258,089
b	Howard Hughes Corp.		United States		11,916		1,880,702
	Keppel Land Ltd.		Singapore		821,676		2,227,782
	KWG Property Holdings Ltd.		China		1,703,000		977,795
	Sino Land Co. Ltd.		Hong Kong		1,496,288		2,455,700
							8,800,068
	Real Estate Operating Companies 7.0%
	Castellum AB		Sweden		106,040		1,880,789
	Deutsche Euroshop AG		Germany		38,467		1,901,699
a	Deutsche Euroshop AG, 144A		Germany		9,299		459,716
b	Gagfah SA		Germany		94,100		1,713,263
a,b	Gagfah SA, 144A		Germany		19,690		358,493
	Global Logistic Properties Ltd.		Singapore		1,672,170		3,621,593
b	Hemfosa Fastigheter AB		Sweden		28,340		476,144
a,b	Hemfosa Fastigheter AB, 144A		Sweden		42,980		722,112
a,b	Hispania Activos Inmobiliarios SAU, 144A		Spain		38,663		535,030
	Hong Kong Land Holdings Ltd.		Hong Kong		810,843		5,408,323
	Hufvudstaden AB, A		Sweden		178,196		2,501,801
	Hysan Development Co. Ltd.		Hong Kong		564,347		2,650,456
	LEG Immobilien AG		Germany		6,420		432,516
a,b	LEG Immobilien AG, 144A		Germany		37,210		2,506,841
	Unite Group PLC		United Kingdom		188,995		1,274,229
a	Unite Group PLC, 144A		United Kingdom		10,534		71,022
							26,514,027

FGR-10 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Global Real Estate VIP Fund (continued)

		Country		Shares/ Warrants		Value
	Common Stocks and Other Equity Interests (continued)
	Residential REITs 8.4%
	Apartment Investment & Management Co., A		United States		91,605	$	2,956,093
	AvalonBay Communities Inc.		United States		32,567		4,630,702
	Boardwalk REIT		Canada		27,336		1,672,790
	Camden Property Trust		United States		18,421		1,310,654
	Education Realty Trust Inc.		United States		74,300		797,982
	Equity Lifestyle Properties Inc.		United States		63,300		2,795,328
	Equity Residential		United States		115,128		7,253,064
	Essex Property Trust Inc.		United States		28,705		5,307,842
	Post Properties Inc.		United States		28,388		1,517,622
	UDR Inc.		United States		129,031		3,694,158
							31,936,235
	Retail REITs 23.6%
a	CapitaMall Trust, 144A		Singapore		433,279		686,421
	CBL & Associates Properties Inc.		United States		45,972		873,468
	DDR Corp.		United States		115,716		2,040,073
	Eurocommercial Properties NV, IDR		Netherlands		39,075		1,927,476
	Federal Realty Investment Trust		United States		27,709		3,350,572
	Federation Centres		Australia		843,365		1,981,015
	General Growth Properties Inc.		United States		253,917		5,982,285
	Hammerson PLC		United Kingdom		462,753		4,592,805
	Kimco Realty Corp.		United States		172,069		3,954,146
	Klepierre		France		94,000		4,790,624
	The Link REIT		Hong Kong		972,788		5,233,923
	The Macerich Co.		United States		34,864		2,327,172
	Ramco-Gershenson Properties Trust		United States		68,113		1,132,038
	Realty Income Corp.		United States		40,103		1,781,375
	Regency Centers Corp.		United States		42,893		2,388,282
	RioCan REIT		Canada		103,826		2,658,810
b	Scentre Group		Australia		1,469,216		4,435,152
	Simon Property Group Inc.		United States		118,608		19,722,138
	Taubman Centers Inc.		United States		16,282		1,234,338
	Unibail-Rodamco SE		France		46,104		13,413,481
	Weingarten Realty Investors		United States		60,110		1,974,012
	Westfield Corp.		Australia		508,928		3,432,695
							89,912,301
	Specialized REITs 3.2%
	CubeSmart		United States		41,184		754,491
	Extra Space Storage Inc.		United States		70,204		3,738,363
	Public Storage		United States		45,014		7,713,149
							12,206,003
	Total Common Stocks and Other Equity Interests (Cost $237,643,386)						375,640,403

Semiannual Report FGR-11

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Global Real Estate VIP Fund (continued)

		Country		Principal Amount		Value
	Short Term Investments (Cost $4,395,660) 1.2%
	Repurchase Agreements (Cost $4,395,660) 1.2%
c	Joint Repurchase Agreement, 0.064%, 7/01/14 (Maturity Value $4,395,668)     BNP Paribas Securities Corp. (Maturity Value $887,837) Credit Suisse Securities (USA) LLC (Maturity Value $443,919) Deutsche Bank Securities Inc. (Maturity Value $333,763) HSBC Securities (USA) Inc. (Maturity Value $1,864,510) Merrill Lynch, Pierce, Fenner & Smith Inc. (Maturity Value $865,639)		United States	$	4,395,660	$	4,395,660
	Collateralized by U.S. Government Agency Securities, 0.00% - 6.21%, 1/16/15 - 5/04/37; dU.S. Government Agency Discount Notes, 12/24/14 - 1/30/15; U.S. Government Agency Securities, Strips, 5/15/30; U.S. Treasury Bonds, 7.50% - 8.875%, 11/15/16 - 2/15/19; U.S. Treasury Notes, 0.25% - 4.50%, 7/15/15 - 4/30/18; and U.S. Treasury Notes, Index Linked, 1.375%, 7/15/18 (valued at $4,484,322)
	Total Investments (Cost $242,039,046) 99.8%						380,036,063
	Other Assets, less Liabilities 0.2%						822,070
	Net Assets 100.0%					$	380,858,133

See Abbreviations on page FGR-23.

^aSecurity was purchased pursuant to Rule 144A under the Securities Act of 1933 and may be sold in transactions exempt from registration only to qualified institutional buyers or in a public offering registered under the Securities Act of 1933. These securities have been deemed liquid under guidelines approved by the Trust’s Board of Trustees. At June 30, 2014, the aggregate value of these securities was $12,485,010, representing 3.28% of net assets.

^bNon-income producing.

^cSee Note 1(c) regarding joint repurchase agreement.

^dThe security is traded on a discount basis with no stated coupon rate.

FGR-12 Semiannual Report   |    The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Financial Statements

Statement of Assets and Liabilities

June 30, 2014 (unaudited)

	Franklin Global Real Estate VIP Fund
Assets:
Investments in securities:
Cost - Unaffiliated issuers	$	237,643,386
Cost - Repurchase agreements		4,395,660
Total cost of investments	$	242,039,046
Value - Unaffiliated issuers	$	375,640,403
Value - Repurchase agreements		4,395,660
Total value of investments		380,036,063
Foreign currency, at value (cost and $50,069)		50,184
Receivables:
Investment securities sold		244,831
Capital shares sold		18,209
Dividends		1,555,424
Other assets		165
Total assets		381,904,876
Liabilities:
Payables:
Capital shares redeemed		430,883
Management fees		328,017
Distribution fees		142,873
Reports to shareholders		109,481
Accrued expenses and other liabilities		35,489
Total liabilities		1,046,743
Net assets, at value	$	380,858,133
Net assets consist of:
Paid-in capital	$	583,200,149
Distributions in excess of net investment income		(5,284,357	)
Net unrealized appreciation (depreciation)		138,004,320
Accumulated net realized gain (loss)		(335,061,979	)
Net assets, at value	$	380,858,133

The accompanying notes are an integral part of these financial statements.    |   Semiannual Report FGR-13

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL STATEMENTS

Statement of Assets and Liabilities (continued)

June 30, 2014 (unaudited)

	Franklin Global Real Estate VIP Fund
Class 1:
Net assets, at value	$	36,539,095
Shares outstanding		2,309,454
Net asset value and maximum offering price per share	$	15.82
Class 2:
Net assets, at value	$	344,319,038
Shares outstanding		22,293,801
Net asset value and maximum offering price per share	$	15.44

FGR-14 Semiannual Report   |    The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL STATEMENTS

Statement of Operations

for the six months ended June 30, 2014 (unaudited)

	Franklin Global Real Estate VIP Fund
Investment income:
Dividends (net of foreign taxes of $385,750)	$	5,021,512
Interest		618
Total investment income		5,022,130
Expenses:
Management fees (Note 3a)		1,916,198
Distribution fees - Class 2 (Note 3c)		412,664
Custodian fees (Note 4)		13,155
Reports to shareholders		41,986
Professional fees		26,823
Trustees’ fees and expenses		710
Other		8,911
Total expenses		2,420,447
Net investment income		2,601,683
Realized and unrealized gains (losses):
Net realized gain (loss) from:
Investments		10,891,725
Realized gain distributions from REITs		1,145,225
Foreign currency transactions		(31,668	)
Net realized gain (loss)		12,005,282
Net change in unrealized appreciation (depreciation) on:
Investments		25,135,025
Translation of other assets and liabilities denominated in foreign currencies		10,594
Net change in unrealized appreciation (depreciation)		25,145,619
Net realized and unrealized gain (loss)		37,150,901
Net increase (decrease) in net assets resulting from operations	$	39,752,584

The accompanying notes are an integral part of these financial statements.    |   Semiannual Report FGR-15

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL STATEMENTS

Statements of Changes in Net Assets

	Franklin Global Real Estate VIP Fund
	Six Months Ended June 30, 2014 (unaudited)			Year Ended December 31, 2013
Increase (decrease) in net assets:
Operations:
Net investment income	$	2,601,683		$	5,357,758
Net realized gain (loss) from investments, realized gain distributions from REITs and foreign currency transactions		12,005,282			16,305,580
Net change in unrealized appreciation (depreciation) on investments, translation of other assets and liabilities denominated in foreign currencies and deferred taxes		25,145,619			(13,068,801	)
Net increase (decrease) in net assets resulting from operations		39,752,584			8,594,537
Distributions to shareholders from net investment income:
Net investment income:
Class 1		(245,080	)		(1,817,696	)
Class 2		(1,512,651	)		(15,833,743	)
Total distributions to shareholders		(1,757,731	)		(17,651,439	)
Capital share transactions: (Note 2)
Class 1		(1,344,681	)		(3,263,237	)
Class 2		(18,893,190	)		(6,951,491	)
Total capital share transactions		(20,237,871	)		(10,214,728	)
Net increase (decrease) in net assets		17,756,982			(19,271,630	)
Net assets:
Beginning of period		363,101,151			382,372,781
End of period	$	380,858,133		$	363,101,151
Distributions in excess of net investment income included in net assets:
End of period	$	(5,284,357	)	$	(6,128,309	)

FGR-16 Semiannual Report   |    The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Notes to Financial Statements (unaudited)

Franklin Global Real Estate VIP Fund

1. Organization and Significant Accounting Policies

Franklin Templeton Variable Insurance Products Trust (Trust) is registered under the Investment Company Act of 1940, as amended, (1940 Act) as an open-end management investment company, consisting of twenty separate funds and applies the specialized accounting and reporting guidance in U.S. Generally Accepted Accounting Principles (U.S. GAAP). The Franklin Global Real Estate VIP Fund (Fund) is included in this report. The financial statements of the remaining funds in the Trust are presented separately. Shares of the Fund are generally sold only to insurance company separate accounts to fund the benefits of variable life insurance policies or variable annuity contracts. At June 30, 2014, 58.07% of the Fund’s shares were held through one insurance company. Investment activities of these insurance company separate accounts could have a material impact on the Fund. The Fund offers two classes of shares: Class 1 and Class 2. Each class of shares differs by its distribution fees, voting rights on matters affecting a single class and its exchange privilege.

Effective May 1, 2014, the Franklin Global Real Estate Securities Fund was renamed the Franklin Global Real Estate VIP Fund.

The following summarizes the Fund’s significant accounting policies.

a. Financial Instrument Valuation

The Fund’s investments in financial instruments are carried at fair value daily. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. The Fund calculates the net asset value (NAV) per share at the close of the New York Stock Exchange (NYSE), generally at 4 p.m. Eastern time (NYSE close) on each day the NYSE is open for trading. Under compliance policies and procedures approved by the Trust’s Board of Trustees (the Board), the Fund’s administrator has responsibility for oversight of valuation, including leading the cross-functional Valuation and Liquidity Oversight Committee (VLOC). The VLOC provides administration and oversight of the Fund’s valuation policies and procedures, which are approved annually by the Board. Among other things, these procedures allow the Fund to utilize independent pricing services, quotations from securities and financial instrument dealers, and other market sources to determine fair value.

Equity securities listed on an exchange or on the NASDAQ National Market System are valued at the last quoted sale price or the official closing price of the day, respectively. Foreign equity securities are valued as of the close of trading on the foreign stock exchange on which the security is primarily traded or as of the NYSE close, whichever is earlier. The value is then converted into its U.S. dollar equivalent at the foreign exchange rate in effect at the NYSE close on the day that the value of the security is determined. Over-the-counter (OTC) securities are valued within the range of the most recent quoted bid and ask prices. Securities that trade in multiple markets or on multiple exchanges are valued according to the broadest and most representative market. Certain equity securities are valued based upon fundamental characteristics or relationships to similar securities. Repurchase agreements are valued at cost, which approximates fair value.

The Fund has procedures to determine the fair value of financial instruments for which market prices are not reliable or readily available. Under these procedures, the VLOC convenes on a regular basis to review such financial instruments and considers a number of factors, including significant unobservable valuation inputs, when arriving at fair value. The VLOC primarily employs a market-based approach which may use related or comparable assets or liabilities, recent transactions, market multiples, book values, and other relevant information for the investment to determine the fair value of the investment. An income-based valuation approach may also be used in which the anticipated future cash flows of the investment are discounted to calculate fair value. Discounts may also be applied due to the nature or duration of any restrictions on the disposition of the investments. Due to the inherent uncertainty of valuations of such investments, the fair values may differ significantly from the values that would have been used had an active market existed. The VLOC employs various methods for calibrating these valuation approaches including a regular review of key inputs and assumptions, transactional back-testing or disposition analysis, and reviews of any related market activity.

Trading in securities on foreign securities stock exchanges and OTC markets may be completed before the daily NYSE close. In addition, trading in certain foreign markets may not take place on every NYSE business day. Occasionally, events occur between the time at which trading in a foreign security is completed and the close of the NYSE that might call into question the reliability of the value of a portfolio security held by the Fund. As a result, differences may arise between the value of

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FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Global Real Estate VIP Fund (continued)

the Fund’s portfolio securities as determined at the foreign market close and the latest indications of value at the close of the NYSE. In order to minimize the potential for these differences, the VLOC monitors price movements following the close of trading in foreign stock markets through a series of country specific market proxies (such as baskets of American Depositary Receipts, futures contracts and exchange traded funds). These price movements are measured against established trigger thresholds for each specific market proxy to assist in determining if an event has occurred that may call into question the reliability of the values of the foreign securities held by the Fund. If such an event occurs, the securities may be valued using fair value procedures, which may include the use of independent pricing services.

Also, when the last day of the reporting period is a non-business day, certain foreign markets may be open on those days that the NYSE is closed, which could result in differences between the value of the Fund’s portfolio securities on the last business day and the last calendar day of the reporting period. Any significant security valuation changes due to an open foreign market are adjusted and reflected by the Fund for financial reporting purposes.

b. Foreign Currency Translation

Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars based on the exchange rate of such currencies against U.S. dollars on the date of valuation. The Fund may enter into foreign currency exchange contracts to facilitate transactions denominated in a foreign currency. Purchases and sales of securities, income and expense items denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date. Portfolio securities and assets and liabilities denominated in foreign currencies contain risks that those currencies will decline in value relative to the U.S. dollar. Occasionally, events may impact the availability or reliability of foreign exchange rates used to convert the U.S. dollar equivalent value. If such an event occurs, the foreign exchange rate will be valued at fair value using procedures established and approved by the Board.

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

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

c. Joint Repurchase Agreement

The Fund enters into a joint repurchase agreement whereby its uninvested cash balance is deposited into a joint cash account with other funds managed by the investment manager or an affiliate of the investment manager and is used to invest in one or more repurchase agreements. The value and face amount of the joint repurchase agreement are allocated to the funds based on their pro-rata interest. A repurchase agreement is accounted for as a loan by the Fund to the seller, collateralized by securities which are delivered to the Fund’s custodian. The fair value, including accrued interest, of the initial collateralization is required to be at least 102% of the dollar amount invested by the funds, with the value of the underlying securities marked to market daily to maintain coverage of at least 100%. Repurchase agreements are subject to the terms of Master Repurchase Agreements (MRAs) with approved counterparties (sellers). The MRAs contain various provisions, including but not limited to events of default and maintenance of collateral for repurchase agreements. In the event of default by either the seller or the Fund, certain MRAs may permit the non-defaulting party to net and close-out all transactions, if any, traded under such agreements. The Fund may sell securities it holds as collateral and apply the proceeds towards the repurchase price and any other amounts owed by the seller to the Fund in the event of default by the seller. This could involve costs or delays in addition to a loss on the securities if their value falls below the repurchase price owed by the seller. The joint repurchase agreement held by the Fund at period end, as indicated in the Statement of Investments, had been entered into on June 30, 2014.

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1. Organization and Significant Accounting Policies (continued)

a. Financial Instrument Valuation (continued)

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Global Real Estate VIP Fund (continued)

d. Income and Deferred Taxes

It is the Fund’s policy to qualify as a regulated investment company under the Internal Revenue Code. The Fund intends to distribute to shareholders substantially all of its taxable income and net realized gains to relieve it from federal income and if applicable, excise taxes. As a result, no provision for U.S. federal income taxes is required.

The Fund may be subject to foreign taxation related to income received, capital gains on the sale of securities and certain foreign currency transactions in the foreign jurisdictions in which it invests. Foreign taxes, if any, are recorded based on the tax regulations and rates that exist in the foreign markets in which the Fund invests. When a capital gain tax is determined to apply the Fund records an estimated deferred tax liability in an amount that would be payable if the securities were disposed of on the valuation date.

The Fund recognizes the tax benefits of uncertain tax positions only when the position is “more likely than not” to be sustained upon examination by the tax authorities based on the technical merits of the tax position. As of June 30, 2014, and for all open tax years, the Fund has determined that no liability for unrecognized tax benefits is required in the Fund’s financial statements related to uncertain tax positions taken on a tax return (or expected to be taken on future tax returns). Open tax years are those that remain subject to examination and are based on each tax jurisdiction statute of limitation.

e. Security Transactions, Investment Income, Expenses and Distributions

Security transactions are accounted for on trade date. Realized gains and losses on security transactions are determined on a specific identification basis. Interest income and estimated expenses are accrued daily. Dividend income is recorded on the ex-dividend date except that certain dividends from foreign securities are recognized as soon as the Fund is notified of the ex-dividend date. Distributions to shareholders are recorded on the ex-dividend date and are determined according to income tax regulations (tax basis). Distributable earnings determined on a tax basis may differ from earnings recorded in accordance with accounting principles generally accepted in the United

States of America. These differences may be permanent or temporary. Permanent differences are reclassified among capital accounts to reflect their tax character. These reclassifications have no impact on net assets or the results of operations. Temporary differences are not reclassified, as they may reverse in subsequent periods.

Common expenses incurred by the Trust are allocated among the funds based on the ratio of net assets of each fund to the combined net assets of the Trust. Fund specific expenses are charged directly to the fund that incurred the expense.

Realized and unrealized gains and losses and net investment income, not including class specific expenses, are allocated daily to each class of shares based upon the relative proportion of net assets of each class. Differences in per share distributions, by class, are generally due to differences in class specific expenses.

Distributions received by the Fund from certain securities may be a return of capital (ROC). Such distributions reduce the cost basis of the securities, and any distributions in excess of the cost basis are recognized as capital gains.

f. Accounting Estimates

The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the amounts of income and expenses during the reporting period. Actual results could differ from those estimates.

g. Guarantees and Indemnifications

Under the Trust’s organizational documents, its officers and trustees are indemnified by the Trust against certain liabilities arising out of the performance of their duties to the Trust. Additionally, in the normal course of business, the Trust, on behalf of the Fund, enters into contracts with service providers that contain general indemnification clauses. The Trust’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Trust that have not yet occurred. Currently, the Trust expects the risk of loss to be remote.

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NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Global Real Estate VIP Fund (continued)

2. Shares of Beneficial Interest

At June 30, 2014, there were an unlimited number of shares authorized (without par value). Transactions in the Fund’s shares were as follows:

	Six Months Ended June 30, 2014						Year Ended December 31, 2013
	Shares			Amount			Shares			Amount
Class 1 Shares:
Shares sold		35,227		$	497,856			36,029		$	545,808
Shares issued in reinvestment of distributions		15,710			245,080			127,468			1,817,696
Shares redeemed		(140,668	)		(2,087,617	)		(379,619	)		(5,626,741	)
Net increase (decrease)		(89,731	)	$	(1,344,681	)		(216,122	)	$	(3,263,237	)
Class 2 Shares:
Shares sold		224,217		$	3,234,700			1,380,638		$	20,243,191
Shares issued in reinvestment of distributions		99,321			1,512,651			1,136,665			15,833,743
Shares redeemed		(1,634,408	)		(23,640,541	)		(3,013,876	)		(43,028,425	)
Net increase (decrease)		(1,310,870	)	$	(18,893,190	)		(496,573	)	$	(6,951,491	)

3. Transactions With Affiliates

Franklin Resources, Inc. is the holding company for various subsidiaries that together are referred to as Franklin Templeton Investments. Certain officers and trustees of the Fund are also officers and/or directors of the following subsidiaries:

Subsidiary	Affiliation
Franklin Templeton Institutional, LLC (FT Institutional)	Investment manager
Franklin Templeton Services, LLC (FT Services)	Administrative manager
Franklin Templeton Distributors, Inc. (Distributors)	Principal underwriter
Franklin Templeton Investor Services, LLC (Investor Services)	Transfer agent

a. Management Fees

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

Annualized Fee Rate	Net Assets
1.050%	Up to and including $500 million
0.950%	Over $500 million, up to and including $1 billion
0.900%	Over $1 billion, up to and including $1.5 billion
0.850%	Over $1.5 billion, up to and including $6.5 billion
0.830%	Over $6.5 billion, up to and including $11.5 billion
0.810%	Over $11.5 billion, up to and including $16.5 billion
0.790%	Over $16.5 billion, up to and including $19 billion
0.780%	Over $19 billion, up to and including $21.5 billion
0.770%	In excess of $21.5 billion

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NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Global Real Estate VIP Fund (continued)

b. Administrative Fees

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

c. Distribution Fees

The Board has adopted a distribution plan for Class 2 shares pursuant to Rule 12b-1 under the 1940 Act. Under the Fund’s compensation distribution plan, the Fund pays Distributors for costs incurred in connection with the servicing, sale and distribution of the Fund’s shares up to 0.35% per year of its average daily net assets of Class 2. Some distribution fees are not charged on shares held by affiliates. The Board has agreed to limit the current rate to 0.25% per year for Class 2. The plan year, for purposes of monitoring compliance with the maximum annual plan rate, is February 1 through January 31.

d. Transfer Agent Fees

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

4. Expense Offset Arrangement

The Fund has entered into an arrangement with its custodian whereby credits realized as a result of uninvested cash balances are used to reduce a portion of the Fund’s custodian expenses. During the period ended June 30, 2014, there were no credits earned.

5. Income Taxes

For tax purposes, capital losses may be carried over to offset future capital gains. Capital loss carryforwards with no expiration, if any, must be fully utilized before those losses with expiration dates.

At December 31, 2013, capital loss carryforwards were as follows:

Capital loss carryforwards expiring in:
2016	$	126,624,881
2017		207,448,609
2018		2,192,369
	$	336,265,859

At June 30, 2014, the cost of investments and net unrealized appreciation (depreciation) for income tax purposes were as follows:

Cost of investments	$	260,355,318
Unrealized appreciation	$	131,257,620
Unrealized depreciation		(11,576,875	)
Net unrealized appreciation (depreciation)	$	119,680,745

Differences between income and/or capital gains as determined on a book basis and a tax basis are primarily due to differing treatment of passive foreign investment company shares and wash sales.

6. Investment Transactions

Purchases and sales of investments (excluding short term securities) for the period ended June 30, 2014, aggregated $34,365,080 and $52,121,385, respectively.

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FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Global Real Estate VIP Fund (continued)

7. Concentration of Risk

Investing in foreign securities may include certain risks and considerations not typically associated with investing in U.S. securities, such as fluctuating currency values and changing local and regional economic, political and social conditions, which may result in greater market volatility. In addition, certain foreign securities may not be as liquid as U.S. securities.

8. Credit Facility

The Fund, together with other U.S. registered and foreign investment funds (collectively, Borrowers), managed by Franklin Templeton Investments, are borrowers in a joint syndicated senior unsecured credit facility totaling $1.5 billion (Global Credit Facility) which matures on February 13, 2015. This Global Credit Facility provides a source of funds to the Borrowers for temporary and emergency purposes, including the ability to meet future unanticipated or unusually large redemption requests.

Under the terms of the Global Credit Facility, the Fund shall, in addition to interest charged on any borrowings made by the Fund and other costs incurred by the Fund, pay its share of fees and expenses incurred in connection with the implementation and maintenance of the Global Credit Facility, based upon its relative share of the aggregate net assets of all of the Borrowers, including an annual commitment fee of 0.07% based upon the unused portion of the Global Credit Facility. These fees are reflected in other expenses on the Statement of Operations. During the period ended June 30, 2014, the Fund did not use the Global Credit Facility.

9. Fair Value Measurements

The Fund follows a fair value hierarchy that distinguishes between market data obtained from independent sources (observable inputs) and the Fund’s own market assumptions (unobservable inputs). These inputs are used in determining the value of the Fund’s financial instruments and are summarized in the following fair value hierarchy:

• Level 1 – quoted prices in active markets for identical financial instruments

• Level 2 – other significant observable inputs (including quoted prices for similar financial instruments, interest rates, prepayment speed, credit risk, etc.)

• Level 3 – significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of financial instruments)

The input levels are not necessarily an indication of the risk or liquidity associated with financial instruments at that level.

For movements between the levels within the fair value hierarchy, the Fund has adopted a policy of recognizing the transfers as of the date of the underlying event which caused the movement.

A summary of inputs used as of June 30, 2014, in valuing the Fund’s assets carried at fair value, is as follows:

	Level 1		Level 2		Level 3		Total
Assets:
Investments in Securities:
Equity Investmentsa	$	375,640,403	$	—	$	—	$	375,640,403
Short Term Investments		—		4,395,660		—		4,395,660
Total Investments in Securities	$	375,640,403	$	4,395,660	$	—	$	380,036,063

^aFor detailed categories, see the accompanying Statement of Investments.

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FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Global Real Estate VIP Fund (continued)

10. New Accounting Pronouncements

In June 2014, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) No. 2014-11, Transfers and Servicing (Topic 860), Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures. The ASU changes the accounting for certain repurchase agreements and expands disclosure requirements related to repurchase agreements, securities lending, repurchase-to-maturity and similar transactions. The ASU is effective for interim and annual reporting periods beginning after December 15, 2014. Management is currently evaluating the impact, if any, of applying this provision.

11. Subsequent Events

The Fund has evaluated subsequent events through the issuance of the financial statements and determined that no events have occurred that require disclosure.

Abbreviations

Selected Portfolio
IDR	International Depositary Receipt
REIT	Real Estate Investment Trust

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FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

TAX INFORMATION (UNAUDITED)

Franklin Global Real Estate VIP Fund

At December 31, 2013, more than 50% of the Fund’s total assets were invested in securities of foreign issuers. In most instances, foreign taxes were withheld from income paid to the Fund on these investments. As shown in the table below, the Fund hereby reports to shareholders the foreign source income and foreign taxes paid, pursuant to Section 853 of the Internal Revenue Code. This written statement will allow shareholders of record on June 12, 2014, to treat their proportionate share of foreign taxes paid by the Fund as having been paid directly by them. The shareholder shall consider these amounts as foreign taxes paid in the tax year in which they receive the Fund distribution.

The following table provides a detailed analysis of foreign tax paid, and foreign source income as reported by the Fund, to Class 1 and Class 2 shareholders of record.

Class	Foreign Tax Paid Per Share		Foreign Source Income Per Share
Class 1		$0.0235		$0.1142
Class 2		$0.0235		$0.0816

Foreign Tax Paid Per Share (Column 1) is the amount per share available to you, as a tax credit (assuming you held your shares in the Fund for a minimum of 16 days during the 31-day period beginning 15 days before the ex-dividend date of the Fund’s distribution to which the foreign taxes relate), or as a tax deduction.

Foreign Source Income Per Share (Column 2) is the amount per share of income dividends attributable to foreign securities held by the Fund, plus any foreign taxes withheld on these dividends.

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Franklin Growth and Income VIP Fund

(Formerly, Franklin Growth and Income Securities Fund)

This semiannual report for Franklin Growth and Income VIP Fund covers the period ended June 30, 2014.

Class 2 Performance Summary as of June 30, 2014

Franklin Growth and Income VIP Fund – Class 2 delivered a +5.88% total return for the six-month period ended June 30, 2014.

Performance reflects the Fund’s Class 2 operating expenses, but does not include any contract fees, expenses or sales charges. If they had been included, performance would be lower. These charges and deductions, particularly for variable life policies, can have a significant effect on contract values and insurance benefits. See the contract prospectus for a complete description of these expenses, including sales charges.

Performance data represent past performance, which does not guarantee future results. Investment return and principal value will fluctuate, and you may have a gain or loss when you sell your shares. Current performance may differ from figures shown.

Semiannual Report FGI-1

FRANKLIN GROWTH AND INCOME VIP FUND

Fund Goals and Main Investments: Franklin Growth and Income VIP Fund seeks capital appreciation with current income as a secondary goal. Under normal market conditions, the Fund invests predominantly in equity securities, including securities convertible into common stock.

Fund Risks: All investments involve risks, including possible loss of principal. Stock prices fluctuate, sometimes rapidly and dramatically, due to factors affecting individual companies, particular industries or sectors, or general market conditions. Convertible securities are subject to the risks of stocks when the underlying stock price is high relative to the conversion price and debt securities when the underlying stock price is low relative to the conversion price. The Fund’s investment in foreign securities also involves special risks, including currency fluctuations and economic as well as political uncertainty. The Fund is actively managed but there is no guarantee that the manager’s investment decisions will produce the desired results. The Fund’s prospectus also includes a description of the main investment risks.

Performance Overview

You can find the Fund’s six-month total return in the Performance Summary. In comparison, the Fund’s benchmark, the Standard & Poor’s^® 500 Index (S&P 500^®), produced a +7.14% total return.¹ The Fund’s peers as measured by the Lipper VIP Equity Income Funds Classification Average, posted a +6.87% return for the same period.²

Economic and Market Overview

The U.S. economy showed some signs of recovery during the six-month period ended June 30, 2014, despite a first-quarter contraction in gross domestic product. Manufacturing activity expanded, and the unemployment rate declined to 6.1% in June 2014 from 6.7% in December 2013.³ Except for a sharp increase in March, retail sales rose at a modest pace that missed consensus expectations. The housing market had some weather-related weakness early in 2014, but home sales picked up in the spring and home prices were higher than a year ago.

The Federal Reserve Board (Fed) began reducing bond purchases by $10 billion a month in January 2014, based on earlier largely positive economic and employment data. Although

economic data in early 2014 were soft, Fed Chair Janet Yellen kept the pace of asset-purchase tapering intact while adopting a more qualitative approach to rate-hike guidance. However, the Fed pledged to keep interest rates low for a considerable time after the asset-purchase program ends, depending on inflation and employment trends. In June, the Fed lowered projections for near- and long-term economic growth even as it maintained the pace of tapering.

Investors’ confidence grew as corporate profits rose and generally favorable economic data indicated continued recovery despite brief sell-offs when many investors reacted to the Fed’s statements, political instability in certain emerging markets and

1. © 2014 Morningstar.

2. Source: Lipper, a Thomson Reuters Company.

One cannot invest directly in an index, and an index is not representative of the Fund’s portfolio. Please see Index Descriptions following the Fund Summaries.

3. Source: Bureau of Labor Statistics.

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FRANKLIN GROWTH AND INCOME VIP FUND

China’s slowing economy. U.S. stocks continued to gain for the six months under review as the S&P 500 and Dow Jones Industrial Average reached all-time highs.⁴

Investment Strategy

We seek to invest in a broadly diversified portfolio of equity securities that we consider to be financially strong, with a focus on “blue chip” companies. We apply a bottom-up approach to investing in individual securities. We will assess the market price of a company’s securities relative to our evaluation of the company’s long-term earnings, asset value and cash flow potential. We also consider a company’s price/earnings ratio, profit margins, balance sheet and liquidation value. We consider dividend yield in selecting stocks for the Fund because we believe that, over time, dividend income can contribute significantly to total return and can be a more consistent source of investment return than capital appreciation. We seek to take advantage of price dislocations that result from the market’s short-term focus and choose to invest in those companies that, in our opinion, offer the best trade-off between growth opportunity, business and financial risk, and valuation.

Manager’s Discussion

During the six months under review, most of the sectors the Fund invested in rose in value, as did most of the portfolio’s individual securities, supporting overall performance. Key contributing sectors included utilities, information technology (IT) and health care. The telecommunication services sector was the sole detractor.

Among utilities, top contributors included natural gas and electric utilities company PG&E’s stock and clean energy company NextEra Energy’s convertible preferred stock. PG&E’s share price rose after the company reported better-than-expected first-quarter 2014 revenue. The stock also benefited from the market’s positive outlook on the company’s portfolio of regulated utility assets and pipeline of electricity transmission and distribution projects. Leading IT performers included semiconductor products manufacturers Maxim Integrated Products and Intel. Maxim reported quarterly earnings that beat expectations, driven by growth in the automotive, industrial and communication businesses. In health care, pharmaceutical company Eli Lilly & Co. and medical devices, pharmaceutical and consumer packaged goods company Johnson & Johnson

Top 10 Holdings
6/30/14
Company Sector/Industry	% of Total Net Assets
Republic Services Inc. Industrials		2.3%
Microsoft Corp. Information Technology		2.2%
Maxim Integrated Products Inc. Information Technology		2.1%
Ford Motor Co. Consumer Discretionary		2.1%
Royal Dutch Shell PLC, A Energy		2.1%
The Dow Chemical Co. Materials		2.1%
Cisco Systems Inc. Information Technology		2.1%
Roche Holding AG Health Care		2.1%
BlackRock Inc. Financials		2.0%
Starwood Hotels & Resorts Worldwide Inc. Consumer Discretionary		2.0%

The dollar value, number of shares or principal amount, and names of all portfolio holdings are listed in the Fund’s Statement of Investments.

were among the top performers. Shares of Eli Lilly gained after the company reported positive phase III trial results for two cancer drugs. The company agreed to acquire the animal health division of Novartis to strengthen its global animal health division.

In contrast, our investments in the telecommunication services sector hindered the Fund’s results. U.K.-based telecommunication services provider Vodafone Group’s share price fell after the company’s fiscal year 2014 revenue declined because of stiff competition and regulatory headwinds in Europe. The company also provided sluggish revenue guidance for fiscal year 2015. Other key individual detractors included software solutions company CA, discount retailer Target, payroll processor Paychex and insurer Aflac. CA detracted from relative returns after it reported lower revenues in the fiscal 2014 fourth quarter. A credit card data breach announced in December 2013 and problems with a Canadian expansion continued to weigh on Target’s stock, although fourth-quarter 2013 earnings still beat estimates. The stock was also affected by concerns over management changes.

4. Please see Index Descriptions following the Fund Summaries.

Semiannual Report FGI-3

FRANKLIN GROWTH AND INCOME VIP FUND

Thank you for your participation in Franklin Growth and Income VIP Fund. We look forward to serving your future investment needs.

The foregoing information reflects our analysis, opinions and portfolio holdings as of June 30, 2014, the end of the reporting period. The way we implement our main investment strategies and the resulting portfolio holdings may change depending on factors such as market and economic conditions. These opinions may not be relied upon as investment advice or an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but the investment manager makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.

FGI-4 Semiannual Report

FRANKLIN GROWTH AND INCOME VIP FUND

Class 2 Fund Expenses

As an investor in a variable insurance contract (Contract) that indirectly provides for investment in an underlying mutual fund, you can incur transaction and/or ongoing expenses at both the Fund level and the Contract level.

• Transaction expenses can include sales charges (loads) on purchases, surrender fees, transfer fees and premium taxes.

• Ongoing expenses can include management fees, distribution and service (12b-1) fees, contract fees, annual maintenance fees, mortality and expense risk fees and other fees and expenses. All mutual funds and Contracts have some types of ongoing expenses.

The expenses shown in the table are meant to highlight ongoing expenses at the Fund level only and do not include ongoing expenses at the Contract level, or transaction expenses at either the Fund or Contract levels. While the Fund does not have transaction expenses, if the transaction and ongoing expenses at the Contract level were included, the expenses shown below would be higher. You should consult your Contract prospectus or disclosure document for more information.

The table shows Fund-level ongoing expenses and can help you understand these expenses and compare them with those of other mutual funds offered through the Contract. The table assumes a $1,000 investment held for the six months indicated. Please refer to the Fund prospectus for additional information on operating expenses.

Actual Fund Expenses

The first line (Actual) of the table provides actual account values and expenses. The “Ending Account Value” is derived from the Fund’s actual return, which includes the effect of ongoing Fund expenses, but does not include the effect of ongoing Contract expenses.

You can estimate the Fund-level expenses you incurred during the period by following these steps. Of course, your account value and expenses will differ from those in this illustration:

1. Divide your account value by $1,000.

If an account had an $8,600 value, then $8,600 ÷ $1,000 = 8.6.

2. Multiply the result by the number under the heading “Fund-Level Expenses Incurred During Period.”

If Fund-Level Expenses Incurred During Period were $7.50, then 8.6 × $7.50 = $64.50.

In this illustration, the estimated expenses incurred this period at the Fund level are $64.50.

Hypothetical Example for Comparison with Other Mutual Funds

Information in the second line (Hypothetical) of the table can help you compare ongoing expenses of the Fund with those of other mutual funds offered through the Contract. This information may not be used to estimate the actual ending account balance or expenses you incurred during the period. The hypothetical “Ending Account Value” is based on the Fund’s actual expense ratio and an assumed 5% annual rate of return before expenses, which does not represent the Fund’s actual return. The figure under the heading “Fund-Level Expenses Incurred During Period” shows the hypothetical expenses your account would have incurred under this scenario. You can compare this figure with the 5% hypothetical examples that appear in shareholder reports of other funds offered through a Contract.

Class 2	Beginning Account Value 1/1/14		Ending Account Value 6/30/14		Fund-Level Expenses Incurred During Period* 1/1/14–6/30/14
Actual		$1,000		$1,058.80		$4.24
Hypothetical (5% return before expenses)		$1,000		$1,020.68		$4.16

*Expenses are calculated using the most recent six-month annualized expense ratio for the Fund’s Class 2 shares (0.83%), which does not include any ongoing expenses of the Contract for which the Fund is an investment option, multiplied by the average account value over the period, multiplied by 181/365 to reflect the one-half year period.

Semiannual Report FGI-5

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Financial Highlights

Franklin Growth and Income VIP Fund

	Six Months Ended June 30, 2014 (unaudited)			Year Ended December 31,
				2013			2012			2011			2010			2009
Class 1
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$15.97			$12.64			$11.60			$11.76			$10.47			$  8.72
Income from investment operationsa:
Net investment incomeb		0.32	c		0.33			0.35			0.33			0.38			0.31
Net realized and unrealized gains (losses)		0.64			3.40			1.08			(0.03	)		1.32			1.92
Total from investment operations		0.96			3.73			1.43			0.30			1.70			2.23
Less distributions from net investment income		(0.43	)		(0.40	)		(0.39	)		(0.46	)		(0.41	)		(0.48	)
Net asset value, end of period		$16.50			$15.97			$12.64			$11.60			$11.76			$10.47
Total returnd		6.05%			29.96%			12.53%			2.64%			16.93%			26.82%
Ratios to average net assetse
Expenses		0.58%	f		0.58%	f		0.60%			0.59%			0.59%			0.60%	f
Net investment income		4.06%	c		2.29%			2.86%			2.80%			3.62%			3.46%
Supplemental data
Net assets, end of period (000’s)		$174,280			$175,860			$154,463			$156,830			$176,590			$174,403
Portfolio turnover rate		9.12%			35.16%			30.00%			32.93%			26.83%			51.05%

^aThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.

^bBased on average daily shares outstanding.

^cNet investment income per share includes approximately $0.12 per share received in the form of a special dividend paid in connection with certain Fund holdings. Excluding this amount, the ratio of net investment income to average net assets would have been 2.60%.

^dTotal return does not include fees, charges or expenses imposed by the variable annuity and life insurance contracts for which the Franklin Templeton Variable Insurance Products Trust serves as an underlying investment vehicle. Total return is not annualized for periods less than one year.

^eRatios are annualized for periods less than one year.

^fBenefit of expense reduction rounds to less than 0.01%.

FGI-6 Semiannual Report   |    The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL HIGHLIGHTS

Franklin Growth and Income VIP Fund (continued)

	Six Months Ended June 30, 2014 (unaudited)			Year Ended December 31,
				2013			2012			2011			2010			2009
Class 2
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$15.73			$12.46			$11.44			$11.60			$10.33			$  8.59
Income from investment operationsa:
Net investment incomeb		0.30	c		0.29			0.32			0.29			0.35			0.28
Net realized and unrealized gains (losses)		0.62			3.35			1.05			(0.02	)		1.31			1.90
Total from investment operations		0.92			3.64			1.37			0.27			1.66			2.18
Less distributions from net investment income		(0.39	)		(0.37	)		(0.35	)		(0.43	)		(0.39	)		(0.44	)
Net asset value, end of period		$16.26			$15.73			$12.46			$11.44			$11.60			$10.33
Total returnd		5.88%			29.60%			12.23%			2.41%			16.68%			26.55%
Ratios to average net assetse
Expenses		0.83%	f		0.83%	f		0.85%			0.84%			0.84%			0.85%	f
Net investment income		3.81%	c		2.04%			2.61%			2.55%			3.37%			3.21%
Supplemental data
Net assets, end of period (000’s)		$145,062			$150,966			$131,400			$129,309			$151,481			$152,077
Portfolio turnover rate		9.12%			35.16%			30.00%			32.93%			26.83%			51.05%

^aThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.

^bBased on average daily shares outstanding.

^cNet investment income per share includes approximately $0.12 per share received in the form of a special dividend paid in connection with certain Fund holdings. Excluding this amount, the ratio of net investment income to average net assets would have been 2.35%.

^dTotal return does not include fees, charges or expenses imposed by the variable annuity and life insurance contracts for which the Franklin Templeton Variable Insurance Products Trust serves as an underlying investment vehicle. Total return is not annualized for periods less than one year.

^eRatios are annualized for periods less than one year.

^fBenefit of expense reduction rounds to less than 0.01%.

The accompanying notes are an integral part of these financial statements.    |   Semiannual Report FGI-7

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Statement of Investments, June 30, 2014 (unaudited)

Franklin Growth and Income VIP Fund
		Country		Shares		Value
	Common Stocks 92.4%
	Consumer Discretionary 16.3%
a	Amazon.com Inc.		United States		15,000	$	4,871,700
	Ford Motor Co.		United States		384,000		6,620,160
	General Motors Co.		United States		34,388		1,248,284
	L Brands Inc.		United States		97,800		5,736,948
	Lowe’s Cos. Inc.		United States		93,600		4,491,864
	McDonald’s Corp.		United States		62,700		6,316,398
	NIKE Inc., B		United States		71,900		5,575,845
	Starwood Hotels & Resorts Worldwide Inc.		United States		80,000		6,465,600
	Target Corp.		United States		89,400		5,180,730
	Wynn Resorts Ltd.		United States		27,500		5,707,900
							52,215,429
	Consumer Staples 7.9%
	Diageo PLC, ADR		United Kingdom		45,300		5,765,331
	Mead Johnson Nutrition Co., A		United States		66,300		6,177,171
	Nestle SA		Switzerland		52,800		4,090,162
	PepsiCo Inc.		United States		70,900		6,334,206
	The Procter & Gamble Co.		United States		36,500		2,868,535
							25,235,405
	Energy 6.0%
	BP PLC, ADR		United Kingdom		59,900		3,159,725
	Chevron Corp.		United States		26,800		3,498,740
	Exxon Mobil Corp.		United States		57,644		5,803,598
	Royal Dutch Shell PLC, A, ADR		United Kingdom		80,200		6,606,074
							19,068,137
	Financials 12.0%
	Aflac Inc.		United States		84,200		5,241,450
	Bank of America Corp.		United States		149,000		2,290,130
	BlackRock Inc.		United States		20,300		6,487,880
	JPMorgan Chase & Co.		United States		111,170		6,405,615
	Marsh & McLennan Cos. Inc.		United States		77,300		4,005,686
	MetLife Inc.		United States		60,723		3,373,770
	T. Rowe Price Group Inc.		United States		54,000		4,558,140
	Wells Fargo & Co.		United States		113,200		5,949,792
							38,312,463
	Health Care 9.3%
	Bristol-Myers Squibb Co.		United States		45,400		2,202,354
	Eli Lilly & Co.		United States		88,700		5,514,479
	Johnson & Johnson		United States		51,800		5,419,316
	Pfizer Inc.		United States		152,600		4,529,168
	Roche Holding AG		Switzerland		21,800		6,501,776
	Sanofi, ADR		France		102,900		5,471,193
							29,638,286
	Industrials 14.1%
	The Boeing Co.		United States		33,900		4,313,097
	Cummins Inc.		United States		35,000		5,400,150
	Emerson Electric Co.		United States		89,100		5,912,676
	General Electric Co.		United States		190,600		5,008,968
	Honeywell International Inc.		United States		61,700		5,735,015

FGI-8 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Growth and Income VIP Fund (continued)

		Country		Shares		Value
	Common Stocks (continued)
	Industrials (continued)
	Lockheed Martin Corp.		United States		40,000	$	6,429,200
	Republic Services Inc.		United States		191,300		7,263,661
	United Parcel Service Inc., B		United States		47,700		4,896,882
							44,959,649
	Information Technology 12.6%
	CA Inc.		United States		179,400		5,155,956
	Cisco Systems Inc.		United States		261,808		6,505,929
	Intel Corp.		United States		187,400		5,790,660
	Maxim Integrated Products Inc.		United States		196,400		6,640,284
	Microsoft Corp.		United States		165,700		6,909,690
	Paychex Inc.		United States		98,300		4,085,348
	Seagate Technology PLC		United States		90,600		5,147,892
							40,235,759
	Materials 6.2%
	BHP Billiton PLC		United Kingdom		130,800		4,229,173
	The Dow Chemical Co.		United States		128,200		6,597,172
	Freeport-McMoRan Copper & Gold Inc., B		United States		103,288		3,770,012
	Potash Corp. of Saskatchewan Inc.		Canada		134,400		5,101,824
							19,698,181
	Telecommunication Services 2.2%
	AT&T Inc.		United States		98,297		3,475,782
	Verizon Communications Inc.		United States		29,601		1,448,377
	Vodafone Group PLC, ADR		United Kingdom		65,172		2,176,093
							7,100,252
	Utilities 5.8%
	Dominion Resources Inc.		United States		60,700		4,341,264
	Duke Energy Corp.		United States		65,603		4,867,086
	PG&E Corp.		United States		126,800		6,088,936
	Xcel Energy Inc.		United States		103,400		3,332,582
							18,629,868
	Total Common Stocks (Cost $213,583,961)						295,093,429
	Convertible Preferred Stocks 6.5%
	Energy 1.1%
b	Chesapeake Energy Corp., 5.75%, cvt. pfd., 144A		United States		2,700		3,427,313
	Financials 1.7%
	Bank of America Corp., 7.25%, cvt. pfd., L		United States		3,100		3,617,700
	MetLife Inc., 5.00%, cvt. pfd.		United States		55,100		1,760,996
							5,378,696
	Industrials 2.0%
	Genesee & Wyoming Inc., 5.00%, cvt. pfd.		United States		9,200		1,245,634
	Stanley Black & Decker Inc., 6.25%, cvt., pfd.		United States		45,300		5,165,559
							6,411,193

Semiannual Report FGI-9

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Growth and Income VIP Fund (continued)

		Country		Shares		Value
	Convertible Preferred Stocks (continued)
	Utilities 1.7%
	NextEra Energy Inc., 5.799%, cvt. pfd.		United States		62,000	$	3,538,340
	NextEra Energy Inc., 5.889%, cvt. pfd.		United States		28,100		1,826,219
							5,364,559
	Total Convertible Preferred Stock (Cost $16,011,683)						20,581,761
	Total Investments before Short Term Investments (Cost $229,595,644)						315,675,190
				Principal Amount
	Short Term Investments (Cost $3,751,836) 1.1%
	Repurchase Agreements 1.1%
c	Joint Repurchase Agreement, 0.064%, 7/01/14 (Maturity Value $3,751,842)     BNP Paribas Securities Corp. (Maturity Value $757,797) Credit Suisse Securities (USA) LLC (Maturity Value $378,899) Deutsche Bank Securities Inc. (Maturity Value $284,877) HSBC Securities (USA) Inc. (Maturity Value $1,591,419) Merrill Lynch, Pierce, Fenner & Smith Inc. (Maturity Value $738,850)		United States	$	3,751,836		3,751,836
	Collateralized by U.S. Government Agency Securities, 0.00% - 6.21%, 1/16/15 - 5/04/37; dU.S. Government Agency Discount Notes, 12/24/14 - 1/30/15; U.S. Government Agency Securities, Strips, 5/15/30; U.S. Treasury Bonds, 7.50% - 8.875%, 11/15/16 - 2/15/19; U.S. Treasury Notes, 0.25% - 4.50%, 7/15/15 - 4/30/18; and U.S. Treasury Notes, Index Linked, 1.375%, 7/15/18 (valued at $3,827,512)
	Total Investments (Cost $233,347,480) 100.0%						319,427,026
	Other Assets, less Liabilities (0.0)%†						(85,113	)
	Net Assets 100.0%					$	319,341,913

See Abbreviations on page FGI-20.

^†Rounds to less than 0.1% of net assets.

^aNon-income producing.

^bSecurity was purchased pursuant to Rule 144A under the Securities Act of 1933 and may be sold in transactions exempt from registration only to qualified institutional buyers or in a public offering registered under the Securities Act of 1933. This security has been deemed liquid under guidelines approved by the Trust’s Board of Trustees. At June 30, 2014, the value of this security was $3,427,313, representing 1.07% of net assets.

^cSee Note 1(c) regarding joint repurchase agreement.

^dThe security is traded on a discount basis with no stated coupon rate.

FGI-10 Semiannual Report   |    The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Financial Statements

Statement of Assets and Liabilities

June 30, 2014 (unaudited)

	Franklin Growth and Income VIP Fund
Assets:
Investments in securities:
Cost - Unaffiliated issuers	$	229,595,644
Cost - Repurchase agreements		3,751,836
Total cost of investments	$	233,347,480
Value - Unaffiliated issuers	$	315,675,190
Value - Repurchase agreements		3,751,836
Total value of investments		319,427,026
Receivables:
Capital shares sold		15,562
Dividends		526,979
Other assets		144
Total assets		319,969,711
Liabilities:
Payables:
Capital shares redeemed		311,927
Management fees		138,090
Distribution fees		60,338
Reports to shareholders		89,338
Accrued expenses and other liabilities		28,105
Total liabilities		627,798
Net assets, at value	$	319,341,913
Net assets consist of:
Paid-in capital	$	230,358,844
Undistributed net investment income		6,281,244
Net unrealized appreciation (depreciation)		86,082,029
Accumulated net realized gain (loss)		(3,380,204	)
Net assets, at value	$	319,341,913
Class 1:
Net assets, at value	$	174,280,047
Shares outstanding		10,565,021
Net asset value and maximum offering price per share	$	16.50
Class 2:
Net assets, at value	$	145,061,866
Shares outstanding		8,920,216
Net asset value and maximum offering price per share	$	16.26

The accompanying notes are an integral part of these financial statements.    |   Semiannual Report FGI-11

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL STATEMENTS

Statement of Operations

for the six months ended June 30, 2014 (unaudited)

	Franklin Growth and Income VIP Fund
Investment income:
Dividends	$	7,294,083
Interest		807
Total investment income		7,294,890
Expenses:
Management fees (Note 3a)		831,662
Distribution fees - Class 2 (Note 3c)		179,810
Custodian fees (Note 4)		1,927
Reports to shareholders		47,537
Professional fees		21,839
Trustees’ fees and expenses		636
Other		6,081
Total expenses		1,089,492
Expense reductions (Note 4)		(6	)
Net expenses		1,089,486
Net investment income		6,205,404
Realized and unrealized gains (losses):
Net realized gain (loss) from:
Investments		13,782,924
Foreign currency transactions		25,363
Net realized gain (loss)		13,808,287
Net change in unrealized appreciation (depreciation) on:
Investments		(1,896,516	)
Translation of other assets and liabilities denominated in foreign currencies		(24	)
Net change in unrealized appreciation (depreciation)		(1,896,540	)
Net realized and unrealized gain (loss)		11,911,747
Net increase (decrease) in net assets resulting from operations	$	18,117,151

FGI-12 Semiannual Report   |    The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL STATEMENTS

Statements of Changes in Net Assets

	Franklin Growth and Income VIP Fund
	Six Months Ended June 30, 2014 (unaudited)			Year Ended December 31, 2013
Increase (decrease) in net assets:
Operations:
Net investment income	$	6,205,404		$	6,736,411
Net realized gain (loss) from investments and foreign currency transactions		13,808,287			28,487,148
Net change in unrealized appreciation (depreciation) on investments and translation of other assets and liabilities denominated in foreign currencies		(1,896,540	)		45,062,156
Net increase (decrease) in net assets resulting from operations		18,117,151			80,285,715
Distributions to shareholders from:
Net investment income:
Class 1		(4,441,593	)		(4,583,247	)
Class 2		(3,421,107	)		(3,711,240	)
Total distributions to shareholders		(7,862,700	)		(8,294,487	)
Capital share transactions: (Note 2)
Class 1		(7,107,978	)		(17,413,301	)
Class 2		(10,630,861	)		(13,615,221	)
Total capital share transactions		(17,738,839	)		(31,028,522	)
Net increase (decrease) in net assets		(7,484,388	)		40,962,706
Net assets:
Beginning of period		326,826,301			285,863,595
End of period	$	319,341,913		$	326,826,301
Undistributed net investment income included in net assets:
End of period	$	6,281,244		$	7,938,540

The accompanying notes are an integral part of these financial statements.    |   Semiannual Report FGI-13

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Notes to Financial Statements (unaudited)

Franklin Growth and Income VIP Fund

1. Organization and Significant Accounting Policies

Franklin Templeton Variable Insurance Products Trust (Trust) is registered under the Investment Company Act of 1940, as amended, (1940 Act) as an open-end management investment company, consisting of twenty separate funds and applies the specialized accounting and reporting guidance in U.S. Generally Accepted Accounting Principles (U.S. GAAP). The Franklin Growth and Income VIP Fund (Fund) is included in this report. The financial statements of the remaining funds in the Trust are presented separately. Shares of the Fund are generally sold only to insurance company separate accounts to fund the benefits of variable life insurance policies or variable annuity contracts. At June 30, 2014, 79.43% of the Fund’s shares were held through one insurance company. Investment activities of these insurance company separate accounts could have a material impact on the Fund. The Fund offers two classes of shares: Class 1 and Class 2. Each class of shares differs by its distribution fees voting rights on matters affecting a single class and its exchange privilege.

Effective May 1, 2014, the Franklin Growth and Income Securities Fund was renamed the Franklin Growth and Income VIP Fund.

The following summarizes the Fund’s significant accounting policies.

a. Financial Instrument Valuation

The Fund’s investments in financial instruments are carried at fair value daily. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. The Fund calculates the net asset value (NAV) per share at the close of the New York Stock Exchange (NYSE), generally at 4 p.m. Eastern time (NYSE close) on each day the NYSE is open for trading. Under compliance policies and procedures approved by the Trust’s Board of Trustees (the Board), the Fund’s administrator has responsibility for oversight of valuation, including leading the cross-functional Valuation and Liquidity Oversight Committee (VLOC). The VLOC provides administration and oversight of the Fund’s valuation policies and procedures, which are approved annually by the Board. Among other things, these procedures allow the Fund to utilize independent pricing services, quotations from securities and financial instrument dealers, and other market sources to determine fair value.

Equity securities listed on an exchange or on the NASDAQ National Market System are valued at the last quoted sale price or the official closing price of the day, respectively. Foreign equity securities are valued as of the close of trading on the foreign stock exchange on which the security is primarily traded or as of the NYSE close, whichever is earlier. The value is then converted into its U.S. dollar equivalent at the foreign exchange rate in effect at the NYSE close on the day that the value of the security is determined. Over-the-counter (OTC) securities are valued within the range of the most recent quoted bid and ask prices. Securities that trade in multiple markets or on multiple exchanges are valued according to the broadest and most representative market. Certain equity securities are valued based upon fundamental characteristics or relationships to similar securities. Repurchase agreements are valued at cost, which approximates fair value.

The Fund has procedures to determine the fair value of financial instruments for which market prices are not reliable or readily available. Under these procedures, the VLOC convenes on a regular basis to review such financial instruments and considers a number of factors, including significant unobservable valuation inputs, when arriving at fair value. The VLOC primarily employs a market-based approach which may use related or comparable assets or liabilities, recent transactions, market multiples, book values, and other relevant information for the investment to determine the fair value of the investment. An income-based valuation approach may also be used in which the anticipated future cash flows of the investment are discounted to calculate fair value. Discounts may also be applied due to the nature or duration of any restrictions on the disposition of the investments. Due to the inherent uncertainty of valuations of such investments, the fair values may differ significantly from the values that would have been used had an active market existed. The VLOC employs various methods for calibrating these valuation approaches including a regular review of key inputs and assumptions, transactional back-testing or disposition analysis, and reviews of any related market activity.

Trading in securities on foreign securities stock exchanges and OTC markets may be completed before the daily NYSE close. In addition, trading in certain foreign markets may not take place on every NYSE business day. Occasionally, events occur between the time at which trading in a foreign security is completed and the close of the NYSE that might call into question the reliability of the value of a portfolio security held by the Fund. As a result, differences may arise between the value of

FGI-14 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Growth and Income VIP Fund (continued)

the Fund’s portfolio securities as determined at the foreign market close and the latest indications of value at the close of the NYSE. In order to minimize the potential for these differences, the VLOC monitors price movements following the close of trading in foreign stock markets through a series of country specific market proxies (such as baskets of American Depositary Receipts, futures contracts and exchange traded funds). These price movements are measured against established trigger thresholds for each specific market proxy to assist in determining if an event has occurred that may call into question the reliability of the values of the foreign securities held by the Fund. If such an event occurs, the securities may be valued using fair value procedures, which may include the use of independent pricing services.

Also, when the last day of the reporting period is a non-business day, certain foreign markets may be open on those days that the NYSE is closed, which could result in differences between the value of the Fund’s portfolio securities on the last business day and the last calendar day of the reporting period. Any significant security valuation changes due to an open foreign market are adjusted and reflected by the Fund for financial reporting purposes.

b. Foreign Currency Translation

Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars based on the exchange rate of such currencies against U.S. dollars on the date of valuation. The Fund may enter into foreign currency exchange contracts to facilitate transactions denominated in a foreign currency. Purchases and sales of securities, income and expense items denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date. Portfolio securities and assets and liabilities denominated in foreign currencies contain risks that those currencies will decline in value relative to the U.S. dollar. Occasionally, events may impact the availability or reliability of foreign exchange rates used to convert the U.S. dollar equivalent value. If such an event occurs, the foreign exchange rate will be valued at fair value using procedures established and approved by the Board.

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

Realized foreign exchange gains or losses arise from sales of foreign currencies, currency gains or losses realized between the

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

c. Joint Repurchase Agreement

The Fund enters into a joint repurchase agreement whereby its uninvested cash balance is deposited into a joint cash account with other funds managed by the investment manager or an affiliate of the investment manager and is used to invest in one or more repurchase agreements. The value and face amount of the joint repurchase agreement are allocated to the funds based on their pro-rata interest. A repurchase agreement is accounted for as a loan by the Fund to the seller, collateralized by securities which are delivered to the Fund’s custodian. The fair value, including accrued interest, of the initial collateralization is required to be at least 102% of the dollar amount invested by the funds, with the value of the underlying securities marked to market daily to maintain coverage of at least 100%. Repurchase agreements are subject to the terms of Master Repurchase Agreements (MRAs) with approved counterparties (sellers). The MRAs contain various provisions, including but not limited to events of default and maintenance of collateral for repurchase agreements. In the event of default by either the seller or the Fund, certain MRAs may permit the non-defaulting party to net and close-out all transactions, if any, traded under such agreements. The Fund may sell securities it holds as collateral and apply the proceeds towards the repurchase price and any other amounts owed by the seller to the Fund in the event of default by the seller. This could involve costs or delays in addition to a loss on the securities if their value falls below the repurchase price owed by the seller. The joint repurchase agreement held by the Fund at period end, as indicated in the Statement of Investments, had been entered into on June 30, 2014.

d. Income and Deferred Taxes

It is the Fund’s policy to qualify as a regulated investment company under the Internal Revenue Code. The Fund intends to distribute to shareholders substantially all of its taxable income and net realized gains to relieve it from federal income and if applicable, excise taxes. As a result, no provision for U.S. federal income taxes is required.

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FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Growth and Income VIP Fund (continued)

1. Organization and Significant Accounting Policies (continued)

d. Income and Deferred Taxes (continued)

The Fund may be subject to foreign taxation related to income received, capital gains on the sale of securities and certain foreign currency transactions in the foreign jurisdictions in which it invests. Foreign taxes, if any, are recorded based on the tax regulations and rates that exist in the foreign markets in which the Fund invests. When a capital gain tax is determined to apply the Fund records an estimated deferred tax liability in an amount that would be payable if the securities were disposed of on the valuation date.

The Fund recognizes the tax benefits of uncertain tax positions only when the position is “more likely than not” to be sustained upon examination by the tax authorities based on the technical merits of the tax position. As of June 30, 2014, and for all open tax years, the Fund has determined that no liability for unrecognized tax benefits is required in the Fund’s financial statements related to uncertain tax positions taken on a tax return (or expected to be taken on future tax returns). Open tax years are those that remain subject to examination and are based on each tax jurisdiction statute of limitation.

e. Security Transactions, Investment Income, Expenses and Distributions

Security transactions are accounted for on trade date. Realized gains and losses on security transactions are determined on a specific identification basis. Interest income and estimated expenses are accrued daily. Dividend income is recorded on the ex-dividend date except that certain dividends from foreign securities are recognized as soon as the Fund is notified of the ex-dividend date. Distributions to shareholders are recorded on the ex-dividend date and are determined according to income tax regulations (tax basis). Distributable earnings determined on a tax basis may differ from earnings recorded in accordance with accounting principles generally accepted in the United

States of America. These differences may be permanent or temporary. Permanent differences are reclassified among capital accounts to reflect their tax character. These reclassifications have no impact on net assets or the results of operations. Temporary differences are not reclassified, as they may reverse in subsequent periods.

Common expenses incurred by the Trust are allocated among the funds based on the ratio of net assets of each fund to the combined net assets of the Trust. Fund specific expenses are charged directly to the fund that incurred the expense.

Realized and unrealized gains and losses and net investment income, not including class specific expenses, are allocated daily to each class of shares based upon the relative proportion of net assets of each class. Differences in per share distributions, by class, are generally due to differences in class specific expenses.

f. Accounting Estimates

The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the amounts of income and expenses during the reporting period. Actual results could differ from those estimates.

g. Guarantees and Indemnifications

Under the Trust’s organizational documents, its officers and trustees are indemnified by the Trust against certain liabilities arising out of the performance of their duties to the Trust. Additionally, in the normal course of business, the Trust, on behalf of the Fund, enters into contracts with service providers that contain general indemnification clauses. The Trust’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Trust that have not yet occurred. Currently, the Trust expects the risk of loss to be remote.

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FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Growth and Income VIP Fund (continued)

2. Shares of Beneficial Interest

At June 30, 2014, there were an unlimited number of shares authorized (without par value). Transactions in the Fund’s shares were as follows:

	Six Months Ended June 30, 2014						Year Ended December 31, 2013
	Shares			Amount			Shares			Amount
Class 1 Shares:
Shares sold		1,448		$	23,814			37,520		$	537,654
Shares issued in reinvestment of distributions		273,329			4,441,593			326,675			4,583,247
Shares redeemed		(718,652	)		(11,573,385	)		(1,571,602	)		(22,534,202	)
Net increase (decrease)		(443,875	)	$	(7,107,978	)		(1,207,407	)	$	(17,413,301	)
Class 2 Shares:
Shares sold		90,325		$	1,443,178			905,864		$	12,758,976
Shares issued in reinvestment of distributions		213,552			3,421,107			268,347			3,711,240
Shares redeemed		(978,621	)		(15,495,146	)		(2,124,043	)		(30,085,437	)
Net increase (decrease)		(674,744	)	$	(10,630,861	)		(949,832	)	$	(13,615,221	)

3. Transactions With Affiliates

Franklin Resources, Inc. is the holding company for various subsidiaries that together are referred to as Franklin Templeton Investments. Certain officers and trustees of the Fund are also officers and/or directors of the following subsidiaries:

Subsidiary	Affiliation
Franklin Advisers, Inc. (Advisers)	Investment manager
Franklin Templeton Services, LLC (FT Services)	Administrative manager
Franklin Templeton Distributors, Inc. (Distributors)	Principal underwriter
Franklin Templeton Investor Services, LLC (Investor Services)	Transfer agent

a. Management Fees

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

Annualized Fee Rate	Net Assets
0.625%	Up to and including $100 million
0.500%	Over $100 million, up to and including $250 million
0.450%	Over $250 million, up to and including $7.5 billion
0.440%	Over $7.5 billion, up to and including $10 billion
0.430%	Over $10 billion, up to and including $12.5 billion
0.420%	Over $12.5 billion, up to and including $15 billion
0.400%	In excess of $15 billion

b. Administrative Fees

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

Semiannual Report FGI-17

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Growth and Income VIP Fund (continued)

3. Transactions With Affiliates (continued)

c. Distribution Fees

The Board has adopted a distribution plan for Class 2 shares pursuant to Rule 12b-1 under the 1940 Act. Under the Fund’s compensation distribution plan, the Fund pays Distributors for costs incurred in connection with the servicing, sale and distribution of the Fund’s shares up to 0.35% per year of its average daily net assets. Some distribution fees are not charged on shares held by affiliates. The Board has agreed to limit the current rate to 0.25% per year for Class 2. The plan year, for purposes of monitoring compliance with the maximum annual plan rate, is February 1 through January 31.

d. Transfer Agent Fees

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

4. Expense Offset Arrangement

The Fund has entered into an arrangement with its custodian whereby credits realized as a result of uninvested cash balances are used to reduce a portion of the Fund’s custodian expenses. During the period ended June 30, 2014, the custodian fees were reduced as noted in the Statement of Operations.

5. Income Taxes

For tax purposes, capital losses may be carried over to offset future capital gains. Capital loss carryforwards with no expiration, if any, must be fully utilized before those losses with expiration dates.

At December 31, 2013, the Fund had capital loss carryforwards of $17,127,212, expiring in 2017.

At June 30, 2014, the cost of investments and net unrealized appreciation (depreciation) for income tax purposes were as follows:

Cost of investments	$	233,418,700
Unrealized appreciation	$	87,286,289
Unrealized depreciation		(1,277,963	)
Net unrealized appreciation (depreciation)	$	86,008,326

Differences between income and/or capital gains as determined on a book basis and a tax basis are primarily due to differing treatments of bond discounts and premiums, corporate actions, and equity-linked securities.

6. Investment Transactions

Purchases and sales of investments (excluding short term securities) for the period ended June 30, 2014, aggregated $28,683,148 and $52,033,049, respectively.

7. Credit Facility

The Fund, together with other U.S. registered and foreign investment funds (collectively, Borrowers), managed by Franklin Templeton Investments, are borrowers in a joint syndicated senior unsecured credit facility totaling $1.5 billion (Global Credit Facility) which matures on February 13, 2015. This Global Credit Facility provides a source of funds to the Borrowers for temporary and emergency purposes, including the ability to meet future unanticipated or unusually large redemption requests.

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FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Growth and Income VIP Fund (continued)

Under the terms of the Global Credit Facility, the Fund shall, in addition to interest charged on any borrowings made by the Fund and other costs incurred by the Fund, pay its share of fees and expenses incurred in connection with the implementation and maintenance of the Global Credit Facility, based upon its relative share of the aggregate net assets of all of the Borrowers, including an annual commitment fee of 0.07% based upon the unused portion of the Global Credit Facility. These fees are reflected in other expenses on the Statement of Operations. During the period ended June 30, 2014, the Fund did not use the Global Credit Facility.

8. Fair Value Measurements

The Fund follows a fair value hierarchy that distinguishes between market data obtained from independent sources (observable inputs) and the Fund’s own market assumptions (unobservable inputs). These inputs are used in determining the value of the Fund’s financial instruments and are summarized in the following fair value hierarchy:

• Level 1 – quoted prices in active markets for identical financial instruments

• Level 2 – other significant observable inputs (including quoted prices for similar financial instruments, interest rates, prepayment speed, credit risk, etc.)

• Level 3 – significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of financial instruments)

The input levels are not necessarily an indication of the risk or liquidity associated with financial instruments at that level.

For movements between the levels within the fair value hierarchy, the Fund has adopted a policy of recognizing the transfers as of the date of the underlying event which caused the movement.

A summary of inputs used as of June 30, 2014, in valuing the Fund’s assets carried at fair value, is as follows:

	Level 1		Level 2		Level 3		Total
Assets:
Investments in Securities:
Equity Investments:a
Energy	$	19,068,137	$	3,427,313	$	—	$	22,495,450
All Other Equity Investmentsb		293,179,740		—		—		293,179,740
Short Term Investments		—		3,751,836		—		3,751,836
Total Investments in Securities	$	312,247,877	$	7,179,149	$	—	$	319,427,026

^aIncludes common and convertible preferred stocks.

^bFor detailed categories, see the accompanying Statement of Investments.

9. New Accounting Pronouncements

In June 2014, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) No. 2014-11, Transfers and Servicing (Topic 860), Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures. The ASU changes the accounting for certain repurchase agreements and expands disclosure requirements related to repurchase agreements, securities lending, repurchase-to-maturity and similar transactions. The ASU is effective for interim and annual reporting periods beginning after December 15, 2014. Management is currently evaluating the impact, if any, of applying this provision.

Semiannual Report FGI-19

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Growth and Income VIP Fund (continued)

10. Subsequent Events

The Fund has evaluated subsequent events through the issuance of the financial statements and determined that no events have occurred that require disclosure.

Abbreviations

Selected Portfolio
ADR	American Depositary Receipt

FGI-20 Semiannual Report

Franklin High Income VIP Fund

(Formerly, Franklin High Income Securities Fund)

This semiannual report for Franklin High Income VIP Fund covers the period ended June 30, 2014.

Class 2 Performance Summary as of June 30, 2014

Franklin High Income VIP Fund – Class 2 delivered a +5.59% total return for the six-month period ended June 30, 2014.

Performance reflects the Fund’s Class 2 operating expenses, but does not include any contract fees, expenses or sales charges. If they had been included, performance would be lower. These charges and deductions, particularly for variable life policies, can have a significant effect on contract values and insurance benefits. See the contract prospectus for a complete description of these expenses, including sales charges.

Performance data represent past performance, which does not guarantee future results. Investment return and principal value will fluctuate, and you may have a gain or loss when you sell your shares. Current performance may differ from figures shown.

Semiannual Report FH-1

FRANKLIN HIGH INCOME VIP FUND

Fund Goals and Main Investments: Franklin High Income VIP Fund seeks a high level of current income with capital appreciation as a secondary goal. Under normal market conditions, the Fund invests predominantly in high yield, lower rated debt securities and preferred stocks.

Fund Risks: All investments involve risks, including possible loss of principal. The risks associated with higher yielding, lower rated securities include higher risk of default and loss of principal. Changes in the financial strength of a bond issuer or in a bond’s credit rating may affect its value. In addition, interest rate movements will affect the Fund’s share price and yield. Bond prices generally move in the opposite direction of interest rates. Thus, as prices of bonds in the Fund adjust to a rise in interest rates, the Fund’s share price may decline. Investment in foreign securities also involves special risks, including currency fluctuations, and political and economic uncertainty. The Fund is actively managed but there is no guarantee that the manager’s investment decisions will produce the desired results. The Fund’s prospectus also includes a description of the main investment risks.

Performance Overview

You can find the Fund’s six-month total return in the Performance Summary. In comparison, the Fund’s benchmark, the Credit Suisse (CS) High Yield Index, posted a +5.55% total return for the period under review.¹ The Fund’s peers, as measured by the Lipper VIP High Yield Funds Classification Average, delivered a +4.72% total return.²

Economic and Market Overview

The U.S. economy continued to show signs of recovery during the six-month period ended June 30, 2014. Economic activity increased toward period-end after severe weather conditions and a slowdown in health care spending led to a contraction in the first quarter of 2014. Manufacturing activity expanded during the period under review, despite a slowdown in January. Except for a sharp rebound in March, retail sales rose at a modest pace and missed consensus expectations. The housing market had some weather-related weakness early in 2014, but home sales picked up in the spring and home prices were higher than a year ago. The unemployment rate declined to 6.1% in June 2014

from 6.7% in December 2013.³ Inflation, as measured by the Consumer Price Index, picked up toward the end of the period.

The Federal Reserve Board (Fed) began reducing bond purchases by $10 billion a month in January 2014, based on earlier largely positive economic and employment data. Although economic data in early 2014 were soft, Fed Chair Janet Yellen kept the pace of asset-purchase tapering intact in the March meeting while adopting a more qualitative approach to rate-hike guidance. In June, the Fed lowered projections for near- and long-term economic growth even as it maintained the pace of tapering and remained committed to keeping interest rates low for a considerable amount of time after the asset-purchase program ends.

The 10-year Treasury yield declined from 3.04% at the beginning of the period to 2.53% on June 30, 2014, as investors shifted to less risky assets given subdued economic data, the crises in Ukraine and Iraq, growth concerns about emerging markets and lower Treasury issuance.

Investment Strategy

We are research-driven, fundamental investors who rely on a team of analysts to provide in-depth industry expertise and use qualitative and quantitative analyses to evaluate companies. As bottom-up investors, we focus primarily on individual securities. We also consider sectors when choosing investments. In selecting securities for the Fund’s investment portfolio, we do not rely principally on ratings assigned by rating agencies, but perform our own independent analysis to evaluate an issuer’s creditworthiness. We consider a variety of factors, including an issuer’s experience and managerial strength, its sensitivity to economic conditions and its current financial condition. We may also enter into various transactions involving certain currency-, interest rate- or credit-related derivative instruments for hedging purposes, to enhance returns or to obtain exposure to various market sectors.

Manager’s Discussion

Contrary to the 2013 predictions of many financial market experts, longer term interest rates in the U.S. declined in the first half of 2014. This move helped to boost corporate bond

1. Source: Credit Suisse.

2. Source: Lipper, a Thomson Reuters Company.

One cannot invest directly in an index, and an index is not representative of the Fund’s portfolio. Please see Index Descriptions following the Fund Summaries.

3. Source: Bureau of Labor Statistics.

FH-2 Semiannual Report

FRANKLIN HIGH INCOME VIP FUND

prices, while underlying earnings fundamentals and a low default rate also remained supportive backdrops. As interest rates remained quite low on an absolute basis, investors continued their search for yield and demonstrated a healthy risk appetite, further supporting high yield bond prices in the secondary market. Correspondingly, the high yield corporate bond market generated a positive return for the first six months of the year. In contrast to 2013, however, there was little dispersion between returns by ratings quality classifications. Higher rated bonds within the high yield universe benefited from their somewhat higher sensitivity to the decline in interest rates, while lower rated bonds were buoyed by the continued search for income and yield. Despite occasional bursts of volatility during the period for the overall market, generally valuations continued to richen. With this in mind, we focused on security selection and slightly increased the Fund’s quality bias during the period. Overall, the Fund performed in line with the CS High Yield Index while outperforming its Lipper peer group.

At the same time, we drew upon our fundamental research process to make individual investments and help adjust the Fund’s industry positioning. Within that framework, we overweighted and underweighted certain industries relative to our benchmark in an effort to outperform. For example, our continued underweighting of the retailing sector proved beneficial. Sluggish consumer spending and confidence levels again weighed on operating results for certain retailers and pressured bond prices in the industry, leading the sector to underperform the benchmark.

In contrast, we maintained an overweighting in the energy sector, which outperformed during the period. With valuations attractive in the sector versus historical averages relative to the market, energy continued to seem to us a relative value opportunity. In addition, we felt the potential for favorable merger and acquisition activity, offering upside potential, combined with relatively solid downside asset protection supported our overweighted positioning. Lastly, we underweighted the fairly small automotive industry and were selective in our holdings given what we felt were that industry’s fairly rich valuations.⁴ The industry did ultimately underperform partly driven by the highly publicized recall issues for automaker General Motors.

*Weightings may be negative or may not total 100% due to rounding, use of any derivatives, unsettled trades or other factors.

**Includes common, preferred and convertible preferred shares.

Although some of the Fund’s industry positioning enhanced relative performance versus its benchmark, certain other weightings had a negative impact. For example, the paper industry continued to face pricing pressures and a secular demand decline, which caused us to hold an underweighted position.⁵ However, some industry consolidation boosted certain bond prices and helped this relatively small industry to outperform the benchmark. Similarly, we underweighted the aerospace sector and this positioning also proved to be a relative performance detractor. A historically highly volatile subsector in aerospace, airlines recently enjoyed the benefits of enhanced capacity management after a wave of consolidation.⁶ This boosted bond prices and helped drive performance.

In contrast, we slightly overweighted the gaming industry.⁷ Given the industry is dependent on discretionary consumer spending, top-line revenue results were soft for many operators. In addition, new casinos continued to open and cause some gaming markets to show signs of being oversaturated. Lastly, bond prices of large capitalization issuer Caesar’s Entertainment fell as a balance sheet restructuring loomed. In addition to having a slightly overweighted gaming industry positioning, the Fund held Caesar’s senior secured bonds, which moved lower during the period and contributed to the sector’s underperformance.

To a small extent, the portfolio utilized derivatives, including currency forwards and credit derivatives through a high yield

4. Automotive is part of automobiles and components in the SOI.

5. Paper is part of materials in the SOI.

6. Aerospace is part of capital goods in the SOI.

7. Gaming is part of consumer services in the SOI.

Semiannual Report FH-3

FRANKLIN HIGH INCOME VIP FUND

Top 10 Sectors/Industries
6/30/14
	% of Total Net Assets
Energy		23.3%
Materials		12.5%
Telecommunication Services		9.4%
Media		9.4%
Health Care Equipment & Services		6.1%
Banks		4.5%
Diversified Financials		3.3%
Software & Services		3.3%
Consumer Durables & Apparel		3.2%
Food, Beverage & Tobacco		2.8%

The dollar value, number of shares or principal amount, and names of all portfolio holdings are listed in the Fund’s Statement of Investments (SOI).

derivatives index. Currency forwards are principally used as a tool to hedge currency risk. Credit derivatives are used to hedge against credit risk, to gain or increase exposure to certain high yield securities or segments of the high yield bond markets, or to otherwise enhance Fund returns. By period-end, the Fund held no credit derivatives.

What is a currency forward contract?

A currency forward contract, also called a “currency forward,” is an agreement between the Fund and a counterparty to buy or sell a foreign currency at a specific exchange rate on a future date.

What is a credit derivative?

A credit derivative is a contract agreement between the Fund and a counterparty that is principally used by the Fund to gain or increase exposure to certain high yield securities or segments of the high yield bond market and/or to hedge against credit risk.

Thank you for your participation in Franklin High Income VIP Fund. We look forward to serving your future investment needs.

The foregoing information reflects our analysis, opinions and portfolio holdings as of June 30, 2014, the end of the reporting period. The way we implement our main investment strategies and the resulting portfolio holdings may change depending on factors such as market and economic conditions. These opinions may not be relied upon as investment advice or an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but the investment manager makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.

FH-4 Semiannual Report

FRANKLIN HIGH INCOME VIP FUND

Class 2 Fund Expenses

As an investor in a variable insurance contract (Contract) that indirectly provides for investment in an underlying mutual fund, you can incur transaction and/or ongoing expenses at both the Fund level and the Contract level.

• Transaction expenses can include sales charges (loads) on purchases, surrender fees, transfer fees and premium taxes.

• Ongoing expenses can include management fees, distribution and service (12b-1) fees, contract fees, annual maintenance fees, mortality and expense risk fees and other fees and expenses. All mutual funds and Contracts have some types of ongoing expenses.

The expenses shown in the table are meant to highlight ongoing expenses at the Fund level only and do not include ongoing expenses at the Contract level, or transaction expenses at either the Fund or Contract levels. While the Fund does not have transaction expenses, if the transaction and ongoing expenses at the Contract level were included, the expenses shown below would be higher. You should consult your Contract prospectus or disclosure document for more information.

The table shows Fund-level ongoing expenses and can help you understand these expenses and compare them with those of other mutual funds offered through the Contract. The table assumes a $1,000 investment held for the six months indicated. Please refer to the Fund prospectus for additional information on operating expenses.

Actual Fund Expenses

The first line (Actual) of the table provides actual account values and expenses. The “Ending Account Value” is derived from the Fund’s actual return, which includes the effect of ongoing Fund expenses, but does not include the effect of ongoing Contract expenses.

You can estimate the Fund-level expenses you incurred during the period by following these steps. Of course, your account value and expenses will differ from those in this illustration:

1. Divide your account value by $1,000.

If an account had an $8,600 value, then $8,600 ÷ $1,000 = 8.6.

2. Multiply the result by the number under the heading “Fund-Level Expenses Incurred During Period.”

If Fund-Level Expenses Incurred During Period were $7.50, then 8.6 × $7.50 = $64.50.

In this illustration, the estimated expenses incurred this period at the Fund level are $64.50.

Hypothetical Example for Comparison with Other Mutual Funds

Information in the second line (Hypothetical) of the table can help you compare ongoing expenses of the Fund with those of other mutual funds offered through the Contract. This information may not be used to estimate the actual ending account balance or expenses you incurred during the period. The hypothetical “Ending Account Value” is based on the Fund’s actual expense ratio and an assumed 5% annual rate of return before expenses, which does not represent the Fund’s actual return. The figure under the heading “Fund-Level Expenses Incurred During Period” shows the hypothetical expenses your account would have incurred under this scenario. You can compare this figure with the 5% hypothetical examples that appear in shareholder reports of other funds offered through a Contract.

Class 2	Beginning Account Value 1/1/14		Ending Account Value 6/30/14		Fund-Level Expenses Incurred During Period* 1/1/14–6/30/14
Actual		$1,000		$1,055.90		$4.18
Hypothetical (5% return before expenses)		$1,000		$1,020.73		$4.11

*Expenses are calculated using the most recent six-month annualized expense ratio for the Fund’s Class 2 shares (0.82%), which does not include any ongoing expenses of the Contract for which the Fund is an investment option, multiplied by the average account value over the period, multiplied by 181/365 to reflect the one-half year period.

Semiannual Report FH-5

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Financial Highlights

Franklin High Income VIP Fund

	Six Months Ended June 30, 2014 (unaudited)			Year Ended December 31,
				2013			2012			2011			2010			2009
Class 1
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$7.02			$7.01			$6.52			$6.63			$6.26			$4.68
Income from investment operationsa:
Net investment incomeb		0.22			0.46			0.48			0.50			0.49			0.46
Net realized and unrealized gains (losses)		0.18			0.09			0.51			(0.19	)		0.32			1.50
Total from investment operations		0.40			0.55			0.99			0.31			0.81			1.96
Less distributions from net investment income		(0.44	)		(0.54	)		(0.50	)		(0.42	)		(0.44	)		(0.38	)
Net asset value, end of period		$6.98			$7.02			$7.01			$6.52			$6.63			$6.26
Total returnc		5.66%			8.17%			15.94%			4.63%			13.71%			42.99%
Ratios to average net assetsd
Expenses		0.57%	e		0.58%	e		0.58%			0.58%			0.61%			0.63%	e
Net investment income		6.08%			6.63%			7.15%			7.52%			7.71%			8.33%
Supplemental data
Net assets, end of period (000’s)		$38,889			$39,300			$42,166			$41,971			$48,051			$48,855
Portfolio turnover rate		14.32%			30.78%			37.03%			45.11%			60.80%			26.41%

^aThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.

^bBased on average daily shares outstanding.

^cTotal return does not include fees, charges or expenses imposed by the variable annuity and life insurance contracts for which the Franklin Templeton Variable Insurance Products Trust serves as an underlying investment vehicle. Total return is not annualized for periods less than one year.

^dRatios are annualized for periods less than one year.

^eBenefit of expense reduction rounds to less than 0.01%.

FH-6 Semiannual Report   |    The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL HIGHLIGHTS

Franklin High Income VIP Fund (continued)

	Six Months Ended June 30, 2014 (unaudited)			Year Ended December 31,
				2013			2012			2011			2010			2009
Class 2
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$6.81			$6.82			$6.36			$6.47			$6.13			$4.59
Income from investment operationsa:
Net investment incomeb		0.20			0.43			0.46			0.47			0.47			0.44
Net realized and unrealized gains (losses)		0.18			0.08			0.48			(0.18	)		0.30			1.47
Total from investment operations		0.38			0.51			0.94			0.29			0.77			1.91
Less distributions from net investment income		(0.42	)		(0.52	)		(0.48	)		(0.40	)		(0.43	)		(0.37	)
Net asset value, end of period		$6.77			$6.81			$6.82			$6.36			$6.47			$6.13
Total returnc		5.59%			7.83%			15.56%			4.56%			13.26%			42.70%
Ratios to average net assetsd
Expenses		0.82%	e		0.83%	e		0.83%			0.83%			0.86%			0.88%	e
Net investment income		5.83%			6.38%			6.90%			7.27%			7.46%			8.08%
Supplemental data
Net assets, end of period (000’s)		$319,222			$291,826			$281,851			$249,452			$239,824			$198,567
Portfolio turnover rate		14.32%			30.78%			37.03%			45.11%			60.80%			26.41%

^aThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.

^bBased on average daily shares outstanding.

^cTotal return does not include fees, charges or expenses imposed by the variable annuity and life insurance contracts for which the Franklin Templeton Variable Insurance Products Trust serves as an underlying investment vehicle. Total return is not annualized for periods less than one year.

^dRatios are annualized for periods less than one year.

^eBenefit of expense reduction rounds to less than 0.01%.

The accompanying notes are an integral part of these financial statements.    |   Semiannual Report FH-7

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL HIGHLIGHTS

Franklin High Income VIP Fund (continued)

	Six Months Ended June 30, 2014 (unaudited)			Year Ended December 31,
				2013			2012			2011			2010			2009
Class 4
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$6.94			$6.94			$6.46			$6.57			$6.22			$4.67
Income from investment operationsa:
Net investment incomeb		0.20			0.43			0.46			0.47			0.47			0.45
Net realized and unrealized gains (losses)		0.18			0.08			0.49			(0.18	)		0.31			1.48
Total from investment operations		0.38			0.51			0.95			0.29			0.78			1.93
Less distributions from net investment income		(0.41	)		(0.51	)		(0.47	)		(0.40	)		(0.43	)		(0.38	)
Net asset value, end of period		$6.91			$6.94			$6.94			$6.46			$6.57			$6.22
Total returnc		5.50%			7.72%			15.50%			4.39%			13.31%			42.36%
Ratios to average net assetsd
Expenses		0.92%	e		0.93%	e		0.93%			0.93%			0.96%			0.98%	e
Net investment income		5.73%			6.28%			6.80%			7.17%			7.36%			7.98%
Supplemental data
Net assets, end of period (000’s)		$28,716			$27,789			$27,664			$27,055			$25,934			$15,105
Portfolio turnover rate		14.32%			30.78%			37.03%			45.11%			60.80%			26.41%

^aThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.

^bBased on average daily shares outstanding.

^cTotal return does not include fees, charges or expenses imposed by the variable annuity and life insurance contracts for which the Franklin Templeton Variable Insurance Products Trust serves as an underlying investment vehicle. Total return is not annualized for periods less than one year.

^dRatios are annualized for periods less than one year.

^eBenefit of expense reduction rounds to less than 0.01%.

FH-8 Semiannual Report   |    The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Statement of Investments, June 30, 2014 (unaudited)

Franklin High Income VIP Fund
		Country		Shares		Value
	Common Stocks 0.2%
	Materials 0.1%
	NewPage Holdings Inc.		United States		5,000	$	415,000
	Transportation 0.1%
a	CEVA Holdings LLC		United Kingdom		224		246,708
	Total Common Stocks (Cost $1,274,328)						661,708
	Convertible Preferred Stocks 0.2%
	Transportation 0.2%
a	CEVA Holdings LLC, cvt. pfd., A-1		United Kingdom		6		8,700
a	CEVA Holdings LLC, cvt. pfd., A-2		United Kingdom		486		534,061
	Total Convertible Preferred Stocks (Cost $731,856)						542,761
	Preferred Stocks (Cost $770,000) 0.2%
	Diversified Financials 0.2%
	GMAC Capital Trust I, 8.125%, pfd.		United States		30,800		840,840
				Principal Amount*
	Corporate Bonds 94.6%
	Automobiles & Components 1.1%
	The Goodyear Tire & Rubber Co., senior note, 6.50%, 3/01/21		United States		2,200,000		2,398,000
b	International Automotive Components Group SA, senior secured note, 144A, 9.125%, 6/01/18		United States		1,600,000		1,709,000
							4,107,000
	Banks 4.5%
c	Bank of America Corp., junior sub. bond, M, 8.125% to 5/15/18, FRN thereafter, Perpetual		United States		2,500,000		2,825,995
	CIT Group Inc., senior note,
	5.375%, 5/15/20		United States		1,700,000		1,831,218
	5.00%, 8/15/22		United States		2,700,000		2,804,625
c	Citigroup Inc., junior sub. bond, M, 6.30% to 5/15/24, FRN thereafter, Perpetual		United States		2,800,000		2,864,722
c	JPMorgan Chase & Co., junior sub. bond,
	5.00% to 7/30/19, FRN thereafter, Perpetual		United States		1,400,000		1,398,877
	6.00% to 8/01/23, FRN thereafter, Perpetual		United States		2,500,000		2,562,500
	Royal Bank of Scotland Group PLC, sub. note,
	6.125%, 12/15/22		United Kingdom		2,000,000		2,191,250
	5.125%, 5/28/24		United Kingdom		900,000		912,938
							17,392,125
	Capital Goods 2.5%
b	Abengoa Finance SAU, senior note, 144A,
	8.875%, 11/01/17		Spain		2,500,000		2,829,688
	7.75%, 2/01/20		Spain		400,000		446,250
	Navistar International Corp., senior note, 8.25%, 11/01/21		United States		1,500,000		1,571,250
b	Oshkosh Corp., senior note, 144A, 5.375%, 3/01/22		United States		1,000,000		1,035,000
	Terex Corp., senior note, 6.00%, 5/15/21		United States		1,200,000		1,299,000
b	TransDigm Inc.,
	senior sub. bond, 144A, 6.50%, 7/15/24		United States		500,000		521,250
	senior sub. note, 144A, 6.00%, 7/15/22		United States		500,000		514,375
b	Zachry Holdings Inc., senior note, 144A, 7.50%, 2/01/20		United States		1,400,000		1,508,500
							9,725,313

Semiannual Report FH-9

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin High Income VIP Fund (continued)

		Country		Principal Amount*		Value
	Corporate Bonds (continued)
	Commercial & Professional Services 1.9%
	ADS Waste Holdings Inc., senior note, 8.25%, 10/01/20		United States		2,500,000	$	2,706,250
b	Algeco Scotsman Global Finance PLC, senior secured note, first lien, 144A, 8.50%, 10/15/18		United Kingdom		1,500,000		1,606,875
d,e	Goss Graphic Systems Inc., senior sub. note, 12.25%, 11/19/05		United States		1,912,374		191
	United Rentals North America Inc., senior bond, 5.75%, 11/15/24		United States		1,400,000		1,457,750
	West Corp., senior note, 7.875%, 1/15/19		United States		1,500,000		1,596,563
							7,367,629
	Consumer Durables & Apparel 3.2%
	KB Home,
	senior bond, 7.50%, 9/15/22		United States		2,100,000		2,341,500
	senior note, 4.75%, 5/15/19		United States		600,000		606,000
	senior note, 7.00%, 12/15/21		United States		700,000		764,750
	Springs Industries Inc., secured note, 6.25%, 6/01/21		United States		700,000		717,500
	Standard Pacific Corp., senior note, 6.25%, 12/15/21		United States		1,500,000		1,608,750
b	Taylor Morrison Communities Inc./Monarch Communities Inc., senior note, 144A,
	7.75%, 4/15/20		United States		1,140,000		1,251,150
	5.25%, 4/15/21		United States		900,000		918,000
	5.625%, 3/01/24		United States		1,000,000		995,000
	Toll Brothers Finance Corp., senior bond, 5.625%, 1/15/24		United States		1,300,000		1,391,000
	Visant Corp., senior note, 10.00%, 10/01/17		United States		1,900,000		1,781,250
							12,374,900
	Consumer Services 2.8%
b	24 Hour Holdings III LLC, senior note, 144A, 8.00%, 6/01/22		United States		1,500,000		1,500,000
	Caesars Entertainment Operating Co. Inc., senior secured note,
	11.25%, 6/01/17		United States		3,000,000		2,760,000
	first lien, 9.00%, 2/15/20		United States		800,000		673,000
b,d	Fontainebleau Las Vegas, senior secured note, first lien, 144A,
	11.00%, 6/15/15		United States		1,700,000		10,625
b	Landry’s Inc., senior note, 144A, 9.375%, 5/01/20		United States		1,600,000		1,768,000
	MGM Resorts International, senior note,
	6.875%, 4/01/16		United States		1,200,000		1,311,000
	8.625%, 2/01/19		United States		400,000		478,500
	6.625%, 12/15/21		United States		300,000		334,125
	Pinnacle Entertainment Inc.,
	senior note, 6.375%, 8/01/21		United States		600,000		636,000
	senior sub. note, 7.75%, 4/01/22		United States		1,100,000		1,201,750
							10,673,000
	Diversified Financials 3.1%
	Ally Financial Inc., senior note, 7.50%, 9/15/20		United States		1,500,000		1,813,125
	General Motors Financial Co. Inc., senior note, 3.25%, 5/15/18		United States		900,000		913,500
b	Neuberger Berman Group LLC/Finance Corp., senior note, 144A,
	5.625%, 3/15/20		United States		500,000		531,250
	5.875%, 3/15/22		United States		600,000		643,500
b	Nuveen Investments Inc., senior note, 144A, 9.50%, 10/15/20		United States		2,000,000		2,380,000
	SLM Corp., senior note,
	8.45%, 6/15/18		United States		1,800,000		2,131,875
	5.50%, 1/15/19		United States		3,500,000		3,727,500
							12,140,750

FH-10 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin High Income VIP Fund (continued)

		Country		Principal Amount*			Value
	Corporate Bonds (continued)
	Energy 23.3%
	Antero Resources Finance Corp., senior note, 5.375%, 11/01/21		United States		1,000,000		$	1,047,500
	Carrizo Oil & Gas Inc., senior note,
	8.625%, 10/15/18		United States		2,000,000			2,117,500
	7.50%, 9/15/20		United States		500,000			551,250
b	CGG SA, senior note, 144A, 6.875%, 1/15/22		France		2,500,000			2,506,250
	Chaparral Energy Inc., senior note,
	9.875%, 10/01/20		United States		1,400,000			1,585,500
	8.25%, 9/01/21		United States		600,000			661,500
	CHC Helicopter SA,
	senior note, 9.375%, 6/01/21		Canada		400,000			429,000
	senior secured note, first lien, 9.25%, 10/15/20		Canada		2,700,000			2,956,500
	Chesapeake Energy Corp., senior note,
	6.625%, 8/15/20		United States		3,000,000			3,465,000
	6.125%, 2/15/21		United States		1,000,000			1,125,000
	Clayton Williams Energy Inc., senior note, 7.75%, 4/01/19		United States		2,400,000	��		2,556,000
	CONSOL Energy Inc., senior note,
	8.25%, 4/01/20		United States		1,000,000			1,087,500
	6.375%, 3/01/21		United States		300,000			320,250
	b 144A, 5.875%, 4/15/22		United States		1,100,000			1,155,000
b	Drill Rigs Holdings Inc., secured note, 144A, 6.50%, 10/01/17		United States		2,000,000			2,055,000
	Eagle Rock Energy Partners LP/Finance Corp., senior note,
	8.375%, 6/01/19		United States		2,500,000			2,712,500
	Energy Transfer Equity LP, senior note,
	7.50%, 10/15/20		United States		3,000,000			3,480,000
	b first lien, 144A, 5.875%, 1/15/24		United States		400,000			420,000
	Energy XXI Gulf Coast Inc., senior note,
	7.50%, 12/15/21		United States		1,000,000			1,075,000
	b 144A, 6.875%, 3/15/24		United States		1,200,000			1,227,000
b	EnQuest PLC, senior note, 144A, 7.00%, 4/15/22		United Kingdom		1,000,000			1,038,125
	EPL Oil & Gas Inc., senior note, 8.25%, 2/15/18		United States		1,400,000			1,505,000
	Goodrich Petroleum Corp., senior note, 8.875%, 3/15/19		United States		2,500,000			2,675,000
	Halcon Resources Corp., senior note,
	8.875%, 5/15/21		United States		2,500,000			2,700,000
	9.25%, 2/15/22		United States		1,100,000			1,207,250
b	Kinder Morgan Finance Co. LLC, senior secured note, 144A, 6.00%, 1/15/18		United States		1,500,000			1,646,250
b	Kinder Morgan Inc.,
	senior secured bond, first lien, 144A, 5.625%, 11/15/23		United States		1,500,000			1,548,750
	senior secured note, 144A, 5.00%, 2/15/21		United States		600,000			625,500
	Kodiak Oil & Gas Corp., senior note,
	8.125%, 12/01/19		United States		1,400,000			1,557,500
	5.50%, 1/15/21		United States		500,000			523,750
	Linn Energy LLC/Finance Corp., senior note,
	6.50%, 5/15/19		United States		600,000			636,000
	8.625%, 4/15/20		United States		2,000,000			2,170,000
	7.75%, 2/01/21		United States		700,000			758,625
	Martin Midstream Partners LP/Martin Midstream Finance Corp., senior note, 7.25%, 2/15/21		United States		1,100,000			1,171,500
b,f	Memorial Resource Development Corp., senior note, 144A, 5.875%, 7/01/22		United States		700,000			708,750
	Midstates Petroleum Co. Inc./LLC, senior note, 9.25%, 6/01/21		United States		1,500,000			1,657,500

Semiannual Report FH-11

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin High Income VIP Fund (continued)

		Country		Principal Amount*		Value
	Corporate Bonds (continued)
	Energy (continued)
b	Murray Energy Corp., senior secured note, 144A, 8.625%, 6/15/21		United States		1,300,000	$	1,413,750
b	Oasis Petroleum Inc., senior note, 144A, 6.875%, 3/15/22		United States		1,500,000		1,642,500
b	Ocean Rig UDW Inc., senior note, 144A, 7.25%, 4/01/19		United States		1,200,000		1,191,000
	Offshore Group Investment Ltd.,
	senior bond, first lien, 7.125%, 4/01/23		United States		1,000,000		1,022,500
	senior secured note, first lien, 7.50%, 11/01/19		United States		2,000,000		2,118,750
	PBF Holding Co. LLC, first lien, 8.25%, 2/15/20		United States		2,500,000		2,737,500
	Peabody Energy Corp., senior note,
	6.50%, 9/15/20		United States		1,700,000		1,721,250
	6.25%, 11/15/21		United States		1,700,000		1,702,125
	Penn Virginia Corp., senior note, 8.50%, 5/01/20		United States		1,200,000		1,347,000
	Penn Virginia Resource Partners LP/Finance Corp., senior note,
	8.375%, 6/01/20		United States		1,094,000		1,243,057
	6.50%, 5/15/21		United States		600,000		657,000
	QEP Resources Inc., senior note,
	5.375%, 10/01/22		United States		1,500,000		1,552,500
	5.25%, 5/01/23		United States		1,000,000		1,027,500
	QR Energy LP/QRE Finance, senior note, 9.25%, 8/01/20		United States		1,900,000		2,085,250
	Quicksilver Resources Inc.,
	b,g secured note, second lien, 144A, FRN, 7.00%, 6/21/19		United States		1,300,000		1,274,000
	senior note, 9.125%, 8/15/19		United States		1,000,000		932,500
	Sabine Pass Liquefaction LLC,
	first lien, 5.625%, 2/01/21		United States		2,400,000		2,550,000
	first lien, 5.625%, 4/15/23		United States		900,000		940,500
	b senior secured note, first lien, 144A, 5.75%, 5/15/24		United States		200,000		208,750
b	Samson Investment Co., senior note, 144A, 9.75%, 2/15/20		United States		2,500,000		2,646,875
b	Sanchez Energy Corp., senior note, 144A,
	7.75%, 6/15/21		United States		1,800,000		1,962,000
	6.125%, 1/15/23		United States		600,000		621,000
	W&T Offshore Inc., senior note, 8.50%, 6/15/19		United States		2,600,000		2,821,000
							90,081,057
	Food, Beverage & Tobacco 2.8%
	Del Monte Corp., senior note, 7.625%, 2/15/19		United States		2,102,000		2,193,122
b	Dole Food Co. Inc., senior secured note, 144A, 7.25%, 5/01/19		United States		1,600,000		1,622,000
b	JBS USA LLC/Finance Inc.,
	senior bond, 144A, 5.875%, 7/15/24		United States		600,000		599,250
	senior note, 144A, 8.25%, 2/01/20		United States		2,600,000		2,834,000
	senior note, 144A, 7.25%, 6/01/21		United States		400,000		431,000
b	Post Holdings Inc., senior note, 144A,
	6.75%, 12/01/21		United States		1,000,000		1,063,750
	7.375%, 2/15/22		United States		1,600,000		1,736,000
	6.00%, 12/15/22		United States		300,000		306,750
							10,785,872
	Health Care Equipment & Services 6.1%
	Alere Inc.,
	senior note, 7.25%, 7/01/18		United States		2,200,000		2,409,000
	senior sub. note, 6.50%, 6/15/20		United States		300,000		316,500
	Aviv Healthcare Properties LP/Aviv Healthcare Capital Corp., senior note,
	7.75%, 2/15/19		United States		1,500,000		1,605,000
	6.00%, 10/15/21		United States		400,000		426,000

FH-12 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin High Income VIP Fund (continued)

		Country		Principal Amount*		Value
	Corporate Bonds (continued)
	Health Care Equipment & Services (continued)
	CHS/Community Health Systems Inc.,
	senior note, 8.00%, 11/15/19		United States		1,700,000	$	1,865,750
	senior note, 7.125%, 7/15/20		United States		700,000		761,250
	bsenior note, 144A, 6.875%, 2/01/22		United States		300,000		319,500
	senior secured note, 5.125%, 8/15/18		United States		1,500,000		1,576,875
	DaVita HealthCare Partners Inc., senior bond, 5.125%, 7/15/24		United States		1,400,000		1,411,375
	ExamWorks Group Inc., senior note, 9.00%, 7/15/19		United States		1,300,000		1,436,500
	HCA Inc.,
	senior note, 7.50%, 2/15/22		United States		800,000		925,000
	senior note, 5.875%, 5/01/23		United States		2,500,000		2,621,875
	senior secured bond, 7.25%, 9/15/20		United States		900,000		965,250
	senior secured note, 5.875%, 3/15/22		United States		1,000,000		1,087,500
	senior secured note, first lien, 5.00%, 3/15/24		United States		2,300,000		2,337,536
	Tenet Healthcare Corp., senior note,
	8.125%, 4/01/22		United States		3,000,000		3,480,000
	b144A, 5.00%, 3/01/19		United States		200,000		203,250
							23,748,161
	Materials 12.4%
	ArcelorMittal, senior note, 6.00%, 3/01/21		Luxembourg		1,900,000		2,056,702
b	Ardagh Packaging Finance PLC, senior note, 144A, 9.125%, 10/15/20		Luxembourg		600,000		666,750
b	Ardagh Packaging Finance PLC/Ardagh MP Holdings USA Inc.,
	senior note, 144A, 6.25%, 1/31/19		Luxembourg		300,000		308,250
	senior note, 144A, 7.00%, 11/15/20		Luxembourg		176,471		183,309
	senior note, 144A, 6.75%, 1/31/21		Luxembourg		300,000		311,625
	f senior note, 144A, 6.00%, 6/30/21		Luxembourg		1,900,000		1,898,813
	senior secured note, first lien, 144A, 7.375%, 10/15/17		Luxembourg		600,000		634,125
b	Barminco Finance Pty. Ltd., senior note, 144A, 9.00%, 6/01/18		Australia		2,000,000		1,965,000
b	BlueScope Steel Ltd./BlueScope Steel Finance, senior note, 144A, 7.125%, 5/01/18		Australia		2,000,000		2,167,500
b	Cemex Finance LLC, senior secured note, 144A, 6.00%, 4/01/24		Mexico		1,200,000		1,253,250
b	Cemex SAB de CV, senior secured note, 144A, 9.00%, 1/11/18		Mexico		2,500,000		2,696,875
b	Constellium NV, senior note, 144A, 5.75%, 5/15/24		Netherlands		3,200,000		3,332,000
b	Eldorado Gold Corp., senior note, 144A, 6.125%, 12/15/20		Canada		3,100,000		3,146,500
b	Exopack Holding Corp., senior note, 144A, 10.00%, 6/01/18		United States		500,000		538,750
b	First Quantum Minerals Ltd., senior note, 144A,
	6.75%, 2/15/20		Canada		2,000,000		2,070,000
	7.00%, 2/15/21		Canada		1,836,000		1,897,965
b	FMG Resources (August 2006) Pty. Ltd., senior note, 144A,
	6.875%, 2/01/18		Australia		2,000,000		2,105,000
	8.25%, 11/01/19		Australia		500,000		546,250
	6.875%, 4/01/22		Australia		200,000		215,250
b	Ineos Finance PLC, senior secured note, 144A,
	8.375%, 2/15/19		Switzerland		200,000		219,500
	7.50%, 5/01/20		Switzerland		500,000		546,250
b	Ineos Group Holdings SA, senior note, 144A,
	6.125%, 8/15/18		Switzerland		1,300,000		1,350,375
	5.875%, 2/15/19		Switzerland		700,000		719,250
	Novelis Inc., senior note, 8.75%, 12/15/20		Canada		1,300,000		1,449,500
	Olin Corp., senior bond, 5.50%, 8/15/22		United States		3,200,000		3,408,000
b	Orion Engineered Carbons Bondco GmbH, senior secured note, first lien, 144A, 9.625%, 6/15/18		Germany		1,400,000		1,512,875

Semiannual Report FH-13

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin High Income VIP Fund (continued)

		Country		Principal Amount*		Value
	Corporate Bonds (continued)
	Materials (continued)
b,h	Orion Engineered Carbons Finance & Co. SCA, senior note, 144A, PIK, 9.25%, 8/01/19		Germany		500,000	$	522,750
b	Polymer Group Inc., senior note, 144A, 6.875%, 6/01/19		United States		900,000		918,000
b	Rain CII Carbon LLC/Corp., second lien, 144A, 8.25%, 1/15/21		United States		1,200,000		1,266,000
	Reynolds Group Issuer Inc./LLC/SA,
	first lien, 5.75%, 10/15/20		United States		1,400,000		1,484,000
	senior note, 8.50%, 5/15/18		United States		2,800,000		2,933,000
	senior note, 9.00%, 4/15/19		United States		200,000		212,750
	senior note, 9.875%, 8/15/19		United States		200,000		222,750
	senior note, 8.25%, 2/15/21		United States		400,000		437,000
b	Sealed Air Corp., senior note, 144A,
	8.125%, 9/15/19		United States		800,000		885,000
	6.50%, 12/01/20		United States		500,000		565,000
	8.375%, 9/15/21		United States		600,000		690,000
b	U.S. Coatings Acquisition Inc./Flash Dutch 2 BV, senior note, 144A, 7.375%, 5/01/21		United States		700,000		766,500
							48,102,414
	Media 9.4%
b	Altice Financing SA, secured note, first lien, 144A, 6.50%, 1/15/22		Luxembourg		300,000		319,313
	Cablevision Systems Corp., senior note, 7.75%, 4/15/18		United States		1,000,000		1,135,000
	CCO Holdings LLC/CCO Holdings Capital Corp.,
	senior bond, 5.25%, 9/30/22		United States		900,000		918,000
	senior note, 6.50%, 4/30/21		United States		1,500,000		1,603,125
	Clear Channel Communications Inc., senior secured bond, first lien, 9.00%, 3/01/21		United States		3,000,000		3,221,250
	Clear Channel Worldwide Holdings Inc.,
	senior note, 6.50%, 11/15/22		United States		1,000,000		1,082,500
	senior sub. note, 7.625%, 3/15/20		United States		1,100,000		1,192,125
	senior sub. note, 7.625%, 3/15/20		United States		200,000		215,000
	CSC Holdings LLC, senior note,
	6.75%, 11/15/21		United States		1,500,000		1,655,625
	b 144A, 5.25%, 6/01/24		United States		1,000,000		986,250
	DISH DBS Corp., senior note,
	7.125%, 2/01/16		United States		2,000,000		2,167,500
	6.75%, 6/01/21		United States		1,500,000		1,713,750
b	Gannett Co. Inc.,
	senior bond, 144A, 6.375%, 10/15/23		United States		2,000,000		2,140,000
	senior note, 144A, 5.125%, 7/15/20		United States		1,400,000		1,443,750
b	The Nielsen Co. (Luxembourg) S.a.r.l., senior note, 144A, 5.50%, 10/01/21		United States		900,000		935,437
b	Nielsen Finance LLC/Co., senior note, 144A, 5.00%, 4/15/22		United States		1,100,000		1,111,687
b	Radio One Inc., senior sub. note, 144A, 9.25%, 2/15/20		United States		800,000		870,000
b	Sirius XM Radio Inc., senior bond, 144A, 6.00%, 7/15/24		United States		2,000,000		2,085,000
b	Univision Communications Inc., senior secured note, 144A,
	6.875%, 5/15/19		United States		2,500,000		2,675,000
	7.875%, 11/01/20		United States		700,000		773,500
b	UPCB Finance III Ltd., senior secured note, 144A, 6.625%, 7/01/20		Netherlands		1,000,000		1,070,000
b	UPCB Finance VI Ltd., senior secured note, 144A, 6.875%, 1/15/22		Netherlands		500,000		548,750
b	Videotron Ltd., senior bond, 144A, 5.375%, 6/15/24		Canada		800,000		822,000
b	Virgin Media Finance PLC., senior bond, 144A, 6.375%, 4/15/23		United Kingdom		1,700,000		1,853,000

FH-14 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin High Income VIP Fund (continued)

		Country		Principal Amount*		Value
	Corporate Bonds (continued)
	Media (continued)
b	Virgin Media Secured Finance PLC, senior secured bond, first lien, 144A, 5.50%, 1/15/25		United Kingdom		1,100,000	$	1,142,625
b	VTR Finance BV, senior secured note, 144A, 6.875%, 1/15/24		Chile		900,000		968,247
b	WMG Acquisition Corp., senior note, 144A, 5.625%, 4/15/22		United States		1,500,000		1,513,125
							36,161,559
	Pharmaceuticals, Biotechnology & Life Sciences 2.7%
b	inVentiv Health Inc., senior secured note, 144A, 9.00%, 1/15/18		United States		600,000		648,000
b,h	Jaguar Holding Co. I, senior note, 144A, PIK, 9.375%, 10/15/17		United States		1,200,000		1,248,000
b	Jaguar Holding Co. II/Merger Sub Inc., senior note, 144A, 9.50%, 12/01/19		United States		700,000		768,250
	Par Pharmaceutical Cos. Inc., senior note, 7.375%, 10/15/20		United States		3,300,000		3,601,125
b	Salix Pharmaceuticals Ltd., senior note, 144A, 6.00%, 1/15/21		United States		400,000		430,000
b	Valeant Pharmaceuticals International Inc., senior note, 144A,
	7.50%, 7/15/21		United States		200,000		222,250
	5.625%, 12/01/21		United States		300,000		309,000
b	VPI Escrow Corp., senior note, 144A, 6.375%, 10/15/20		United States		3,000,000		3,198,750
							10,425,375
	Retailing 0.9%
b	American Builders & Contractors Supply Co. Inc., senior note, 144A, 5.625%, 4/15/21		United States		2,100,000		2,178,750
b	New Look Bondco I PLC, secured note, 144A, 8.375%, 5/14/18		United Kingdom		1,000,000		1,074,375
							3,253,125
	Semiconductors & Semiconductor Equipment 0.3%
	Freescale Semiconductor Inc., senior note, 8.05%, 2/01/20		United States		1,028,000		1,112,810
	Software & Services 3.3%
b	BMC Software Finance Inc., senior note, 144A, 8.125%, 7/15/21		United States		2,000,000		2,067,500
	Equinix Inc., senior bond, 5.375%, 4/01/23		United States		3,300,000		3,390,750
	First Data Corp.,
	senior bond, 12.625%, 1/15/21		United States		1,800,000		2,220,750
	senior note, 11.25%, 1/15/21		United States		1,000,000		1,170,000
	b senior secured bond, 144A, 8.25%, 1/15/21		United States		2,500,000		2,750,000
	Sterling International Inc., senior note, 11.00%, 10/01/19		United States		1,200,000		1,293,000
							12,892,000
	Technology Hardware & Equipment 1.0%
b	Alcatel-Lucent USA Inc., senior note, 144A, 6.75%, 11/15/20		France		2,400,000		2,568,000
b	Blackboard Inc., senior note, 144A, 7.75%, 11/15/19		United States		900,000		945,000
b,h	CommScope Holdings Co. Inc., senior note, 144A, PIK, 6.625%, 6/01/20		United States		400,000		429,000
							3,942,000
	Telecommunication Services 9.4%
	CenturyLink Inc.,
	senior bond, 6.75%, 12/01/23		United States		100,000		109,750
	senior note, 6.45%, 6/15/21		United States		400,000		436,000
	senior note, 5.80%, 3/15/22		United States		2,500,000		2,615,625
b	Digicel Group Ltd., senior note, 144A, 8.25%, 9/30/20		Bermuda		2,000,000		2,205,000
b	Digicel Ltd., senior note, 144A, 6.00%, 4/15/21		Bermuda		1,200,000		1,242,750

Semiannual Report FH-15

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin High Income VIP Fund (continued)

		Country		Principal Amount*		Value
	Corporate Bonds (continued)
	Telecommunication Services (continued)
b	eAccess Ltd., senior note, 144A, 8.25%, 4/01/18		Japan		1,800,000	$	1,951,875
	Frontier Communications Corp.,
	senior bond, 7.625%, 4/15/24		United States		200,000		216,250
	senior note, 8.50%, 4/15/20		United States		2,000,000		2,370,000
	senior note, 8.75%, 4/15/22		United States		900,000		1,048,500
	senior note, 7.875%, 1/15/27		United States		200,000		207,750
	Intelsat Jackson Holdings SA,
	senior bond, 5.50%, 8/01/23		Luxembourg		1,500,000		1,496,250
	senior note, 7.25%, 10/15/20		Luxembourg		900,000		972,000
	senior note, 7.50%, 4/01/21		Luxembourg		3,800,000		4,180,000
b	Millicom International Cellular SA, senior note, 144A, 6.625%, 10/15/21		Luxembourg		1,500,000		1,629,375
b	Sprint Corp.,
	senior bond, 144A, 7.125%, 6/15/24		United States		500,000		531,250
	senior note, 144A, 7.875%, 9/15/23		United States		500,000		557,500
	Sprint Nextel Corp., senior note,
	8.375%, 8/15/17		United States		3,000,000		3,513,750
	b 144A, 9.00%, 11/15/18		United States		3,000,000		3,645,000
	b 144A, 7.00%, 3/01/20		United States		300,000		346,500
	T-Mobile USA Inc.,
	senior bond, 6.50%, 1/15/24		United States		400,000		428,500
	senior note, 6.542%, 4/28/20		United States		1,600,000		1,734,000
	senior note, 6.125%, 1/15/22		United States		200,000		213,000
b	Wind Acquisition Finance SA, senior secured note, 144A,
	f 4.75%, 7/15/20		Italy		1,000,000		1,009,375
	7.375%, 4/23/21		Italy		3,500,000		3,764,687
							36,424,687
	Transportation 1.8%
b	Florida East Coast Holdings Corp.,
	secured note, first lien, 144A, 6.75%, 5/01/19		United States		900,000		952,875
	senior note, 144A, 9.75%, 5/01/20		United States		500,000		530,625
	Hertz Corp., senior note,
	7.50%, 10/15/18		United States		1,100,000		1,155,000
	6.75%, 4/15/19		United States		2,200,000		2,343,000
b	Stena AB, senior bond, 144A, 7.00%, 2/01/24		Sweden		1,000,000		1,067,500
b	Stena International SA, secured bond, 144A, 5.75%, 3/01/24		Sweden		1,000,000		1,017,500
							7,066,500
	Utilities 2.1%
b	Calpine Corp.,
	senior secured bond, first lien, 144A, 5.875%, 1/15/24		United States		400,000		424,000
	senior secured note, 144A, 7.875%, 7/31/20		United States		654,000		712,860
	senior secured note, 144A, 7.50%, 2/15/21		United States		1,170,000		1,270,913
	senior secured note, 144A, 7.875%, 1/15/23		United States		782,000		875,840
	senior secured note, first lien, 144A, 6.00%, 1/15/22		United States		100,000		108,250
b	InterGen NV, secured bond, 144A, 7.00%, 6/30/23		Netherlands		2,000,000		2,080,000
b,f	NGL Energy Partners LP/NGL Energy Finance Corp., senior note, 144A, 5.125%, 7/15/19		United States		500,000		503,750

FH-16 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin High Income VIP Fund (continued)

		Country		Principal Amount*		Value
	Corporate Bonds (continued)
	Utilities (continued)
b,d	Texas Competitive Electric Holdings Co. LLC/Texas Competitive Electric Holdings Finance Inc., senior secured note, 144A, 11.50%, 10/01/20		United States		2,500,000	$	2,293,750
							8,269,363
	Total Corporate Bonds (Cost $345,104,897)						366,045,640
g,i	Senior Floating Rate Interests 1.1%
	Capital Goods 0.2%
	Navistar Inc., Tranche B Term Loan, 5.75%, 8/17/17		United States		760,128		776,518
	Household & Personal Products 0.6%
	Sun Products Corp., Tranche B Term Loan, 5.50%, 3/23/20		United States		2,346,427		2,308,297
	Utilities 0.3%
d	Texas Competitive Electric Holdings Co. LLC,Term Loan, 4.737%, 10/10/17		United States		1,431,288		1,187,970
	Total Senior Floating Rate Interests (Cost $4,347,220)						4,272,785
				Shares
	Escrow Accounts and Litigation Trusts (Cost $ —) 0.0%
a,e	NewPage Corp., Litigation Trust		United States		2,500,000		—
	Total Investments before Short Term Investments (Cost $352,228,301)						372,363,734
				Principal Amount*
	Short Term Investments (Cost $10,908,707) 2.8%
	Repurchase Agreements 2.8%
j	Joint Repurchase Agreement, 0.064%, 7/01/14 (Maturity Value $10,908,726) BNP Paribas Securities Corp. (Maturity Value $2,203,345) Credit Suisse Securities (USA) LLC (Maturity Value $1,101,672) Deutsche Bank Securities Inc. (Maturity Value $828,300) HSBC Securities (USA) Inc. (Maturity Value $4,627,154) Merrill Lynch, Pierce, Fenner & Smith Inc. (Maturity Value $2,148,255)		United States		10,908,707		10,908,707
	Collateralized by U.S. Government Agency Securities, 0.00% - 6.21%, 1/16/15 - 05/04/37; kU.S. Government Agency Discount Notes, 12/24/14 - 1/30/15; U.S. Government Agency Securities, Strips, 5/15/30; U.S. Treasury Bonds, 7.50% - 8.875%, 11/15/16 - 2/15/19; U.S. Treasury Notes, 0.25% - 4.50%, 7/15/15 - 4/30/18; and U.S. Treasury Notes, Index Linked, 1.375%, 7/15/18 (valued at $11,128,739)
	Total Investments (Cost $363,137,008) 99.1%						383,272,441
	Other Assets, less Liabilities 0.9%						3,554,488
	Net Assets 100.0%					$	386,826,929

Semiannual Report FH-17

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin High Income VIP Fund (continued)

*The principal amount is stated in U.S. dollars unless otherwise indicated.

^aNon-income producing.

^bSecurity was purchased pursuant to Rule 144A under the Securities Act of 1933 and may be sold in transactions exempt from registration only to qualified institutional buyers or in a public offering registered under the Securities Act of 1933. These securities have been deemed liquid under guidelines approved by the Trust’s Board of Trustees. At June 30, 2014, the aggregate value of these securities was $157,888,908, representing 40.82% of net assets.

^cPerpetual security with no stated maturity date.

^dSee Note 7 regarding defaulted securities.

^eSecurity has been deemed illiquid because it may not be able to be sold within seven days. At June 30, 2014, the aggregate value of these securities was $191, representing less than 0.01% of net assets.

^fSecurity purchased on a when-issued basis. See Note 1(d).

^gThe coupon rate shown represents the rate at period end.

^hIncome may be received in additional securities and/or cash.

ⁱSee Note 1(f) regarding senior floating rate interests.

^jSee Note 1(c) regarding joint repurchase agreement.

^kThe security is traded on a discount basis with no stated coupon rate.

FH-18 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin High Income VIP Fund (continued)

At June 30, 2014, the Fund had the following forward exchange contracts outstanding. See Note 1(e).

Forward Exchange Contracts
Currency	Counterpartya		Type		Quantity		Contract Amount		Settlement Date		Unrealized Appreciation		Unrealized Depreciation
Euro		DBAB		Buy		600,000	$	821,850		12/17/14	$	400	$	—
Euro		DBAB		Sell		600,000		823,230		12/17/14		980		—
Net unrealized appreciation (depreciation)											$	1,380

^a May be comprised of multiple contracts using the same currency and settlement date.

See Abbreviations on page FH-32.

The accompanying notes are an integral part of these financial statements.    |   Semiannual Report FH-19

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Financial Statements

Statement of Assets and Liabilities

June 30, 2014 (unaudited)

	Franklin High Income VIP Fund
Assets:
Investments in securities:
Cost - Unaffiliated issuers	$	352,228,301
Cost - Repurchase agreements		10,908,707
Total cost of investments	$	363,137,008
Value - Unaffiliated issuers	$	372,363,734
Value - Repurchase agreements		10,908,707
Total value of investments		383,272,441
Cash		47,761
Receivables:
Investment securities sold		1,987,227
Capital shares sold		220,903
Dividends and interest		5,939,737
Unrealized appreciation on forward exchange contracts		1,380
Other assets		202
Total assets		391,469,651
Liabilities:
Payables:
Investment securities purchased		4,100,000
Capital shares redeemed		113,424
Management fees		163,164
Distribution fees		149,927
Accrued expenses and other liabilities		116,207
Total liabilities		4,642,722
Net assets, at value	$	386,826,929
Net assets consist of:
Paid-in capital	$	378,065,415
Undistributed net investment income		8,996,075
Net unrealized appreciation (depreciation)		20,136,813
Accumulated net realized gain (loss)		(20,371,374	)
Net assets, at value	$	386,826,929

FH-20 Semiannual Report   |    The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL STATEMENTS

Statement of Assets and Liabilities (continued)

June 30, 2014 (unaudited)

	Franklin High Income VIP Fund
Class 1:
Net assets, at value	$	38,888,569
Shares outstanding		5,575,009
Net asset value and maximum offering price per share	$	6.98
Class 2:
Net assets, at value	$	319,222,108
Shares outstanding		47,180,079
Net asset value and maximum offering price per share	$	6.77
Class 4:
Net assets, at value	$	28,716,252
Shares outstanding		4,157,264
Net asset value and maximum offering price per share	$	6.91

The accompanying notes are an integral part of these financial statements.    |   Semiannual Report FH-21

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL STATEMENTS

Statement of Operations

for the six months ended June 30, 2014 (unaudited)

	Franklin High Income VIP Fund
Investment income:
Dividends	$	34,831
Interest		12,324,689
Total investment income		12,359,520
Expenses:
Management fees (Note 3a)		960,520
Distribution fees: (Note 3c)
Class 2		381,563
Class 4		49,457
Custodian fees (Note 4)		1,610
Reports to shareholders		47,996
Professional fees		22,340
Trustees’ fees and expenses		734
Other		21,254
Total expenses		1,485,474
Expense reductions (Note 4)		(6	)
Net expenses		1,485,468
Net investment income		10,874,052
Realized and unrealized gains (losses):
Net realized gain (loss) from:
Investments		2,977,734
Foreign currency transactions		(7,180	)
Net realized gain (loss)		2,970,554
Net change in unrealized appreciation (depreciation) on:
Investments		6,187,390
Translation of other assets and liabilities denominated in foreign currencies		3,947
Net change in unrealized appreciation (depreciation)		6,191,337
Net realized and unrealized gain (loss)		9,161,891
Net increase (decrease) in net assets resulting from operations	$	20,035,943

FH-22 Semiannual Report   |    The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL STATEMENTS

Statements of Changes in Net Assets

	Franklin High Income VIP Fund
	Six Months Ended June 30, 2014 (unaudited)			Year Ended December 31, 2013
Increase (decrease) in net assets:
Operations:
Net investment income	$	10,874,052		$	22,562,058
Net realized gain (loss) from investments and foreign currency transactions		2,970,554			5,546,800
Net change in unrealized appreciation (depreciation) on investments and translation of other assets and liabilities denominated in foreign currencies		6,191,337			(1,216,918	)
Net increase (decrease) in net assets resulting from operations		20,035,943			26,891,940
Distributions to shareholders from:
Net investment income:
Class 1		(2,292,485	)		(2,998,716	)
Class 2		(18,595,621	)		(20,021,935	)
Class 4		(1,613,962	)		(1,982,283	)
Total distributions to shareholders		(22,502,068	)		(25,002,934	)
Capital share transactions: (Note 2)
Class 1		(263,567	)		(3,089,037	)
Class 2		29,609,426			8,408,156
Class 4		1,032,146			25,255
Total capital share transactions		30,378,005			5,344,374
Net increase (decrease) in net assets		27,911,880			7,233,380
Net assets:
Beginning of period		358,915,049			351,681,669
End of period	$	386,826,929		$	358,915,049
Undistributed net investment income included in net assets:
End of period	$	8,996,075		$	20,624,091

The accompanying notes are an integral part of these financial statements.    |   Semiannual Report FH-23

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Notes to Financial Statements (unaudited)

Franklin High Income VIP Fund

1. Organization and Significant Accounting Policies

Franklin Templeton Variable Insurance Products Trust (Trust) is registered under the Investment Company Act of 1940, as amended, (1940 Act) as an open-end management investment company, consisting of twenty separate funds and applies the specialized accounting and reporting guidance in U.S. Generally Accepted Accounting Principles (U.S. GAAP). The Franklin High Income VIP Fund (Fund) is included in this report. The financial statements of the remaining funds in the Trust are presented separately. Shares of the Fund are generally sold only to insurance company separate accounts to fund the benefits of variable life insurance policies or variable annuity contracts. At June 30, 2014, 80.95% of the Fund’s shares were held through one insurance company. Investment activities of these insurance company separate accounts could have a material impact on the Fund. The Fund offers 3 classes of shares: Class 1, Class 2, and Class 4. Each class of shares differs by its distribution fees, voting rights on matters affecting a single class and its exchange privilege.

Effective May 1, 2014, the Franklin High Income Securities Fund was renamed the Franklin High Income VIP Fund.

The following summarizes the Fund’s significant accounting policies.

a. Financial Instrument Valuation

The Fund’s investments in financial instruments are carried at fair value daily. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. The Fund calculates the net asset value (NAV) per share at the close of the New York Stock Exchange (NYSE), generally at 4 p.m. Eastern time (NYSE close) on each day the NYSE is open for trading. Under compliance policies and procedures approved by the Trust’s Board of Trustees (the Board), the Fund’s administrator has responsibility for oversight of valuation, including leading the cross-functional Valuation and Liquidity Oversight Committee (VLOC). The VLOC provides administration and oversight of the Fund’s valuation policies and procedures, which are approved annually by the Board. Among other things, these procedures allow the Fund to utilize independent pricing services, quotations from securities and financial instrument dealers, and other market sources to determine fair value.

Equity securities listed on an exchange or on the NASDAQ National Market System are valued at the last quoted sale price or the official closing price of the day, respectively. Foreign equity securities are valued as of the close of trading on the foreign stock exchange on which the security is primarily traded or as of the NYSE close, whichever is earlier. The value is then converted into its U.S. dollar equivalent at the foreign exchange rate in effect at the NYSE close on the day that the value of the security is determined. Over-the-counter (OTC) securities are valued within the range of the most recent quoted bid and ask prices. Securities that trade in multiple markets or on multiple exchanges are valued according to the broadest and most representative market. Certain equity securities are valued based upon fundamental characteristics or relationships to similar securities.

Debt securities generally trade in the OTC market rather than on a securities exchange. The Fund’s pricing services use multiple valuation techniques to determine fair value. In instances where sufficient market activity exists, the pricing services may utilize a market-based approach through which quotes from market makers are used to determine fair value. In instances where sufficient market activity may not exist or is limited, the pricing services also utilize proprietary valuation models which may consider market characteristics such as benchmark yield curves, credit spreads, estimated default rates, anticipated market interest rate volatility, coupon rates, anticipated timing of principal repayments, underlying collateral, and other unique security features in order to estimate the relevant cash flows, which are then discounted to calculate the fair value. Securities denominated in a foreign currency are converted into their U.S. dollar equivalent at the foreign exchange rate in effect at the NYSE close on the date that the values of the foreign debt securities are determined. Repurchase agreements are valued at cost, which approximates fair value.

Certain derivative financial instruments (derivatives) trade in the OTC market. The Fund’s pricing services use various techniques including industry standard option pricing models and proprietary discounted cash flow models to determine the fair value of those instruments. The Fund’s net benefit or obligation under the derivative contract, as measured by the fair value of the contract, is included in net assets.

The Fund has procedures to determine the fair value of financial instruments for which market prices are not reliable or readily available. Under these procedures, the VLOC convenes on a

FH-24 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin High Income VIP Fund (continued)

regular basis to review such financial instruments and considers a number of factors, including significant unobservable valuation inputs, when arriving at fair value. The VLOC primarily employs a market-based approach which may use related or comparable assets or liabilities, recent transactions, market multiples, book values, and other relevant information for the investment to determine the fair value of the investment. An income-based valuation approach may also be used in which the anticipated future cash flows of the investment are discounted to calculate fair value. Discounts may also be applied due to the nature or duration of any restrictions on the disposition of the investments. Due to the inherent uncertainty of valuations of such investments, the fair values may differ significantly from the values that would have been used had an active market existed. The VLOC employs various methods for calibrating these valuation approaches including a regular review of key inputs and assumptions, transactional back-testing or disposition analysis, and reviews of any related market activity.

Trading in securities on foreign securities stock exchanges and OTC markets may be completed before the daily NYSE close. In addition, trading in certain foreign markets may not take place on every NYSE business day. Occasionally, events occur between the time at which trading in a foreign security is completed and the close of the NYSE that might call into question the reliability of the value of a portfolio security held by the Fund. As a result, differences may arise between the value of the Fund’s portfolio securities as determined at the foreign market close and the latest indications of value at the close of the NYSE. In order to minimize the potential for these differences, the VLOC monitors price movements following the close of trading in foreign stock markets through a series of country specific market proxies (such as baskets of American Depositary Receipts, futures contracts and exchange traded funds). These price movements are measured against established trigger thresholds for each specific market proxy to assist in determining if an event has occurred that may call into question the reliability of the values of the foreign securities held by the Fund. If such an event occurs, the securities may be valued using fair value procedures, which may include the use of independent pricing services.

Also, when the last day of the reporting period is a non-business day, certain foreign markets may be open on those days that the NYSE is closed, which could result in differences between the value of the Fund’s portfolio securities on the last business day and the last calendar day of the reporting period. Any

significant security valuation changes due to an open foreign market are adjusted and reflected by the Fund for financial reporting purposes.

b. Foreign Currency Translation

Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars based on the exchange rate of such currencies against U.S. dollars on the date of valuation. The Fund may enter into foreign currency exchange contracts to facilitate transactions denominated in a foreign currency. Purchases and sales of securities, income and expense items denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date. Portfolio securities and assets and liabilities denominated in foreign currencies contain risks that those currencies will decline in value relative to the U.S. dollar. Occasionally, events may impact the availability or reliability of foreign exchange rates used to convert the U.S. dollar equivalent value. If such an event occurs, the foreign exchange rate will be valued at fair value using procedures established and approved by the Board.

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

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

c. Joint Repurchase Agreement

The Fund enters into a joint repurchase agreement whereby its uninvested cash balance is deposited into a joint cash account with other funds managed by the investment manager or an affiliate of the investment manager and is used to invest in one or more repurchase agreements. The value and face amount of the joint repurchase agreement are allocated to the funds based on their pro-rata interest. A repurchase agreement is accounted

Semiannual Report FH-25

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin High Income VIP Fund (continued)

1. Organization and Significant Accounting Policies (continued)

c. Joint Repurchase Agreement (continued)

for as a loan by the Fund to the seller, collateralized by securities which are delivered to the Fund’s custodian. The fair value, including accrued interest, of the initial collateralization is required to be at least 102% of the dollar amount invested by the funds, with the value of the underlying securities marked to market daily to maintain coverage of at least 100%. Repurchase agreements are subject to the terms of Master Repurchase Agreements (MRAs) with approved counterparties (sellers). The MRAs contain various provisions, including but not limited to events of default and maintenance of collateral for repurchase agreements. In the event of default by either the seller or the Fund, certain MRAs may permit the non-defaulting party to net and close-out all transactions, if any, traded under such agreements. The Fund may sell securities it holds as collateral and apply the proceeds towards the repurchase price and any other amounts owed by the seller to the Fund in the event of default by the seller. This could involve costs or delays in addition to a loss on the securities if their value falls below the repurchase price owed by the seller. The joint repurchase agreement held by the Fund at period end, as indicated in the Statement of Investments, had been entered into on June 30, 2014.

d. Securities Purchased on a When-Issued Basis

The Fund purchases securities on a when-issued basis, with payment and delivery scheduled for a future date. These transactions are subject to market fluctuations and are subject to the risk that the value at delivery may be more or less than the trade date purchase price. Although the Fund will generally purchase these securities with the intention of holding the securities, it may sell the securities before the settlement date. Sufficient assets have been segregated for these securities.

e. Derivative Financial Instruments

The Fund invested in derivatives in order to manage risk or gain exposure to various other investments or markets. Derivatives are financial contracts based on an underlying or notional amount, require no initial investment or an initial net investment that is smaller than would normally be required to have a similar response to changes in market factors, and require or permit net settlement. Derivatives contain various risks including the potential inability of the counterparty to fulfill their obligations under the terms of the contract, the potential for an illiquid

secondary market, and/or the potential for market movements which expose the Fund to gains or losses in excess of the amounts shown on the Statement of Assets and Liabilities. Realized gain and loss and unrealized appreciation and depreciation on these contracts for the period are included in the Statement of Operations.

Derivative counterparty credit risk is managed through a formal evaluation of the creditworthiness of all potential counterparties. The Fund attempts to reduce its exposure to counterparty credit risk on OTC derivatives, whenever possible, by entering into International Swaps and Derivatives Association (ISDA) master agreements with certain counterparties. These agreements contain various provisions, including but not limited to collateral requirements, events of default, or early termination. Termination events applicable to the counterparty include certain deteriorations in the credit quality of the counterparty. Termination events applicable to the Fund include failure of the Fund to maintain certain net asset levels and/or limit the decline in net assets over various periods of time. In the event of default or early termination, the ISDA master agreement gives the non-defaulting party the right to net and close-out all transactions traded, whether or not arising under the ISDA agreement, to one net amount payable by one counterparty to the other. However, absent an event of default or early termination, OTC derivative assets and liabilities are presented gross and not offset in the Statement of Assets and Liabilities. Early termination by the counterparty may result in an immediate payment by the Fund of any net liability owed to that counterparty under the ISDA agreement. At June 30, 2014, the Fund had no OTC derivatives in a net liability position for such contracts.

Collateral requirements differ by type of derivative. Collateral terms are contract specific for OTC derivatives. For OTC derivatives traded under an ISDA master agreement, posting of collateral is required by either the fund or the applicable counterparty if the total net exposure of all OTC derivatives with the applicable counterparty exceeds the minimum transfer amount, which typically ranges from $100,000 to $250,000, and can vary depending on the counterparty and the type of the agreement. Generally, collateral is determined at the close of fund business each day and any additional collateral required due to changes in derivative values may be delivered by the fund or the counterparty within a few business days. Collateral pledged and/or received by the fund, if any, is held in segregated accounts with the fund’s custodian/counterparty broker and can be in the form

FH-26 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin High Income VIP Fund (continued)

of cash and/or securities. Unrestricted cash may be invested according to the Fund’s investment objectives.

The Fund entered into OTC forward exchange contracts primarily to manage and/or gain exposure to certain foreign currencies. A forward exchange contract is an agreement between the Fund and a counterparty to buy or sell a foreign currency at a specific exchange rate on a future date.

See Note 8 regarding other derivative information.

f. Senior Floating Rate Interests

The Fund invests in senior secured corporate loans that pay interest at rates which are periodically reset by reference to a base lending rate plus a spread. These base lending rates are generally the prime rate offered by a designated U.S. bank or the London InterBank Offered Rate (LIBOR). Senior secured corporate loans often require prepayment of principal from excess cash flows or at the discretion of the borrower. As a result, actual maturity may be substantially less than the stated maturity. Senior secured corporate loans in which the Fund invests are generally readily marketable, but may be subject to certain restrictions on resale.

g. Income and Deferred Taxes

It is the Fund’s policy to qualify as a regulated investment company under the Internal Revenue Code. The Fund intends to distribute to shareholders substantially all of its taxable income and net realized gains to relieve it from federal income and excise taxes. As a result, no provision for U.S. federal income taxes is required.

The Fund may be subject to foreign taxation related to income received, capital gains on the sale of securities and certain foreign currency transactions in the foreign jurisdictions in which it invests. Foreign taxes, if any, are recorded based on the tax regulations and rates that exist in the foreign markets in which the Fund invests. When a capital gain tax is determined to apply the Fund records an estimated deferred tax liability in an amount that would be payable if the securities were disposed of on the valuation date.

The Fund recognizes the tax benefits of uncertain tax positions only when the position is “more likely than not” to be sustained upon examination by the tax authorities based on the technical merits of the tax position. As of June 30, 2014, and for all open tax years, the Fund has determined that no liability for unrecognized tax benefits is required in the Fund’s financial statements

related to uncertain tax positions taken on a tax return (or expected to be taken on future tax returns). Open tax years are those that remain subject to examination and are based on each tax jurisdiction statute of limitation.

h. Security Transactions, Investment Income, Expenses and Distributions

Security transactions are accounted for on trade date. Realized gains and losses on security transactions are determined on a specific identification basis. Interest income and estimated expenses are accrued daily. Amortization of premium and accretion of discount on debt securities are included in interest income. Facility fees are recognized as income over the expected term of the loan. Dividend income recorded on the ex-dividend date except that certain dividends from foreign securities are recognized as soon as the Fund is notified of the ex-dividend date. Distributions to shareholders are recorded on the ex-dividend date and are determined according to income tax regulations (tax basis). Distributable earnings determined on a tax basis may differ from earnings recorded in accordance with accounting principles generally accepted in the United States of America. These differences may be permanent or temporary. Permanent differences are reclassified among capital accounts to reflect their tax character. These reclassifications have no impact on net assets or the results of operations. Temporary differences are not reclassified, as they may reverse in subsequent periods.

Common expenses incurred by the Trust are allocated among the funds based on the ratio of net assets of each fund to the combined net assets of the Trust. Fund specific expenses are charged directly to the fund that incurred the expense.

Realized and unrealized gains and losses and net investment income, not including class specific expenses, are allocated daily to each class of shares based upon the relative proportion of net assets of each class. Differences in per share distributions, by class, are generally due to differences in class specific expenses.

i. Accounting Estimates

The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the amounts of income and expenses during the reporting period. Actual results could differ from those estimates.

Semiannual Report FH-27

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin High Income VIP Fund (continued)

1. Organization and Significant Accounting Policies (continued)

j. Guarantees and Indemnifications

Under the Trust’s organizational documents, its officers and trustees are indemnified by the Trust against certain liabilities arising out of the performance of their duties to the Trust.

Additionally, in the normal course of business, the Trust, on behalf of the Fund, enters into contracts with service providers that contain general indemnification clauses. The Trust’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Trust that have not yet occurred. Currently, the Trust expects the risk of loss to be remote.

2. Shares of Beneficial Interest

At June 30, 2014, there were an unlimited number of shares authorized (without par value). Transactions in the Fund’s shares were as follows:

	Six Months Ended June 30, 2014						Year Ended December 31, 2013
	Shares			Amount			Shares			Amount
Class 1 Shares:
Shares sold		39,418		$	283,449			296,126		$	2,094,060
Shares issued in reinvestment of distributions		329,854			2,292,485			448,910			2,998,716
Shares redeemed		(395,149	)		(2,839,501	)		(1,160,278	)		(8,181,813	)
Net increase (decrease)		(25,877	)	$	(263,567	)		(415,242	)	$	(3,089,037	)
Class 2 Shares:
Shares sold		6,614,219		$	46,185,549			8,384,624		$	56,291,181
Shares issued in reinvestment of distributions		2,754,907			18,595,621			3,085,044			20,021,935
Shares redeemed		(5,034,138	)		(35,171,744	)		(9,961,173	)		(67,904,960	)
Net increase (decrease)		4,334,988		$	29,609,426			1,508,495		$	8,408,156
Class 4 Shares:
Shares sold		150,401		$	1,072,695			232,056		$	1,586,635
Shares issued on reinvestment of distributions		234,247			1,613,962			299,438			1,982,283
Shares redeemed		(231,394	)		(1,654,511	)		(515,161	)		(3,543,663	)
Net increase (decrease)		153,254		$	1,032,146			16,333		$	25,255

3. Transactions With Affiliates

Franklin Resources, Inc. is the holding company for various subsidiaries that together are referred to as Franklin Templeton Investments. Certain officers and trustees of the Fund are also officers and/or directors of the following subsidiaries:

Subsidiary	Affiliation
Franklin Advisers, Inc. (Advisers)	Investment manager
Franklin Templeton Services, LLC (FT Services)	Administrative manager
Franklin Templeton Distributors, Inc. (Distributors)	Principal underwriter
Franklin Templeton Investor Services, LLC (Investor Services)	Transfer agent

FH-28 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin High Income VIP Fund (continued)

a. Management Fees

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

Annualized Fee Rate	Net Assets
0.625%	Up to and including $100 million
0.500%	Over $100 million, up to and including $250 million
0.450%	Over $250 million, up to and including $7.5 billion
0.440%	Over $7.5 billion, up to and including $10 billion
0.430%	Over $10 billion, up to and including $12.5 billion
0.420%	Over $12.5 billion, up to and including $15 billion
0.400%	In excess of $15 billion

b. Administrative Fees

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

c. Distribution Fees

The Board has adopted distribution plans for Class 2 and Class 4 shares pursuant to Rule 12b-1 under the 1940 Act. Under the Fund’s compensation distribution plans, the Fund pays Distributors for costs incurred in connection with the servicing, sale and distribution of the Fund’s shares up to 0.35% per year of its average daily net assets. Some distribution fees are not charged on shares held by affiliates. The Board has agreed to limit the current rate to 0.25% per year for Class 2. The plan year, for purposes of monitoring compliance with the maximum annual plan rate, is February 1 through January 31.

d. Transfer Agent Fees

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

4. Expense Offset Arrangement

The Fund has entered into an arrangement with its custodian whereby credits realized as a result of uninvested cash balances are used to reduce a portion of the Fund’s custodian expenses. During the period ended June 30, 2014, the custodian fees were reduced as noted in the Statement of Operations.

5. Income Taxes

For tax purposes, capital losses may be carried over to offset future capital gains. Capital loss carryforwards with no expiration, if any, must be fully utilized before those losses with expiration dates.

At December 31, 2013, capital loss carryforwards were as follows:

Capital loss carryforwards subject to expiration:
2014	$       40,420
2015	4,493,289
2016	8,150,741
2017	10,621,353
Total capital loss carryforwards	$23,305,803

Semiannual Report FH-29

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin High Income VIP Fund (continued)

5. Income Taxes (continued)

At June 30, 2014, the cost of investments and net unrealized appreciation (depreciation) for income tax purposes were as follows:

Cost of investments	$	363,949,536
Unrealized appreciation	$	23,514,254
Unrealized depreciation		(4,191,349	)
Net unrealized appreciation (depreciation)	$	19,322,905

Differences between income and/or capital gains as determined on a book basis and a tax basis are primarily due to differing treatments of bond discounts and premiums.

6. Investment Transactions

Purchases and sales of investments (excluding short term securities) for the period ended June 30, 2014, aggregated $75,435,522 and $51,426,030, respectively.

7. Credit Risk and Defaulted Securities

At June 30, 2014, the Fund had 98.39 % of its portfolio invested in high yield, senior secured floating rate notes, or other securities rated below investment grade. These securities may be more sensitive to economic conditions causing greater price volatility and are potentially subject to a greater risk of loss due to default than higher rated securities.

The Fund held defaulted securities and/or other securities for which the income has been deemed uncollectible. At June 30, 2014, the aggregate value of these securities was $3,492,536, representing 0.90% of the Fund’s net assets. The Fund discontinues accruing income on securities for which income has been deemed uncollectible and provides an estimate for losses on interest receivable. The securities have been identified on the accompanying Statement of Investments.

8. Other Derivative Information

At June 30, 2014, the Fund’s investments in derivative contracts are reflected on the Statement of Assets and Liabilities as follows:

	Asset Derivatives		Liability Derivatives
Derivative Contracts Not Accounted for as Hedging Instruments	Statement of Assets and Liabilities Location	Fair Value Amount	Statement of Assets and Liabilities Location	Fair Value Amount
Foreign exchange contracts	Unrealized appreciation on forward exchange contracts	$1,380	Unrealized depreciation on forward exchange contracts	$	—

For the period ended June 30, 2014, the effect of derivative contracts on the Fund’s Statement of Operations was as follows:

Derivative Contracts Not Accounted for as Hedging Instruments	Statement of Operations Locations	Realized Gain (Loss) for the Period	Change in Unrealized Appreciation (Depreciation) for the Period
Foreign exchange contracts	Net realized gain (loss) from foreign currency transactions / Net change in unrealized appreciation (depreciation) on translation of other assets and liabilities denominated in foreign currencies	$ —	$3,947

For the period ended June 30, 2014, the average month end fair value of derivatives represented less than .01% of average month end net assets. The average month end number of open derivative contracts for the period was 2.

See Note 1(e) regarding derivative financial instruments.

FH-30 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin High Income VIP Fund (continued)

9. Credit Facility

The Fund, together with other U.S. registered and foreign investment funds (collectively, Borrowers), managed by Franklin Templeton Investments, are borrowers in a joint syndicated senior unsecured credit facility totaling $1.5 billion (Global Credit Facility) which matures on February 13, 2015. This Global Credit Facility provides a source of funds to the Borrowers for temporary and emergency purposes, including the ability to meet future unanticipated or unusually large redemption requests.

Under the terms of the Global Credit Facility, the Fund shall, in addition to interest charged on any borrowings made by the Fund and other costs incurred by the Fund, pay its share of fees and expenses incurred in connection with the implementation and maintenance of the Global Credit Facility, based upon its relative share of the aggregate net assets of all of the Borrowers, including an annual commitment fee of 0.07% based upon the unused portion of the Global Credit Facility. These fees are reflected in other expenses on the Statement of Operations. During the period ended June 30, 2014, the Fund did not use the Global Credit Facility.

10. Fair Value Measurements

The Fund follows a fair value hierarchy that distinguishes between market data obtained from independent sources (observable inputs) and the Fund’s own market assumptions (unobservable inputs). These inputs are used in determining the value of the Fund’s financial instruments and are summarized in the following fair value hierarchy:

• Level 1 – quoted prices in active markets for identical financial instruments

• Level 2 – other significant observable inputs (including quoted prices for similar financial instruments, interest rates, prepayment speed, credit risk, etc.)

• Level 3 – significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of financial instruments)

The input levels are not necessarily an indication of the risk or liquidity associated with financial instruments at that level.

For movements between the levels within the fair value hierarchy, the Fund has adopted a policy of recognizing the transfers as of the date of the underlying event which caused the movement.

A summary of inputs used as of June 30, 2014, in valuing the Fund’s assets carried at fair value, is as follows:

	Level 1		Level 2		Level 3			Total
Assets:
Investments in Securities:
Equity Investments:a
Materials	$	—	$	415,000	$	—		$	415,000
Transportation		—		789,469		—			789,469
All Other Equity Investmentsb		840,840		—		—			840,840
Corporate Bonds		—		366,034,824		10,816			366,045,640
Senior Floating Rate Interests		—		4,272,785		—			4,272,785
Escrow Accounts and Litigation Trusts		—		—		—	c		—
Short Term Investments		—		10,908,707		—			10,908,707
Total Investments in Securities	$	840,840	$	382,420,785	$	10,816		$	383,272,441
Other Financial Instruments
Forward Exchange Contracts	$	—	$	1,380	$	—		$	1,380

^aIncludes common, preferred, and convertible preferred stocks as well as other equity investments.

^bFor detailed categories, see the accompanying Statement of Investments.

^cIncludes securities determined to have no value at June 30, 2014.

Semiannual Report FH-31

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin High Income VIP Fund (continued)

10. Fair Value Measurements (continued)

A reconciliation of assets in which Level 3 inputs are used in determining fair value is presented when there are significant Level 3 financial instruments at the end of the period.

11. New Accounting Pronouncements

In June 2014, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) No. 2014-11, Transfers and Servicing (Topic 860), Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures. The ASU changes the accounting for certain repurchase agreements and expands disclosure requirements related to repurchase agreements, securities lending, repurchase-to-maturity and similar transactions. The ASU is effective for interim and annual reporting periods beginning after December 15, 2014. Management is currently evaluating the impact, if any, of applying this provision.

12. Subsequent Events

The Fund has evaluated subsequent events through the issuance of the financial statements and determined that no events have occurred that require disclosure.

Abbreviations

Counterparty		Selected Portfolio
DBAB	Deutsche Bank AG	FRN	Floating Rate Note
		PIK	Payment-In-Kind

FH-32 Semiannual Report

Franklin Income VIP Fund

(Formerly, Franklin Income Securities Fund)

We are pleased to bring you Franklin Income VIP Fund’s semiannual report for the period ended June 30, 2014.

Class 2 Performance Summary as of June 30, 2014

Franklin Income VIP Fund – Class 2 delivered a +9.72% total return for the six-month period ended June 30, 2014.

Performance reflects the Fund’s Class 2 operating expenses, but does not include any contract fees, expenses or sales charges. If they had been included, performance would be lower. These charges and deductions, particularly for variable life policies, can have a significant effect on contract values and insurance benefits. See the contract prospectus for a complete description of these expenses, including sales charges.

Performance data represent past performance, which does not guarantee future results. Investment return and principal value will fluctuate, and you may have a gain or loss when you sell your shares. Current performance may differ from figures shown.

Semiannual Report FI-1

FRANKLIN INCOME VIP FUND

Fund Goal and Main Investments: Franklin Income VIP Fund seeks to maximize income while maintaining prospects for capital appreciation. Under normal market conditions, the Fund invests in both equity and debt securities.

Fund Risks: All investments involve risks, including possible loss of principal. The Fund’s share price and yield will be affected by interest rate movements. Bond prices generally move in the opposite direction of interest rates. Thus, as prices of bonds in the Fund adjust to a rise in interest rates, the Fund’s share price may decline. Changes in the financial strength of a bond issuer or in a bond’s credit rating may affect its value. The Fund’s portfolio includes a substantial portion of higher yielding, lower rated corporate bonds because of the relatively higher yields they offer. Floating rate loans are lower rated, higher yielding instruments, which are subject to increased risk of default and can potentially result in loss of principal. These securities carry a greater degree of credit risk relative to investment-grade securities. Stock prices fluctuate, sometimes rapidly and dramatically, due to factors affecting individual companies, particular industries or sectors, or general market conditions. The Fund is actively managed but there is no guarantee that the manager’s investment decisions will produce the desired results. The Fund’s prospectus also includes a description of the main investment risks.

Performance Overview

You can find the Fund’s six-month total return in the Performance Summary. For comparison, the Fund’s equity benchmark, the Standard & Poor’s^® 500 Index (S&P 500^®), produced a +7.14% total return, and its fixed income benchmark, the Barclays U.S. Aggregate Index, posted a +3.93% total return for the same period.¹

Economic and Market Overview

The U.S. economy showed some signs of recovery during the six-month period ended June 30, 2014, despite a first-quarter contraction in gross domestic product. Manufacturing activity expanded, and the unemployment rate declined to 6.1% in June 2014 from 6.7% in December 2013.² Except for a sharp increase in March, retail sales rose at a modest pace that missed consensus expectations. The housing market had some

weather-related weakness early in 2014, but home sales picked up in the spring and home prices were higher than a year ago.

The Federal Reserve Board (Fed) began reducing bond purchases by $10 billion a month in January 2014, based on earlier largely positive economic and employment data. Although economic data in early 2014 were soft, Fed Chair Janet Yellen kept the pace of asset-purchase tapering intact while adopting a more qualitative approach to rate-hike guidance. However, the Fed pledged to keep interest rates low for a considerable time after the asset-purchase program ends, depending on inflation and employment trends. In June, the Fed lowered projections for near- and long-term economic growth even as it maintained the pace of tapering.

Investors’ confidence grew as corporate profits rose and generally favorable economic data indicated continued recovery despite brief sell-offs when many investors reacted to the Fed’s statements, political instability in certain emerging markets and China’s slowing economy. U.S. stocks continued to gain for the six months under review as the S&P 500 and Dow Jones Industrial Average reached all-time highs.³ The 10-year Treasury yield declined from 3.04% at the beginning of the period to 2.53% on June 30, 2014, as investors shifted to less risky assets given subdued economic data, the crises in Ukraine and Iraq, growth concerns about emerging markets and lower Treasury issuance.

Investment Strategy

We search for undervalued or out-of-favor securities we believe offer opportunities for income today and growth tomorrow. We generally perform independent analysis of the debt securities being considered for the Fund’s portfolio, rather than relying principally on ratings assigned by rating agencies. In analyzing debt and equity securities, we consider a variety of factors, including: a security’s relative value based on such factors as anticipated cash flow, interest or dividend coverage, asset coverage, and earnings prospects; the experience and strength of a company’s management; a company’s sensitivity to changes in interest rates and business conditions; a company’s debt maturity schedules and borrowing requirements; and a company’s changing financial condition and market recognition of the change.

1. Source: © 2014 Morningstar. One cannot invest directly in an index, and an index is not representative of the Fund’s portfolio. Please see Index Descriptions following the Fund Summaries.

2. Source: Bureau of Labor Statistics.

3. Please see Index Description following the Fund Summaries.

FI-2 Semiannual Report

FRANKLIN INCOME VIP FUND

Manager’s Discussion

Although the Fund remained diversified during the six months under review, the portfolio’s asset mix remained heavily tilted toward equities including common stocks and convertible securities. We slightly increased the Fund’s overall equity weighting from 60.0% to 61.1% of total net assets, particularly with additions to the information technology and utilities sectors. In contrast, we decreased the Fund’s equity sector weightings in energy, industrials and consumer staples during the period. The Fund’s fixed income exposure decreased from 35.7% to 33.1% of total net assets. We focused on corporate bonds, primarily high yield bonds. We believed that investor concerns regarding the potential for higher long-term interest rates going forward, as well as narrowing credit spreads during the period warranted a selective approach to holding high yield bonds. The Fund’s cash position increased during the period from 4.3% to 5.8% of total net assets.

During the six months under review, the Fund’s equity and fixed income components contributed to absolute performance. Many of the Fund’s equity sectors aided results and outperformed the broader equity market, led by utilities, energy, information technology, health care and materials. Utilities including Dynegy and Exelon generally outperformed broader equity markets, supported by factors including investors’ continued attraction to yield-oriented investments, relatively stable interest rates and a decline in the benchmark 10-year Treasury yield. Prices for a wide variety of raw materials, including U.S. crude oil and precious metals, rose during the period, and these higher price levels supported results across the energy and materials sectors. In this environment, Royal Dutch Shell and Halliburton in energy and The Dow Chemical Co. and LyondellBasell Industries in materials boosted Fund results. In contrast, the Fund had a number of notable individual equity detractors during the period. General Electric in industrials suffered from weak U.S. economic growth in the beginning of 2014. In consumer discretionary, mass-market retailer Target suffered losses after experiencing a customer data breach and problems with a Canadian expansion, and General Motors’ shares were negatively affected by a massive faulty vehicle recall.

Most fixed income securities performed well during the period, driven by continued low interest rates and a favorable environment for credit fundamentals featuring robust new issuance levels that facilitated access to capital. These conditions enabled many companies to reduce debt, extend maturities and reduce overall debt financing costs, factors we felt could help default levels remain fairly low. Major fixed income contributors during the period included CC Media Holdings⁴ and Sprint in communications⁵ and First Data in technology.⁶ Notable individual detractors included Caesars Entertainment Operating Company in consumer cyclical,⁷ Genon Energy⁸ in electric utility⁹ and Walter Energy in basic industry.¹⁰

Portfolio Breakdown
6/30/14
	% of Total Net Assets
Equity*		61.1%
Utilities		13.2%
Energy		11.3%
Materials		9.6%
Financials		9.1%
Health Care		6.2%
Information Technology		3.7%
Industrials		3.3%
Other		4.7%
Fixed Income		33.1%
Energy		7.4%
Consumer Discretionary		6.0%
Information Technology		4.7%
Telecommunication Services		3.4%
Financials		3.0%
Materials		2.9%
Health Care		2.0%
Other		3.7%
Short-Term Investments & Other Net Assets		5.8%

*Includes convertible bonds.

Semiannual Report FI-3

4. CC Media Holdings comprises Clear Channel Communications, Inc. and Clear Channel Worldwide Holdings, Inc. in the SOI.

5. Communications holdings are in consumer discretionary and telecommunication services in the fixed income section of the SOI.

6. Technology holdings are in information technology in the fixed income section of the SOI.

7. Consumer cyclical holdings are in consumer discretionary and industrials in the fixed income section of the SOI.

8. Sold by period-end.

9. Electric utility holdings are in utilities in the fixed income section of the SOI.

10. Basic industry holdings are in energy and materials in the fixed income section of the SOI.

FRANKLIN INCOME VIP FUND

Thank you for your participation in Franklin Income VIP Fund. We look forward to serving your future investment needs.

The foregoing information reflects our analysis, opinions and portfolio holdings as of June 30, 2014, the end of the reporting period. The way we implement our main investment strategies and the resulting portfolio holdings may change depending on factors such as market and economic conditions. These opinions may not be relied upon as investment advice or an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but the investment manager makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.

Top Five Equity Holdings
6/30/14
Company Sector/Industry	% of Total Net Assets
Wells Fargo & Co. Financials		2.8%
Merck & Co. Inc. Health Care		2.3%
Bank of America Corp. Financials		2.2%
The Dow Chemical Co. Materials		2.1%
Royal Dutch Shell PLC, A, ADR (U.K.) Energy		2.1%

Top Five Fixed Income and Senior Floating Rate Interests Holdings*
6/30/14
Issuer Sector/Industry	% of Total Net Assets
First Data Corp. Information Technology		2.7%
Clear Channel Communications Inc. Consumer Discretionary		1.6%
JPMorgan Chase & Co. Financials		1.4%
Sprint Nextel Corp. Telecommunication Services		1.1%
Freescale Semiconductor Inc. Information Technology		1.0%

*Does not include convertible bonds.

The dollar value, number of shares or principal amount, and names of all portfolio holdings are listed in the Fund’s Statement of Investments (SOI).

FI-4 Semiannual Report

FRANKLIN INCOME VIP FUND

Class 2 Fund Expenses

As an investor in a variable insurance contract (Contract) that indirectly provides for investment in an underlying mutual fund, you can incur transaction and/or ongoing expenses at both the Fund level and the Contract level.

• Transaction expenses can include sales charges (loads) on purchases, surrender fees, transfer fees and premium taxes.

• Ongoing expenses can include management fees, distribution and service (12b-1) fees, contract fees, annual maintenance fees, mortality and expense risk fees and other fees and expenses. All mutual funds and Contracts have some types of ongoing expenses.

The expenses shown in the table are meant to highlight ongoing expenses at the Fund level only and do not include ongoing expenses at the Contract level, or transaction expenses at either the Fund or Contract levels. While the Fund does not have transaction expenses, if the transaction and ongoing expenses at the Contract level were included, the expenses shown below would be higher. You should consult your Contract prospectus or disclosure document for more information.

The table shows Fund-level ongoing expenses and can help you understand these expenses and compare them with those of other mutual funds offered through the Contract. The table assumes a $1,000 investment held for the six months indicated. Please refer to the Fund prospectus for additional information on operating expenses.

Actual Fund Expenses

The first line (Actual) of the table provides actual account values and expenses. The “Ending Account Value” is derived from the Fund’s actual return, which includes the effect of ongoing Fund expenses, but does not include the effect of ongoing Contract expenses.

You can estimate the Fund-level expenses you incurred during the period by following these steps. Of course, your account value and expenses will differ from those in this illustration:

1. Divide your account value by $1,000.

If an account had an $8,600 value, then $8,600 ÷ $1,000 = 8.6.

2. Multiply the result by the number under the heading “Fund-Level Expenses Incurred During Period.”

If Fund-Level Expenses Incurred During Period were $7.50, then 8.6 × $7.50 = $64.50.

In this illustration, the estimated expenses incurred this period at the Fund level are $64.50.

Hypothetical Example for Comparison with Other Mutual Funds

Information in the second line (Hypothetical) of the table can help you compare ongoing expenses of the Fund with those of other mutual funds offered through the Contract. This information may not be used to estimate the actual ending account balance or expenses you incurred during the period. The hypothetical “Ending Account Value” is based on the Fund’s actual expense ratio and an assumed 5% annual rate of return before expenses, which does not represent the Fund’s actual return. The figure under the heading “Fund-Level Expenses Incurred During Period” shows the hypothetical expenses your account would have incurred under this scenario. You can compare this figure with the 5% hypothetical examples that appear in shareholder reports of other funds offered through a Contract.

Class 2	Beginning Account Value 1/1/14		Ending Account Value 6/30/14		Fund-Level Expenses Incurred During Period* 1/1/14–6/30/14
Actual		$1,000		$1,097.20		$3.74
Hypothetical (5% return before expenses)		$1,000		$1,021.22		$3.61

*Expenses are calculated using the most recent six-month annualized expense ratio for the Fund’s Class 2 shares (0.72%), which does not include any ongoing expenses of the Contract for which the Fund is an investment option, multiplied by the average account value over the period, multiplied by 181/365 to reflect the one-half year period.

Semiannual Report FI-5

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Financial Highlights

Franklin Income VIP Fund

	Six Months Ended June 30, 2014 (unaudited)			Year Ended December 31,
				2013			2012			2011			2010			2009
Class 1
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$16.53			$15.47			$14.68			$15.16			$14.43			$11.53
Income from investment operationsa:
Net investment incomeb		0.38			0.81			0.91			0.96			0.89			0.91
Net realized and unrealized gains (losses)		1.23			1.31			0.90			(0.54	)		0.85			3.08
Total from investment operations		1.61			2.12			1.81			0.42			1.74			3.99
Less distributions from net investment income		(0.88	)		(1.06	)		(1.02	)		(0.90	)		(1.01	)		(1.09	)
Net asset value, end of period		$17.26			$16.53			$15.47			$14.68			$15.16			$14.43
Total returnc		9.89%			14.18%			12.91%			2.71%			12.87%			35.88%
Ratios to average net assetsd
Expenses		0.47%	e		0.47%	e		0.47%			0.47%	e		0.47%	e		0.47%	e
Net investment income		4.53%			5.07%			6.03%			6.35%			6.28%			7.23%
Supplemental data
Net assets, end of period (000’s)		$764,282			$695,004			$584,391			$1,300,935			$1,449,028			$910,504
Portfolio turnover rate		7.62%			21.71%			26.66%	f		28.65%			41.65%			42.30%

^aThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.

^bBased on average daily shares outstanding.

^cTotal return does not include fees, charges or expenses imposed by the variable annuity and life insurance contracts for which the Franklin Templeton Variable Insurance Products Trust serves as an underlying investment vehicle. Total return is not annualized for periods less than one year.

^dRatios are annualized for periods less than one year.

^eBenefit of expense reduction rounds to less than 0.01%.

^fExcludes the value of portfolio securities delivered as a result of a redemption in-kind.

FI-6 Semiannual Report   |    The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL HIGHLIGHTS

Franklin Income VIP Fund (continued)

	Six Months Ended June 30, 2014 (unaudited)			Year Ended December 31,
				2013			2012			2011			2010			2009
Class 2
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$16.07			$15.07			$14.32			$14.82			$14.12			$11.30
Income from investment operationsa:
Net investment incomeb		0.35			0.75			0.85			0.90			0.86			0.86
Net realized and unrealized gains (losses)		1.20			1.27			0.88			(0.53	)		0.82			3.01
Total from investment operations		1.55			2.02			1.73			0.37			1.68			3.87
Less distributions from net investment income		(0.84	)		(1.02	)		(0.98	)		(0.87	)		(0.98	)		(1.05	)
Net asset value, end of period		$16.78			$16.07			$15.07			$14.32			$14.82			$14.12
Total returnc		9.72%			13.94%			12.65%			2.38%			12.67%			35.59%
Ratios to average net assetsd
Expenses		0.72%	e		0.72%	e		0.72%			0.72%	e		0.72%	e		0.72%	e
Net investment income		4.28%			4.82%			5.78%			6.10%			6.03%			6.98%
Supplemental data
Net assets, end of period (000’s)		$6,577,658			$6,188,045			$6,182,997			$5,915,637			$6,309,207			$6,114,898
Portfolio turnover rate		7.62%			21.71%			26.66%	f		28.65%			41.65%			42.30%

^aThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.

^bBased on average daily shares outstanding.

^cTotal return does not include fees, charges or expenses imposed by the variable annuity and life insurance contracts for which the Franklin Templeton Variable Insurance Products Trust serves as an underlying investment vehicle. Total return is not annualized for periods less than one year.

^dRatios are annualized for periods less than one year.

^eBenefit of expense reduction rounds to less than 0.01%.

^fExcludes the value of portfolio securities delivered as a result of a redemption in-kind.

The accompanying notes are an integral part of these financial statements.    |   Semiannual Report FI-7

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL HIGHLIGHTS

Franklin Income VIP Fund (continued)

	Six Months Ended June 30, 2014 (unaudited)			Year Ended December 31,
				2013			2012			2011			2010			2009
Class 4
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$16.36			$15.32			$14.54			$15.04			$14.33			$11.49
Income from investment operationsa:
Net investment incomeb		0.35			0.75			0.85			0.90			0.85			0.86
Net realized and unrealized gains (losses)		1.22			1.30			0.90			(0.54	)		0.84			3.06
Total from investment operations		1.57			2.05			1.75			0.36			1.69			3.92
Less distributions from net investment income		(0.82	)		(1.01	)		(0.97	)		(0.86	)		(0.98	)		(1.08	)
Net asset value, end of period		$17.11			$16.36			$15.32			$14.54			$15.04			$14.33
Total returnc		9.65%			13.85%			12.56%			2.29%			12.54%			35.37%
Ratios to average net assetsd
Expenses		0.82%	e		0.82%	e		0.82%			0.82%	e		0.82%	e		0.82%	e
Net investment income		4.18%			4.72%			5.68%			6.00%			5.93%			6.88%
Supplemental data
Net assets, end of period (000’s)		$412,489			$397,652			$436,405			$431,435			$415,541			$347,733
Portfolio turnover rate		7.62%			21.71%			26.66%	f		28.65%			41.65%			42.30%

^aThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.

^bBased on average daily shares outstanding.

^cTotal return does not include fees, charges or expenses imposed by the variable annuity and life insurance contracts for which the Franklin Templeton Variable Insurance Products Trust serves as an underlying investment vehicle. Total return is not annualized for periods less than one year.

^dRatios are annualized for periods less than one year.

^eBenefit of expense reduction rounds to less than 0.01%.

^fExcludes the value of portfolio securities delivered as a result of a redemption in-kind.

FI-8 Semiannual Report   |    The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Statement of Investments, June 30, 2014 (unaudited)

Franklin Income VIP Fund
		Country		Shares/ Warrants		Value
	Common Stocks and Other Equity Interests 54.9%
	Consumer Discretionary 1.4%
a,b	Dex Media Inc.		United States		458,876	$	5,111,878
	Ford Motor Co.		United States		3,000,000		51,720,000
	General Motors Co.		United States		384,539		13,958,766
	Target Corp.		United States		600,000		34,770,000
							105,560,644
	Consumer Staples 1.2%
	The Coca-Cola Co.		UnitedStates		729,800		30,914,328
	Nestle SA		Switzerland		150,000		11,619,778
	PepsiCo Inc.		United States		584,000		52,174,560
							94,708,666
	Energy 9.5%
	BP PLC, ADR		United Kingdom		2,750,000		145,062,500
	Canadian Oil Sands Ltd.		Canada		2,212,700		50,169,334
	Chevron Corp.		United States		561,000		73,238,550
	Exxon Mobil Corp.		United States		884,850		89,086,698
	Halliburton Co.		United States		1,151,700		81,782,217
	Royal Dutch Shell PLC, A, ADR		United Kingdom		1,951,748		160,765,483
	Spectra Energy Corp.		United States		600,000		25,488,000
	Total SA, B, ADR		France		732,900		52,915,380
	Transocean Ltd.		United States		500,000		22,515,000
	The Williams Cos. Inc.		United States		563,900		32,824,619
							733,847,781
	Financials 6.3%
	Banco Santander SA		Spain		2,357,359		24,631,815
	Bank of America Corp.		United States		4,909,800		75,463,626
	Barclays PLC		United Kingdom		3,473,166		12,647,304
	Citigroup Inc.		United States		350,000		16,485,000
	Commonwealth Bank of Australia		Australia		374,700		28,588,917
	HSBC Holdings PLC		United Kingdom		4,341,457		44,047,143
	JPMorgan Chase & Co.		United States		1,606,400		92,560,768
	MetLife Inc.		United States		500,000		27,780,000
a	Scentre Group		Australia		5,089,110		15,362,599
	Wells Fargo & Co.		United States		2,863,100		150,484,536
							488,051,708
	Health Care 6.2%
	Eli Lilly & Co.		United States		434,800		27,031,516
	Johnson & Johnson		United States		617,800		64,634,236
	Merck & Co. Inc.		United States		3,023,200		174,892,120
	Pfizer Inc.		United States		3,055,375		90,683,530
	Roche Holding AG		Switzerland		257,719		76,863,816
	Sanofi, ADR		France		868,292		46,167,086
							480,272,304
	Industrials 3.1%
a	CEVA Holdings LLC		United Kingdom		13,012		14,313,486
	Deere & Co.		United States		100,000		9,055,000
	General Electric Co.		United States		4,341,500		114,094,620
	Lockheed Martin Corp.		United States		253,200		40,696,836
	Republic Services Inc.		United States		527,300		20,021,581
	Waste Management Inc.		United States		1,028,200		45,991,386
							244,172,909

Semiannual Report FI-9

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Income VIP Fund (continued)

		Country		Shares/ Warrants		Value
	Common Stocks and Other Equity Interests (continued)
	Information Technology 3.4%
	Apple Inc.		United States		350,000	$	32,525,500
	Cisco Systems Inc.		United States		1,534,600		38,134,810
a,c,d	First Data Holdings Inc., B		United States		4,929,600		19,718,400
	Intel Corp.		United States		3,679,300		113,690,370
	QUALCOMM Inc.		United States		200,000		15,840,000
	Texas Instruments Inc.		United States		924,800		44,196,192
							264,105,272
	Materials 9.4%
	Agrium Inc.		Canada		650,000		59,559,500
a	AngloGold Ashanti Ltd., ADR		South Africa		199,655		3,436,063
	Barrick Gold Corp.		Canada		1,903,176		34,828,121
	BHP Billiton PLC		United Kingdom		2,566,292		82,976,241
	The Dow Chemical Co.		United States		3,207,200		165,042,512
	E. I. du Pont de Nemours and Co.		United States		1,047,500		68,548,400
	Freeport-McMoRan Copper & Gold Inc., B		United States		1,709,971		62,413,942
	Goldcorp Inc.		Canada		1,508,600		42,105,026
	LyondellBasell Industries NV, A		United States		1,050,000		102,532,500
	The Mosaic Co.		United States		200,000		9,890,000
	Newmont Mining Corp.		United States		735,317		18,706,464
	Rio Tinto PLC, ADR		United Kingdom		1,500,000		81,420,000
							731,458,769
	Telecommunication Services 1.6%
	AT&T Inc.		United States		2,000,000		70,720,000
	CenturyLink Inc.		United States		500,000		18,100,000
	Telstra Corp. Ltd.		Australia		4,946,331		24,310,493
	Verizon Communications Inc.		United States		101,992		4,990,469
	Vodafone Group PLC		United Kingdom		2,115,279		7,058,348
							125,179,310
	Utilities 12.8%
	AGL Resources Inc.		United States		290,732		15,998,982
	American Electric Power Co. Inc.		United States		1,300,000		72,501,000
	Dominion Resources Inc.		United States		800,000		57,216,000
	Duke Energy Corp.		United States		1,302,500		96,632,475
a,b	Dynegy Inc.		United States		1,750,000		60,900,000
a,b	Dynegy Inc., wts., 10/02/17		United States		242,666		1,123,543
	Entergy Corp.		United States		738,100		60,590,629
	Exelon Corp.		United States		2,450,000		89,376,000
	FirstEnergy Corp.		United States		1,095,900		38,049,648
a	HK Electric Investments/HK Electric Investments Ltd.		Hong Kong		7,500,000		5,080,350
	NextEra Energy Inc.		United States		651,300		66,745,224
	PG&E Corp.		United States		1,736,600		83,391,532
	Pinnacle West Capital Corp.		United States		260,500		15,067,320
	PPL Corp.		United States		1,615,400		57,395,162
	Public Service Enterprise Group Inc.		United States		1,823,500		74,380,565
	Sempra Energy		United States		368,300		38,564,693
	The Southern Co.		United States		1,500,000		68,070,000
	TECO Energy Inc.		United States		1,753,700		32,408,376
	Xcel Energy Inc.		United States		1,710,964		55,144,370
							988,635,869
	Total Common Stocks and Other Equity Interests (Cost $3,206,047,067)						4,255,993,232

FI-10 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Income VIP Fund (continued)

		Country		Shares/ Warrants		Value
e	Equity-Linked Securities 1.1%
	Energy 0.8%
f	Barclays Bank PLC into Devon Energy Corp., 6.00%, 144A		United States		650,000	$	46,242,235
f	Barclays Bank PLC into Weatherford International Inc., 7.50%, 144A		United States		850,000		16,076,050
							62,318,285
	Information Technology 0.3%
f	Wells Fargo & Co. into Broadcom Corp., 7.00%, 144A		United States		600,000		18,681,600
	Total Equity-Linked Securities (Cost $70,190,000)						80,999,885
	Convertible Preferred Stocks 3.7%
	Energy 0.6%
	Halcon Resources Corp., 5.75%, cvt. pfd., A		United States		10,000		11,940,000
	Sanchez Energy Corp., 6.50%, cvt. pfd., B		United States		200,000		19,325,780
	SandRidge Energy Inc., 7.00%, cvt. pfd.		United States		121,600		13,540,160
							44,805,940
	Financials 2.5%
	Bank of America Corp., 7.25%, cvt. pfd., L		United States		78,200		91,259,400
	FelCor Lodging Trust Inc., 7.80%, cvt. pfd., A		United States		347,325		9,068,656
a	FNMA, 5.38%, cvt. pfd.		United States		475		15,200,000
	MetLife Inc., 5.00%, cvt. pfd.		United States		455,925		14,571,363
	Wells Fargo & Co., 7.50%, cvt. pfd., A		United States		53,000		64,342,000
							194,441,419
	Industrials 0.2%
a	CEVA Holdings LLC, cvt. pfd., A-1		United Kingdom		397		575,650
a	CEVA Holdings LLC, cvt. pfd., A-2		United Kingdom		14,711		16,181,990
							16,757,640
	Materials 0.0%†
	ArcelorMittal, 6.00%, cvt. pfd.		Luxembourg		160,000		3,598,400
	Utilities 0.4%
	Dominion Resources Inc., 6.00%, cvt. pfd., B		United States		145,000		8,412,900
	Dominion Resources Inc., 6.125%, cvt. pfd., A		United States		145,000		8,359,250
	Dominion Resources Inc., 6.375%, cvt. pfd., A		United States		162,000		8,525,250
	NextEra Energy Inc., 5.889%, cvt. pfd.		United States		83,100		5,400,669
							30,698,069
	Total Convertible Preferred Stocks (Cost $255,372,542)						290,301,468
	Preferred Stocks 0.3%
	Financials 0.3%
a	FHLMC, 8.375%, pfd., Z		United States		745,175		8,129,859
a	FNMA, 6.75%, pfd.		United States		434,150		3,959,448
a	FNMA, 7.625%, pfd., R		United States		694,650		6,494,978
a	FNMA, 8.25%, pfd.		United States		739,375		7,652,531
	Total Preferred Stocks (Cost $65,333,750)						26,236,816

Semiannual Report FI-11

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Income VIP Fund (continued)

		Country		Principal Amount*			Value
	Convertible Bonds 1.1%
	Consumer Discretionary 0.5%
f	Volkswagen International Finance, cvt., sub. note, 144A, 5.50%, 11/09/15		Germany		25,000,000	EUR	$	40,169,047
	Energy 0.4%
	Cobalt International Energy Inc., cvt., senior bond, 3.125%, 5/15/24		United States		25,000,000			26,984,375
	Materials 0.2%
	Cemex SAB de CV, cvt., sub. note,
	3.25%, 3/15/16		Mexico		1,700,000			2,481,745
	3.75%, 3/15/18		Mexico		7,920,000			12,046,439
								14,528,184
	Total Convertible Bonds (Cost $66,064,226)							81,681,606
	Corporate Bonds 30.4%
	Consumer Discretionary 5.1%
f	Academy Ltd./Finance Corp., senior note, 144A, 9.25%, 8/01/19		United States		5,300,000			5,710,750
	Cablevision Systems Corp., senior note, 7.75%, 4/15/18		United States		10,000,000			11,350,000
	Caesars Entertainment Operating Co. Inc., senior secured note, 11.25%, 6/01/17		United States		2,500,000			2,300,000
f	CBS Outdoor Americas Capital LLC/CBS Outdoor Americas Capital Corp.,
	senior bond, 144A, 5.625%, 2/15/24		United States		1,600,000			1,656,000
	senior note, 144A, 5.25%, 2/15/22		United States		1,600,000			1,648,000
	CCO Holdings LLC/CCO Holdings Capital Corp.,
	senior bond, 5.75%, 1/15/24		United States		15,000,000			15,375,000
	senior note, 6.50%, 4/30/21		United States		15,000,000			16,031,250
	Chrysler Group LLC/CG Co-Issuer Inc., senior secured note,
	8.00%, 6/15/19		United States		25,000,000			27,281,250
	8.25%, 6/15/21		United States		15,400,000			17,479,000
	Clear Channel Communications Inc.,
	gsenior note, PIK, 14.00%, 2/01/21		United States		13,332,000			13,671,593
	senior secured bond, first lien, 9.00%, 3/01/21		United States		24,100,000			25,877,375
	senior secured note, first lien, 9.00%, 12/15/19		United States		18,000,000			19,260,000
	Clear Channel Worldwide Holdings Inc., senior sub. note, 7.625%, 3/15/20		United States		8,750,000			9,482,813
	CSC Holdings LLC, senior note, 6.75%, 11/15/21		United States		15,400,000			16,997,750
	Cumulus Media Holdings Inc., senior note, 7.75%, 5/01/19		United States		10,000,000			10,537,500
g	Dex Media Inc., senior sub. note, PIK, 14.00%, 1/29/17		United States		15,985,148			10,840,056
	DISH DBS Corp., senior bond, 5.00%, 3/15/23		United States		15,000,000			15,318,750
	The Goodyear Tire & Rubber Co., senior note,
	8.25%, 8/15/20		United States		4,900,000			5,402,250
	6.50%, 3/01/21		United States		12,600,000			13,734,000
	HD Supply Inc., senior note, 7.50%, 7/15/20		United States		10,000,000			10,975,000
f	Jaguar Land Rover Automotive PLC, 144A, 8.125%, 5/15/21		United Kingdom		2,118,000			2,397,025
	KB Home,
	senior bond, 7.50%, 9/15/22		United States		6,500,000			7,247,500
	senior note, 7.25%, 6/15/18		United States		10,600,000			11,978,000
f	Laureate Education Inc., 144A, 9.25%, 9/01/19		United States		5,000,000			5,175,000
	MGM Resorts International, senior note,
	6.625%, 7/15/15		United States		3,200,000			3,368,000
	10.00%, 11/01/16		United States		10,000,000			11,875,000
	8.625%, 2/01/19		United States		3,700,000			4,426,125
	5.25%, 3/31/20		United States		5,000,000			5,212,500
	6.75%, 10/01/20		United States		5,500,000			6,153,125

FI-12 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Income VIP Fund (continued)

		Country		Principal Amount*			Value
	Corporate Bonds (continued)
	Consumer Discretionary (continued)
f	Numericable Group SA, first lien, senior note, 144A, 6.00%, 5/15/22		France		10,000,000		$	10,440,700
	Shea Homes LP/Funding Corp., senior secured note, 8.625%, 5/15/19		United States		6,700,000			7,336,500
f	Sirius XM Radio Inc., senior bond, 144A, 6.00%, 7/15/24		United States		14,600,000			15,220,500
f	Univision Communications Inc., senior secured note, 144A,
	6.875%, 5/15/19		United States		15,000,000			16,050,000
	5.125%, 5/15/23		United States		10,000,000			10,637,500
f	UPCB Finance III Ltd., senior secured note, 144A, 6.625%, 7/01/20		Netherlands		7,500,000			8,025,000
f	Virgin Media Secured Finance PLC, senior secured bond, first lien, 144A, 5.50%, 1/15/25		United Kingdom		7,000,000			7,271,250
	Visant Corp., senior note, 10.00%, 10/01/17		United States		12,800,000			12,000,000
								395,742,062
	Consumer Staples 1.0%
	Alliance One International Inc., secured note, second lien, 9.875%, 7/15/21		United States		10,000,000			10,300,000
f	Boparan Finance PLC, senior note, 144A,
	9.75%, 4/30/18		United Kingdom		2,000,000	EUR		2,949,453
	9.875%, 4/30/18		United Kingdom		7,500,000	GBP		13,828,635
f	Innovation Ventures LLC/Finance Corp., secured note, 144A, 9.50%, 8/15/19		United States		5,000,000			4,950,000
f	JBS USA LLC/Finance Inc., senior note, 144A,
	8.25%, 2/01/20		United States		10,000,000			10,900,000
	7.25%, 6/01/21		United States		17,400,000			18,748,500
	SUPERVALU Inc., senior note, 8.00%, 5/01/16		United States		5,000,000			5,518,750
	U.S. Foods Inc., 8.50%, 6/30/19		United States		10,000,000			10,715,000
								77,910,338
	Energy 6.8%
	Alpha Natural Resources Inc., senior note, 6.25%, 6/01/21		United States		2,500,000			1,781,250
	Antero Resources Finance Corp., senior note, 5.375%, 11/01/21		United States		2,200,000			2,304,500
	Arch Coal Inc., senior note,
	h 7.00%, 6/15/19		United States		5,500,000			4,193,750
	7.25%, 6/15/21		United States		12,500,000			9,187,500
	Bill Barrett Corp., senior note, 7.00%, 10/15/22		United States		5,000,000			5,325,000
f	Calumet Specialty Products Partners LP/Calumet Finance Corp., senior note, 144A, 6.50%, 4/15/21		United States		5,000,000			5,125,000
	CGG SA, senior note, 6.50%, 6/01/21		France		12,500,000			12,468,750
	CHC Helicopter SA, senior secured note, first lien, 9.25%, 10/15/20		Canada		22,500,000			24,637,500
	CONSOL Energy Inc., senior note,
	8.25%, 4/01/20		United States		1,800,000			1,957,500
	f 144A, 5.875%, 4/15/22		United States		21,500,000			22,575,000
	Denbury Resources Inc., senior note, 5.50%, 5/01/22		United States		7,500,000			7,678,125
	El Paso Corp., senior note, MTN, 7.75%, 1/15/32		United States		22,000,000			24,365,000
	Energy XXI Gulf Coast Inc., senior note, 9.25%, 12/15/17		United States		10,000,000			10,700,000
f	EnQuest PLC, senior note, 144A, 7.00%, 4/15/22		United Kingdom		13,000,000			13,495,625
	EP Energy LLC/Finance Inc., senior note, 9.375%, 5/01/20		United States		10,000,000			11,500,000
	EXCO Resources Inc., senior note, 7.50%, 9/15/18		United States		10,500,000			10,815,000
f	Expro Finance Luxembourg, senior secured note, 144A, 8.50%, 12/15/16		United Kingdom		16,840,000			17,608,325
f	Gibson Energy Inc., senior note, 144A, 6.75%, 7/15/21		Canada		7,000,000			7,612,500
	Halcon Resources Corp., senior note,
	9.75%, 7/15/20		United States		10,000,000			10,962,500
	9.25%, 2/15/22		United States		5,800,000			6,365,500

Semiannual Report FI-13

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Income VIP Fund (continued)

		Country		Principal Amount*		Value
	Corporate Bonds (continued)
	Energy (continued)
f	Kinder Morgan Inc.,
	senior secured bond, first lien, 144A, 5.625%, 11/15/23		United States		9,800,000	$	10,118,500
	senior secured note, 144A, 5.00%, 2/15/21		United States		2,400,000		2,502,000
	Linn Energy LLC/Finance Corp., senior note, 8.625%, 4/15/20		United States		20,000,000		21,700,000
	Magnum Hunter Resources Corp., senior note, 9.75%, 5/15/20		United States		5,000,000		5,550,000
	Midstates Petroleum Co. Inc./LLC, senior note, 10.75%, 10/01/20		United States		5,000,000		5,700,000
f	Niska Gas Storage Canada ULC/Finance Corp., senior note, 144A, 6.50%, 4/01/19		United States		11,500,000		11,083,125
f	Ocean Rig UDW Inc., senior note, 144A, 7.25%, 4/01/19		United States		7,500,000		7,443,750
	Peabody Energy Corp., senior note, 6.25%, 11/15/21		United States		15,000,000		15,018,750
	Penn Virginia Corp., senior note, 8.50%, 5/01/20		United States		8,600,000		9,653,500
	Plains Exploration & Production Co., senior note, 6.50%, 11/15/20		United States		10,000,000		11,137,500
	Quicksilver Resources Inc., senior note, 9.125%, 8/15/19		United States		20,000,000		18,650,000
	Regency Energy Partners LP/Regency Energy Finance Corp., senior note, 5.875%, 3/01/22		United States		3,900,000		4,246,125
f	Rice Energy Inc., senior note, 144A, 6.25%, 5/01/22		United States		2,700,000		2,770,875
	Sabine Pass Liquefaction LLC,
	first lien, 5.625%, 2/01/21		United States		15,100,000		16,043,750
	f senior secured note, first lien, 144A, 5.75%, 5/15/24		United States		9,900,000		10,333,125
	Sabine Pass LNG LP,
	first lien, 6.50%, 11/01/20		United States		10,000,000		10,875,000
	senior secured note, 7.50%, 11/30/16		United States		10,000,000		11,100,000
f	Samson Investment Co., senior note, 144A, 9.75%, 2/15/20		United States		26,300,000		27,845,125
f	Sanchez Energy Corp., senior note, 144A,
	7.75%, 6/15/21		United States		9,300,000		10,137,000
	6.125%, 1/15/23		United States		6,200,000		6,417,000
	SandRidge Energy Inc., senior note,
	8.75%, 1/15/20		United States		20,000,000		21,600,000
	7.50%, 3/15/21		United States		15,000,000		16,331,250
	8.125%, 10/15/22		United States		10,000,000		11,062,500
	7.50%, 2/15/23		United States		6,600,000		7,194,000
	W&T Offshore Inc., senior note, 8.50%, 6/15/19		United States		40,500,000		43,942,500
							529,113,700
	Financials 3.0%
	Ally Financial Inc., senior note, 6.25%, 12/01/17		United States		3,900,000		4,368,000
i	Bank of America Corp., junior sub. bond, M, 8.125% to 5/15/18, FRN thereafter, Perpetual		United States		5,000,000		5,651,990
f	Ceridian LLC/Comdata Inc., senior note, 144A, 8.125%, 11/15/17		United States		5,000,000		5,062,500
i	Citigroup Inc.,
	junior sub. bond, M, 6.30% to 5/15/24, FRN thereafter, Perpetual		United States		16,800,000		17,188,332
	junior sub. note, 5.90% to 2/15/23, FRN thereafter, Perpetual		United States		12,500,000		12,679,838
	E*TRADE Financial Corp., senior note, 6.00%, 11/15/17		United States		12,500,000		13,062,500
	International Lease Finance Corp., senior note, 8.75%, 3/15/17		United States		15,000,000		17,465,625
i	JPMorgan Chase & Co.,
	junior sub. bond, 5.00% to 7/30/19, FRN thereafter, Perpetual		United States		10,000,000		9,991,980
	junior sub. bond, 6.00% to 8/01/23, FRN thereafter, Perpetual		United States		3,200,000		3,280,000
	junior sub. note, 1, 7.90% to 4/30/19, FRN thereafter, Perpetual		United States		85,000,000		95,625,000
	Morgan Stanley, senior note, 5.50%, 1/26/20		United States		15,000,000		17,186,655
	Nationstar Mortgage LLC/Nationstar Capital Corp., senior note, 9.625%, 5/01/19		United States		5,000,000		5,600,000

FI-14 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Income VIP Fund (continued)

		Country		Principal Amount*		Value
	Corporate Bonds (continued)
	Financials (continued)
f	Nuveen Investments Inc., senior note, 144A, 9.50%, 10/15/20		United States		3,600,000	$	4,284,000
i	PNC Financial Services Group Inc., junior sub. note, 4.85% to 6/01/23, FRN thereafter, Perpetual		United States		8,000,000		7,710,000
	SLM Corp., senior note, 6.125%, 3/25/24		United States		5,000,000		5,081,250
i	Wells Fargo & Co., S, junior sub. bond, 5.90% to 6/15/14, FRN thereafter, Perpetual		United States		7,900,000		8,383,875
							232,621,545
	Health Care 2.0%
f	CHS/Community Health Systems Inc., senior note, 144A,
	5.125%, 8/01/21		United States		2,600,000		2,678,000
	6.875%, 2/01/22		United States		6,400,000		6,816,000
	HCA Inc.,
	senior note, 7.50%, 2/15/22		United States		25,000,000		28,906,250
	senior note, 5.875%, 5/01/23		United States		7,500,000		7,865,625
	senior secured note, 6.50%, 2/15/20		United States		16,500,000		18,603,750
	senior secured note, first lien, 5.00%, 3/15/24		United States		10,400,000		10,569,728
b,f,g	Jaguar Holding Co. I, senior note, 144A, PIK, 9.375%, 10/15/17		United States		10,200,000		10,608,000
f	MPH Acquisition Holdings LLC, senior note, 144A, 6.625%, 4/01/22		United States		5,000,000		5,250,000
	Tenet Healthcare Corp., senior note,
	8.00%, 8/01/20		United States		10,426,000		11,325,243
	8.125%, 4/01/22		United States		22,500,000		26,100,000
	f 144A, 5.00%, 3/01/19		United States		3,400,000		3,455,250
	j FRN, 9.25%, 2/01/15		United States		13,000,000		13,670,800
f	Valeant Pharmaceuticals International Inc., senior note, 144A, 7.50%, 7/15/21		United States		7,700,000		8,556,625
							154,405,271
	Industrials 1.3%
f	Abengoa Finance SAU, senior note, 144A, 8.875%, 11/01/17		Spain		12,900,000		14,601,187
f	Algeco Scotsman Global Finance PLC,
	senior note, 144A, 10.75%, 10/15/19		United Kingdom		5,000,000		5,234,375
	senior secured note, first lien, 144A, 8.50%, 10/15/18		United Kingdom		9,900,000		10,605,375
f	Bombardier Inc., senior bond, 144A, 6.125%, 1/15/23		Canada		7,500,000		7,762,500
f	CEVA Group PLC,
	secured note, 144A, 9.00%, 9/01/21		United Kingdom		5,000,000		5,178,125
	senior note, first lien, 144A, 4.00%, 5/01/18		United Kingdom		12,691,882		11,739,991
	Hertz Corp., senior note, 6.75%, 4/15/19		United States		4,500,000		4,792,500
	Navistar International Corp., senior note, 8.25%, 11/01/21		United States		16,300,000		17,074,250
f	Stena AB, senior bond, 144A, 7.00%, 2/01/24		Sweden		5,800,000		6,191,500
f	TransDigm Inc.,
	senior sub. bond, 144A, 6.50%, 7/15/24		United States		2,700,000		2,814,750
	senior sub. note, 144A, 6.00%, 7/15/22		United States		2,700,000		2,777,625
	United Rentals North America Inc., senior sub. note, 8.375%, 9/15/20		United States		8,800,000		9,702,000
							98,474,178
	Information Technology 4.3%
f	BMC Software Finance Inc., senior note, 144A, 8.125%, 7/15/21		United States		16,500,000		17,056,875
f,g	Boxer Parent Co. Inc., senior note, 144A, PIK, 9.75%, 10/15/19		United States		10,000,000		9,800,000
	CDW LLC/Finance Corp., senior note, 8.50%, 4/01/19		United States		13,725,000		14,925,937
f,g	CommScope Holdings Co. Inc., senior note, 144A, PIK, 7.375%, 6/01/20		United States		11,200,000		12,012,000

Semiannual Report FI-15

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Income VIP Fund (continued)

		Country		Principal Amount*			Value
	Corporate Bonds (continued)
	Information Technology (continued)
	First Data Corp.,
	senior bond, 12.625%, 1/15/21		United States		80,000,000		$	98,700,000
	f senior secured bond, 144A, 8.25%, 1/15/21		United States		45,000,000			49,500,000
	f,g senior secured note, 144A, PIK, 8.75%, 1/15/22		United States		33,188,000			36,797,195
	Freescale Semiconductor Inc., senior note,
	8.05%, 2/01/20		United States		15,606,000			16,893,495
	10.75%, 8/01/20		United States		54,846,000			62,113,095
	Infor U.S. Inc., senior note, 9.375%, 4/01/19		United States		4,100,000			4,581,750
	Sterling International Inc., senior note, 11.00%, 10/01/19		United States		7,500,000			8,081,250
								330,461,597
	Materials 2.9%
	AngloGold Ashanti Holdings PLC, senior note, 8.50%, 7/30/20		South Africa		6,000,000			6,753,750
f	Ardagh Packaging Finance PLC/Ardagh MP Holdings USA Inc., senior note, 144A,
	6.25%, 1/31/19		Luxembourg		2,800,000			2,877,000
	6.75%, 1/31/21		Luxembourg		3,000,000			3,116,250
f	Cemex Finance LLC, senior secured note, 144A,
	9.375%, 10/12/22		Mexico		7,100,000			8,386,875
	6.00%, 4/01/24		Mexico		14,700,000			15,352,312
f	Cemex SAB de CV, senior secured note, 144A,
	9.00%, 1/11/18		Mexico		5,581,000			6,020,504
	9.50%, 6/15/18		Mexico		12,000,000			13,807,500
f	Consolidated Minerals Ltd., senior secured note, 144A, 8.00%, 5/15/20		Jersey Islands		5,000,000			4,918,750
	Dynacast International LLC/Finance Inc., 9.25%, 7/15/19		United States		5,000,000			5,525,000
f	First Quantum Minerals Ltd., senior note, 144A,
	6.75%, 2/15/20		Canada		2,300,000			2,380,500
	7.00%, 2/15/21		Canada		2,300,000			2,377,625
f	FMG Resources (August 2006) Pty. Ltd., senior note, 144A,
	6.875%, 2/01/18		Australia		11,900,000			12,524,750
	8.25%, 11/01/19		Australia		15,000,000			16,387,500
	HudBay Minerals Inc., senior note, 9.50%, 10/01/20		Canada		10,000,000			11,050,000
f	Ineos Finance PLC, senior secured note, 144A, 8.375%, 2/15/19		Switzerland		5,100,000			5,597,250
f	Ineos Group Holdings SA, senior note, 144A, 5.75%, 2/15/19		Switzerland		5,700,000	EUR		8,083,949
f	Kerling PLC, senior secured note, 144A, 10.625%, 2/01/17		United Kingdom		9,400,000	EUR		13,693,665
f	Orion Engineered Carbons Bondco GmbH,
	senior secured bond, 144A, 10.00%, 6/15/18		Germany		7,920,000	EUR		11,713,727
	senior secured note, first lien, 144A, 9.625%, 6/15/18		Germany		10,100,000			10,914,312
f,g	Orion Engineered Carbons Finance & Co. SCA, senior note, 144A, PIK, 9.25%, 8/01/19		Germany		4,800,000			5,018,400
	Reynolds Group Issuer Inc./LLC/SA,
	first lien, 5.75%, 10/15/20		United States		14,200,000			15,052,000
	senior note, 9.00%, 4/15/19		United States		5,000,000			5,318,750
	senior note, 9.875%, 8/15/19		United States		16,800,000			18,711,000
	senior note, 8.25%, 2/15/21		United States		5,200,000			5,681,000
	senior secured note, 6.875%, 2/15/21		United States		10,000,000			10,841,250
	Walter Energy Inc., senior note, 9.875%, 12/15/20		United States		7,000,000			4,392,500
								226,496,119
	Telecommunication Services 3.4%
f	Altice SA, senior secured note, 144A, 7.75%, 5/15/22		Luxembourg		3,000,000			3,198,540

FI-16 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Income VIP Fund (continued)

		Country		Principal Amount*		Value
	Corporate Bonds (continued)
	Telecommunication Services (continued)
	CenturyLink Inc., senior bond, 6.75%, 12/01/23		United States		1,700,000	$	1,865,750
	Frontier Communications Corp., senior note,
	8.50%, 4/15/20		United States		12,900,000		15,286,500
	9.25%, 7/01/21		United States		7,400,000		8,889,250
	7.125%, 1/15/23		United States		8,800,000		9,372,000
	Intelsat Jackson Holdings SA, senior bond, 5.50%, 8/01/23		Luxembourg		8,400,000		8,379,000
f	Sprint Corp.,
	senior bond, 144A, 7.125%, 6/15/24		United States		8,200,000		8,712,500
	senior note, 144A, 7.875%, 9/15/23		United States		37,500,000		41,812,500
	Sprint Nextel Corp.,
	11.50%, 11/15/21		United States		30,000,000		40,650,000
	senior note, 9.125%, 3/01/17		United States		13,300,000		15,610,875
	senior note, 7.00%, 8/15/20		United States		5,000,000		5,556,250
	f senior note, 144A, 9.00%, 11/15/18		United States		20,000,000		24,300,000
	T-Mobile USA Inc.,
	senior bond, 6.625%, 4/01/23		United States		15,000,000		16,350,000
	senior note, 6.542%, 4/28/20		United States		11,200,000		12,138,000
	senior note, 6.633%, 4/28/21		United States		5,000,000		5,431,250
	senior note, 6.731%, 4/28/22		United States		5,000,000		5,412,500
f	Telecom Italia SpA, senior note, 144A, 5.303%, 5/30/24		Italy		7,500,000		7,537,500
	Verizon Communications Inc.,
	senior bond, 6.55%, 9/15/43		United States		7,300,000		9,205,081
	senior note, 5.15%, 9/15/23		United States		6,900,000		7,731,954
f	Wind Acquisition Finance SA, senior secured note, 144A, 7.375%, 4/23/21		Italy		15,000,000		16,134,375
							263,573,825
	Utilities 0.6%
f	Calpine Corp., senior secured note, 144A,
	7.875%, 7/31/20		United States		4,542,000		4,950,780
	7.50%, 2/15/21		United States		11,970,000		13,002,413
	7.875%, 1/15/23		United States		4,448,000		4,981,760
f	InterGen NV, secured bond, 144A, 7.00%, 6/30/23		Netherlands		25,000,000		26,000,000
							48,934,953
	Total Corporate Bonds (Cost $2,133,534,510)						2,357,733,588
j,k	Senior Floating Rate Interests 2.7%
	Consumer Discretionary 0.9%
	Clear Channel Communications Inc.,
	Tranche B Term Loan, 3.80%, 1/29/16		United States		711,676		707,448
	Tranche D Term Loan, 6.90%, 1/30/19		United States		50,864,664		50,743,860
	Tranche E Term Loan, 7.65%, 7/30/19		United States		13,142,769		13,198,441
	Dex Media West LLC, Term Loan B, 8.00%, 12/30/16		United States		1,219,214		1,127,773
	SuperMedia Inc., Exit Term Loan, 11.60%, 12/31/16		United States		799,290		678,397
							66,455,919
	Consumer Staples 0.2%
	U.S. Foods Inc., Term Loan, 4.50%, 3/31/19		United States		14,850,000		14,887,125
	Energy 0.6%
	Drillships Financing Holding Inc., Tranche B-1 Term Loan, 6.00%, 3/31/21		Marshall Islands		14,962,312		15,186,746
	Fieldwood Energy LLC, Second Lien Closing Date Loans, 8.375%, 9/30/20		United States		10,000,000		10,341,040

Semiannual Report FI-17

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Income VIP Fund (continued)

		Country		Principal Amount*		Value
	Senior Floating Rate Interests (continued)
	Energy (continued)
	Quicksilver Resources Inc., Second Lien Loans, 7.00%, 6/21/19		United States		25,000,000	$	24,484,375
							50,012,161
	Industrials 0.6%
	Altegrity Inc.,
	Tranche B Term Loan, 5.00%, 2/21/15		United States		12,332,706		12,247,919
	Tranche D Term Loan, 7.75%, 2/21/15		United States		12,440,382		12,393,730
	CEVA Group PLC, Pre-Funded L/C, 6.50%, 3/19/21		United States		5,418,719		5,322,765
	Ceva Intercompany B.V., Dutch BV Term Loan, 6.50%, 3/19/21		Netherlands		5,700,000		5,600,250
	CEVA Logistics Canada ULC, Canadian Term Loan, 6.50%, 3/19/21		Canada		982,759		965,560
	CEVA Logistics U.S. Holdings Inc., U.S. Term Loan, 6.50%, 3/19/21		United States		7,862,069		7,722,847
	Navistar Inc., Tranche B Term Loan, 5.75%, 8/17/17		United States		6,081,022		6,212,147
							50,465,218
	Information Technology 0.4%
	First Data Corp., 2018 Term Loan, 4.154%, 3/24/18		United States		22,436,455		22,510,899
	SRA International Inc., Term Loan, 6.50%, 7/20/18		United States		7,714,286		7,752,857
							30,263,756
	Total Senior Floating Rate Interests (Cost $205,714,832)						212,084,179
				Shares
	Escrows and Litigation Trusts 0.0%†
a,l	Dynegy Holdings Inc., Escrow Account		United States		149,699,000		—
a	Motors Liquidation Co., Escrow Account, cvt. pfd., C		United States		1,400,000		14,000
a,l	SuperMedia Inc., Litigation Trust		United States		3,472,135		—
	Total Escrows and Litigation Trusts (Cost $101,664)						14,000
	Total Investments before Short Term Investments (Cost $6,002,358,591)						7,305,044,774

FI-18 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Income VIP Fund (continued)

		Country		Principal Amount*		Value
	Short Term Investments 1.0%
	Repurchase Agreements (Cost $76,482,610) 1.0%
m	Joint Repurchase Agreement, 0.064%, 7/01/14 (Maturity Value $76,482,747)		United States		76,482,610	$	76,482,610
	BNP Paribas Securities Corp. (Maturity Value $15,447,985)
	Credit Suisse Securities (USA) LLC (Maturity Value $7,723,993)
	Deutsche Bank Securities Inc. (Maturity Value $5,807,335)
	HSBC Securities (USA) Inc. (Maturity Value $32,441,687)
	Merrill Lynch, Pierce, Fenner & Smith Inc. (Maturity Value $15,061,747)
	Collateralized by U.S. Government Agency Securities, 0.00% - 6.21%, 1/16/15 - 5/04/37; nU.S. Government Agency Discount Notes, 12/24/14 - 1/30/15; U.S. Government Agency Securities, Strips, 5/15/30; U.S. Treasury Bonds, 7.50% - 8.875%, 11/15/16 - 2/15/19; U.S. Treasury Notes, 0.25% - 4.50%, 7/15/15 - 4/30/18; and U.S. Treasury Notes, Index Linked, 1.375%, 7/15/18 (valued at $78,025,291)
`				Shares
o	Investments from Cash Collateral Received for Loaned Securities (Cost $221,520) 0.0%†
	Money Market Funds 0.0%†
p	BNY Mellon Overnight Government Fund, 0.082%		United States		221,520		221,520
	Total Investments (Cost $6,079,062,721) 95.2%						7,381,748,904
	Other Assets, less Liabilities 4.8%						372,680,666
	Net Assets 100.0%					$	7,754,429,570

See Abbreviations on page FI-32.

^†Rounds to less than 0.1% of net assets.

*The principal amount is stated in U.S. dollars unless otherwise indicated.

^aNon-income producing.

^bAt June 30, 2014, pursuant to the Fund’s policies and the requirements of applicable securities law, the Fund may be restricted from trading these securities for a limited or extended period of time due to ownership limits and/or potential possession of material non-public information.

^cSecurity purchased on a delayed delivery basis. See Note 1(d).

^dSee Note 8 regarding restricted securities.

^eSee Note 1(e) regarding equity-linked securities.

^fSecurity was purchased pursuant to Rule 144A under the Securities Act of 1933 and may be sold in transactions exempt from registration only to qualified institutional buyers or in a public offering registered under the Securities Act of 1933. These securities have been deemed liquid under guidelines approved by the Trust’s Board of Trustees. At June 30, 2014, the aggregate value of these securities was $944,427,305, representing 12.18% of net assets.

^gIncome may be received in additional securities and/or cash.

^hA portion or all of the security is on loan at June 30, 2014. See Note 1(f).

ⁱPerpetual security with no stated maturity date.

^jThe coupon rate shown represents the rate at period end.

^kSee Note 1(g) regarding senior floating rate interests.

^lSecurity has been deemed illiquid because it may not be able to be sold within seven days.

^mSee Note 1(c) regarding joint repurchase agreement.

ⁿThe security is traded on a discount basis with no stated coupon rate.

^oSee Note 1(f) regarding securities on loan.

^pThe rate shown is the annualized seven-day yield at period end.

The accompanying notes are an integral part of these financial statements.    |   Semiannual Report FI-19

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Financial Statements

Statement of Assets and Liabilities

June 30, 2014 (unaudited)

	Franklin Income VIP Fund
Assets:
Investments in securities:
Cost - Unaffiliated issuers	$	6,002,580,111
Cost - Repurchase agreements		76,482,610
Total cost of investments	$	6,079,062,721
Value - Unaffiliated issuers	$	7,305,266,294
Value - Repurchase agreements		76,482,610
Total value of investments (includes securities loaned in the amount $216,550)		7,381,748,904
Cash		350,754,938
Receivables:
Investment securities sold		3,802,160
Capital shares sold		2,898,038
Dividends and interest		59,082,237
Other assets		3,338
Total assets		7,798,289,615
Liabilities:
Payables:
Investment securities purchased		27,818,400
Capital shares redeemed		9,034,387
Management fees		2,856,659
Distribution fees		2,950,985
Payable upon return of securities loaned		221,520
Accrued expenses and other liabilities		978,094
Total liabilities		43,860,045
Net assets, at value	$	7,754,429,570
Net assets consist of:
Paid-in capital	$	7,280,731,483
Undistributed net investment income		132,841,540
Net unrealized appreciation (depreciation)		1,302,756,859
Accumulated net realized gain (loss)		(961,900,312	)
Net assets, at value	$	7,754,429,570

FI-20 Semiannual Report   |    The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL STATEMENTS

Statement of Assets and Liabilities (continued)

June 30, 2014 (unaudited)

	Franklin Income VIP Fund
Class 1:
Net assets, at value	$	764,282,259
Shares outstanding		44,284,419
Net asset value and maximum offering price per share	$	17.26
Class 2:
Net assets, at value	$	6,577,658,277
Shares outstanding		392,094,629
Net asset value and maximum offering price per share	$	16.78
Class 4:
Net assets, at value	$	412,489,034
Shares outstanding		24,112,731
Net asset value and maximum offering price per share	$	17.11

The accompanying notes are an integral part of these financial statements.    |   Semiannual Report FI-21

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL STATEMENTS

Statement of Operations

for the six months ended June 30, 2014 (unaudited)

	Franklin Income VIP Fund
Investment income:
Dividends	$	80,760,905
Interest		103,484,028
Income from securities loaned		559,713
Total investment income		184,804,646
Expenses:
Management fees (Note 3a)		16,742,930
Distribution fees: (Note 3c)
Class 2		7,845,902
Class 4		703,467
Custodian fees (Note 4)		53,390
Reports to shareholders		361,660
Professional fees		77,862
Trustees’ fees and expenses		19,264
Other		74,027
Total expenses		25,878,502
Expense reductions (Note 4)		(356	)
Net expenses		25,878,146
Net investment income		158,926,500
Realized and unrealized gains (losses):
Net realized gain (loss) from:
Investments		83,353,512
Foreign currency transactions		(296,578	)
Net realized gain (loss)		83,056,934
Net change in unrealized appreciation (depreciation) on:
Investments		452,238,485
Translation of other assets and liabilities denominated in foreign currencies		(43,297	)
Net change in unrealized appreciation (depreciation)		452,195,188
Net realized and unrealized gain (loss)		535,252,122
Net increase (decrease) in net assets resulting from operations	$	694,178,622

FI-22 Semiannual Report   |    The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL STATEMENTS

Statements of Changes in Net Assets

	Franklin Income VIP Fund
	Six Months Ended June 30, 2014 (unaudited)			Year Ended December 31, 2013
Increase (decrease) in net assets:
Operations:
Net investment income	$	158,926,500		$	352,220,004
Net realized gain (loss) from investments and foreign currency transactions		83,056,934			58,814,586
Net change in unrealized appreciation (depreciation) on investments and translation of other assets and liabilities denominated in foreign currencies		452,195,188			532,304,482
Net increase (decrease) in net assets resulting from operations		694,178,622			943,339,072
Distributions to shareholders from:
Net investment income:
Class 1		(37,211,436	)		(40,171,484	)
Class 2		(314,580,044	)		(401,855,498	)
Class 4		(19,237,312	)		(27,978,841	)
Total distributions to shareholders		(371,028,792	)		(470,005,823	)
Capital share transactions (Note 2)
Class 1		38,237,054			66,533,168
Class 2		115,787,004			(397,831,491	)
Class 4		(3,445,547	)		(65,127,276	)
Total capital share transactions		150,578,511			(396,425,599	)
Net increase (decrease) in net assets		473,728,341			76,907,650
Net assets:
Beginning of period		7,280,701,229			7,203,793,579
End of period	$	7,754,429,570		$	7,280,701,229
Undistributed net investment income included in net assets:
End of period	$	132,841,540		$	344,943,832

The accompanying notes are an integral part of these financial statements.    |   Semiannual Report FI-23

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Notes to Financial Statements (unaudited)

Franklin Income VIP Fund

1. Organization and Significant Accounting Policies

Franklin Templeton Variable Insurance Products Trust (Trust) is registered under the Investment Company Act of 1940, as amended, (1940 Act) as an open-end management investment company, consisting of twenty separate funds and applies the specialized accounting and reporting guidance in U.S. Generally Accepted Accounting Principles (U.S. GAAP). The Franklin Income VIP Fund (Fund) is included in this report. The financial statements of the remaining funds in the Trust are presented separately. Shares of the Fund are generally sold only to insurance company separate accounts to fund the benefits of variable life insurance policies or variable annuity contracts. The Fund offers three classes of shares: Class 1, Class 2, and Class 4. Each class of shares differs by its distribution fees, voting rights on matters affecting a single class and its exchange privilege.

Effective May 1, 2014, the Franklin Income Securities Fund was renamed the Franklin Income VIP Fund.

The following summarizes the Fund’s significant accounting policies.

a. Financial Instrument Valuation

The Fund’s investments in financial instruments are carried at fair value daily. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. The Fund calculates the net asset value (NAV) per share at the close of the New York Stock Exchange (NYSE), generally at 4 p.m. Eastern time (NYSE close) on each day the NYSE is open for trading. Under compliance policies and procedures approved by the Trust’s Board of Trustees (the Board), the Fund’s administrator has responsibility for oversight of valuation, including leading the cross-functional Valuation and Liquidity Oversight Committee (VLOC). The VLOC provides administration and oversight of the Fund’s valuation policies and procedures, which are approved annually by the Board. Among other things, these procedures allow the Fund to utilize independent pricing services, quotations from securities and financial instrument dealers, and other market sources to determine fair value.

Equity securities listed on an exchange or on the NASDAQ National Market System are valued at the last quoted sale price or the official closing price of the day, respectively. Foreign equity securities are valued as of the close of trading on the foreign stock exchange on which the security is primarily traded or as of the NYSE close, whichever is earlier. The value is then

converted into its U.S. dollar equivalent at the foreign exchange rate in effect at the NYSE close on the day that the value of the security is determined. Over-the-counter (OTC) securities are valued within the range of the most recent quoted bid and ask prices. Securities that trade in multiple markets or on multiple exchanges are valued according to the broadest and most representative market. Certain equity securities are valued based upon fundamental characteristics or relationships to similar securities. Investments in non-registered money market funds are valued at the closing net asset value.

Debt securities generally trade in the OTC market rather than on a securities exchange. The Fund’s pricing services use multiple valuation techniques to determine fair value. In instances where sufficient market activity exists, the pricing services may utilize a market-based approach through which quotes from market makers are used to determine fair value. In instances where sufficient market activity may not exist or is limited, the pricing services also utilize proprietary valuation models which may consider market characteristics such as benchmark yield curves, credit spreads, estimated default rates, anticipated market interest rate volatility, coupon rates, anticipated timing of principal repayments, underlying collateral, and other unique security features in order to estimate the relevant cash flows, which are then discounted to calculate the fair value. Securities denominated in a foreign currency are converted into their U.S. dollar equivalent at the foreign exchange rate in effect at the NYSE close on the date that the values of the foreign debt securities are determined. Repurchase agreements are valued at cost, which approximates market value.

The Fund has procedures to determine the fair value of financial instruments for which market prices are not reliable or readily available. Under these procedures, the VLOC convenes on a regular basis to review such financial instruments and considers a number of factors, including significant unobservable valuation inputs, when arriving at fair value. The VLOC primarily employs a market-based approach which may use related or comparable assets or liabilities, recent transactions, market multiples, book values, and other relevant information for the investment to determine the fair value of the investment. An income-based valuation approach may also be used in which the anticipated future cash flows of the investment are discounted to calculate fair value. Discounts may also be applied due to the nature or duration of any restrictions on the disposition of the investments. Due to the inherent uncertainty of valuations of such investments, the fair values may differ significantly from

FI-24 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Income VIP Fund (continued)

the values that would have been used had an active market existed. The VLOC employs various methods for calibrating these valuation approaches including a regular review of key inputs and assumptions, transactional back-testing or disposition analysis, and reviews of any related market activity.

Trading in securities on foreign securities stock exchanges and OTC markets may be completed before the daily NYSE close. In addition, trading in certain foreign markets may not take place on every NYSE business day. Occasionally, events occur between the time at which trading in a foreign security is completed and the close of the NYSE that might call into question the reliability of the value of a portfolio security held by the Fund. As a result, differences may arise between the value of the Fund’s portfolio securities as determined at the foreign market close and the latest indications of value at the close of the NYSE. In order to minimize the potential for these differences, the VLOC monitors price movements following the close of trading in foreign stock markets through a series of country specific market proxies (such as baskets of American Depositary Receipts, futures contracts and exchange traded funds). These price movements are measured against established trigger thresholds for each specific market proxy to assist in determining if an event has occurred that may call into question the reliability of the values of the foreign securities held by the Fund. If such an event occurs, the securities may be valued using fair value procedures, which may include the use of independent pricing services.

Also, when the last day of the reporting period is a non-business day, certain foreign markets may be open on those days that the NYSE is closed, which could result in differences between the value of the Fund’s portfolio securities on the last business day and the last calendar day of the reporting period. Any significant security valuation changes due to an open foreign market are adjusted and reflected by the Fund for financial reporting purposes.

b. Foreign Currency Translation

Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars based on the exchange rate of such currencies against U.S. dollars on the date of valuation. The Fund may enter into foreign currency exchange contracts to facilitate transactions denominated in a foreign currency. Purchases and sales of securities, income and expense items denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction

date. Portfolio securities and assets and liabilities denominated in foreign currencies contain risks that those currencies will decline in value relative to the U.S. dollar. Occasionally, events may impact the availability or reliability of foreign exchange rates used to convert the U.S. dollar equivalent value. If such an event occurs, the foreign exchange rate will be valued at fair value using procedures established and approved by the Board.

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

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

c. Joint Repurchase Agreement

The Fund enters into a joint repurchase agreement whereby its uninvested cash balance is deposited into a joint cash account with other funds managed by the investment manager or an affiliate of the investment manager and is used to invest in one or more repurchase agreements. The value and face amount of the joint repurchase agreement are allocated to the funds based on their pro-rata interest. A repurchase agreement is accounted for as a loan by the Fund to the seller, collateralized by securities which are delivered to the Fund’s custodian. The fair value, including accrued interest, of the initial collateralization is required to be at least 102% of the dollar amount invested by the funds, with the value of the underlying securities marked to market daily to maintain coverage of at least 100%. Repurchase agreements are subject to the terms of Master Repurchase Agreements (MRAs) with approved counterparties (sellers). The MRAs contain various provisions, including but not limited to events of default and maintenance of collateral for repurchase agreements. In the event of default by either the seller or the Fund, certain MRAs may permit the non-defaulting party to net and close-out all transactions, if any, traded under such agreements. The Fund may sell securities it holds as collateral and apply the proceeds towards the

Semiannual Report FI-25

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Income VIP Fund (continued)

1. Organization and Significant Accounting Policies (continued)

c. Joint Repurchase Agreement (continued)

repurchase price and any other amounts owed by the seller to the Fund in the event of default by the seller. This could involve costs or delays in addition to a loss on the securities if their value falls below the repurchase price owed by the seller. The joint repurchase agreement held by the Fund at period end, as indicated in the Statement of Investments, had been entered into on June 30, 2014.

d. Securities Purchased on a Delayed Delivery Basis

The Fund purchases securities on a delayed delivery basis, with payment and delivery scheduled for a future date. These transactions are subject to market fluctuations and are subject to the risk that the value at delivery may be more or less than the trade date purchase price. Although the Fund will generally purchase these securities with the intention of holding the securities, it may sell the securities before the settlement date. Sufficient assets have been segregated for these securities.

e. Equity-Linked Securities

The Fund invests in equity-linked securities. Equity-linked securities are hybrid financial instruments that generally combine both debt and equity characteristics into a single note form. Income received from equity-linked securities is recorded as realized gains in the Statement of Operations and may be based on the performance of an underlying equity security, an equity index, or an option position. The risks of investing in equity-linked securities include unfavorable price movements in the underlying security and the credit risk of the issuing financial institution. There may be no guarantee of a return of principal with equity-linked securities and the appreciation potential may be limited. Equity-linked securities may be more volatile and less liquid than other investments held by the Fund.

f. Securities Lending

The Fund participates in an agency based securities lending program. The Fund receives cash collateral against the loaned securities in an amount equal to at least 102% of the fair value of the loaned securities. Collateral is maintained over the life of the loan in an amount not less than 100% of the fair value of loaned securities, as determined at the close of fund business each day; any additional collateral required due to changes in security

values is delivered to the Fund on the next business day. The collateral is invested in a non-registered money fund as indicated on the Statement of Investments. The Fund receives income from the investment of cash collateral, in addition to lending fees and rebates paid by the borrower. The Fund bears the market risk with respect to the collateral investment, securities loaned, and the risk that the agent may default on its obligations to the Fund. The securities lending agent has agreed to indemnify the Fund in the event of default by a third party borrower.

g. Senior Floating Rate Interests

The Fund invests in senior secured corporate loans that pay interest at rates which are periodically reset by reference to a base lending rate plus a spread. These base lending rates are generally the prime rate offered by a designated U.S. bank or the London InterBank Offered Rate (LIBOR). Senior secured corporate loans often require prepayment of principal from excess cash flows or at the discretion of the borrower. As a result, actual maturity may be substantially less than the stated maturity. Senior secured corporate loans in which the Fund invests are generally readily marketable, but may be subject to certain restrictions on resale.

h. Income and Deferred Taxes

It is the Fund’s policy to qualify as a regulated investment company under the Internal Revenue Code. The Fund intends to distribute to shareholders substantially all of its taxable income and net realized gains to relieve it from federal income and if applicable, excise taxes. As a result, no provision for U.S. federal income taxes is required.

The Fund may be subject to foreign taxation related to income received, capital gains on the sale of securities and certain foreign currency transactions in the foreign jurisdictions in which it invests. Foreign taxes, if any, are recorded based on the tax regulations and rates that exist in the foreign markets in which the Fund invests. When a capital gain tax is determined to apply the Fund records an estimated deferred tax liability in an amount that would be payable if the securities were disposed of on the valuation date.

The Fund recognizes the tax benefits of uncertain tax positions only when the position is “more likely than not” to be sustained upon examination by the tax authorities based on the technical merits of the tax position. As of June 30, 2014, and for all open tax years, the Fund has determined that no liability for

FI-26 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Income VIP Fund (continued)

unrecognized tax benefits is required in the Fund’s financial statements related to uncertain tax positions taken on a tax return (or expected to be taken on future tax returns). Open tax years are those that remain subject to examination and are based on each tax jurisdiction statute of limitation.

i. Security Transactions, Investment Income, Expenses and Distributions

Security transactions are accounted for on trade date. Realized gains and losses on security transactions are determined on a specific identification basis. Interest income and estimated expenses are accrued daily. Amortization of premium and accretion of discount on debt securities are included in interest income. Facility fees are recognized as income over the expected term of the loan. Dividend income is recorded on the ex-dividend date except that certain dividends from foreign securities are recognized as soon as the Fund is notified of the ex-dividend date. Distributions to shareholders are recorded on the ex-dividend date and are determined according to income tax regulations (tax basis). Distributable earnings determined on a tax basis may differ from earnings recorded in accordance with accounting principles generally accepted in the United States of America. These differences may be permanent or temporary. Permanent differences are reclassified among capital accounts to reflect their tax character. These reclassifications have no impact on net assets or the results of operations. Temporary differences are not reclassified, as they may reverse in subsequent periods.

Common expenses incurred by the Trust are allocated among the funds based on the ratio of net assets of each fund to the combined net assets of the Trust. Fund specific expenses are charged directly to the fund that incurred the expense.

Realized and unrealized gains and losses and net investment income, not including class specific expenses, are allocated daily to each class of shares based upon the relative proportion of net assets of each class. Differences in per share distributions, by class, are generally due to differences in class specific expenses.

j. Accounting Estimates

The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the amounts of income and expenses during the reporting period. Actual results could differ from those estimates.

k. Guarantees and Indemnifications

Under the Trust’s organizational documents, its officers and trustees are indemnified by the Trust against certain liabilities arising out of the performance of their duties to the Trust. Additionally, in the normal course of business, the Trust, on behalf of the Fund, enters into contracts with service providers that contain general indemnification clauses. The Trust’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Trust that have not yet occurred. Currently, the Trust expects the risk of loss to be remote.

2. Shares of Beneficial Interest

At June 30, 2014, there were an unlimited number of shares authorized (without par value). Transactions in the Fund’s shares were as follows:

	Six Months Ended June 30, 2014						Year Ended December 31, 2013
	Shares			Amount			Shares			Amount
Class 1 Shares:
Shares sold		1,295,389		$	22,423,714			4,144,696		$	65,962,113
Shares issued in reinvestment of distributions		2,182,489			37,211,436			2,620,449			40,171,484
Shares redeemed		(1,250,764	)		(21,398,096	)		(2,480,546	)		(39,600,429	)
Net increase (decrease)		2,227,114		$	38,237,054			4,284,599		$	66,533,168

Semiannual Report FI-27

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Income VIP Fund (continued)

2. Shares of Beneficial Interest (continued)

	Six Months Ended June 30, 2014						Year Ended December 31, 2013
	Shares			Amount			Shares			Amount
Class 2 Shares:
Shares sold		16,531,918		$	275,993,700			35,402,352		$	551,266,014
Shares issued in reinvestment of distributions		18,973,465			314,580,044			26,915,974			401,855,498
Shares redeemed		(28,553,126	)		(474,786,740	)		(87,475,715	)		(1,350,953,003	)
Net increase (decrease)		6,952,257		$	115,787,004			(25,157,389	)	$	(397,831,491	)
Class 4 Shares:
Shares sold		1,797,456		$	30,493,495			3,337,474		$	52,791,548
Shares issued on reinvestment of distributions		1,137,629			19,237,312			1,839,503			27,978,841
Shares redeemed		(3,134,749	)		(53,176,354	)		(9,346,237	)		(145,897,665	)
Net increase (decrease)		(199,664	)	$	(3,445,547	)		(4,169,260	)	$	(65,127,276	)

3. Transactions With Affiliates

Franklin Resources, Inc. is the holding company for various subsidiaries that together are referred to as Franklin Templeton Investments. Certain officers and trustees of the Fund are also officers and/or directors of the following subsidiaries:

Subsidiary	Affiliation
Franklin Advisers, Inc. (Advisers)	Investment manager
Templeton Investment Counsel, LLC (TIC)	Investment manager
Franklin Templeton Services, LLC (FT Services)	Administrative manager
Franklin Templeton Distributors, Inc. (Distributors)	Principal underwriter
Franklin Templeton Investor Services, LLC (Investor Services)	Transfer agent

a. Management Fees

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

Annualized Fee Rate	Net Assets
0.625%	Up to and including $100 million
0.500%	Over $100 million, up to and including $250 million
0.450%	Over $250 million, up to and including $7.5 billion
0.440%	Over $7.5 billion, up to and including $10 billion
0.430%	Over $10 billion, up to and including $12.5 billion
0.420%	Over $12.5 billion, up to and including $15 billion
0.400%	In excess of $15 billion

Under a subadvisory agreement, TIC, an affiliate of Advisers, provides subadvisory services to the Fund. The subadvisory fee is paid by Advisers based on the average daily net assets, and is not an additional expense of the Fund. Effective February 1, 2014, the subadvisory agreement was terminated.

FI-28 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Income VIP Fund (continued)

b. Administrative Fees

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

c. Distribution Fees

The Board has adopted distribution plans for Class 2 and Class 4 shares pursuant to Rule 12b-1 under the 1940 Act. Under the Fund’s compensation distribution plans, the Fund pays Distributors for costs incurred in connection with the servicing, sale and distribution of the Fund’s shares up to 0.35% per year of its average daily net assets of each class. Some distribution fees are not charged on shares held by affiliates. The Board has agreed to limit the current rate to 0.25% per year for Class 2. The plan year, for purposes of monitoring compliance with the maximum annual plan rates, is February 1 through January 31.

d. Transfer Agent Fees

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

4. Expense Offset Arrangement

The Fund has entered into an arrangement with its custodian whereby credits realized as a result of uninvested cash balances are used to reduce a portion of the Fund’s custodian expenses. During the period ended June 30, 2014, the custodian fees were reduced as noted in the Statement of Operations.

5. Income Taxes

For tax purposes, capital losses may be carried over to offset future capital gains. Capital loss carryforwards with no expiration, if any, must be fully utilized before those losses with expiration dates.

At December 31, 2013, capital loss carryforwards were as follows:

Capital loss carryforwards subject to expiration:
2016	$    310,746,276
2017	521,405,875
2018	157,561,044
Capital loss carryforwards not subject to expiration:
Long term	54,314,457
Total capital loss carryforwards	$1,044,027,652

At June 30, 2014, the cost of investments and net unrealized appreciation (depreciation) for income tax purposes were as follows:

Cost of investments	$6,092,002,038
Unrealized appreciation	$1,578,629,284
Unrealized depreciation	(288,882,418)
Net unrealized appreciation (depreciation)	$1,289,746,866

Differences between income and/or capital gains as determined on a book basis and a tax basis are primarily due to differing treatments of defaulted securities, passive foreign investment company shares, payments-in-kind, bond discounts and premiums, corporate actions and wash sales.

Semiannual Report FI-29

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Income VIP Fund (continued)

6. Investment Transactions

Purchases and sales of investments (excluding short term securities) for the period ended June 30, 2014, aggregated $543,448,589 and $759,472,982 respectively.

7. Credit Risk

At June 30, 2014, the Fund had 32.51% of its portfolio invested in high yield, senior secured floating rate notes, or other securities rated below investment grade. These securities may be more sensitive to economic conditions causing greater price volatility and are potentially subject to a greater risk of loss due to default than higher rated securities.

8. Restricted Securities

The Fund invests in securities that are restricted under the Securities Act of 1933 (1933 Act) or which are subject to legal, contractual, or other agreed upon restrictions on resale. Restricted securities are often purchased in private placement transactions, and cannot be sold without prior registration unless the sale is pursuant to an exemption under the 1933 Act. Disposal of these securities may require greater effort and expense, and prompt sale at an acceptable price may be difficult. The Fund may have registration rights for restricted securities. The issuer generally incurs all registration costs.

At June 30, 2014, the Fund held investments in restricted securities, excluding certain securities exempt from registration under the 1933 Act deemed to be liquid, as follows:

Shares		Issuer	Acquisition Date		Cost		Value
	4,929,600	First Data Holdings Inc., B (Value is 0.25% of Net Assets)		6/26/14	$	19,718,400	$	19,718,400

9. Credit Facility

The Fund, together with other U.S. registered and foreign investment funds (collectively, Borrowers), managed by Franklin Templeton Investments, are borrowers in a joint syndicated senior unsecured credit facility totaling $1.5 billion (Global Credit Facility) which matures on February 13, 2015. This Global Credit Facility provides a source of funds to the Borrowers for temporary and emergency purposes, including the ability to meet future unanticipated or unusually large redemption requests.

Under the terms of the Global Credit Facility, the Fund shall, in addition to interest charged on any borrowings made by the Fund and other costs incurred by the Fund, pay its share of fees and expenses incurred in connection with the implementation and maintenance of the Global Credit Facility, based upon its relative share of the aggregate net assets of all of the Borrowers, including an annual commitment fee of 0.07% based upon the unused portion of the Global Credit Facility. These fees are reflected in other expenses on the Statement of Operations. During the period ended June 30, 2014, the Fund did not use the Global Credit Facility.

10. Fair Value Measurements

The Fund follows a fair value hierarchy that distinguishes between market data obtained from independent sources (observable inputs) and the Fund’s own market assumptions (unobservable inputs). These inputs are used in determining the value of the Fund’s financial instruments and are summarized in the following fair value hierarchy:

• Level 1 – quoted prices in active markets for identical financial instruments

• Level 2 – other significant observable inputs (including quoted prices for similar financial instruments, interest rates, prepayment speed, credit risk, etc.)

• Level 3 – significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of financial instruments)

FI-30 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Income VIP Fund (continued)

The input levels are not necessarily an indication of the risk or liquidity associated with financial instruments at that level.

For movements between the levels within the fair value hierarchy, the Fund has adopted a policy of recognizing the transfers as of the date of the underlying event which caused the movement.

A summary of inputs used as of June 30, 2014, in valuing the Fund’s assets carried at fair value, is as follows:

	Level 1		Level 2		Level 3			Total
Assets:
Investments in Securities:
Equity Investments:a
Energy	$	733,847,781	$	44,805,940	$	—		$	778,653,721
Financials		693,529,943		15,200,000		—			708,729,943
Industrials		229,859,423		31,071,126		—			260,930,549
Information Technology		244,386,872		—		19,718,400			264,105,272
All Other Equity Investmentsb		2,560,112,031		—		—			2,560,112,031
Equity-Linked Securities		—		80,999,885		—			80,999,885
Convertible Bonds		—		81,681,606		—			81,681,606
Corporate Bonds		—		2,357,733,588		—			2,357,733,588
Senior Floating Rate Interests		—		212,084,179		—			212,084,179
Escrows and Litigation Trusts		—		—		14,000	c		14,000
Short Term Investments		—		76,704,130		—			76,704,130
Total Investments in Securities	$	4,461,736,050	$	2,900,280,454	$	19,732,400		$	7,381,748,904

^aIncludes common, preferred, and convertible preferred stocks as well as other equity investments.

^bFor detailed categories, see the accompanying Statement of Investments.

^c Includes securities determined to have no value at June 30, 2014.

A reconciliation of assets in which Level 3 inputs are used in determining fair value is presented when there are significant Level 3 financial instruments at the end of the period.

11. New Accounting Pronouncements

In June 2014, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) No. 2014-11, Transfers and Servicing (Topic 860), Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures. The ASU changes the accounting for certain repurchase agreements and expands disclosure requirements related to repurchase agreements, securities lending, repurchase-to-maturity and similar transactions. The ASU is effective for interim and annual reporting periods beginning after December 15, 2014. Management is currently evaluating the impact, if any, of applying this provision.

12. Subsequent Events

The Fund has evaluated subsequent events through the issuance of the financial statements and determined that no events have occurred that require disclosure.

Semiannual Report FI-31

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Income VIP Fund (continued)

Abbreviations

Currency		Selected Portfolio
EUR	Euro	ADR	American Depositary Receipt
GBP	British Pound	FHLMC	Federal Home Loan Mortgage Corp.
		FNMA	Federal National Mortgage Association
		FRN	Floating Rate Note
		L/C	Letter of Credit
		MTN	Medium Term Note
		PIK	Payment-In-Kind

FI-32 Semiannual Report

Franklin Large Cap Growth VIP Fund

(Formerly, Franklin Large Cap Growth Securities Fund)

We are pleased to bring you Franklin Large Cap Growth VIP Fund’s semiannual report for the period ended June 30, 2014.

Class 2 Performance Summary as of June 30, 2014

Franklin Large Cap Growth VIP Fund – Class 2 delivered a total return of +8.20% for the six-month period ended June 30, 2014.

Performance reflects the Fund’s Class 2 operating expenses, but does not include any contract fees, expenses or sales charges. If they had been included, performance would be lower. These charges and deductions, particularly for variable life policies, can have a significant effect on contract values and insurance benefits. See the contract prospectus for a complete description of these expenses, including sales charges.

Performance data represent past performance, which does not guarantee future results. Investment return and principal value will fluctuate, and you may have a gain or loss when you sell your shares. Current performance may differ from figures shown.

Semiannual Report FLG-1

FRANKLIN LARGE CAP GROWTH VIP FUND

Fund Goal and Main Investments: Franklin Large Cap Growth VIP Fund seeks capital appreciation. Under normal market conditions, the Fund invests at least 80% of its net assets in investments of large capitalization companies. For this Fund, large capitalization companies are those with market capitalization values within those of the top 50% of companies in the Russell 1000^® Index at the time of purchase.¹

Fund Risks: All investments involve risks, including possible loss of principal. Stock prices fluctuate, sometimes rapidly and dramatically, due to factors affecting individual companies, particular industries or sectors, or general market conditions. The Fund may focus on particular sectors of the market from time to time, which can carry greater risks of adverse developments in such sectors. Smaller or midsized companies can be particularly sensitive to changing economic conditions, and their prospects for growth are less certain than those of larger, more established companies. Investments in foreign securities may involve special risks including currency fluctuations and economic and political uncertainty. The Fund is actively managed but there is no guarantee that the manager’s investment decisions will produce the desired results. The Fund’s prospectus also includes a description of the main investment risks.

Performance Overview

You can find the Fund’s six-month total return in the Performance Summary. In comparison, the Fund’s benchmark, the Standard & Poor’s^® 500 Index (S&P 500^®), posted a +7.14% total return.²

Economic and Market Overview

The U.S. economy showed some signs of recovery during the six-month period ended June 30, 2014, despite a first-quarter contraction in gross domestic product. Manufacturing activity expanded, and the unemployment rate declined to 6.1% in June 2014 from 6.7% in December 2013.² Except for a sharp increase in March, retail sales rose at a modest pace that missed consensus expectations. The housing market had some weather-related weakness early in 2014, but home sales picked up in the spring and home prices were higher than a year ago.

The Federal Reserve Board (Fed) began reducing bond purchases by $10 billion a month in January 2014, based on earlier largely positive economic and employment data. Although economic data in early 2014 were soft, Fed Chair Janet Yellen kept the pace of asset-purchase tapering intact while adopting a more qualitative approach to rate-hike guidance. However, the Fed pledged to keep interest rates low for a considerable time after the asset-purchase program ends, depending on inflation and employment trends. In June, the Fed lowered projections for near- and long-term economic growth even as it maintained the pace of tapering.

Investors’ confidence grew as corporate profits rose and generally favorable economic data indicated continued recovery despite brief sell-offs when many investors reacted to the Fed’s

1. Please see Index Descriptions following the Fund Summaries.

2. © 2014 Morningstar. One cannot invest directly in an index, and an index is not representative of the Fund’s portfolio. Please see Index Descriptions following the Fund Summaries.

3. Source: Bureau of Labor Statistics.

FLG-2 Semiannual Report

FRANKLIN LARGE CAP GROWTH VIP FUND

statements, political instability in certain emerging markets and China’s slowing economy. U.S. stocks continued to gain for the six-months under review as the S&P 500 and Dow Jones Industrial Average reached all-time highs.¹

Investment Strategy

We are a research driven, fundamental investor, pursuing a growth strategy. As a “bottom-up” investor focusing primarily on individual securities, we seek companies that have identifiable drivers of future earnings growth and that present, in our opinion, the best trade-off between that potential earnings growth, business and financial risk, and valuation.

Manager’s Discussion

Looking back on the key factors impacting the Fund’s returns during the six months under review, we would like to remind shareholders that our investment strategy is primarily bottom-up and driven by individual stock selection. However, we recognize that a sector-based discussion can be a helpful way to organize a portfolio review of key performance drivers. We employed our long-held strategy: bottom-up, individual-company, fundamental research aimed at opportunistically finding what we believed to be outstanding large-cap companies across all sectors, at valuations we believed understated their fair worth, with future growth potential being a key driver of estimated worth.

From a sector perspective, our stock selection in energy, health care and consumer discretionary helped the Fund’s performance relative to the S&P 500. Major energy contributors included oil companies Anadarko Petroleum, Oasis Petroleum,⁴ a new holding, and Devon Energy as well as oil-field services provider Halliburton. Anadarko Petroleum’s share price advanced after the company settled a long-running pollution case and hit a new high after news that the company could be acquired. Investor sentiment toward oil exploration and production companies improved as crude oil prices rose following geopolitical tension in Ukraine and Iraq.

In health care, global prescription drug maker Actavis, clinical-stage pharmaceutical company Karyopharm Therapeutics,⁴ a new holding, and health care benefit provider Aetna aided relative returns. Actavis’s shares rallied after the company announced it would acquire Forest Laboratories to strengthen its

Top 10 Holdings
6/30/14
Company Sector/Industry	% of Total Net Assets
Google Inc. Information Technology		3.0%
Gilead Sciences Inc. Health Care		3.0%
Actavis PLC Health Care		2.6%
SBA Communications Corp. Telecommunication Services		2.6%
Apple Inc. Information Technology		2.5%
Wells Fargo & Co. Financials		2.1%
Aetna Inc. Health Care		2.0%
Facebook Inc., A Information Technology		2.0%
Las Vegas Sands Corp. Consumer Discretionary		2.0%
Amazon.com Inc. Consumer Discretionary		1.8%

The dollar value, number of shares or principal amount, and names of all portfolio holdings are listed in the Fund’s Statement of Investments.

specialty pharmaceuticals portfolio. Actavis also reported stronger-than-expected quarterly earnings, boosted by its acquisition of specialty drug maker Warner Chilcott in 2013. Aetna’s stock price gained after the company reported better-than-expected first-quarter results, driven by growth in new customers, and raised its 2014 guidance. The stock also benefited as investors’ concerns abated over the impact of the Affordable Care Act. Within consumer discretionary, automotive components manufacturer BorgWarner helped the Fund’s performance. The company reported better-than-expected fourth-quarter 2013 and first-quarter 2014 results and raised its full-year guidance given the potential benefits of acquiring engine component maker Gustav Wahler. In other sectors, personal computing and mobile communication device developer Apple was a key contributor.

In contrast, the Fund’s stock selection in consumer staples and an underweighting in utilities detracted from relative performance. Whole Foods Market in the consumer staples

4. Not part of the index.

Semiannual Report FLG-3

FRANKLIN LARGE CAP GROWTH VIP FUND

sector was a key detractor.⁵ Heightened competition in the organic food market led the natural and organic foods retailer to deliver disappointing fiscal second-quarter revenues and earnings and lower its fiscal 2014 guidance. In the utilities sector, underweightings in electric utilities and multi-utilities weighed on the Fund’s performance. Elsewhere, major individual detractors were discount retailer Target, global payments and technology companies MasterCard and Visa, futures and options exchange operator CME Group⁵ and health care cost containment services provider HMS Holdings.⁴ A credit card data breach announced in December 2013 and problems with a Canadian expansion continued to weigh on Target’s stock, although fourth-quarter 2013 earnings beat estimates. The stock was also affected by concerns over management changes. MasterCard’s share price declined after the company reported softer-than-expected fiscal-year 2013 earnings. Investor concerns about the potential impact of U.S. economic sanctions on Russia further weighed on the stock. Russia accounted for about 2% of MasterCard’s global net revenues, and the country’s pending electronic payment rule changes could have a small negative effect on fiscal-year 2014 results. Potentially offsetting this negative effect was MasterCard’s organic growth, including new branding and

co-branding agreements. The company continued to repurchase its shares and delivered stronger-than-expected first-quarter 2014 revenues and earnings. The share price of CME Group declined after regulators began investigating whether exchanges such as CME Group were offering preferential treatment to high-frequency traders.

Thank you for your participation in Franklin Large Cap Growth VIP Fund. We look forward to serving your future investment needs.

The foregoing information reflects our analysis, opinions and portfolio holdings as of June 30, 2014, the end of the reporting period. The way we implement our main investment strategies and the resulting portfolio holdings may change depending on factors such as market and economic conditions. These opinions may not be relied upon as investment advice or an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but the investment manager makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.

FLG-4 Semiannual Report

5. Sold by period-end.

FRANKLIN LARGE CAP GROWTH VIP FUND

Class 2 Fund Expenses

As an investor in a variable insurance contract (Contract) that indirectly provides for investment in an underlying mutual fund, you can incur transaction and/or ongoing expenses at both the Fund level and the Contract level.

• Transaction expenses can include sales charges (loads) on purchases, surrender fees, transfer fees and premium taxes.

• Ongoing expenses can include management fees, distribution and service (12b-1) fees, contract fees, annual maintenance fees, mortality and expense risk fees and other fees and expenses. All mutual funds and Contracts have some types of ongoing expenses.

The expenses shown in the table are meant to highlight ongoing expenses at the Fund level only and do not include ongoing expenses at the Contract level, or transaction expenses at either the Fund or Contract levels. While the Fund does not have transaction expenses, if the transaction and ongoing expenses at the Contract level were included, the expenses shown below would be higher. You should consult your Contract prospectus or disclosure document for more information.

The table shows Fund-level ongoing expenses and can help you understand these expenses and compare them with those of other mutual funds offered through the Contract. The table assumes a $1,000 investment held for the six months indicated. Please refer to the Fund prospectus for additional information on operating expenses.

Actual Fund Expenses

The first line (Actual) of the table provides actual account values and expenses. The “Ending Account Value” is derived from the Fund’s actual return, which includes the effect of ongoing Fund expenses, but does not include the effect of ongoing Contract expenses.

You can estimate the Fund-level expenses you incurred during the period by following these steps. Of course, your account value and expenses will differ from those in this illustration:

1. Divide your account value by $1,000.

If an account had an $8,600 value, then $8,600 ÷ $1,000 = 8.6.

2. Multiply the result by the number under the heading “Fund-Level Expenses Incurred During Period.”

If Fund-Level Expenses Incurred During Period were $7.50, then 8.6 × $7.50 = $64.50.

In this illustration, the estimated expenses incurred this period at the Fund level are $64.50.

Hypothetical Example for Comparison with Other Mutual Funds

Information in the second line (Hypothetical) of the table can help you compare ongoing expenses of the Fund with those of other mutual funds offered through the Contract. This information may not be used to estimate the actual ending account balance or expenses you incurred during the period. The hypothetical “Ending Account Value” is based on the Fund’s actual expense ratio and an assumed 5% annual rate of return before expenses, which does not represent the Fund’s actual return. The figure under the heading “Fund-Level Expenses Incurred During Period” shows the hypothetical expenses your account would have incurred under this scenario. You can compare this figure with the 5% hypothetical examples that appear in shareholder reports of other funds offered through a Contract.

Class 2	Beginning Account Value 1/1/14		Ending Account Value 6/30/14		Fund-Level Expenses Incurred During Period* 1/1/14–6/30/14
Actual		$1,000		$1,082.00		$5.37
Hypothetical (5% return before expenses)		$1,000		$1,019.64		$5.21

*Expenses are calculated using the most recent six-month annualized expense ratio for the Fund’s Class 2 shares (1.04%), which does not include any ongoing expenses of the Contract for which the Fund is an investment option, multiplied by the average account value over the period, multiplied by 181/365 to reflect the one-half year period.

Semiannual Report FLG-5

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Financial Highlights

Franklin Large Cap Growth VIP Fund

	Six Months Ended June 30, 2014 (unaudited)			Year Ended December 31,
				2013			2012			2011			2010			2009
Class 1
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$20.91			$16.43			$14.75			$15.07			$13.62			$10.66
Income from investment operationsa:
Net investment incomeb		0.10			0.24			0.21			0.15			0.12			0.12
Net realized and unrealized gains (losses)		1.65			4.48			1.65			(0.33	)		1.48			3.04
Total from investment operations		1.75			4.72			1.86			(0.18	)		1.60			3.16
Less distributions from net investment income		(0.30	)		(0.24	)		(0.18	)		(0.14	)		(0.15	)		(0.20	)
Net asset value, end of period		$22.36			$20.91			$16.43			$14.75			$15.07			$13.62
Total returnc		8.37%			28.92%			12.65%			(1.22)%			11.85%			30.04%
Ratios to average net assetsd
Expenses		0.79%			0.79%			0.80%			0.80%			0.79%			0.81%	e
Net investment income		0.94%			1.27%			1.31%			0.99%			0.86%			1.03%
Supplemental data
Net assets, end of period (000's)		$55,741			$54,291			$46,756			$48,666			$58,265			$58,287
Portfolio turnover rate		58.95%			28.27%			33.88%			56.61%			46.75%			71.95%

^aThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.

^bBased on average daily shares outstanding.

^cTotal return does not include fees, charges or expenses imposed by the variable annuity and life insurance contracts for which the Franklin Templeton Variable Insurance Products Trust serves as an underlying investment vehicle. Total return is not annualized for periods less than one year.

^dRatios are annualized for periods less than one year.

^eBenefit of expense reduction rounds to less than 0.01%.

FLG-6 Semiannual Report   |    The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL HIGHLIGHTS

Franklin Large Cap Growth VIP Fund (continued)

	Six Months Ended June 30, 2014 (unaudited)			Year Ended December 31,
				2013			2012			2011			2010			2009
Class 2
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$20.62			$16.20			$14.54			$14.86			$13.43			$10.50
Income from investment operationsa:
Net investment incomeb		0.07			0.19			0.17			0.11			0.08			0.09
Net realized and unrealized gains (losses)		1.62			4.42			1.62			(0.33	)		1.46			3.00
Total from investment operations		1.69			4.61			1.79			(0.22	)		1.54			3.09
Less distributions from net investment income		(0.24	)		(0.19	)		(0.13	)		(0.10	)		(0.11	)		(0.16	)
Net asset value, end of period		$22.07			$20.62			$16.20			$14.54			$14.86			$13.43
Total returnc		8.20%			28.63%			12.37%			(1.51)%			11.59%			29.73%
Ratios to average net assetsd
Expenses		1.04%			1.04%			1.05%			1.05%			1.04%			1.06%	e
Net investment income		0.69%			1.02%			1.06%			0.74%			0.61%			0.78%
Supplemental data
Net assets, end of period (000's)		$265,707			$285,477			$278,989			$293,226			$357,405			$373,821
Portfolio turnover rate		58.95%			28.27%			33.88%			56.61%			46.75%			71.95%

^aThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.

^bBased on average daily shares outstanding.

^cTotal return does not include fees, charges or expenses imposed by the variable annuity and life insurance contracts for which the Franklin Templeton Variable Insurance Products Trust serves as an underlying investment vehicle. Total return is not annualized for periods less than one year.

^dRatios are annualized for periods less than one year.

^eBenefit of expense reduction rounds to less than 0.01%.

The accompanying notes are an integral part of these financial statements.    |   Semiannual Report FLG-7

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Statement of Investments, June 30, 2014 (unaudited)

Franklin Large Cap Growth VIP Fund
		Shares		Value
	Common Stocks 99.0%
	Consumer Discretionary 21.0%
a	Amazon.com Inc.		18,302	$	5,944,123
a	AMC Networks Inc., A		26,415		1,624,258
	BorgWarner Inc.		78,090		5,090,687
	CBS Corp., B		52,341		3,252,470
a	Chipotle Mexican Grill Inc.		7,195		4,263,109
a	DISH Network Corp., A		26,884		1,749,611
	Harman International Industries Inc.		29,216		3,138,675
a	Kate Spade & Co.		65,120		2,483,677
	Las Vegas Sands Corp.		83,344		6,352,480
	Lowe's Cos. Inc.		48,700		2,337,113
a	Michael Kors Holdings Ltd.		33,053		2,930,148
a	Netflix Inc.		6,826		3,007,536
	NIKE Inc., B		31,200		2,419,560
a	The Priceline Group Inc.		3,753		4,514,859
	Starbucks Corp.		64,084		4,958,820
	Target Corp.		40,918		2,371,198
	Twenty-First Century Fox Inc., B		73,542		2,517,343
a	Under Armour Inc., A		61,977		3,687,012
	The Walt Disney Co.		56,601		4,852,970
					67,495,649
	Consumer Staples 1.5%
	Mead Johnson Nutrition Co., A		17,100		1,593,207
	PepsiCo Inc.		18,178		1,624,022
	The Procter & Gamble Co.		19,971		1,569,521
					4,786,750
	Energy 7.2%
	Anadarko Petroleum Corp.		46,531		5,093,749
	Devon Energy Corp.		44,100		3,501,540
a	Eclipse Resources Corp.		31,748		797,827
	Halliburton Co.		74,700		5,304,447
a	Oasis Petroleum Inc.		55,000		3,073,950
	Schlumberger Ltd.		45,370		5,351,391
					23,122,904
	Financials 13.1%
	American Express Co.		18,000		1,707,660
	Aon PLC		26,932		2,426,304
	Bank of America Corp.		213,587		3,282,832
	BlackRock Inc.		6,800		2,173,280
	Capital One Financial Corp.		19,466		1,607,892
a	CBRE Group Inc.		105,148		3,368,942
	Citigroup Inc.		66,276		3,121,599
	Discover Financial Services		46,400		2,875,872
	Intercontinental Exchange Inc.		16,318		3,082,470
	Invesco Ltd.		81,300		3,069,075
	MetLife Inc.		39,900		2,216,844
a	Signature Bank		26,343		3,323,960
	U.S. Bancorp		74,913		3,245,231
	Wells Fargo & Co.		126,800		6,664,608
					42,166,569

FLG-8 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Large Cap Growth VIP Fund (continued)

		Shares		Value
	Common Stocks (continued)
	Health Care 20.3%
a	Actavis PLC		37,861	$	8,444,896
	Aetna Inc.		80,689		6,542,264
	Allergan Inc.		12,200		2,064,484
a	Biogen Idec Inc.		10,079		3,178,010
a	Celgene Corp.		61,138		5,250,532
a	Gilead Sciences Inc.		115,096		9,542,609
a	HMS Holdings Corp.		146,300		2,985,983
a	Illumina Inc.		19,846		3,543,305
a	Incyte Corp.		33,103		1,868,333
a	InterMune Inc.		38,168		1,685,117
a	Jazz Pharmaceuticals PLC		11,117		1,634,310
	Johnson & Johnson		30,855		3,228,050
a	Karyopharm Therapeutics Inc.		52,300		2,434,565
a	Medivation Inc.		53,103		4,093,179
	Perrigo Co. PLC		22,466		3,274,644
a	Valeant Pharmaceuticals International Inc. (Canada)		23,962		3,022,088
	Zoetis Inc.		78,413		2,530,388
					65,322,757
	Industrials 11.8%
	Allegiant Travel Co.		13,599		1,601,554
a	American Airlines Group Inc.		95,595		4,106,761
	The Boeing Co.		21,300		2,709,999
	Caterpillar Inc.		21,000		2,282,070
a	Colfax Corp.		60,538		4,512,503
a	DigitalGlobe Inc.		68,400		1,901,520
	Flowserve Corp.		41,301		3,070,729
a	Hexcel Corp.		43,133		1,764,140
	Kansas City Southern		18,900		2,031,939
	Precision Castparts Corp.		18,258		4,608,319
	Rockwell Automation Inc.		12,665		1,585,151
	Towers Watson & Co.		13,921		1,450,986
	Union Pacific Corp.		16,044		1,600,389
	United Technologies Corp.		41,900		4,837,355
					38,063,415
	Information Technology 20.2%
a	Adobe Systems Inc.		47,073		3,406,202
	Apple Inc.		86,933		8,078,684
	Broadcom Corp., A		43,412		1,611,453
a	BroadSoft Inc.		71,870		1,896,649
a	Facebook Inc., A		95,683		6,438,509
	Google Inc., A		8,238		4,816,512
a	Google Inc., C		8,363		4,811,067
	Intersil Corp., A		80,100		1,197,495
a	LinkedIn Corp., A		9,856		1,690,008
	MasterCard Inc., A		63,300		4,650,651
	Microsoft Corp.		118,400		4,937,280
a	NetSuite Inc.		28,043		2,436,376
a	NXP Semiconductors NV (Netherlands)		38,242		2,530,856
a	Palo Alto Networks Inc.		21,324		1,788,017
	QUALCOMM Inc.		59,038		4,675,810

Semiannual Report FLG-9

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Large Cap Growth VIP Fund (continued)

		Shares		Value
	Common Stocks (continued)
	Information Technology (continued)
a	Salesforce.com Inc.		45,000	$	2,613,600
a	ServiceNow Inc.		32,792		2,031,792
a	Ubiquiti Networks Inc.		46,576		2,104,769
	Visa Inc., A		15,400		3,244,934
					64,960,664
	Materials 1.3%
	E. I. du Pont de Nemours and Co.		38,000		2,486,720
	Martin Marietta Materials Inc.		12,340		1,629,497
					4,116,217
	Telecommunication Services 2.6%
a	SBA Communications Corp.		81,392		8,326,402
	Total Common Stocks (Cost $227,604,367)				318,361,327
		Principal Amount
	Short Term Investments (Cost $1,845,163) 0.6%
	Repurchase Agreements 0.6%
b	Joint Repurchase Agreement, 0.064%, 7/01/14 (Maturity Value $1,845,166)     BNP Paribas Securities Corp. (Maturity Value $372,687) Credit Suisse Securities (USA) LLC (Maturity Value $186,343) Deutsche Bank Securities Inc. (Maturity Value $140,103) HSBC Securities (USA) Inc. (Maturity Value $782,664) Merrill Lynch, Pierce, Fenner & Smith Inc. (Maturity Value $363,369)		$1,845,163		1,845,163
	Collateralized by U.S. Government Agency Securities, 0.00% - 6.21%, 1/16/15 - 5/04/37; cU.S. Government Agency Discount Notes, 12/24/14 - 1/30/15; U.S. Government Agency Securities, Strips, 5/15/30; U.S. Treasury Bonds, 7.50% - 8.875%, 11/15/16 - 2/15/19; U.S. Treasury Notes, 0.25% - 4.50%, 7/15/15 - 4/30/18; and U.S. Treasury Notes, Index Linked, 1.375%, 7/15/18 (valued at $1,882,381)
	Total Investments (Cost $229,449,530) 99.6%				320,206,490
	Other Assets, less Liabilities 0.4%				1,241,306
	Net Assets 100.0%			$	321,447,796

^aNon-income producing.

^bSee Note 1(c) regarding joint repurchase agreement.

^cThe security is traded on a discount basis with no stated coupon rate.

FLG-10 Semiannual Report   |    The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Financial Statements

Statement of Assets and Liabilities

June 30, 2014 (unaudited)

	Franklin Large Cap Growth VIP Fund
Assets:
Investments in securities:
Cost - Unaffiliated issuers	$	227,604,367
Cost - Repurchase agreements		1,845,163
Total cost of investments	$	229,449,530
Value - Unaffiliated issuers	$	318,361,327
Value - Repurchase agreements		1,845,163
Total value of investments		320,206,490
Receivables:
Investment securities sold		14,745,263
Capital shares sold		318,693
Dividends		122,518
Other assets		149
Total assets		335,393,113
Liabilities:
Payables:
Investment securities purchased		12,679,836
Capital shares redeemed		847,615
Management fees		196,958
Distribution fees		109,645
Accrued expenses and other liabilities		111,263
Total liabilities		13,945,317
Net assets, at value	$	321,447,796
Net assets consist of:
Paid-in capital	$	187,049,163
Undistributed net investment income		1,210,032
Net unrealized appreciation (depreciation)		90,756,960
Accumulated net realized gain (loss)		42,431,641
Net assets, at value	$	321,447,796
Class 1:
Net assets, at value	$	55,740,598
Shares outstanding		2,493,288
Net asset value and maximum offering price per share	$	22.36
Class 2:
Net assets, at value	$	265,707,198
Shares outstanding		12,037,956
Net asset value and maximum offering price per share	$	22.07

The accompanying notes are an integral part of these financial statements.    |   Semiannual Report FLG-11

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL STATEMENTS

Statement of Operations

for the six months ended June 30, 2014 (unaudited)

	Franklin Large Cap Growth VIP Fund
Investment income:
Dividends	$	2,774,560
Interest		1,707
Total investment income		2,776,267
Expenses:
Management fees (Note 3a)		1,204,121
Distribution fees - Class 2 (Note 3c)		334,223
Custodian fees (Note 4)		1,603
Reports to shareholders		45,591
Professional fees		18,012
Trustees' fees and expenses		698
Other		4,835
Total expenses		1,609,083
Net investment income		1,167,184
Realized and unrealized gains (losses):
Net realized gain (loss) from:
Investments		72,636,180
Foreign currency transactions		(3,691	)
Net realized gain (loss)		72,632,489
Net change in unrealized appreciation (depreciation) on investments		(48,700,612	)
Net realized and unrealized gain (loss)		23,931,877
Net increase (decrease) in net assets resulting from operations	$	25,099,061

FLG-12 Semiannual Report   |    The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL STATEMENTS

Statements of Changes in Net Assets

	Franklin Large Cap Growth VIP Fund
	Six Months Ended June 30, 2014 (unaudited)			Year Ended December 31, 2013
Increase (decrease) in net assets:
Operations:
Net investment income	$	1,167,184		$	3,571,905
Net realized gain (loss) from investments and foreign currency transactions		72,632,489			34,945,789
Net change in unrealized appreciation (depreciation) on investments		(48,700,612	)		46,349,997
Net increase (decrease) in net assets resulting from operations		25,099,061			84,867,691
Distributions to shareholders from:
Net investment income:
Class 1		(729,509	)		(652,010	)
Class 2		(2,842,675	)		(3,061,884	)
Total distributions to shareholders		(3,572,184	)		(3,713,894	)
Capital share transactions: (Note 2)
Class 1		(2,151,939	)		(4,699,193	)
Class 2		(37,695,532	)		(62,431,458	)
Total capital share transactions		(39,847,471	)		(67,130,651	)
Net increase (decrease) in net assets		(18,320,594	)		14,023,146
Net assets:
Beginning of period		339,768,390			325,745,244
End of period	$	321,447,796		$	339,768,390
Undistributed net investment income included in net assets:
End of period	$	1,210,032		$	3,615,032

The accompanying notes are an integral part of these financial statements.    |   Semiannual Report FLG-13

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Notes to Financial Statements (unaudited)

Franklin Large Cap Growth VIP Fund

1. Organization and Significant Accounting Policies

Franklin Templeton Variable Insurance Products Trust (Trust) is registered under the Investment Company Act of 1940, as amended, (1940 Act) as an open-end management investment company, consisting of twenty separate funds and applies the specialized accounting and reporting guidance in U.S. Generally Accepted Accounting Principles (U.S. GAAP). The Franklin Large Cap Growth VIP Fund (Fund) is included in this report. The financial statements of the remaining funds in the Trust are presented separately. Shares of the Fund are generally sold only to insurance company separate accounts to fund the benefits of variable life insurance policies or variable annuity contracts. At June 30, 2014, 46.91% of the Fund's shares were held through one insurance company. Investment activities of these insurance company separate accounts could have a material impact on the Fund. The Fund offers two classes of shares: Class 1 and Class 2. Each class of shares differs by its distribution fees, voting rights on matters affecting a single class and its exchange privilege.

Effective May 1, 2014, the Franklin Large Cap Growth Securities Fund was renamed the Franklin Large Cap Growth VIP Fund.

The following summarizes the Fund's significant accounting policies.

a. Financial Instrument Valuation

The Fund's investments in financial instruments are carried at fair value daily. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. The Fund calculates the net asset value (NAV) per share at the close of the New York Stock Exchange (NYSE), generally at 4 p.m. Eastern time (NYSE close) on each day the NYSE is open for trading. Under compliance policies and procedures approved by the Trust's Board of Trustees (the Board), the Fund’s administrator has responsibility for oversight of valuation, including leading the cross-functional Valuation and Liquidity Oversight Committee (VLOC). The VLOC provides administration and oversight of the Fund's valuation policies and procedures, which are approved annually by the Board. Among other things, these procedures allow the Fund to utilize independent pricing services, quotations from securities and financial instrument dealers, and other market sources to determine fair value.

Equity securities listed on an exchange or on the NASDAQ National Market System are valued at the last quoted sale price or the official closing price of the day, respectively. Foreign equity securities are valued as of the close of trading on the foreign stock exchange on which the security is primarily traded or as of the NYSE close, whichever is earlier. The value is then converted into its U.S. dollar equivalent at the foreign exchange rate in effect at the NYSE close on the day that the value of the security is determined. Over-the-counter (OTC) securities are valued within the range of the most recent quoted bid and ask prices. Securities that trade in multiple markets or on multiple exchanges are valued according to the broadest and most representative market. Certain equity securities are valued based upon fundamental characteristics or relationships to similar securities.

The Fund has procedures to determine the fair value of financial instruments for which market prices are not reliable or readily available. Under these procedures, the VLOC convenes on a regular basis to review such financial instruments and considers a number of factors, including significant unobservable valuation inputs, when arriving at fair value. The VLOC primarily employs a market-based approach which may use related or comparable assets or liabilities, recent transactions, market multiples, book values, and other relevant information for the investment to determine the fair value of the investment. An income-based valuation approach may also be used in which the anticipated future cash flows of the investment are discounted to calculate fair value. Discounts may also be applied due to the nature or duration of any restrictions on the disposition of the investments. Due to the inherent uncertainty of valuations of such investments, the fair values may differ significantly from the values that would have been used had an active market existed. The VLOC employs various methods for calibrating these valuation approaches including a regular review of key inputs and assumptions, transactional back-testing or disposition analysis, and reviews of any related market activity.

Trading in securities on foreign securities stock exchanges and OTC markets may be completed before the daily NYSE close. In addition, trading in certain foreign markets may not take place on every NYSE business day. Occasionally, events occur between the time at which trading in a foreign security is completed and the close of the NYSE that might call into question the reliability of the value of a portfolio security held by the Fund. As a result, differences may arise between the value of

FLG-14 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Large Cap Growth VIP Fund (continued)

the Fund’s portfolio securities as determined at the foreign market close and the latest indications of value at the close of

the NYSE. In order to minimize the potential for these differences, the VLOC monitors price movements following the close of trading in foreign stock markets through a series of country specific market proxies (such as baskets of American Depositary Receipts, futures contracts and exchange traded funds). These price movements are measured against established trigger thresholds for each specific market proxy to assist in determining if an event has occurred that may call into question the reliability of the values of the foreign securities held by the Fund. If such an event occurs, the securities may be valued using fair value procedures, which may include the use of independent pricing services.

Also, when the last day of the reporting period is a non-business day, certain foreign markets may be open on those days that the NYSE is closed, which could result in differences between the value of the Fund’s portfolio securities on the last business day and the last calendar day of the reporting period. Any significant security valuation changes due to an open foreign market are adjusted and reflected by the Fund for financial reporting purposes.

b. Foreign Currency Translation

Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars based on the exchange rate of such currencies against U.S. dollars on the date of valuation. The Fund may enter into foreign currency exchange contracts to facilitate transactions denominated in a foreign currency. Purchases and sales of securities, income and expense items denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date. Portfolio securities and assets and liabilities denominated in foreign currencies contain risks that those currencies will decline in value relative to the U.S. dollar. Occasionally, events may impact the availability or reliability of foreign exchange rates used to convert the U.S. dollar equivalent value. If such an event occurs, the foreign exchange rate will be valued at fair value using procedures established and approved by the Board.

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

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

c. Joint Repurchase Agreement

The Fund enters into a joint repurchase agreement whereby its uninvested cash balance is deposited into a joint cash account with other funds managed by the investment manager or an affiliate of the investment manager and is used to invest in one or more repurchase agreements. The value and face amount of the joint repurchase agreement are allocated to the funds based on their pro-rata interest. A repurchase agreement is accounted for as a loan by the Fund to the seller, collateralized by securities which are delivered to the Fund’s custodian. The fair value, including accrued interest, of the initial collateralization is required to be at least 102% of the dollar amount invested by the funds, with the value of the underlying securities marked to market daily to maintain coverage of at least 100%. Repurchase agreements are subject to the terms of Master Repurchase Agreements (MRAs) with approved counterparties (sellers). The MRAs contain various provisions, including but not limited to events of default and maintenance of collateral for repurchase agreements. In the event of default by either the seller or the Fund, certain MRAs may permit the non-defaulting party to net and close-out all transactions, if any, traded under such agreements. The Fund may sell securities it holds as collateral and apply the proceeds towards the repurchase price and any other amounts owed by the seller to the Fund in the event of default by the seller. This could involve costs or delays in addition to a loss on the securities if their value falls below the repurchase price owed by the seller. The joint repurchase agreement held by the Fund at period end, as indicated in the Statement of Investments, had been entered into on June 30, 2014.

d. Income and Deferred Taxes

It is the Fund's policy to qualify as a regulated investment company under the Internal Revenue Code. The Fund intends to distribute to shareholders substantially all of its taxable income

Semiannual Report FLG-15

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Large Cap Growth VIP Fund (continued)

1. Organization and Significant Accounting Policies (continued)

d. Income and Deferred Taxes (continued)

and net realized gains to relieve it from federal income and if applicable, excise taxes. As a result, no provision for U.S. federal income taxes is required.

The Fund may be subject to foreign taxation related to income received, capital gains on the sale of securities and certain foreign currency transactions in the foreign jurisdictions in which it invests. Foreign taxes, if any, are recorded based on the tax regulations and rates that exist in the foreign markets in which the Fund invests. When a capital gain tax is determined to apply the Fund records an estimated deferred tax liability in an amount that would be payable if the securities were disposed of on the valuation date.

The Fund recognizes the tax benefits of uncertain tax positions only when the position is “more likely than not” to be sustained upon examination by the tax authorities based on the technical merits of the tax position. As of June 30, 2014, and for all open tax years, the Fund has determined that no liability for unrecognized tax benefits is required in the Fund's financial statements related to uncertain tax positions taken on a tax return (or expected to be taken on future tax returns). Open tax years are those that remain subject to examination and are based on each tax jurisdiction statute of limitation.

e. Security Transactions, Investment Income, Expenses and Distributions

Security transactions are accounted for on trade date. Realized gains and losses on security transactions are determined on a specific identification basis. Interest income and estimated expenses are accrued daily. Dividend income is recorded on the ex-dividend date. Distributions to shareholders are recorded on the ex-dividend date and are determined according to income tax regulations (tax basis). Distributable earnings determined on a tax basis may differ from earnings recorded in accordance

with accounting principles generally accepted in the United States of America. These differences may be permanent or temporary. Permanent differences are reclassified among capital accounts to reflect their tax character. These reclassifications have no impact on net assets or the results of operations. Temporary differences are not reclassified, as they may reverse in subsequent periods.

Common expenses incurred by the Trust are allocated among the funds based on the ratio of net assets of each fund to the combined net assets of the Trust. Fund specific expenses are charged directly to the fund that incurred the expense.

Realized and unrealized gains and losses and net investment income, not including class specific expenses, are allocated daily to each class of shares based upon the relative proportion of net assets of each class. Differences in per share distributions, by class, are generally due to differences in class specific expenses.

f. Accounting Estimates

The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the amounts of income and expenses during the reporting period. Actual results could differ from those estimates.

g. Guarantees and Indemnifications

Under the Trust's organizational documents, its officers and trustees are indemnified by the Trust against certain liabilities arising out of the performance of their duties to the Trust. Additionally, in the normal course of business, the Trust, on behalf of the Fund, enters into contracts with service providers that contain general indemnification clauses. The Trust's maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Trust that have not yet occurred. Currently, the Trust expects the risk of loss to be remote.

FLG-16 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Large Cap Growth VIP Fund (continued)

2. Shares of Beneficial Interest

At June 30, 2014, there were an unlimited number of shares authorized (without par value). Transactions in the Fund's shares were as follows:

	Six Months Ended June 30, 2014						Year Ended December 31, 2013
	Shares			Amount			Shares			Amount
Class 1 Shares:
Shares sold		21,961		$	459,843			49,133		$	921,214
Shares issued in reinvestment of distributions		33,235			729,509			35,282			652,010
Shares redeemed		(157,859	)		(3,341,291	)		(333,854	)		(6,272,417	)
Net increase (decrease)		(102,663	)	$	(2,151,939	)		(249,439	)	$	(4,699,193	)
Class 2 Shares:
Shares sold		134,579		$	2,829,028			1,055,133		$	19,291,413
Shares issued in reinvestment of distributions		131,120			2,842,675			167,774			3,061,884
Shares redeemed		(2,071,584	)		(43,367,235	)		(4,595,616	)		(84,784,755	)
Net increase (decrease)		(1,805,885	)	$	(37,695,532	)		(3,372,709	)	$	(62,431,458	)

3. Transactions With Affiliates

Franklin Resources, Inc. is the holding company for various subsidiaries that together are referred to as Franklin Templeton Investments. Certain officers and trustees of the Fund are also officers and/or directors of the following subsidiaries:

Subsidiary	Affiliation
Franklin Advisers, Inc. (Advisers)	Investment manager
Franklin Templeton Services, LLC (FT Services)	Administrative manager
Franklin Templeton Distributors, Inc. (Distributors)	Principal underwriter
Franklin Templeton Investor Services, LLC (Investor Services)	Transfer agent

a. Management Fees

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

Annualized Fee Rate	Net Assets
0.750%	Up to and including $500 million
0.625%	Over $500 million, up to and including $1 billion
0.500%	In excess of $1 billion

b. Administrative Fees

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

Semiannual Report FLG-17

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Large Cap Growth VIP Fund (continued)

3. Transactions With Affiliates (continued)

c. Distribution Fees

The Board has adopted a distribution plan for Class 2 shares pursuant to Rule 12b-1 under the 1940 Act. Under the Fund's compensation distribution plan, the Fund pays Distributors for costs incurred in connection with the servicing, sale and distribution of the Fund's shares up to 0.35% per year of its average daily net assets. Some distribution fees are not charged on shares held by affiliates. The Board has agreed to limit the current rate to 0.25% per year for Class 2. The plan year, for purposes of monitoring compliance with the maximum annual plan rate, is February 1 through January 31.

d. Transfer Agent Fees

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

4. Expense Offset Arrangement

The Fund has entered into an arrangement with its custodian whereby credits realized as a result of uninvested cash balances are used to reduce a portion of the Fund’s custodian expenses. During the period ended June 30, 2014, there were no credits earned.

5. Income Taxes

For tax purposes, capital losses may be carried over to offset future capital gains. Capital loss carryforwards with no expiration, if any, must be fully utilized before those losses with expiration dates.

At December 31, 2013, the Fund had capital loss carryforwards of $ 25,430,360 expiring in 2017.

At June 30, 2014, the cost of investments and net unrealized appreciation (depreciation) for income tax purposes were as follows:

Cost of investments	$	230,050,092
Unrealized appreciation	$	91,649,892
Unrealized depreciation		(1,493,494	)
Net unrealized appreciation (depreciation)	$	90,156,398

Differences between income and/or capital gains as determined on a book basis and a tax basis are primarily due to differing treatments of wash sales.

6. Investment Transactions

Purchases and sales of investments (excluding short term securities) for the period ended June 30, 2014, aggregated $184,764,821 and $ 219,395,725, respectively.

7. Credit Facility

The Fund, together with other U.S. registered and foreign investment funds (collectively, Borrowers), managed by Franklin Templeton Investments, are borrowers in a joint syndicated senior unsecured credit facility totaling $1.5 billion (Global Credit Facility) which matures on February 13, 2015. This Global Credit Facility provides a source of funds to the Borrowers for temporary and emergency purposes, including the ability to meet future unanticipated or unusually large redemption requests.

FLG-18 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Large Cap Growth VIP Fund (continued)

Under the terms of the Global Credit Facility, the Fund shall, in addition to interest charged on any borrowings made by the Fund and other costs incurred by the Fund, pay its share of fees and expenses incurred in connection with the implementation and maintenance of the Global Credit Facility, based upon its relative share of the aggregate net assets of all of the Borrowers, including an annual commitment fee of 0.07% based upon the unused portion of the Global Credit Facility. These fees are reflected in other expenses on the Statement of Operations. During the period ended June 30, 2014, the Fund did not use the Global Credit Facility.

8. Fair Value Measurements

The Fund follows a fair value hierarchy that distinguishes between market data obtained from independent sources (observable inputs) and the Fund’s own market assumptions (unobservable inputs). These inputs are used in determining the value of the Fund’s financial instruments and are summarized in the following fair value hierarchy:

• Level 1 – quoted prices in active markets for identical financial instruments

• Level 2 – other significant observable inputs (including quoted prices for similar financial instruments, interest rates, prepayment speed, credit risk, etc.)

• Level 3 – significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of financial instruments)

The input levels are not necessarily an indication of the risk or liquidity associated with financial instruments at that level.

For movements between the levels within the fair value hierarchy, the Fund has adopted a policy of recognizing the transfers as of the date of the underlying event which caused the movement.

A summary of inputs used as of June 30, 2014, in valuing the Fund’s assets carried at fair value, is as follows:

	Level 1		Level 2		Level 3		Total
Assets:
Investments in Securities:
Equity Investmentsa	$	318,361,327	$	—	$	—	$	318,361,327
Short Term Investments		—		1,845,163		—		1,845,163
Total Investments in Securities	$	318,361,327	$	1,845,163	$	—	$	320,206,490

^aFor detailed categories, see the accompanying Statement of Investments.

9. New Accounting Pronouncements

In June 2014, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) No. 2014-11, Transfers and Servicing (Topic 860), Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures. The ASU changes the accounting for certain repurchase agreements and expands disclosure requirements related to repurchase agreements, securities lending, repurchase-to-maturity and similar transactions. The ASU is effective for interim and annual reporting periods beginning after December 15, 2014. Management is currently evaluating the impact, if any, of applying this provision.

10. Subsequent Events

The Fund has evaluated subsequent events through the issuance of the financial statements and determined that no events have occurred that require disclosure.

Semiannual Report FLG-19

Franklin Large Cap Value VIP Fund

(Formerly, Franklin Large Cap Value Securities Fund)

This semiannual report for Franklin Large Cap Value VIP Fund covers the period ended June 30, 2014.

Class 2 Performance Summary as of June 30, 2014

Franklin Large Cap Value VIP Fund – Class 2 delivered a +6.21% total return* for the six-month period ended June 30, 2014.

*The Fund has an expense reduction contractually guaranteed through at least 4/30/15 and a fee waiver associated with its investments in a Franklin Templeton money fund, contractually guaranteed through at least its current fiscal year-end. Fund investment results reflect the expense reduction and fee waiver, to the extent applicable; without these reductions, the results would have been lower.

Performance reflects the Fund’s Class 2 operating expenses, but does not include any contract fees, expenses or sales charges. If they had been included, performance would be lower. These charges and deductions, particularly for variable life policies, can have a significant effect on contract values and insurance benefits. See the contract prospectus for a complete description of these expenses, including sales charges.

Performance data represent past performance, which does not guarantee future results. Investment return and principal value will fluctuate, and you may have a gain or loss when you sell your shares. Current performance may differ from figures shown.

Semiannual Report FLV-1

FRANKLIN LARGE CAP VALUE VIP FUND

Fund Goal and Main Investments: Franklin Large Cap Value VIP Fund seeks long-term capital appreciation. Under normal market conditions, the Fund invests at least 80% of its net assets in investments of large capitalization companies, focusing on those the investment manager believes to be undervalued. For this Fund, large capitalization companies are those that are similar in size to those in the Russell 1000^® Index at the time of purchase.¹

Fund Risks: All investments involve risks, including possible loss of principal. Stock prices fluctuate, sometimes rapidly and dramatically, due to factors affecting individual companies, particular industries or sectors, or general market conditions. These price movements may result from factors affecting individual companies, industries or the securities market as a whole. The Fund is actively managed but there is no guarantee that the manager’s investment decisions will produce the desired results. The Fund’s prospectus also includes a description of the main investment risks.

Performance Overview

You can find the Fund’s six-month total return in the Performance Summary. In comparison, the Russell 1000 Value Index rose 8.28% for the same period.² Please note that the Fund employs a bottom-up stock selection process, and the managers invest in securities without regard to benchmark comparisons.

Economic and Market Overview

The U.S. economy showed some signs of recovery during the six-month period ended June 30, 2014, despite a first-quarter contraction in gross domestic product. Manufacturing activity expanded, and the unemployment rate declined to 6.1% in June 2014 from 6.7% in December 2013.³ Except for a sharp increase in March, retail sales rose at a modest pace that missed consensus expectations. The housing market had some weather-related weakness early in 2014, but home sales picked up in the spring and home prices were higher than a year ago.

The Federal Reserve Board (Fed) began reducing bond purchases by $10 billion a month in January 2014, based on earlier largely positive economic and employment data. Although economic data in early 2014 were soft, Fed Chair Janet Yellen

1. Please see Index Descriptions following the Fund Summaries.

2. Source: © 2014 Morningstar. One cannot invest directly in an index, and an index is not representative of the Fund’s portfolio. Please see Index Descriptions following the Fund Summaries.

3. Source: Bureau of Labor Statistics.

FLV-2 Semiannual Report

FRANKLIN LARGE CAP VALUE VIP FUND

kept the pace of asset-purchase tapering intact while adopting a more qualitative approach to rate-hike guidance. However, the Fed pledged to keep interest rates low for a considerable time after the asset-purchase program ends, depending on inflation and employment trends. In June, the Fed lowered projections for near- and long-term economic growth even as it maintained the pace of tapering.

Investors’ confidence grew as corporate profits rose and generally favorable economic data indicated continued recovery despite brief sell-offs when many investors reacted to the Fed’s statements, political instability in certain emerging markets and China’s slowing economy. U.S. stocks continued to gain for the six-months under review as the Standard & Poor’s^® 500 Index and Dow Jones Industrial Average reached all-time highs.¹

Investment Strategy

Although this report covers a six-month period, our investment horizon aims for longer term results. We seek to invest in securities of large-capitalization companies that we believe are selling below their underlying worth and hold them until they reach what we believe is their fair market value. Our aim is to construct a diversified portfolio of fundamentally sound companies purchased at attractive prices, often when they are out of favor with other investors for reasons we believe are temporary. Portfolio securities are selected without regard to benchmark comparisons and are chosen based on fundamental, bottom-up research focusing on several criteria, such as low price relative to earnings, cash flow or book value. We also consider stocks with recent sharp price declines that we feel still have significant growth potential or that possess valuable intangibles not reflected in the stock price.

Manager’s Discussion

Individual contributors to absolute performance included Alcoa, Baker Hughes and Corning. The stock price of Alcoa, an aluminum manufacturer, reacted favorably to the prospect of higher aluminum prices that may be driven by a more favorable global supply and demand balance. Baker Hughes, an oilfield services company, reported better than expected earnings results as market conditions improved in North America. Results for Corning, a specialty glass and ceramics manufacturer, were positive amid an improved capital allocation strategy and the company’s announcement of an accelerated share buyback program.

Top 10 Holdings
6/30/14
Company Sector/Industry	% of Total Net Assets
Corning Inc. Technology Hardware & Equipment		2.3%
Prudential Financial Inc. Insurance		2.2%
MetLife Inc. Insurance		2.2%
Alcoa Inc. Materials		2.1%
Johnson Controls Inc. Automobiles & Components		2.1%
Gilead Sciences Inc. Pharmaceuticals, Biotechnology & Life Sciences		2.1%
The Allstate Corp. Insurance		2.0%
Eaton Corp. PLC Capital Goods		1.9%
Baker Hughes Inc. Energy		1.9%
Citigroup Inc. Banks		1.9%

The dollar value, number of shares or principal amount, and names of all portfolio holdings are listed in the Fund’s Statement of Investments.

Detractors from performance included Citigroup, State Street and Bunge. Citigroup, a financial services company, declined amid weaker trading activity in fixed income and currencies as a result of global uncertainty. Shares of State Street, an institutional financial services provider, suffered as earnings were negatively affected by an issuance of preferred equity to optimize the company’s capital structure. Bunge, a global agribusiness and food company, reported a sizable trading loss reflected in its first-quarter earnings results.

We initiated six new positions: CVS Caremark, a drug store operator; Teradata, an analytic data solutions provider; Principal Financial Group, a global financial services firm; First Solar, a manufacturer and designer of solar modules and solutions; Symantec, an information technology security solutions provider; and Progressive, a property and casualty insurer. We added to our holdings in Abbott Laboratories, Capital One Financial and Family Dollar Stores, among others. We liquidated our position in Knowles, which we received from a spin-off of Dover, and reduced a number of holdings including Gilead Sciences, Prudential Financial and the aforementioned Citigroup.

Semiannual Report FLV-3

FRANKLIN LARGE CAP VALUE VIP FUND

Thank you for your participation in Franklin Large Cap Value VIP Fund.

The foregoing information reflects our analysis, opinions and portfolio holdings as of June 30, 2014, the end of the reporting period. The way we implement our main investment strategies and the resulting portfolio holdings may change depending on factors such as market and economic conditions. These opinions may not be relied upon as investment advice or an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but the investment manager makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.

FLV-4 Semiannual Report

FRANKLIN LARGE CAP VALUE VIP FUND

Class 2 Fund Expenses

As an investor in a variable insurance contract (Contract) that indirectly provides for investment in an underlying mutual fund, you can incur transaction and/or ongoing expenses at both the Fund level and the Contract level.

• Transaction expenses can include sales charges (loads) on purchases, surrender fees, transfer fees and premium taxes.

• Ongoing expenses can include management fees, distribution and service (12b-1) fees, contract fees, annual maintenance fees, mortality and expense risk fees and other fees and expenses. All mutual funds and Contracts have some types of ongoing expenses.

The expenses shown in the table are meant to highlight ongoing expenses at the Fund level only and do not include ongoing expenses at the Contract level, or transaction expenses at either the Fund or Contract levels. While the Fund does not have transaction expenses, if the transaction and ongoing expenses at the Contract level were included, the expenses shown below would be higher. You should consult your Contract prospectus or disclosure document for more information.

The table shows Fund-level ongoing expenses and can help you understand these expenses and compare them with those of other mutual funds offered through the Contract. The table assumes a $1,000 investment held for the six months indicated. Please refer to the Fund prospectus for additional information on operating expenses.

Actual Fund Expenses

The first line (Actual) of the table provides actual account values and expenses. The “Ending Account Value” is derived from the Fund’s actual return, which includes the effect of ongoing Fund expenses, but does not include the effect of ongoing Contract expenses.

You can estimate the Fund-level expenses you incurred during the period by following these steps. Of course, your account value and expenses will differ from those in this illustration:

1. Divide your account value by $1,000.

If an account had an $8,600 value, then $8,600 ÷ $1,000 = 8.6.

2. Multiply the result by the number under the heading “Fund-Level Expenses Incurred During Period.”

If Fund-Level Expenses Incurred During Period were $7.50, then 8.6 × $7.50 = $64.50.

In this illustration, the estimated expenses incurred this period at the Fund level are $64.50.

Hypothetical Example for Comparison with Other Mutual Funds

Information in the second line (Hypothetical) of the table can help you compare ongoing expenses of the Fund with those of other mutual funds offered through the Contract. This information may not be used to estimate the actual ending account balance or expenses you incurred during the period. The hypothetical “Ending Account Value” is based on the Fund’s actual expense ratio and an assumed 5% annual rate of return before expenses, which does not represent the Fund’s actual return. The figure under the heading “Fund-Level Expenses Incurred During Period” shows the hypothetical expenses your account would have incurred under this scenario. You can compare this figure with the 5% hypothetical examples that appear in shareholder reports of other funds offered through a Contract.

Class 2	Beginning Account Value 1/1/14		Ending Account Value 6/30/14		Fund-Level Expenses Incurred During Period* 1/1/14–6/30/14
Actual		$1,000		$1,062.10		$4.60
Hypothetical (5% return before expenses)		$1,000		$1,020.33		$4.51

*Expenses are calculated using the most recent six-month annualized expense ratio, net of expense waivers, for the Fund’s Class 2 shares (0.90%), which does not include any ongoing expenses of the Contract for which the Fund is an investment option, multiplied by the average account value over the period, multiplied by 181/365 to reflect the one-half year period.

Semiannual Report FLV-5

SUPPLEMENT DATED MAY 1, 2014

TO THE PROSPECTUS DATED MAY 1, 2014

OF

FRANKLIN LARGE CAP VALUE VIP FUND

(A series of Franklin Templeton Variable Insurance Products Trust)

The prospectus is amended as follows:

I.  The “Fund Summaries – Portfolio Managers” section on page FLV-S4 is revised to read as follows:

Portfolio Managers

WILLIAM J. LIPPMAN President of Advisory Services and portfolio manager of the Fund since inception (2005).

JAKOV STIPANOV, CFA Portfolio Manager of Advisory Services and portfolio manager of the Fund since May 2014.

DONALD G. TAYLOR, CPA Chief Investment Officer of Advisory Services and portfolio manager of the Fund since inception (2005).

BRUCE C. BAUGHMAN, CPA Senior Vice President of Advisory Services and portfolio manager of the Fund since inception (2005).

II.  The “Fund Details – Management” section disclosure concerning the portfolio management team beginning on page FLV-D5 is revised to read as follows:

The Fund is managed by a team of dedicated professionals focused on investments of large capitalization companies believed undervalued. The portfolio managers of the team are as follows:

WILLIAM J. LIPPMAN President of Advisory Services Mr. Lippman assumed the duties of lead portfolio manager in 2007 and has been a portfolio manager of the Fund since its inception (2005). He has primary responsibility for the investments of the Fund. He has final authority over all aspects of the Fund’s investment portfolio, including but not limited to, purchases and sales of individual securities, portfolio risk assessment, and the management of daily cash balances in accordance with anticipated investment management requirements. The degree to which he may perform these functions, and the nature of these functions, may change from time to time. He joined Franklin Templeton Investments in 1988.

FLV-6

JAKOV STIPANOV, CFA Portfolio Manager of Advisory Services	Mr. Stipanov has been a portfolio manager of the Fund since May 2014, providing support to the lead portfolio manager(s) as needed. He joined Franklin Templeton Investments in 2010. Prior to joining Franklin Templeton Investments he served as an equity analyst with Systematic Financial where he conducted company-specific research spanning the market capitalization spectrum. He was a portfolio assistant with Scudder, Stevens and Clark and an analyst with Stein Roe Farnham, where he conducted fundamental research coverage on the technology sector.
DONALD G. TAYLOR, CPA Chief Investment Officer of Advisory Services	Mr. Taylor has been a portfolio manager of the Fund since its inception (2005), providing support to the lead portfolio manager(s) as needed. He joined Franklin Templeton Investments in 1996.
BRUCE C. BAUGHMAN, CPA Senior Vice President of Advisory Services	Mr. Baughman has been a portfolio manager of the Fund since its inception (2005), providing support to the lead portfolio manager(s) as needed. He joined Franklin Templeton Investments in 1988.

Please keep this supplement with your prospectus for future reference

FLV-7

SUPPLEMENT DATED AUGUST 1, 2014

TOTHE PROSPECTUS DATED MAY 1, 2014

OF

FRANKLIN LARGE CAP VALUE VIP FUND

(A series of Franklin Templeton Variable Insurance Products Trust)

The prospectus is amended to add the following:

On July 16, 2014, the Board of Trustees of Franklin Templeton Variable Insurance Products Trust (Trust) on behalf of Franklin Large Cap Value VIP Fund (Fund) approved a proposal to terminate and liquidate the Fund. The liquidation is anticipated to occur on or about November 7, 2014, but may be delayed if unforeseen circumstances arise.

Effective at the close of market on October 1, 2014, the Fund is closed to all new investments.

Contract owners should refer to documents provided by their insurance companies concerning the effect of the liquidation and any steps they may need to take. In addition, in considering new purchases or transfers, contract owners may want to refer to their contract and Trust prospectuses or consult with their investment representatives to consider other investment options.

Please keep this supplement for future reference.

FLV-8

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Financial Highlights

Franklin Large Cap Value VIP Fund

	Six Months Ended June 30, 2014 (unaudited)			Year Ended December 31,
				2013			2012			2011			2010			2009
Class 2
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$14.82			$11.07			$9.83			$10.50			$9.36			$7.54
Income from investment operationsa:
Net investment incomeb		0.08			0.14			0.15			0.14			0.12			0.17
Net realized and unrealized gains (losses)		0.84			3.79			1.25			(0.69	)		1.19			1.81
Total from investment operations		0.92			3.93			1.40			(0.55	)		1.31			1.98
Less distributions from net investment income		(0.18	)		(0.18	)		(0.16	)		(0.12	)		(0.17	)		(0.16	)
Net asset value, end of period		$15.56			$14.82			$11.07			$9.83			$10.50			$9.36
Total returnc		6.21%			35.75%			14.44%			(5.26)%			14.27%			26.76%
Ratios to average net assetsd
Expenses before waiver and payments by affiliates		1.42%			1.41%			1.42%			1.39%			1.40%			1.38%
Expenses net of waiver and payments by affiliates		0.90%			0.90%			0.90%			0.90%			0.90%			0.90%
Net investment income		1.05%			1.08%			1.42%			1.35%			1.25%			2.15%
Supplemental data
Net assets, end of period (000’s)		$34,493			$38,813			$31,148			$34,091			$40,183			$35,892
Portfolio turnover rate		4.78%			10.75%			29.50%			20.31%			13.91%			15.64%

^aThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.

^bBased on average daily shares outstanding.

^cTotal return does not include fees, charges or expenses imposed by the variable annuity and life insurance contracts for which the Franklin Templeton Variable Insurance Products Trust serves as an underlying investment vehicle. Total return is not annualized for periods less than one year.

^dRatios are annualized for periods less than one year.

The accompanying notes are an integral part of these financial statements.    |   Semiannual Report FLV-9

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Statement of Investments, June 30, 2014 (unaudited)

Franklin Large Cap Value VIP Fund
		Shares		Value
	Common Stocks 96.2%
	Automobiles & Components 3.6%
	BorgWarner Inc.		7,800	$	508,482
	Johnson Controls Inc.		14,500		723,985
					1,232,467
	Banks 7.7%
	Bank of America Corp.		22,500		345,825
	Citigroup Inc.		13,700		645,270
	Comerica Inc.		11,000		551,760
	KeyCorp		42,000		601,860
	U.S. Bancorp		11,600		502,512
					2,647,227
	Capital Goods 13.3%
	3M Co.		3,900		558,636
	Dover Corp.		5,500		500,225
	Eaton Corp. PLC		8,700		671,466
	General Dynamics Corp.		4,100		477,855
	General Electric Co.		16,600		436,248
	Illinois Tool Works Inc.		4,600		402,776
	Parker Hannifin Corp.		4,300		540,639
	Rockwell Automation Inc.		2,300		287,868
	Stanley Black & Decker Inc.		2,500		219,550
	United Technologies Corp.		4,300		496,435
					4,591,698
	Consumer Durables & Apparel 1.3%
	NIKE Inc., B		6,000		465,300
	Consumer Services 0.6%
	McDonald’s Corp.		2,000		201,480
	Diversified Financials 3.9%
a	Berkshire Hathaway Inc., A		1		189,900
	Capital One Financial Corp.		3,300		272,580
	Northern Trust Corp.		4,500		288,945
	State Street Corp.		8,600		578,436
					1,329,861
	Energy 16.5%
	Apache Corp.		5,200		523,224
	Baker Hughes Inc.		8,800		655,160
	Chevron Corp.		3,200		417,760
	ConocoPhillips		6,200		531,526
	Denbury Resources Inc.		17,000		313,820
	Devon Energy Corp.		7,200		571,680
	Ensco PLC, A		6,800		377,876
	Exxon Mobil Corp.		4,700		473,196
	HollyFrontier Corp.		6,500		283,985
	Noble Corp. PLC		8,000		268,480
	Occidental Petroleum Corp.		4,300		441,309
	Phillips 66		2,700		217,161
	Schlumberger Ltd.		1,500		176,925
	Valero Energy Corp.		8,500		425,850
					5,677,952
					��

FLV-10 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Large Cap Value VIP Fund (continued)

		Shares		Value
	Common Stocks (continued)
	Food & Staples Retailing 2.6%
	CVS Caremark Corp.		4,000	$	301,480
	Wal-Mart Stores Inc.		1,900		142,633
	Walgreen Co.		6,200		459,606
					903,719
	Food, Beverage & Tobacco 2.9%
	Archer-Daniels-Midland Co.		10,500		463,155
	Bunge Ltd.		7,300		552,172
					1,015,327
	Health Care Equipment & Services 3.0%
	Abbott Laboratories		5,700		233,130
	Becton, Dickinson and Co.		4,600		544,180
	Covidien PLC		2,800		252,504
					1,029,814
	Household & Personal Products 0.9%
	The Procter & Gamble Co.		3,800		298,642
	Insurance 10.4%
	Aflac Inc.		9,100		566,475
	The Allstate Corp.		12,000		704,640
	The Chubb Corp.		4,100		377,897
	MetLife Inc.		13,400		744,504
	Principal Financial Group Inc.		2,000		100,960
	The Progressive Corp.		3,100		78,616
	Prudential Financial Inc.		8,600		763,422
	The Travelers Cos. Inc.		2,800		263,396
					3,599,910
	Materials 5.3%
	Air Products and Chemicals Inc.		1,700		218,654
	Alcoa Inc.		49,300		734,077
	Nucor Corp.		12,300		605,775
	Praxair Inc.		2,000		265,680
					1,824,186
	Pharmaceuticals, Biotechnology & Life Sciences 6.2%
a	Gilead Sciences Inc.		8,600		713,026
	Merck & Co. Inc.		10,000		578,500
	Pfizer Inc.		14,900		442,232
	Teva Pharmaceutical Industries Ltd., ADR (Israel)		7,500		393,150
					2,126,908
	Retailing 5.0%
	Family Dollar Stores Inc.		3,200		211,648
	The Home Depot Inc.		6,200		501,952
	Nordstrom Inc.		5,900		400,787
a	Office Depot Inc.		14,000		79,660
	Target Corp.		9,300		538,935
					1,732,982
	Semiconductors & Semiconductor Equipment 2.2%
a	First Solar Inc.		1,500		106,590

Semiannual Report FLV-11

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Large Cap Value VIP Fund (continued)

		Shares		Value
	Common Stocks (continued)
	Semiconductors & Semiconductor Equipment (continued)
	Maxim Integrated Products Inc.		9,300	$	314,433
	Microchip Technology Inc.		7,000		341,670
					762,693
	Software & Services 4.3%
	International Business Machines Corp.		2,300		416,921
	Microsoft Corp.		5,500		229,350
	Symantec Corp.		4,000		91,600
a	Teradata Corp.		4,375		175,875
	Xerox Corp.		47,100		585,924
					1,499,670
	Technology Hardware & Equipment 5.0%
	Cisco Systems Inc.		17,400		432,390
	Corning Inc.		35,500		779,225
	EMC Corp.		5,300		139,602
	QUALCOMM Inc.		3,700		293,040
	TE Connectivity Ltd.		1,500		92,760
					1,737,017
	Transportation 1.2%
	Norfolk Southern Corp.		4,100		422,423
	Utilities 0.3%
	Exelon Corp.		2,500		91,200
	Total Common Stocks (Cost $19,331,684)				33,190,476
	Short Term Investments (Cost $1,480,453) 4.3%
	Money Market Funds 4.3%
a,b	Institutional Fiduciary Trust Money Market Portfolio		1,480,453		1,480,453
	Total Investments (Cost $20,812,137) 100.5%				34,670,929
	Other Assets, less Liabilities (0.5)%				(177,768	)
	Net Assets 100.0%			$	34,493,161

See Abbreviations on page FLV-21.

^aNon-income producing.

^bSee Note 3(e) regarding investments in the Institutional Fiduciary Trust Money Market Portfolio.

FLV-12 Semiannual Report   |    The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Financial Statements

Statement of Assets and Liabilities

June 30, 2014 (unaudited)

	Franklin Large Cap Value VIP Fund
Assets:
Investments in securities:
Cost - Unaffiliated issuers		$19,331,684
Cost - Sweep Money Fund (Note 3e)		1,480,453
Total cost of investments		$20,812,137
Value - Unaffiliated issuers		$33,190,476
Value - Sweep Money Fund (Note 3e)		1,480,453
Total value of investments		34,670,929
Receivables:
Investment securities sold		41,989
Capital shares sold		16,267
Dividends		43,232
Total assets		34,772,417
Liabilities:
Payables:
Investment securities purchased		100,001
Capital shares redeemed		125,975
Management fees		13,583
Distribution fees		14,247
Professional fees		16,113
Accrued expenses and other liabilities		9,337
Total liabilities		279,256
Net assets, at value		$34,493,161
Net assets consist of:
Paid-in capital		$22,872,514
Undistributed net investment income		193,990
Net unrealized appreciation (depreciation)		13,858,792
Accumulated net realized gain (loss)		(2,432,135	)
Net assets, at value		$34,493,161
Class 2:
Net assets, at value		$34,493,161
Shares outstanding		2,217,353
Net asset value and maximum offering price per share		$         15.56

The accompanying notes are an integral part of these financial statements.    |   Semiannual Report FLV-13

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL STATEMENTS

Statement of Operations

for the six months ended June 30, 2014 (unaudited)

	Franklin Large Cap Value VIP Fund
Investment income:
Dividends	$	339,337
Expenses:
Management fees (Note 3a)		173,990
Distribution fees: Class 2 (Note 3c)		43,438
Custodian fees (Note 4)		152
Reports to shareholders		7,652
Professional fees		17,355
Other		3,759
Total expenses		246,346
Expenses waived/paid by affiliates (Note 3e and 3f)		(89,814	)
Net expenses		156,532
Net investment income		182,805
Realized and unrealized gains (losses):
Net realized gain (loss) from investments		2,890,225
Net change in unrealized appreciation (depreciation) on investments		(1,118,246	)
Net realized and unrealized gain (loss)		1,771,979
Net increase (decrease) in net assets resulting from operations	$	1,954,784

FLV-14 Semiannual Report   |    The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL STATEMENTS

Statements of Changes in Net Assets

	Franklin Large Cap Value VIP Fund
	Six Months Ended June 30, 2014 (unaudited)			Year Ended December 31, 2013
Increase (decrease) in net assets:
Operations:
Net investment income	$	182,805		$	388,717
Net realized gain (loss) from investments		2,890,225			1,635,761
Net change in unrealized appreciation (depreciation) on investments		(1,118,246	)		8,779,216
Net increase (decrease) in net assets resulting from operations		1,954,784			10,803,694
Distributions to shareholders from net investment income: Class 2		(386,881	)		(481,480	)
Capital share transactions: Class 2 (Note 2)		(5,887,509	)		(2,657,434	)
Net increase (decrease) in net assets		(4,319,606	)		7,664,780
Net assets:
Beginning of period		38,812,767			31,147,987
End of period	$	34,493,161		$	38,812,767
Undistributed net investment income included in net assets:
End of period	$	193,990		$	398,066

The accompanying notes are an integral part of these financial statements.    |   Semiannual Report FLV-15

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Notes to Financial Statements (unaudited)

Franklin Large Cap Value VIP Fund

1. Organization and Significant Accounting Policies

Franklin Templeton Variable Insurance Products Trust (Trust) is registered under the Investment Company Act of 1940, as amended, (1940 Act) as an open-end management investment company, consisting of twenty separate funds and applies the specialized accounting and reporting guidance in U.S. Generally Accepted Accounting Principles (U.S. GAAP). The Franklin Large Cap Value VIP Fund (Fund) is included in this report. The financial statements of the remaining funds in the Trust are presented separately. Shares of the Fund are generally sold only to insurance company separate accounts to fund the benefits of variable life insurance policies or variable annuity contracts. At June 30, 2014, 99.13% of the Fund’s shares were held through one insurance company. Investment activities of these insurance company separate accounts could have a material impact on the Fund. The Fund offers one class of shares: Class 2.

Effective May 1, 2014, the Franklin Large Cap Value Securities Fund was renamed the Franklin Large Cap Value VIP Fund.

The following summarizes the Fund’s significant accounting policies.

a. Financial Instrument Valuation

The Fund’s investments in financial instruments are carried at fair value daily. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. The Fund calculates the net asset value (NAV) per share at the close of the New York Stock Exchange (NYSE), generally at 4 p.m. Eastern time (NYSE close) on each day the NYSE is open for trading. Under compliance policies and procedures approved by the Trust’s Board of Trustees (the Board), the Fund’s administrator has responsibility for oversight of valuation, including leading the cross-functional Valuation and Liquidity Oversight Committee (VLOC). The VLOC provides administration and oversight of the Fund’s valuation policies and procedures, which are approved annually by the Board. Among other things, these procedures allow the Fund to utilize independent pricing services, quotations from securities and financial instrument dealers, and other market sources to determine fair value.

Equity securities listed on an exchange or on the NASDAQ National Market System are valued at the last quoted sale price or the official closing price of the day, respectively. Foreign equity securities are valued as of the close of trading on the foreign stock exchange on which the security is primarily traded or

as of the NYSE close, whichever is earlier. The value is then converted into its U.S. dollar equivalent at the foreign exchange rate in effect at the NYSE close on the day that the value of the security is determined. Over-the-counter (OTC) securities are valued within the range of the most recent quoted bid and ask prices. Securities that trade in multiple markets or on multiple exchanges are valued according to the broadest and most representative market. Certain equity securities are valued based upon fundamental characteristics or relationships to similar securities. Investments in open-end mutual funds are valued at the closing net asset value.

The Fund has procedures to determine the fair value of financial instruments for which market prices are not reliable or readily available. Under these procedures, the VLOC convenes on a regular basis to review such financial instruments and considers a number of factors, including significant unobservable valuation inputs, when arriving at fair value. The VLOC primarily employs a market-based approach which may use related or comparable assets or liabilities, recent transactions, market multiples, book values, and other relevant information for the investment to determine the fair value of the investment. An income-based valuation approach may also be used in which the anticipated future cash flows of the investment are discounted to calculate fair value. Discounts may also be applied due to the nature or duration of any restrictions on the disposition of the investments. Due to the inherent uncertainty of valuations of such investments, the fair values may differ significantly from the values that would have been used had an active market existed. The VLOC employs various methods for calibrating these valuation approaches including a regular review of key inputs and assumptions, transactional back-testing or disposition analysis, and reviews of any related market activity.

Trading in securities on foreign securities stock exchanges and OTC markets may be completed before the daily NYSE close. In addition, trading in certain foreign markets may not take place on every NYSE business day. Occasionally, events occur between the time at which trading in a foreign security is completed and the close of the NYSE that might call into question the reliability of the value of a portfolio security held by the Fund. As a result, differences may arise between the value of the Fund’s portfolio securities as determined at the foreign market close and the latest indications of value at the close of the NYSE. In order to minimize the potential for these differences, the VLOC monitors price movements following the close of trading in foreign stock markets through a series of country

FLV-16 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Large Cap Value VIP Fund (continued)

specific market proxies (such as baskets of American Depositary Receipts, futures contracts and exchange traded funds). These price movements are measured against established trigger thresholds for each specific market proxy to assist in determining if an event has occurred that may call into question the reliability of the values of the foreign securities held by the Fund. If such an event occurs, the securities may be valued using fair value procedures, which may include the use of independent pricing services.

Also, when the last day of the reporting period is a non-business day, certain foreign markets may be open on those days that the NYSE is closed, which could result in differences between the value of the Fund’s portfolio securities on the last business day and the last calendar day of the reporting period. Any significant security valuation changes due to an open foreign market are adjusted and reflected by the Fund for financial reporting purposes.

b. Income and Deferred Taxes

It is the Fund’s policy to qualify as a regulated investment company under the Internal Revenue Code. The Fund intends to distribute to shareholders substantially all of its taxable income and net realized gains to relieve it from federal income and if applicable, excise taxes. As a result, no provision for U.S. federal income taxes is required.

The Fund may be subject to foreign taxation related to income received, capital gains on the sale of securities and certain foreign currency transactions in the foreign jurisdictions in which it invests. Foreign taxes, if any, are recorded based on the tax regulations and rates that exist in the foreign markets in which the Fund invests. When a capital gain tax is determined to apply the Fund records an estimated deferred tax liability in an amount that would be payable if the securities were disposed of on the valuation date.

The Fund recognizes the tax benefits of uncertain tax positions only when the position is “more likely than not” to be sustained upon examination by the tax authorities based on the technical merits of the tax position. As of June 30, 2014, and for all open tax years, the Fund has determined that no liability for unrecognized tax benefits is required in the Fund’s financial statements related to uncertain tax positions taken on a tax return (or expected to be taken on future tax returns). Open tax years are those that remain subject to examination and are based on each tax jurisdiction statute of limitation.

c. Security Transactions, Investment Income, Expenses and Distributions

Security transactions are accounted for on trade date. Realized gains and losses on security transactions are determined on a specific identification basis. Estimated expenses are accrued daily. Dividend income is recorded on the ex-dividend date except that certain dividends from foreign securities are recognized as soon as the Fund is notified of the ex-dividend date. Distributions to shareholders are recorded on the ex-dividend date and are determined according to income tax regulations (tax basis). Distributable earnings determined on a tax basis may differ from earnings recorded in accordance with accounting principles generally accepted in the United States of America. These differences may be permanent or temporary. Permanent differences are reclassified among capital accounts to reflect their tax character. These reclassifications have no impact on net assets or the results of operations. Temporary differences are not reclassified, as they may reverse in subsequent periods.

Common expenses incurred by the Trust are allocated among the funds based on the ratio of net assets of each fund to the combined net assets of the Trust. Fund specific expenses are charged directly to the fund that incurred the expense.

d. Accounting Estimates

The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the amounts of income and expenses during the reporting period. Actual results could differ from those estimates.

e. Guarantees and Indemnifications

Under the Trust’s organizational documents, its officers and trustees are indemnified by the Trust against certain liabilities arising out of the performance of their duties to the Trust. Additionally, in the normal course of business, the Trust, on behalf of the Fund, enters into contracts with service providers that contain general indemnification clauses. The Trust’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Trust that have not yet occurred. Currently, the Trust expects the risk of loss to be remote.

Semiannual Report FLV-17

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Large Cap Value VIP Fund (continued)

2. Shares of Beneficial Interest

At June 30, 2014, there were an unlimited number of shares authorized (without par value). Transactions in the Fund’s shares were as follows:

	Six Months Ended June 30, 2014						Year Ended December 31, 2013
	Shares			Amount			Shares			Amount
Class 2 Shares:
Shares sold		166,970		$	2,523,157			883,791		$	11,420,212
Shares issued in reinvestment of distributions		25,073			386,881			37,912			481,480
Shares redeemed		(594,296	)		(8,797,547	)		(1,116,968	)		(14,559,126	)
Net increase (decrease)		(402,253	)	$	(5,887,509	)		(195,265	)	$	(2,657,434	)

3. Transactions With Affiliates

Franklin Resources, Inc. is the holding company for various subsidiaries that together are referred to as Franklin Templeton Investments. Certain officers and trustees of the Fund are also officers and/or directors of the following subsidiaries:

Subsidiary	Affiliation
Franklin Advisory Services, LLC (Advisory Services)	Investment manager
Franklin Templeton Services, LLC (FT Services)	Administrative manager
Franklin Templeton Distributors, Inc. (Distributors)	Principal underwriter
Franklin Templeton Investor Services, LLC (Investor Services)	Transfer agent

a. Management Fees

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

Annualized Fee Rate	Net Assets
1.000%	Up to and including $500 million
0.900%	Over $500 million, up to and including $1 billion
0.850%	Over $1 billion, up to and including $1.5 billion
0.800%	Over $1.5 billion, up to and including $6.5 billion
0.775%	Over $6.5 billion, up to and including $11.5 billion
0.750%	Over $11.5 billion, up to and including $16.5 billion
0.740%	Over $16.5 billion, up to and including $19 billion
0.730%	Over $19 billion, up to and including $21.5 billion
0.720%	In excess of $21.5 billion

b. Administrative Fees

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

FLV-18 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Large Cap Value VIP Fund (continued)

c. Distribution Fees

The Board has adopted a distribution plan for Class 2 shares pursuant to Rule 12b-1 under the 1940 Act. Under the Fund’s compensation distribution plan, the Fund pays Distributors for costs incurred in connection with the servicing, sale and distribution of the Fund’s shares up to 0.35% per year of its average daily net assets. Some distribution fees are not charged on shares held by affiliates. The Board has agreed to limit the current rate to 0.25% per year for Class 2. The plan year, for purposes of monitoring compliance with the maximum annual plan rate, is February 1 through January 31.

d. Transfer Agent Fees

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

e. Investment in Institutional Fiduciary Trust Money Market Portfolio

The Fund invests in the Institutional Fiduciary Trust Money Market Portfolio (Sweep Money Fund), an affiliated open-end management investment company. Management fees paid by the Fund are waived on assets invested in the Sweep Money Fund, in an amount not to exceed the management and administrative fees paid directly or indirectly by the Sweep Money Fund, as noted on the Statement of Operations. Prior to January 1, 2014 the waiver was accounted for as a reduction to management fees.

f. Waiver and Expense Reimbursements

Advisory Services has contractually agreed in advance to waive or limit its fees and to assume as its own expense certain expenses otherwise payable by the Fund so that the expenses (excluding distribution fees, and acquired fund fees and expenses) do not exceed 0.65% (other than certain non-routine expenses or costs, including those relating to litigation, indemnification, reorganizations, and liquidations) until April 30, 2015.

4. Expense Offset Arrangement

The Fund has entered into an arrangement with its custodian whereby credits realized as a result of uninvested cash balances are used to reduce a portion of the Fund’s custodian expenses. During the period ended June 30, 2014, there were no credits earned.

5. Income Taxes

For tax purposes, capital losses may be carried over to offset future capital gains. Capital loss carryforwards with no expiration, if any, must be fully utilized before those losses with expiration dates.

At December 31, 2013, capital loss carryforwards were as follows:

Capital loss carryforwards subject to expiration:
2016	$1,797,418
2017	2,320,965
2018	1,173,534
	$5,291,917

At June 30, 2014, the cost of investments and net unrealized appreciation (depreciation) for income tax purposes were as follows:

Cost of investments	$20,840,113
Unrealized appreciation	$14,019,170
Unrealized depreciation	(188,354)
Net unrealized appreciation (depreciation)	$13,830,816

Semiannual Report FLV-19

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Large Cap Value VIP Fund (continued)

5. Income Taxes (continued)

Differences between income and/or capital gains as determined on a book basis and a tax basis are primarily due to differing treatment of wash sales.

6. Investment Transactions

Purchases and sales of investments (excluding short term securities) for the period ended June 30, 2014, aggregated $1,635,417 and $7,882,536, respectively.

7. Credit Facility

The Fund, together with other U.S. registered and foreign investment funds (collectively, Borrowers), managed by Franklin Templeton Investments, are borrowers in a joint syndicated senior unsecured credit facility totaling $1.5 billion (Global Credit Facility) which matures on February 13, 2015. This Global Credit Facility provides a source of funds to the Borrowers for temporary and emergency purposes, including the ability to meet future unanticipated or unusually large redemption requests.

Under the terms of the Global Credit Facility, the Fund shall, in addition to interest charged on any borrowings made by the Fund and other costs incurred by the Fund, pay its share of fees and expenses incurred in connection with the implementation and maintenance of the Global Credit Facility, based upon its relative share of the aggregate net assets of all of the Borrowers, including an annual commitment fee of 0.07% based upon the unused portion of the Global Credit Facility. These fees are reflected in other expenses on the Statement of Operations. During the period ended June 30, 2014, the Fund did not use the Global Credit Facility.

8. Fair Value Measurements

The Fund follows a fair value hierarchy that distinguishes between market data obtained from independent sources (observable inputs) and the Fund’s own market assumptions (unobservable inputs). These inputs are used in determining the value of the Fund’s financial instruments and are summarized in the following fair value hierarchy:

• Level 1 – quoted prices in active markets for identical financial instruments

• Level 2 – other significant observable inputs (including quoted prices for similar financial instruments, interest rates, prepayment speed, credit risk, etc.)

• Level 3 – significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of financial instruments)

The input levels are not necessarily an indication of the risk or liquidity associated with financial instruments at that level.

For movements between the levels within the fair value hierarchy, the Fund has adopted a policy of recognizing the transfers as of the date of the underlying event which caused the movement.

At June 30, 2014, all of the Fund’s investments in financial instruments carried at fair value were valued using Level 1inputs. For detailed categories, see the accompanying Statement of Investments.

9. New Accounting Pronouncements

In June 2014, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) No. 2014-11, Transfers and Servicing (Topic 860), Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures. The ASU changes the accounting for certain repurchase agreements and expands disclosure requirements related to repurchase agreements, securities lending, repurchase-to-maturity and similar transactions. The ASU is effective for interim and annual reporting periods beginning after December 15, 2014. Management is currently evaluating the impact, if any, of applying this provision.

FLV-20 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Large Cap Value VIP Fund (continued)

10. Subsequent Events

The Fund has evaluated subsequent events through the issuance of the financial statements and determined that no events have occurred that require disclosure, except for the following:

On July 16, 2014, the Board approved a proposal to terminate and liquidate the Fund. The Fund is scheduled to liquidate on or about November 7, 2014.

Abbreviations

Selected Portfolio:
ADR	American Depositary Receipt

Semiannual Report FLV-21

Franklin Mutual Global Discovery VIP Fund

(Formerly, Mutual Global Discovery Securities Fund)

We are pleased to bring you Franklin Mutual Global Discovery VIP Fund’s

semiannual report for the period ended June 30, 2014.

Class 2 Performance Summary as of June 30, 2014

Franklin Mutual Global Discovery VIP Fund – Class 2 delivered a +7.22% total return for the six-month period ended June 30, 2014.

Performance reflects the Fund’s Class 2 operating expenses, but does not include any contract fees, expenses or sales charges. If they had been included, performance would be lower. These charges and deductions, particularly for variable life policies, can have a significant effect on contract values and insurance benefits. See the contract prospectus for a complete description of these expenses, including sales charges.

Performance data represent past performance, which does not guarantee future results. Investment return and principal value will fluctuate, and you may have a gain or loss when you sell your shares. Current performance may differ from figures shown.

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FRANKLIN MUTUAL GLOBAL DISCOVERY VIP FUND

Fund Goal and Main Investments: Franklin Mutual Global Discovery VIP Fund seeks capital appreciation. Under normal market conditions, the Fund invests primarily in U.S. and foreign equity securities that the investment manager believes are undervalued.

Fund Risks: All investments involve risks, including possible loss of principal. Value securities may not increase in price as anticipated, or may decline further in value. The Fund’s investments in foreign securities involve certain risks including currency fluctuations, and economic and political uncertainties. Smaller company stocks have exhibited greater price volatility than larger company stocks, particularly over the short term. The Fund’s investments in companies engaged in mergers, reorganizations or liquidations also involve special risks as pending deals may not be completed on time or on favorable terms. The Fund may invest in lower rated bonds, which entail higher credit risk. The Fund is actively managed but there is no guarantee that the manager’s investment decisions will produce the desired results. The Fund’s prospectus also includes a description of the main investment risks.

Performance Overview

You can find the Fund’s six-month total return in the Performance Summary. For comparison, the Fund’s benchmark, the MSCI World Index, generated a +6.52% total return, and the Standard & Poor’s^® 500 Index posted a +7.14% total return for the same period.¹

Economic and Market Overview

The global economy grew moderately during the six months under review as many developed markets continued to recover and many emerging markets recorded continued growth. Major developed market central banks reaffirmed their accommodative monetary policies in an effort to support ongoing recovery. Several emerging market central banks cut interest rates to boost economic growth, while others raised rates to control inflation and currency depreciation.

U.S. economic growth and employment trends were generally encouraging during the period, despite severe weather across many states that limited economic activity in the first quarter of 2014. The U.S. Federal Reserve Board (Fed) began reducing

bond purchases by $10 billion a month in January 2014, based on earlier largely positive economic and employment data. The Fed continued reducing asset purchases during the period.

Outside the U.S., the U.K. economy grew relatively well in the first half of 2014, supported by the services and manufacturing sectors. In the second quarter, a preliminary estimate registered expansion at precrisis levels. The Japanese economy grew strongly during the first quarter of 2014 as consumption rose ahead of a sales tax increase in April. The Bank of Japan kept its monetary policy unchanged as it maintained an upbeat inflation forecast and reiterated that the economy continued to recover moderately, despite challenges resulting from the sales tax increase. Japan’s growth weakened, however, in the second quarter. The Japanese government proposed a reduction in corporate taxes as part of its economic reforms in an effort to avoid deflation and facilitate growth. Although out of recession, the eurozone experienced deflationary risks and weak employment trends. The region’s first-quarter economic growth was softer than what many observers had expected. In the second quarter, concerns arose about the potential negative impacts to growth from the crisis in Ukraine and tension in the Middle East. Toward period-end, the European Central Bank reduced its main interest rate and, for the first time, set a negative deposit rate.

In several emerging markets, including China, growth remained solid though moderating, as domestic demand and exports were relatively soft. Emerging market equities generally rose for the six-month period, despite volatility resulting from concerns about moderating economic growth, rising geopolitical tensions in certain regions and the potential impact of the Fed’s tapering its asset purchases. Many emerging market currencies depreciated against the U.S. dollar, leading central banks in several countries, including Brazil, India, Turkey and South Africa, to raise interest rates in an effort to curb inflation and support their currencies.

Stocks in developed markets advanced overall during the period amid a generally accommodative monetary policy environment, continued strength in corporate earnings and signs of an economic recovery. Global government and corporate bonds delivered solid performance as interest rates in many developed market countries remained low. Gold prices rose during the period, and oil prices increased amid supply concerns related to

1. Source: © 2014 Morningstar. One cannot invest directly in an index, and an index is not representative of the Fund’s portfolio. Please see Index Descriptions following the Fund Summaries.

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FRANKLIN MUTUAL GLOBAL DISCOVERY VIP FUND

the crises in Ukraine and Iraq. The U.S. dollar was relatively flat compared to most currencies.

Investment Strategy

At Franklin Mutual Series, we are committed to our distinctive value approach to investing. Our major investment strategy is investing in undervalued stocks. When selecting undervalued equities, we are attracted to fundamentally strong companies with healthy balance sheets, high-quality assets, substantial free cash flow and shareholder-oriented management teams and whose stocks are trading at discounts to our assessment of the companies’ intrinsic or business value. We also look for asset rich companies whose shares may be trading at depressed levels due to concerns over short-term earnings disappointments, litigation, management strategy or other perceived negatives. While the vast majority of our undervalued equity investments are made in publicly traded companies globally, we may invest occasionally in privately held companies as well.

We complement this more traditional investment strategy with two others. One is distressed investing, which is complex and can take many forms. The most common distressed investment the Fund undertakes is the purchase of financially troubled or bankrupt companies’ debt at a substantial discount to face value. After the financially distressed company is reorganized, often in bankruptcy court, the old debt is typically replaced with new securities issued by the financially stronger company.

The other piece of our investment strategy is participating in arbitrage situations, another highly specialized field. When companies announce proposed mergers or takeovers, commonly referred to as “deals,” the target company may trade at a discount to the bid it ultimately accepts. One form of arbitrage involves purchasing the target company’s stock when it is trading below the value we believe it would receive in a deal. In keeping with our commitment to a relatively conservative investment approach, we typically focus our arbitrage efforts on announced deals, and eschew rumored deals or other situations we consider relatively risky.

In addition, it is our practice to hedge the Fund’s currency exposure when we deem it advantageous for our shareholders.

What is meant by “hedge”?

To hedge an investment is to take a position intended to offset potential losses/gains that may be incurred by a companion financial instrument.

*Weightings may be negative or may not total 100% due to rounding, use of any derivatives, unsettled trades or other factors.

Manager’s Discussion

Many Fund holdings increased in value during the review period. Top contributors included pharmaceutical companies Teva Pharmaceutical Industries and Merck & Co. and technology leader Apple.

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FRANKLIN MUTUAL GLOBAL DISCOVERY VIP FUND

Shares of Israel-based Teva Pharmaceutical Industries rose notably in the first quarter of 2014, supported by positive developments related to the company’s most profitable drug, Copaxone, which is used to prevent the relapse of multiple sclerosis. In March, the U.S. Supreme Court agreed to hear Teva’s patent appeal, which could lead to potential delays in generic competition for Copaxone. In addition, the U.S. Food and Drug Administration (FDA) had delays approving a generic for Copaxone while Teva has done a good job converting more patients to its new formulation of the drug. This should help the company retain a higher portion of revenues and cash flows from this highly profitable product. Also supporting the share price was the announcement of a new chief executive officer, who the market believed could successfully execute on Teva’s cost-cutting restructuring program. Despite Teva’s recent positive performance, at period-end, we still believed its shares had further upside potential. Our analysis suggested opportunities remained for margin expansion through restructuring efforts, especially in Teva’s generics division. We also believed that investors were not attaching appropriate value to its research and development investments.

Merck’s stock started 2014 on a positive note as the company announced a rolling submission to the U.S. FDA in January for one of its key drug compounds to treat advanced melanoma. The filing timeline was substantially ahead of the market’s prior expectations. In February, the stock moved higher following Merck’s announcement of clinical collaboration agreements with three other pharmaceutical companies that suggested to the market that Merck was willing to collaborate and was planning to make substantial investments to realize the full value of this important asset. The positive news continued in May with the sale of its consumer care business to Bayer for $14.2 billion, a price that we believed offered significant value to Merck shareholders.

In April, Apple reported quarterly results that beat consensus estimates, driven by its strong iPhone business. In addition, the company announced a trio of shareholder-friendly actions. Apple’s board of directors authorized an increase in the company’s share repurchase program to $90 billion from $60 billion while maintaining the December 2015 end date. The Board also approved an approximately 8% dividend increase and announced a 7-for-1 stock split that went into effect in early June.

Top 10 Sectors/Industries
6/30/14
	% of Total Net Assets
Banks		11.9%
Oil, Gas & Consumable Fuels		8.8%
Insurance		7.7%
Pharmaceuticals		7.3%
Media		5.1%
Tobacco		4.9%
Food & Staples Retailing		4.9%
Software		4.7%
Technology Hardware, Storage & Peripherals		3.1%
Metals & Mining		2.8%

During the period under review, some of the Fund’s investments negatively affected performance. These included mobile telecommunications company Vodafone Group, retailer Metro and financial services firm KB Financial Group.

In May, U.K.-based Vodafone Group reported fiscal fourth-quarter results (the company has a March 31 fiscal year-end) as earnings fell short of expectations and capital spending increased significantly, following Vodafone’s strategic decision to significantly upgrade its network to offer a differentiated level of service. The company believed that consumers would be willing to pay a premium for network quality as data usage increases. We agreed with this position; however, in the near term, earnings were likely to be under pressure. With the possibility of a merger with AT&T on hold, we believed the primary near-term catalysts were potential market consolidation in Europe, disposals of non-core assets and the resolution of a tax dispute with India’s government, which could pave the way for an initial public offering (IPO) of Vodafone’s India business.

Upheaval in Ukraine disrupted Germany-based retailer Metro’s plans to pursue a partial IPO of its Russia cash-and-carry business. The potential IPO, which was put on hold in mid-March, was being closely watched as it would have provided a benchmark valuation for this important Metro operation and also raised capital to fund growth and further reduce debt. Shares of Metro rebounded slightly in May as quarterly results revealed that operations in Russia continued to perform well with a slight uptick in business, small market share gains and intentions to

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FRANKLIN MUTUAL GLOBAL DISCOVERY VIP FUND

Top 10 Equity Holdings
6/30/14
Company Sector/Industry, Country	% of Total Net Assets
Microsoft Corp. Software, U.S.		2.6%
Merck & Co. Inc. Pharmaceuticals, U.S.		2.5%
Royal Dutch Shell PLC, A Oil, Gas & Consumable Fuels, U.K.		2.5%
A.P. Moeller-Maersk AS, B Marine, Denmark		2.5%
Apple Inc. Technology Hardware, Storage & Peripherals, U.S.		2.4%
ACE Ltd. Insurance, U.S.		2.1%
Medtronic Inc. Health Care Equipment & Supplies, U.S.		2.1%
Wells Fargo & Co. Banks, U.S.		2.0%
Apache Corp. Oil, Gas & Consumable Fuels, U.S.		1.9%
Cigna Corp. Health Care Providers & Services, U.S.		1.8%

The dollar value, number of shares or principal amount, and names of all portfolio holdings are listed in the Fund’s Statement of Investments.

accelerate the company’s new store opening program. Although capital market conditions were not yet suitable for the delayed IPO as of period-end, we believed the quarterly results demonstrated Metro could act quickly if conditions improve.

KB Financial Group shares declined in January after the firm announced leaks of client credit card information. KB Financial was one of three South Korean financial firms that reported data leaks, and the country’s Financial Supervisory Service banned each from issuing new credit cards for three months. In June, top executives at the company and its credit card unit offered to resign amid ongoing investigations. In our view, the market overreacted and the magnitude of the decline in KB Financial’s share price suggested investors were ascribing a negative value to the group’s credit card business.

During the period, the Fund held currency forwards and futures to somewhat hedge the currency risk of the portfolio’s non-U.S. dollar investments. The hedges had a minor negative impact on the Fund’s performance.

What is a currency forward contract?

A currency forward contract, also called a “currency forward,” is an agreement between the Fund and a counterparty to buy or sell a foreign currency at a specific exchange rate on a future date.

What is a futures contract?

A futures contract, also called a “future,” is an agreement between the Fund and a counterparty made through a U.S. or foreign futures exchange to buy or sell an asset at a specific price on a future date.

Thank you for your participation in Franklin Mutual Global Discovery VIP Fund. We look forward to serving your future investment needs.

The foregoing information reflects our analysis, opinions and portfolio holdings as of June 30, 2014, the end of the reporting period. The way we implement our main investment strategies and the resulting portfolio holdings may change depending on factors such as market and economic conditions. These opinions may not be relied upon as investment advice or an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but the investment manager makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.

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FRANKLIN MUTUAL GLOBAL DISCOVERY VIP FUND

Class 2 Fund Expenses

As an investor in a variable insurance contract (Contract) that indirectly provides for investment in an underlying mutual fund, you can incur transaction and/or ongoing expenses at both the Fund level and the Contract level.

• Transaction expenses can include sales charges (loads) on purchases, surrender fees, transfer fees and premium taxes.

• Ongoing expenses can include management fees, distribution and service (12b-1) fees, contract fees, annual maintenance fees, mortality and expense risk fees and other fees and expenses. All mutual funds and Contracts have some types of ongoing expenses.

The expenses shown in the table are meant to highlight ongoing expenses at the Fund level only and do not include ongoing expenses at the Contract level, or transaction expenses at either the Fund or Contract levels. While the Fund does not have transaction expenses, if the transaction and ongoing expenses at the Contract level were included, the expenses shown below would be higher. You should consult your Contract prospectus or disclosure document for more information.

The table shows Fund-level ongoing expenses and can help you understand these expenses and compare them with those of other mutual funds offered through the Contract. The table assumes a $1,000 investment held for the six months indicated. Please refer to the Fund prospectus for additional information on operating expenses.

Actual Fund Expenses

The first line (Actual) of the table provides actual account values and expenses. The “Ending Account Value” is derived from the Fund’s actual return, which includes the effect of ongoing Fund expenses, but does not include the effect of ongoing Contract expenses.

You can estimate the Fund-level expenses you incurred during the period by following these steps. Of course, your account value and expenses will differ from those in this illustration:

1. Divide your account value by $1,000.

If an account had an $8,600 value, then $8,600 ÷ $1,000 = 8.6.

2. Multiply the result by the number under the heading “Fund-Level Expenses Incurred During Period.”

If Fund-Level Expenses Incurred During Period were $7.50, then 8.6 × $7.50 = $64.50.

In this illustration, the estimated expenses incurred this period at the Fund level are $64.50.

Hypothetical Example for Comparison with Other Mutual Funds

Information in the second line (Hypothetical) of the table can help you compare ongoing expenses of the Fund with those of other mutual funds offered through the Contract. This information may not be used to estimate the actual ending account balance or expenses you incurred during the period. The hypothetical “Ending Account Value” is based on the Fund’s actual expense ratio and an assumed 5% annual rate of return before expenses, which does not represent the Fund’s actual return. The figure under the heading “Fund-Level Expenses Incurred During Period” shows the hypothetical expenses your account would have incurred under this scenario. You can compare this figure with the 5% hypothetical examples that appear in shareholder reports of other funds offered through a Contract.

Class 2	Beginning Account Value 1/1/14		Ending Account Value 6/30/14		Fund-Level Expenses Incurred During Period* 1/1/14–6/30/14
Actual		$1,000		$1,072.20		$6.37
Hypothetical (5% return before expenses)		$1,000		$1,018.65		$6.21

*Expenses are calculated using the most recent six-month annualized expense ratio for the Fund’s Class 2 shares (1.24%), which does not include any ongoing expenses of the Contract for which the Fund is an investment option, multiplied by the average account value over the period, multiplied by 181/365 to reflect the one-half year period.

MGD-6 Semiannual Report

SUPPLEMENT DATED AUGUST 1, 2014

TOTHE PROSPECTUS DATED MAY 1, 2014

OF

FRANKLIN MUTUAL GLOBAL DISCOVERY VIP FUND

(a series of Franklin Templeton Variable Insurance Products Trust)

The prospectus is amended as follows:

I.  The “Fund Summary – Annual Fund Operating Expenses” table beginning on page MGD-S1 in the Fund’s Class 1 prospectus is replaced with the following:

Annual Fund Operating Expenses

(expenses that you pay each year as a percentage of the value of your investment)

	Class 1
Management fees1		0.94%
Distribution and service (12b-1) fees		None
Other expenses1		0.03%
Total annual Fund operating expenses		0.97%

1. Management fees and other expenses have been restated to reflect current fiscal year fees and expenses as a result of the bundling of the Fund’s investment management agreement with its fund administration agreement effective May 1, 2014. Such combined investment management fees are described further under “Management” in the Fund’s prospectus. Total annual fund operating expenses are not affected by such bundling.

II.  The “Fund Summary – Annual Fund Operating Expenses” table beginning on page MGD-S1 in the Fund’s Class 2 prospectus is replaced with the following:

Annual Fund Operating Expenses

(expenses that you pay each year as a percentage of the value of your investment)

	Class 2
Management fees1		0.94%
Distribution and service (12b-1) fees		0.25%
Other expenses1		0.03%
Total annual Fund operating expenses		1.22%

1. Management fees and other expenses have been restated to reflect current fiscal year fees and expenses as a result of the bundling of the Fund’s investment management agreement with its fund administration agreement effective May 1, 2014. Such combined investment management fees are described further under “Management” in the Fund’s prospectus. Total annual fund operating expenses are not affected by such bundling.

III.  The “Fund Summary – Annual Fund Operating Expenses” table beginning on page MGD-S1 in the Fund’s Class 4 prospectus is replaced with the following:

Annual Fund Operating Expenses

(expenses that you pay each year as a percentage of the value of your investment)

	Class 4
Management fees1		0.94%
Distribution and service (12b-1) fees		0.35%
Other expenses1		0.03%
Total annual Fund operating expenses		1.32%

MGD-7

1. Management fees and other expenses have been restated to reflect current fiscal year fees and expenses as a result of the bundling of the Fund’s investment management agreement with its fund administration agreement effective May 1, 2014. Such combined investment management fees are described further under “Management” in the Fund’s prospectus. Total annual fund operating expenses are not affected by such bundling.

IV.  The following is added as the second to last paragraph in the “Fund Details – Management” section of each Class’ prospectus beginning on page MGD-D8:

Effective May 1, 2014, the Fund’s investment management agreement was bundled with its fund administration agreement, including the fees payable to the Fund’s administrator thereunder, as approved by the board of trustees. The fee payable to the administrator under the Fund’s administration agreement, prior to May 1, 2014, was a monthly fee under the following fee schedule of the Fund’s average daily net assets:

• 0.150% up to and including $200 million;

• 0.135% over $200 million, up to and including $700 million;

• 0.100% over $700 million, up to and including $1.2 billion;

• 0.075% in excess of $1.2 billion.

As of such date, the Fund’s investment management fees became a monthly fee at the annual rate of the value of the Fund’s average daily net assets as set forth below:

• 0.950% up to and including $200 million;

• 0.935% over $200 million, up to and including $700 million;

• 0.900% over $700 million, up to and including $1.2 billion;

• 0.875% over $1.2 billion, up to and including $4 billion;

• 0.845% over $4 billion, up to and including $7 billion;

• 0.825% over $7 billion, up to and including $10 billion;

• 0.805% in excess of $10 billion.

Please keep this supplement with your prospectus for future reference.

MGD-8

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Financial Highlights

Franklin Mutual Global Discovery VIP Fund

	Six Months Ended June 30, 2014 (unaudited)			Year Ended December 31,
				2013			2012			2011			2010			2009
Class 1
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$23.31			$20.55			$19.66			$21.16			$19.14			$16.12
Income from investment operationsa:
Net investment incomeb		0.55	c		0.46			0.43			0.52			0.38			0.19	d
Net realized and unrealized gains (losses)		1.17			5.03			2.21			(1.09	)		1.94			3.57
Total from investment operations		1.72			5.49			2.64			(0.57	)		2.32			3.76
Less distributions from:
Net investment income		—			(0.58	)		(0.64	)		(0.50	)		(0.30	)		(0.26	)
Net realized gains		—			(2.15	)		(1.11	)		(0.43	)		—			(0.48	)
Total distributions		—			(2.73	)		(1.75	)		(0.93	)		(0.30	)		(0.74	)
Net asset value, end of period		$25.03			$23.31			$20.55			$19.66			$21.16			$19.14
Total returne		7.38%			27.95%			13.63%			(2.73)%			12.24%			23.63%
Ratios to average net assetsf
Expensesg		0.99%	h		0.97%	h		0.99%			0.97%	h		1.00%	h		1.06%	h
Expenses incurred in connection with securities sold short		0.01%			—%	i		—%	i		—%	i		0.02%			0.09%
Net investment income		4.75%	c		2.13%			2.12%			2.34%			1.93%			1.07%	d
Supplemental data
Net assets, end of period (000’s)		$1,905			$2,465			$1,136			$974			$84,213			$86,755
Portfolio turnover rate		11.83%			15.58%			25.63%			26.17%	j		49.31%			43.35%

^aThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund shares in relation to income earned and/or fluctuating market value of the investments of the Fund.

^bBased on average daily shares outstanding.

^cNet investment income per share includes approximately $0.34 per share received in the form of special dividends paid in connection with certain Fund’s holdings. Excluding these amounts, the ratio of net investment income to average net assets would have been 1.83%.

^dNet investment income per share includes approximately $(0.03) per share related to an adjustment for uncollectible interest. Excluding the effect of this adjustment, the ratio of net investment income to average net assets would have been 1.26%.

^eTotal return does not include fees, charges or expenses imposed by the variable annuity and life insurance contracts for which the Franklin Templeton Variable Insurance Products Trust serves as an underlying investment vehicle. Total return is not annualized for periods less than one year.

^fRatios are annualized for periods less than one year.

^gIncludes dividend or interest expense on securities sold short and security borrowing fees, if any. See below for the ratios of such expenses to average net assets for the periods presented. See Note 1(d).

^hBenefit of expense reduction rounds to less than 0.01%.

ⁱRounds to less than 0.01%.

^jExcludes the value of portfolio securities delivered as a result of a redemption in-kind.

The accompanying notes are an integral part of these financial statements.    |   Semiannual Report MGD-9

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL HIGHLIGHTS

Franklin Mutual Global Discovery VIP Fund (continued)

	Six Months Ended June 30, 2014 (unaudited)			Year Ended December 31,
				2013			2012			2011			2010			2009
Class 2
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$22.84			$20.17			$19.30			$20.80			$18.81			$15.85
Income from investment operationsa:
Net investment incomeb		0.52	c		0.42			0.38			0.43			0.33			0.14	d
Net realized and unrealized gains (losses)		1.13			4.92			2.15			(1.04	)		1.91			3.50
Total from investment operations		1.65			5.34			2.53			(0.61	)		2.24			3.64
Less distributions from:
Net investment income		—			(0.52	)		(0.55	)		(0.46	)		(0.25	)		(0.20	)
Net realized gains		—			(2.15	)		(1.11	)		(0.43	)		—			(0.48	)
Total distributions		—			(2.67	)		(1.66	)		(0.89	)		(0.25	)		(0.68	)
Net asset value, end of period		$24.49			$22.84			$20.17			$19.30			$20.80			$18.81
Total returne		7.22%			27.61%			13.36%			(2.96)%			11.96%			23.31%
Ratios to average net assetsf
Expensesg		1.24%	h		1.22%	h		1.24%			1.22%	h		1.25%	h		1.31%	h
Expenses incurred in connection with securities sold short		0.01%			—%	i		—%	i		—%	i		0.02%			0.09%
Net investment income		4.50%	c		1.88%			1.87%			2.09%			1.68%			0.82%	d
Supplemental data
Net assets, end of period (000’s)		$719,617			$684,780			$660,465			$712,161			$1,351,223			$1,309,852
Portfolio turnover rate		11.83%			15.58%			25.63%			26.17%j			49.31%			43.35%

^aThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund shares in relation to income earned and/or fluctuating market value of the investments of the Fund.

^bBased on average daily shares outstanding.

^cNet investment income per share includes approximately $0.34 per share received in the form of special dividends paid in connection with certain Fund’s holdings. Excluding these amounts, the ratio of net investment income to average net assets would have been 1.58%.

^dNet investment income per share includes approximately $(0.03) per share related to an adjustment for uncollectible interest. Excluding the effect of this adjustment, the ratio of net investment income to average net assets would have been 1.01%.

^eTotal return does not include fees, charges or expenses imposed by the variable annuity and life insurance contracts for which the Franklin Templeton Variable Insurance Products Trust serves as an underlying investment vehicle. Total return is not annualized for periods less than one year.

^fRatios are annualized for periods less than one year.

^gIncludes dividend or interest expense on securities sold short and security borrowing fees, if any. See below for the ratios of such expenses to average net assets for the periods presented. See Note 1(d).

^hBenefit of expense reduction rounds to less than 0.01%.

ⁱRounds to less than 0.01%.

^jExcludes the value of portfolio securities delivered as a result of a redemption in-kind.

MGD-10 Semiannual Report   |    The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL HIGHLIGHTS

Franklin Mutual Global Discovery VIP Fund (continued)

	Six Months Ended June 30, 2014 (unaudited)			Year Ended December 31,
				2013			2012			2011			2010			2009
Class 4
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$23.10			$20.38			$19.50			$21.02			$19.02			$16.07
Income from investment operationsa:
Net investment incomeb		0.52	c		0.40			0.36			0.40			0.31			0.11	d
Net realized and unrealized gains (losses)		1.14			4.97			2.19			(1.05	)		1.94			3.56
Total from investment operations		1.66			5.37			2.55			(0.65	)		2.25			3.67
Less distributions from:
Net investment income		—			(0.50	)		(0.56	)		(0.44	)		(0.25	)		(0.24	)
Net realized gains		—			(2.15	)		(1.11	)		(0.43	)		—			(0.48	)
Total distributions		—			(2.65	)		(1.67	)		(0.87	)		(0.25	)		(0.72	)
Net asset value, end of period		$24.76			$23.10			$20.38			$19.50			$21.02			$19.02
Total returne		7.19%			27.52%			13.27%			(3.08)%			11.87%			23.19%
Ratios to average net assetsf
Expensesg		1.34%	h		1.32%	h		1.34%			1.32%	h		1.35%	h		1.41%	h
Expenses incurred in connection with securities sold short		0.01%			—%	i		—%	i		—%	i		0.02%			0.09%
Net investment income		4.40%	c		1.78%			1.77%			1.99%			1.58%			0.72%	d
Supplemental data
Net assets, end of period (000’s)		$68,436			$70,354			$62,346			$66,695			$70,613			$59,178
Portfolio turnover rate		11.83%			15.58%			25.63%			26.17%	j		49.31%			43.35%

^aThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund shares in relation to income earned and/or fluctuating market value of the investments of the Fund.

^bBased on average daily shares outstanding.

^cNet investment income per share includes approximately $0.34 per share received in the form of special dividends paid in connection with certain Fund’s holdings. Excluding these amounts, the ratio of net investment income to average net assets would have been 1.48%.

^dNet investment income per share includes approximately $(0.03) per share related to an adjustment for uncollectible interest. Excluding the effect of this adjustment, the ratio of net investment income to average net assets would have been 0.91%.

^eTotal return does not include fees, charges or expenses imposed by the variable annuity and life insurance contracts for which the Franklin Templeton Variable Insurance Products Trust serves as an underlying investment vehicle. Total return is not annualized for periods less than one year.

^fRatios are annualized for periods less than one year.

^gIncludes dividend or interest expense on securities sold short and security borrowing fees, if any. See below for the ratios of such expenses to average net assets for the periods presented. See Note 1(d).

^hBenefit of expense reduction rounds to less than 0.01%.

ⁱRounds to less than 0.01%.

^jExcludes the value of portfolio securities delivered as a result of a redemption in-kind.

The accompanying notes are an integral part of these financial statements.    |   Semiannual Report MGD-11

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Statement of Investments, June 30, 2014 (unaudited)

Franklin Mutual Global Discovery VIP Fund
		Country		Shares/Units		Value
	Common Stocks and Other Equity Interests 90.9%
	Aerospace & Defense 1.5%
a	B/E Aerospace Inc.		United States		52,340	$	4,840,927
	Safran SA		France		107,185		7,018,500
							11,859,427
	Auto Components 0.9%
	Cie Generale des Etablissements Michelin, B		France		30,800		3,680,544
a,b	International Automotive Components Group Brazil LLC		Brazil		424,073		67,627
a,b,c	International Automotive Components Group North America, LLC		United States		4,052,916		3,739,950
							7,488,121
	Automobiles 0.8%
	General Motors Co.		United States		181,030		6,571,389
	Banks 11.9%
a,b,d	The Bankshares Inc.		United States		800,000		4,109,947
	Barclays PLC		United Kingdom		990,101		3,605,387
	BNP Paribas SA		France		107,180		7,272,098
a	Capital Bank Financial Corp., A		United States		78,494		1,853,243
a,e	Capital Bank Financial Corp., B, 144A, non-voting		United States		269,922		6,372,859
	CIT Group Inc.		United States		108,462		4,963,221
	Citigroup Inc.		United States		229,050		10,788,255
	HSBC Holdings PLC		United Kingdom		586,355		5,948,985
	Industrial and Commercial Bank of China Ltd., H		China		6,040,679		3,819,046
	JPMorgan Chase & Co.		United States		131,280		7,564,354
	KB Financial Group Inc.		South Korea		101,400		3,526,957
	PNC Financial Services Group Inc.		United States		112,821		10,046,710
	Societe Generale SA		France		64,534		3,380,827
	SunTrust Banks Inc.		United States		117,939		4,724,636
	Wells Fargo & Co.		United States		307,140		16,143,278
							94,119,803
	Beverages 1.4%
	Coca-Cola Enterprises Inc.		United States		55,506		2,652,076
	PepsiCo Inc.		United States		90,367		8,073,388
							10,725,464
	Capital Markets 1.2%
	Credit Suisse Group AG		Switzerland		264,483		7,563,048
	Morgan Stanley		United States		53,407		1,726,648
							9,289,696
	Communications Equipment 1.1%
	Cisco Systems Inc.		United States		359,180		8,925,623
	Consumer Finance 0.5%
a	Ally Financial Inc.		United States		151,600		3,624,756
	Diversified Consumer Services 0.1%
a	Cengage Learning Holdings II LP		United States		22,762		802,361
	Diversified Financial Services 1.3%
a	ING Groep NV, IDR		Netherlands		756,040		10,622,783
	Diversified Telecommunication Services 0.0%
a,f,g	Global Crossing Holdings Ltd., Contingent Distribution		United States		2,236,777		—

MGD-12 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Mutual Global Discovery VIP Fund (continued)

		Country		Shares/Units		Value
	Common Stocks and Other Equity Interests (continued)
	Energy Equipment & Services 2.7%
	Baker Hughes Inc.		United States		147,071	$	10,949,436
	Ensco PLC, A		United States		83,364		4,632,538
	Transocean Ltd.		United States		120,473		5,424,899
							21,006,873
	Food & Staples Retailing 4.9%
	China Resources Enterprise Ltd.		China		851,619		2,373,407
	CVS Caremark Corp.		United States		46,236		3,484,807
	Empire Co. Ltd., A		Canada		72,193		4,911,927
a	Metro AG		Germany		318,004		13,861,664
	Tesco PLC		United Kingdom		1,412,832		6,870,928
	Walgreen Co.		United States		98,012		7,265,629
							38,768,362
	Health Care Equipment & Supplies 2.6%
	Medtronic Inc.		United States		257,980		16,448,805
	Stryker Corp.		United States		46,588		3,928,300
							20,377,105
	Health Care Providers & Services 1.8%
	Cigna Corp.		United States		152,861		14,058,626
	Hotels, Restaurants & Leisure 1.5%
	Accor SA		France		233,913		12,169,418
	Independent Power & Renewable Electricity Producers 1.4%
	NRG Energy Inc.		United States		299,277		11,133,104
	Industrial Conglomerates 2.7%
	Jardine Matheson Holdings Ltd.		Hong Kong		123,597		7,330,538
	Jardine Strategic Holdings Ltd.		Hong Kong		371,698		13,280,769
	Siemens AG		Germany		3,785		499,936
							21,111,243
	Insurance 7.7%
	ACE Ltd.		United States		163,160		16,919,692
a	Alleghany Corp.		United States		2,730		1,196,067
	The Allstate Corp.		United States		104,847		6,156,616
	American International Group Inc.		United States		243,553		13,293,123
	China Pacific Insurance (Group) Co. Ltd., H		China		1,127,908		3,987,469
	E-L Financial Corp. Ltd.		Canada		5,378		3,560,287
	MetLife Inc.		United States		63,096		3,505,614
a,b	Olympus Re Holdings Ltd.		United States		2,140		—
	PartnerRe Ltd.		United States		58,470		6,385,508
	PICC Property and Casualty Co. Ltd., H		China		228,457		346,645
	Zurich Insurance Group AG		Switzerland		17,558		5,292,049
							60,643,070
	IT Services 1.1%
	Xerox Corp.		United States		720,967		8,968,829
	Marine 2.5%
	A.P. Moeller-Maersk AS, B		Denmark		7,825		19,444,654
	Media 5.1%
	CBS Corp., B		United States		72,249		4,489,553
	Comcast Corp., Special A		United States		48,623		2,593,064

Semiannual Report MGD-13

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Mutual Global Discovery VIP Fund (continued)

		Country		Shares/Units		Value
	Common Stocks and Other Equity Interests (continued)
	Media (continued)
a	DIRECTV		United States		93,680	$	7,963,737
	Reed Elsevier PLC		United Kingdom		251,872		4,051,432
	Time Warner Cable Inc.		United States		62,129		9,151,602
a	Tribune Co., A		United States		43,818		3,726,721
a	Tribune Co., B		United States		26,867		2,285,038
	Twenty-First Century Fox Inc., B		United States		170,160		5,824,577
							40,085,724
	Metals & Mining 2.8%
	Anglo American PLC		United Kingdom		275,805		6,748,993
	Freeport-McMoRan Copper & Gold Inc., B		United States		135,280		4,937,720
a	ThyssenKrupp AG		Germany		344,296		10,038,152
							21,724,865
	Multiline Retail 0.7%
	Kohl’s Corp.		United States		99,870		5,261,152
	Oil, Gas & Consumable Fuels 8.8%
	Apache Corp.		United States		149,500		15,042,690
	BG Group PLC		United Kingdom		229,790		4,856,226
	BP PLC		United Kingdom		1,028,014		9,057,800
	China Shenhua Energy Co. Ltd., H		China		1,242,931		3,592,263
	CONSOL Energy Inc.		United States		114,311		5,266,308
	Marathon Oil Corp.		United States		178,885		7,141,089
	Royal Dutch Shell PLC, A		United Kingdom		469,862		19,458,003
	Talisman Energy Inc.		Canada		468,250		4,963,450
							69,377,829
	Paper & Forest Products 0.2%
	NewPage Holdings Inc.		United States		19,416		1,611,528
	Personal Products 0.6%
	Avon Products Inc.		United States		337,600		4,932,336
	Pharmaceuticals 7.3%
	AstraZeneca PLC		United Kingdom		85,840		6,375,735
	AstraZeneca PLC, ADR		United Kingdom		35,792		2,659,704
	Eli Lilly & Co.		United States		118,220		7,349,737
a	Hospira Inc.		United States		44,053		2,263,003
	Merck & Co. Inc.		United States		346,558		20,048,380
	Novartis AG, ADR		Switzerland		60,628		5,488,653
	Teva Pharmaceutical Industries Ltd., ADR		Israel		257,877		13,517,912
							57,703,124
	Real Estate Management & Development 0.5%
g	Canary Wharf Group PLC		United Kingdom		487,324		3,705,733
	Semiconductors & Semiconductor Equipment 0.3%
a	SK Hynix Semiconductor Inc.		South Korea		53,632		2,572,958
	Software 4.7%
a	Check Point Software Technologies Ltd.		Israel		130,472		8,745,538
	Microsoft Corp.		United States		487,458		20,326,999
	Symantec Corp.		United States		364,800		8,353,920
							37,426,457

MGD-14 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Mutual Global Discovery VIP Fund (continued)

		Country		Shares/Units		Value
	Common Stocks and Other Equity Interests (continued)
	Specialty Retail 0.8%
	Kingfisher PLC		United Kingdom		973,910	$	5,982,932
	Technology Hardware, Storage & Peripherals 3.1%
	Apple Inc.		United States		203,847		18,943,502
	Hewlett-Packard Co.		United States		172,177		5,798,921
							24,742,423
	Tobacco 4.9%
	Altria Group Inc.		United States		176,234		7,391,254
	British American Tobacco PLC		United Kingdom		220,778		13,139,722
	Lorillard Inc.		United States		197,019		12,012,248
	Philip Morris International Inc.		United States		75,124		6,333,704
							38,876,928
	Wireless Telecommunication Services 1.5%
	Vodafone Group PLC		United Kingdom		3,618,505		12,074,373
	Total Common Stocks and Other Equity Interests (Cost $504,114,894)						717,789,069
	Preferred Stocks 0.7%
	Automobiles 0.1%
	Volkswagen AG, pfd.		Germany		4,196		1,102,123
	Diversified Financial Services 0.6%
a,b	Hightower Holding LLC, pfd., A, Series 2		United States		2,172,000		4,388,309
	Total Preferred Stocks (Cost $6,518,663)						5,490,432
				Principal Amount*
	Corporate Notes and Senior Floating Rate Interests 2.9%
e	American Airlines Inc., senior secured note, 144A, 7.50%, 3/15/16		United States		3,487,000		3,628,659
h,i	Cengage Learning Acquisitions Inc., First Lien Exit Term Loan, 7.00%, 3/31/20		United States		147,630		149,737
	Clear Channel Communications Inc.,   senior secured note, first lien, 9.00%, 12/15/19		United States		5,184,000		5,546,880
	h,iTranche B Term Loan, 3.80%, 1/29/16		United States		102,224		101,616
	h,iTranche C Term Loan, 3.80%, 1/29/16		United States		15,975		15,831
	h,iTranche D Term Loan, 6.90%, 1/30/19		United States		6,889,154		6,872,792
	h,iTranche E Term Loan, 7.65%, 7/30/19		United States		2,213,881		2,223,259
h,i	JC Penney Corp. Inc., Term Loan, 6.00%, 5/22/18		United States		726,660		735,030
e	NGPL PipeCo LLC,
	secured note, 144A, 7.119%, 12/15/17		United States		1,086,000		1,107,720
	senior secured note, 144A, 9.625%, 6/01/19		United States		2,369,000		2,605,900
	Total Corporate Notes and Senior Floating Rate Interests (Cost $21,226,808)						22,987,424

Semiannual Report MGD-15

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Mutual Global Discovery VIP Fund (continued)

		Country		Principal Amount*		Value
	Corporate Notes and Senior Floating Rate Interests in Reorganization 1.3%
b,j	Broadband Ventures III LLC, secured promissory note, 5.00%, 2/01/12		United States		595	$	—
h,i	Texas Competitive Electric Holdings Co. LLC, Extended Term Loan, 4.651%, 10/10/17		United States		5,912,264		4,907,179
e,j	Texas Competitive Electric Holdings Co. LLC/Texas Competitive Electric Holdings Finance Inc., senior secured note, 144A, 11.50%, 10/01/20		United States		5,895,000		5,408,662
	Total Corporate Notes and Senior Floating Rate Interests in Reorganization (Cost $10,574,327)						10,315,841
				Shares
	Companies in Liquidation 1.0%
a	Adelphia Recovery Trust		United States		5,379,562		53,796
a,f	Adelphia Recovery Trust, Arahova Contingent Value Vehicle, Contingent Distribution		United States		386,774		4,641
a,f,g	Century Communications Corp., Contingent Distribution		United States		1,074,000		—
a,b	FIM Coinvestor Holdings I, LLC		United States		2,077,368		—
a,k	Lehman Brothers Holdings Inc., Bankruptcy Claim		United States		17,348,669		7,958,702
a,f,g	NewPage Corp., Litigation Trust, Contingent Distribution		United States		4,854,000		—
a,f,g	Tribune Litigation Trust, Contingent Distribution		United States		56,883		—
	Total Companies in Liquidation (Cost $8,239,386)						8,017,139
				Principal Amount*
	Municipal Bonds (Cost $2,109,740) 0.2%
	Puerto Rico Commonwealth GO, Refunding, Series A, 8.00%, 7/01/35		United States		2,261,000		1,991,805
	Total Investments before Short Term Investments (Cost $552,783,818)						766,591,710
	Short Term Investments 3.2%
	U.S. Government and Agency Securities 3.2%
l	FHLB, 7/01/13		United States		5,100,000		5,100,000
l,m	U.S. Treasury Bills, 8/21/14 - 12/26/14		United States		20,000,000		19,998,314
	Total U.S. Government and Agency Securities (Cost $25,096,930)						25,098,314
	Total Investments (Cost $577,880,748) 100.2%						791,690,024
	Securities Sold Short (0.5)%						(4,306,247	)
	Other Assets, less Liabilities 0.3%						2,573,302
	Net Assets 100.0%					$	789,957,079

MGD-16 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Mutual Global Discovery VIP Fund (continued)

		Country		Shares		Value
n	Securities Sold Short (Proceeds $4,275,367) (0.5)%
	Common Stocks (0.5)%
	Diversified Telecommunication Services (0.5)%
	AT&T Inc.		United States		121,783	$	(4,306,247	)

*The principal amount is stated in U.S. dollars unless otherwise indicated.

^aNon-income producing.

^bSee Note 9 regarding restricted securities.

^cAt June 30, 2014, pursuant to the Fund’s policies and the requirements of applicable securities law, the Fund may be restricted from trading this security for a limited or extended period of time due to ownership limits and/or potential possession of material non-public information.

^dSee Note 11 regarding holdings of 5% voting securities.

^eSecurity was purchased pursuant to Rule 144A under the Securities Act of 1933 and may be sold in transactions exempt from registration only to qualified institutional buyers or in a public offering registered under the Securities Act of 1933. These securities have been deemed liquid under guidelines approved by the Trust’s Board of Trustees. At June 30, 2014, the aggregate value of these securities was $19,123,800, representing 2.42% of net assets.

^fContingent distributions represent the right to receive additional distributions, if any, during the reorganization of the underlying company. Shares represent total underlying principal of debt securities.

^gSecurity has been deemed illiquid because it may not be able to be sold within seven days. At June 30, 2014, the aggregate value of these securities was $3,705,733, representing 0.47% of net assets.

^hSee Note 1(f) regarding senior floating rate interests.

ⁱThe coupon rate shown represents the rate at period end.

^jSee Note 7 regarding credit risk and defaulted securities.

^kBankruptcy claims represent the right to receive distributions, if any, during the liquidation of the underlying pool of assets. Shares represent amount of allowed unsecured claims.

^lThe security is traded on a discount basis with no stated coupon rate.

^mSecurity or a portion of the security has been pledged as collateral for securities sold short, open futures and forward contracts. At June 30, 2014, the aggregate value of these securities and/or cash pledged as collateral was $6,794,004, representing 0.86% of net assets.

ⁿSee Note 1(d) regarding securities sold short.

The accompanying notes are an integral part of these financial statements.    |   Semiannual Report MGD-17

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Mutual Global Discovery VIP Fund (continued)

At June 30, 2014, the Fund had the following futures contracts outstanding. See Note 1(c).

Futures Contracts

Description	Type		Number of Contracts		Notional Value		Expiration Date		Unrealized Appreciation		Unrealized Depreciation
Currency Contracts
CHF/USD		Short		2		282,175		9/15/14	$	—	$	(2,057	)
EUR/USD		Short		244		41,778,900		9/15/14		—		(451,497	)
GBP/USD		Short		189		20,193,469		9/15/14		—		(374,327	)
Net unrealized appreciation (depreciation)											$	(827,881	)

At June 30, 2014, the Fund had the following forward exchange contracts outstanding. See Note 1(c).

Forward Exchange Contracts
Currency	Counterpartya		Type		Quantity		Contract Amount		Settlement Date		Unrealized Appreciation		Unrealized Depreciation
Euro		BOFA		Buy		6,525,313	$	9,010,761		7/17/14	$	868	$	(74,921	)
Euro		BOFA		Sell		8,428,476		11,461,049		7/17/14		44		(82,170	)
Euro		BONY		Buy		2,470,160		3,418,616		7/17/14		538		(36,159	)
Euro		BONY		Sell		105,362		143,506		7/17/14		—		(792	)
Euro		BZWS		Buy		3,235,710		4,448,528		7/17/14		570		(17,649	)
Euro		BZWS		Sell		123,581		167,816		7/17/14		—		(1,433	)
Euro		HSBC		Buy		1,443,640		1,988,044		7/17/14		562		(11,477	)
Euro		HSBC		Sell		760,149		1,037,538		7/17/14		138		(3,659	)
Euro		SCBT		Buy		1,917,958		2,641,247		7/17/14		625		(15,141	)
Euro		SCBT		Sell		7,092,890		9,646,706		7/17/14		—		(67,325	)
Euro		SSBT		Buy		850,468		1,173,524		7/17/14		502		(9,271	)
Euro		SSBT		Sell		80,886		110,739		7/17/14		—		(38	)
British Pound		BOFA		Buy		83,408		138,653		7/21/14		4,050		—
British Pound		BOFA		Sell		3,319,230		5,420,296		7/21/14		—		(258,568	)
British Pound		BONY		Buy		448,427		745,873		7/21/14		21,340		—
British Pound		BZWS		Buy		67,815		112,614		7/21/14		3,411		—
British Pound		BZWS		Sell		6,997,908		11,526,947		7/21/14		—		(445,760	)
British Pound		HSBC		Buy		255,992		425,526		7/21/14		12,450		—
British Pound		HSBC		Sell		1,189,530		1,952,018		7/21/14		—		(83,146	)
British Pound		SCBT		Buy		717,483		1,193,619		7/21/14		33,921		—
British Pound		SSBT		Buy		918,284		1,527,189		7/21/14		43,902		—
South Korean Won		BOFA		Buy		310,084,649		295,649		8/12/14		10,246		—
South Korean Won		BOFA		Sell		1,325,019,344		1,237,197		8/12/14		—		(69,917	)
South Korean Won		FBCO		Buy		218,156,256		202,447		8/12/14		12,761		—
South Korean Won		FBCO		Sell		2,738,683,324		2,549,662		8/12/14		—		(152,013	)
South Korean Won		HSBC		Buy		206,890,725		192,200		8/12/14		11,895		—
South Korean Won		HSBC		Sell		2,657,359,260		2,483,025		8/12/14		—		(138,425	)
Swiss Franc		BOFA		Buy		44,504		49,940		8/12/14		261		—
Swiss Franc		BOFA		Sell		847,989		962,393		8/12/14		7,422		(1,568	)
Swiss Franc		BZWS		Sell		452,860		514,072		8/12/14		4,339		(1,096	)
Swiss Franc		DBAB		Buy		50,700		56,683		8/12/14		507		—
Swiss Franc		DBAB		Sell		44,100		49,162		8/12/14		—		(583	)
Swiss Franc		FBCO		Buy		27,667		30,983		8/12/14		225		—
Swiss Franc		HSBC		Buy		9,600		10,825		8/12/14		4		—
Swiss Franc		SSBT		Buy		46,696		52,309		8/12/14		364		—
Swiss Franc		SSBT		Sell		596,400		672,263		8/12/14		1,969		(2,450	)
British Pound		BOFA		Buy		750,236		1,275,027		8/19/14		8,317		(69	)
British Pound		BOFA		Sell		2,431,447		4,082,000		8/19/14		—		(76,981	)
British Pound		BZWS		Buy		285,713		485,046		8/19/14		3,666		—
British Pound		BZWS		Sell		3,403,001		5,699,484		8/19/14		—		(121,337	)
British Pound		DBAB		Buy		220,657		376,458		8/19/14		975		—
British Pound		FBCO		Buy		834,172		1,418,638		8/19/14		8,258		(48	)
British Pound		HSBC		Buy		161,462		271,031		8/19/14		5,149		—

MGD-18 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Mutual Global Discovery VIP Fund (continued)

Forward Exchange Contracts (continued)
Currency	Counterpartya		Type		Quantity		Contract Amount		Settlement Date		Unrealized Appreciation		Unrealized Depreciation
British Pound		HSBC		Sell		3,058,343	$	5,130,103		8/19/14	$	—	$	(101,181	)
British Pound		SCBT		Buy		46,855		78,776		8/19/14		1,369		—
British Pound		SSBT		Buy		734,860		1,244,805		8/19/14		12,171		—
British Pound		SSBT		Sell		36,516		61,528		8/19/14		—		(932	)
Euro		BOFA		Buy		1,591,235		2,174,345		8/29/14		9,463		(4,231	)
Euro		BOFA		Sell		5,576,275		7,629,068		8/29/14		—		(8,972	)
Euro		BONY		Buy		944,124		1,303,618		8/29/14		—		(10,414	)
Euro		BZWS		Buy		1,012,197		1,398,032		8/29/14		13		(11,600	)
Euro		BZWS		Sell		5,576,328		7,623,621		8/29/14		—		(14,493	)
Euro		HSBC		Buy		1,164,010		1,597,241		8/29/14		332		(3,184	)
Euro		SCBT		Buy		1,256,570		1,727,336		8/29/14		694		(6,857	)
Euro		SSBT		Buy		472,730		654,958		8/29/14		16		(7,457	)
Canadian Dollar		BOFA		Sell		63,530		57,229		9/18/14		—		(2,224	)
Canadian Dollar		BONY		Buy		84,783		77,870		9/18/14		1,471		—
Canadian Dollar		BONY		Sell		29,982		28,053		9/18/14		—		(4	)
Canadian Dollar		BZWS		Buy		16,526		15,215		9/18/14		250		—
Canadian Dollar		BZWS		Sell		8,514,917		7,655,234		9/18/14		—		(313,170	)
Canadian Dollar		HSBC		Buy		42,609		39,132		9/18/14		742		—
Canadian Dollar		SCBT		Sell		239,182		219,359		9/18/14		—		(4,472	)
Canadian Dollar		SSBT		Buy		42,609		39,133		9/18/14		741		—
British Pound		BOFA		Sell		3,854,240		6,466,644		10/22/14		—		(121,847	)
British Pound		DBAB		Buy		275,120		460,979		10/22/14		9,315		—
British Pound		HSBC		Buy		28,817		49,070		10/22/14		190		—
British Pound		SSBT		Sell		4,506,805		7,559,187		10/22/14		—		(144,808	)
Euro		BOFA		Sell		5,932,560		8,138,327		11/17/14		11,335		(1,982	)
Euro		BZWS		Sell		7,494,892		10,284,229		11/17/14		15,706		(1,205	)
Euro		HSBC		Sell		1,035,802		1,420,044		11/17/14		1,639		(883	)
Euro		SCBT		Sell		160,000		217,947		11/17/14		—		(1,290	)
Euro		SSBT		Sell		67,534		92,095		11/17/14		—		(442	)
British Pound		BOFA		Sell		2,983,987		5,016,082		11/21/14		—		(82,990	)
British Pound		SSBT		Sell		2,645,137		4,446,475		11/21/14		—		(73,567	)
Unrealized appreciation (depreciation)												264,726		(2,590,201	)
Net unrealized appreciation (depreciation)													$	(2,325,475	)

^aMay be comprised of multiple contracts using the same currency and settlement date.

See Abbreviations on page MGD-35.

Semiannual Report MGD-19

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Financial Statements

Statement of Assets and Liabilities

June 30, 2014 (unaudited)

	Franklin Mutual Global Discovery VIP Fund
Assets:
Investments in securities:
Cost - Unaffiliated issuers	$	569,880,748
Cost - Non-controlled affiliated issuers (Note 11)		8,000,000
Total cost of investments	$	577,880,748
Value - Unaffiliated issuers	$	787,580,077
Value - Non-controlled affiliated issuers (Note 11)		4,109,947
Total value of investments		791,690,024
Cash		347,483
Foreign currency, at value (cost $697,311)		699,399
Receivables:
Investment securities sold		1,408,082
Capital shares sold		278,506
Dividends and interest		2,134,413
Due from brokers		4,413,564
Unrealized appreciation on forward exchange contracts		264,726
Other assets		158,978
Total assets		801,395,175
Liabilities:
Payables:
Capital shares redeemed		3,132,303
Management fees		609,569
Distribution fees		338,757
Variation margin		250,125
Securities sold short, at value (proceeds $4,275,367)		4,306,247
Unrealized depreciation on forward exchange contracts		2,590,201
Accrued expenses and other liabilities		210,894
Total liabilities		11,438,096
Net assets, at value	$	789,957,079
Net assets consist of:
Paid-in capital	$	483,196,611
Undistributed net investment income		32,001,349
Net unrealized appreciation (depreciation)		210,647,733
Accumulated net realized gain (loss)		64,111,386
Net assets, at value	$	789,957,079

MGD-20 Semiannual Report   |    The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL STATEMENTS

Statement of Assets and Liabilities (continued)

June 30, 2014 (unaudited)

	Franklin Mutual Global Discovery VIP Fund
Class 1:
Net assets, at value	$	1,904,506
Shares outstanding		76,083
Net asset value and maximum offering price per share	$	25.03
Class 2:
Net assets, at value	$	719,616,869
Shares outstanding		29,378,209
Net asset value and maximum offering price per share	$	24.49
Class 4:
Net assets, at value	$	68,435,704
Shares outstanding		2,764,511
Net asset value and maximum offering price per share	$	24.76

The accompanying notes are an integral part of these financial statements.    |   Semiannual Report MGD-21

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL STATEMENTS

Statement of Operations

for the six months ended June 30, 2014 (unaudited)

	Franklin Mutual Global Discovery VIP Fund
Investment income:
Dividends	$	20,157,380
Interest		1,533,206
Income from securities loaned		5,057
Total investment income		21,695,643
Expenses:
Management fees (Note 3a)		3,202,234
Administrative fees (Note 3b)		337,573
Distribution fees: (Note 3c)
Class 2		856,042
Class 4		120,919
Custodian fees (Note 4)		16,152
Reports to shareholders		69,386
Professional fees		50,812
Trustees’ fees and expenses		1,492
Dividends on securities sold short		50,286
Other		14,997
Total expenses		4,719,893
Expense reductions (Note 4)		(31	)
Net expenses		4,719,862
Net investment income		16,975,781
Realized and unrealized gains (losses):
Net realized gain (loss) from:
Investments		17,446,502
Foreign currency transactions		(3,684,920	)
Futures contracts		94,687
Securities sold short		49,526
Net realized gain (loss)		13,905,795
Net change in unrealized appreciation (depreciation) on:
Investments		21,328,311
Translation of other assets and liabilities denominated in foreign currencies		1,472,594
Net change in unrealized appreciation (depreciation)		22,800,905
Net realized and unrealized gain (loss)		36,706,700
Net increase (decrease) in net assets resulting from operations	$	53,682,481

MGD-22 Semiannual Report   |    The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL STATEMENTS

Statements of Changes in Net Assets

	Franklin Mutual Global Discovery VIP Fund
	Six Months Ended June 30, 2014 (unaudited)			Year Ended December 31, 2013
Increase (decrease) in net assets:
Operations:
Net investment income	$	16,975,781		$	14,042,917
Net realized gain (loss) from investments, written options, foreign currency transactions, futures contracts and securities sold short		13,905,795			51,438,971
Net change in unrealized appreciation (depreciation) on investments and translation of other assets and liabilities denominated in foreign currencies		22,800,905			116,840,987
Net increase (decrease) in net assets resulting from operations		53,682,481			182,322,875
Distributions to shareholders from:
Net investment income:
Class 1		—			(52,604	)
Class 2		—			(14,417,027	)
Class 4		—			(1,382,402	)
Net realized gains:
Class 1		—			(195,304	)
Class 2		—			(59,917,989	)
Class 4		—			(5,990,316	)
Total distributions to shareholders		—			(81,955,642	)
Capital share transactions: (Note 2)
Class 1		(695,319	)		1,149,200
Class 2		(13,861,052	)		(67,039,527	)
Class 4		(6,767,889	)		(825,524	)
Total capital share transactions		(21,324,260	)		(66,715,851	)
Net increase (decrease) in net assets		32,358,221			33,651,382
Net assets:
Beginning of period		757,598,858			723,947,476
End of period	$	789,957,079		$	757,598,858
Undistributed net investment income included in net assets:
End of period	$	32,001,349		$	15,025,568

The accompanying notes are an integral part of these financial statements.    |   Semiannual Report MGD-23

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Notes to Financial Statements (unaudited)

Franklin Mutual Global Discovery VIP Fund

1. Organization and Significant Accounting Policies

Franklin Templeton Variable Insurance Products Trust (Trust) is registered under the Investment Company Act of 1940, as amended, (1940 Act) as an open-end management investment company, consisting of twenty separate funds and applies the specialized accounting and reporting guidance in U.S. Generally Accepted Accounting Principles (U.S. GAAP). The Franklin Mutual Global Discovery VIP Fund (Fund) is included in this report. The financial statements of the remaining funds in the Trust are presented separately. Shares of the Fund are generally sold only to insurance company separate accounts to fund the benefits of variable life insurance policies or variable annuity contracts. At June 30, 2014, 64.81% of the Fund’s shares were held through one insurance company. Investment activities of these insurance company separate accounts could have a material impact on the Fund. The Fund offers three classes of shares: Class 1, Class 2, and Class 4. Each class of shares differs by its distribution fees, voting rights on matters affecting a single class and its exchange privilege.

Effective May 1, 2014, the Mutual Global Discovery Securities Fund was renamed the Franklin Mutual Global Discovery VIP Fund.

The following summarizes the Fund’s significant accounting policies.

a. Financial Instrument Valuation

The Fund’s investments in financial instruments are carried at fair value daily. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. The Fund calculates the net asset value (NAV) per share at the close of the New York Stock Exchange (NYSE), generally at 4 p.m. Eastern time (NYSE close) on each day the NYSE is open for trading. Under compliance policies and procedures approved by the Trust’s Board of Trustees (the Board), the Fund’s administrator has responsibility for oversight of valuation, including leading the cross-functional Valuation and Liquidity Oversight Committee (VLOC). The VLOC provides administration and oversight of the Fund’s valuation policies and procedures, which are approved annually by the Board. Among other things, these procedures allow the Fund to utilize independent pricing services, quotations from securities and financial instrument dealers, and other market sources to determine fair value.

Equity securities and derivative financial instruments (derivatives) listed on an exchange or on the NASDAQ National Market System are valued at the last quoted sale price or the official closing price of the day, respectively. Foreign equity securities are valued as of the close of trading on the foreign stock exchange on which the security is primarily traded or as of the NYSE close, whichever is earlier. The value is then converted into its U.S. dollar equivalent at the foreign exchange rate in effect at the NYSE close on the day that the value of the security is determined. Over-the-counter (OTC) securities are valued within the range of the most recent quoted bid and ask prices. Securities that trade in multiple markets or on multiple exchanges are valued according to the broadest and most representative market. Certain equity securities are valued based upon fundamental characteristics or relationships to similar securities.

Debt securities generally trade in the OTC market rather than on a securities exchange. The Fund’s pricing services use multiple valuation techniques to determine fair value. In instances where sufficient market activity exists, the pricing services may utilize a market-based approach through which quotes from market makers are used to determine fair value. In instances where sufficient market activity may not exist or is limited, the pricing services also utilize proprietary valuation models which may consider market characteristics such as benchmark yield curves, credit spreads, estimated default rates, anticipated market interest rate volatility, coupon rates, anticipated timing of principal repayments, underlying collateral, and other unique security features in order to estimate the relevant cash flows, which are then discounted to calculate the fair value. Securities denominated in a foreign currency are converted into their U.S. dollar equivalent at the foreign exchange rate in effect at the NYSE close on the date that the values of the foreign debt securities are determined.

Certain derivatives trade in the OTC market. The Fund’s pricing services use various techniques including industry standard option pricing models and proprietary discounted cash flow models to determine the fair value of those instruments. The Fund’s net benefit or obligation under the derivative contract, as measured by the fair value of the contract, is included in net assets.

The Fund has procedures to determine the fair value of financial instruments for which market prices are not reliable or readily available. Under these procedures, the VLOC convenes on a

MGD-24 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual Global Discovery VIP Fund (continued)

regular basis to review such financial instruments and considers a number of factors, including significant unobservable valuation inputs, when arriving at fair value. The VLOC primarily employs a market-based approach which may use related or comparable assets or liabilities, recent transactions, market multiples, book values, and other relevant information for the investment to determine the fair value of the investment. An income-based valuation approach may also be used in which the anticipated future cash flows of the investment are discounted to calculate fair value. Discounts may also be applied due to the nature or duration of any restrictions on the disposition of the investments. Due to the inherent uncertainty of valuations of such investments, the fair values may differ significantly from the values that would have been used had an active market existed. The VLOC employs various methods for calibrating these valuation approaches including a regular review of key inputs and assumptions, transactional back-testing or disposition analysis, and reviews of any related market activity.

Trading in securities on foreign securities stock exchanges and OTC markets may be completed before the daily NYSE close. In addition, trading in certain foreign markets may not take place on every NYSE business day. Occasionally, events occur between the time at which trading in a foreign security is completed and the close of the NYSE that might call into question the reliability of the value of a portfolio security held by the Fund. As a result, differences may arise between the value of the Fund’s portfolio securities as determined at the foreign market close and the latest indications of value at the close of the NYSE. In order to minimize the potential for these differences, the VLOC monitors price movements following the close of trading in foreign stock markets through a series of country specific market proxies (such as baskets of American Depositary Receipts, futures contracts and exchange traded funds). These price movements are measured against established trigger thresholds for each specific market proxy to assist in determining if an event has occurred that may call into question the reliability of the values of the foreign securities held by the Fund. If such an event occurs, the securities may be valued using fair value procedures, which may include the use of independent pricing services.

Also, when the last day of the reporting period is a non-business day, certain foreign markets may be open on those days that the NYSE is closed, which could result in differences between the value of the Fund’s portfolio securities on the last business day and the last calendar day of the reporting period. Any

significant security valuation changes due to an open foreign market are adjusted and reflected by the Fund for financial reporting purposes.

b. Foreign Currency Translation

Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars based on the exchange rate of such currencies against U.S. dollars on the date of valuation. The Fund may enter into foreign currency exchange contracts to facilitate transactions denominated in a foreign currency. Purchases and sales of securities, income and expense items denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date. Portfolio securities and assets and liabilities denominated in foreign currencies contain risks that those currencies will decline in value relative to the U.S. dollar. Occasionally, events may impact the availability or reliability of foreign exchange rates used to convert the U.S. dollar equivalent value. If such an event occurs, the foreign exchange rate will be valued at fair value using procedures established and approved by the Board.

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

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

c. Derivative Financial Instruments

The Fund invested in derivatives in order to manage risk or gain exposure to various other investments or markets. Derivatives are financial contracts based on an underlying or notional amount, require no initial investment or an initial net investment that is smaller than would normally be required to have a similar response to changes in market factors, and require or permit net settlement. Derivatives contain various risks including the potential inability of the counterparty to fulfill their obligations

Semiannual Report MGD-25

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual Global Discovery VIP Fund (continued)

1. Organization and Significant Accounting Policies (continued)

c. Derivative Financial Instruments (continued)

under the terms of the contract, the potential for an illiquid secondary market, and/or the potential for market movements which expose the Fund to gains or losses in excess of the amounts shown on the Statement of Assets and Liabilities. Realized gain and loss and unrealized appreciation and depreciation on these contracts for the period are included in the Statement of Operations.

Derivative counterparty credit risk is managed through a formal evaluation of the creditworthiness of all potential counterparties. The Fund attempts to reduce its exposure to counterparty credit risk on OTC derivatives, whenever possible, by entering into International Swaps and Derivatives Association (ISDA) master agreements with certain counterparties. These agreements contain various provisions, including but not limited to collateral requirements, events of default, or early termination. Termination events applicable to the counterparty include certain deteriorations in the credit quality of the counterparty. Termination events applicable to the Fund include failure of the Fund to maintain certain net asset levels and/or limit the decline in net assets over various periods of time. In the event of default or early termination, the ISDA master agreement gives the non-defaulting party the right to net and close-out all transactions traded, whether or not arising under the ISDA agreement, to one net amount payable by one counterparty to the other. However, absent an event of default or early termination, OTC derivative assets and liabilities are presented gross and not offset in the Statement of Assets and Liabilities. Early termination by the counterparty may result in an immediate payment by the Fund of any net liability owed to that counterparty under the ISDA agreement. At June 30, 2014, the Fund had OTC derivatives in a net liability position of $2,156,389 and the aggregate value of collateral pledged for such contracts was $1,527,548.

Collateral requirements differ by type of derivative. Collateral or initial margin requirements are set by the broker or exchange clearing house for exchange traded and centrally cleared derivatives. Initial margin deposited is held at the exchange and can be in the form of cash and/or securities. For OTC derivatives traded under an ISDA master agreement, posting of collateral is required by either the fund or the applicable counterparty if the total net exposure of all OTC derivatives with the applicable counterparty exceeds the minimum transfer

amount, which typically ranges from $100,000 to $250,000, and can vary depending on the counterparty and the type of the agreement. Generally, collateral is determined at the close of fund business each day and any additional collateral required due to changes in derivative values may be delivered by the fund or the counterparty within a few business days. Collateral pledged and/or received by the fund for OTC derivatives, if any, is held in segregated accounts with the fund’s custodian/counterparty broker and can be in the form of cash and/or securities. Unrestricted cash may be invested according to the Fund’s investment objectives.

The Fund entered into exchange traded futures contracts primarily to manage exposure to certain foreign currencies. A futures contract is an agreement between the Fund and a counterparty to buy or sell an asset for a specified price on a future date. Required initial margins are pledged by the Fund, and the daily change in fair value is accounted for as a variation margin payable or receivable on the Statement of Assets and Liabilities.

The Fund entered into OTC forward exchange contracts primarily to manage exposure to certain foreign currencies. A forward exchange contract is an agreement between the Fund and a counterparty to buy or sell a foreign currency at a specific exchange rate on a future date.

The Fund purchased or wrote exchange traded option contracts primarily to manage exposure to equity price risk. An option is a contract entitling the holder to purchase or sell a specific amount of shares or units of an asset or notional amount of a swap (swaption), at a specified price. Options purchased are recorded as an asset while options written are recorded as a liability. Upon exercise of an option, the acquisition cost or sales proceeds of the underlying investment is adjusted by any premium received or paid. Upon expiration of an option, any premium received or paid is recorded as a realized gain or loss. Upon closing an option other than through expiration or exercise, the difference between the premium and the cost to close the position is recorded as a realized gain or loss.

See Notes 6 and 10 regarding investment transactions and other derivative information, respectively.

d. Securities Sold Short

The Fund is engaged in selling securities short, which obligates the Fund to replace a borrowed security with the same security at current fair value. The Fund incurs a loss if the price of the security increases between the date of the short sale and the date

MGD-26 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual Global Discovery VIP Fund (continued)

on which the Fund replaces the borrowed security. The Fund realizes a gain if the price of the security declines between those dates. Gains are limited to the price at which the Fund sold the security short, while losses are potentially unlimited in size.

The Fund is required to establish a margin account with the broker lending the security sold short. While the short sale is outstanding, the broker retains the proceeds of the short sale to the extent necessary to meet margin requirements until the short position is closed out. A deposit must also be maintained with the Fund’s custodian/counterparty broker consisting of cash and/or securities having a value equal to a specified percentage of the value of the securities sold short. The Fund is obligated to pay fees for borrowing the securities sold short and is required to pay the counterparty any dividends and/or interest due on securities sold short. Such dividends and/or interest and any security borrowing fees are recorded as an expense to the Fund.

e. Securities Lending

The Fund participates in an agency based securities lending program. The Fund receives cash collateral against the loaned securities in an amount equal to at least 102% of the fair value of the loaned securities. Collateral is maintained over the life of the loan in an amount not less than 100% of the fair value of loaned securities, as determined at the close of fund business each day; any additional collateral required due to changes in security values is delivered to the Fund on the next business day. The collateral is invested in non-registered money fund. The Fund receives income from the investment of cash collateral, in addition to lending fees and rebates paid by the borrower. The Fund bears the market risk with respect to the collateral investment, securities loaned, and the risk that the agent may default on its obligations to the Fund. The securities lending agent has agreed to indemnify the Fund in the event of default by a third party borrower. At June 30, 2014, the Fund had no securities on loan.

f. Senior Floating Rate Interests

The Fund invests in senior secured corporate loans that pay interest at rates which are periodically reset by reference to a base lending rate plus a spread. These base lending rates are generally the prime rate offered by a designated U.S. bank or the London InterBank Offered Rate (LIBOR). Senior secured corporate loans often require prepayment of principal from excess cash flows or at the discretion of the borrower. As a result, actual maturity may be substantially less than the stated maturity.

Senior secured corporate loans in which the Fund invests are generally readily marketable, but may be subject to certain restrictions on resale.

g. Income and Deferred Taxes

It is the Fund’s policy to qualify as a regulated investment company under the Internal Revenue Code. The Fund intends to distribute to shareholders substantially all of its taxable income and net realized gains to relieve it from federal income and if applicable, excise taxes. As a result, no provision for U.S. federal income taxes is required.

The Fund may be subject to foreign taxation related to income received, capital gains on the sale of securities and certain foreign currency transactions in the foreign jurisdictions in which it invests. Foreign taxes, if any, are recorded based on the tax regulations and rates that exist in the foreign markets in which the Fund invests. When a capital gain tax is determined to apply the Fund records an estimated deferred tax liability in an amount that would be payable if the securities were disposed of on the valuation date.

The Fund recognizes the tax benefits of uncertain tax positions only when the position is “more likely than not” to be sustained upon examination by the tax authorities based on the technical merits of the tax position. As of June 30, 2014, and for all open tax years, the Fund has determined that no liability for unrecognized tax benefits is required in the Fund’s financial statements related to uncertain tax positions taken on a tax return (or expected to be taken on future tax returns). Open tax years are those that remain subject to examination and are based on each tax jurisdiction statute of limitation.

h. Security Transactions, Investment Income, Expenses and Distributions

Security transactions are accounted for on trade date. Realized gains and losses on security transactions are determined on a specific identification basis. Interest income and estimated expenses are accrued daily. Amortization of premium and accretion of discount on debt securities are included in interest income. Dividend income and dividends declared on securities sold short are recorded on the ex-dividend date except that certain dividends from foreign securities are recognized as soon as the Fund is notified of the ex-dividend date. Distributions to shareholders are recorded on the ex-dividend date and are determined according to income tax regulations (tax basis).

Semiannual Report MGD-27

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual Global Discovery VIP Fund (continued)

1. Organization and Significant Accounting Policies (continued)

h. Security Transactions, Investment Income, Expenses and Distributions (continued)

Distributable earnings determined on a tax basis may differ from earnings recorded in accordance with accounting principles generally accepted in the United States of America. These differences may be permanent or temporary. Permanent differences are reclassified among capital accounts to reflect their tax character. These reclassifications have no impact on net assets or the results of operations. Temporary differences are not reclassified, as they may reverse in subsequent periods.

Common expenses incurred by the Trust are allocated among the funds based on the ratio of net assets of each fund to the combined net assets of the Trust. Fund specific expenses are charged directly to the fund that incurred the expense.

Realized and unrealized gains and losses and net investment income, not including class specific expenses, are allocated daily to each class of shares based upon the relative proportion of net

assets of each class. Differences in per share distributions, by class, are generally due to differences in class specific expenses.

i. Accounting Estimates

The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the amounts of income and expenses during the reporting period. Actual results could differ from those estimates.

j. Guarantees and Indemnifications

Under the Trust’s organizational documents, its officers and trustees are indemnified by the Trust against certain liabilities arising out of the performance of their duties to the Trust. Additionally, in the normal course of business, the Trust, on behalf of the Fund, enters into contracts with service providers that contain general indemnification clauses. The Trust’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Trust that have not yet occurred. Currently, the Trust expects the risk of loss to be remote.

2. Shares of Beneficial Interest

At June 30, 2014, there were an unlimited number of shares authorized (without par value). Transactions in the Fund’s shares were as follows:

	Six Months Ended June 30, 2014						Year Ended December 31, 2013
	Shares			Amount			Shares			Amount
Class 1 Shares:
Shares sold		6,835		$	162,044			44,760		$	1,035,207
Shares issued in reinvestment of distributions		—			—			11,601			247,908
Shares redeemed		(36,487	)		(857,363	)		(5,936	)		(133,915	)
Net increase (decrease)		(29,652	)	$	(695,319	)		50,425		$	1,149,200
Class 2 Shares:
Shares sold		2,119,975		$	49,569,013			4,182,129		$	92,856,510
Shares issued in reinvestment of distributions		—			—			3,546,518			74,335,016
Shares redeemed		(2,719,401	)		(63,430,065	)		(10,488,139	)		(234,231,053	)
Net increase (decrease)		(599,426	)	$	(13,861,052	)		(2,759,492	)	$	(67,039,527	)
Class 4 Shares:
Shares sold		38,965		$	905,748			372,331		$	8,412,949
Shares issued on reinvestment of distributions		—			—			347,770			7,372,718
Shares redeemed		(320,453	)		(7,673,637	)		(733,968	)		(16,611,191	)
Net increase (decrease)		(281,488	)	$	(6,767,889	)		(13,867	)	$	(825,524	)

MGD-28 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual Global Discovery VIP Fund (continued)

3. Transactions With Affiliates

Franklin Resources, Inc. is the holding company for various subsidiaries that together are referred to as Franklin Templeton Investments. Certain officers and trustees of the Fund are also officers and/or directors of the following subsidiaries:

Subsidiary	Affiliation
Franklin Mutual Advisers, LLC (Franklin Mutual)	Investment manager
Franklin Templeton Services, LLC (FT Services)	Administrative manager
Franklin Templeton Distributors, Inc. (Distributors)	Principal underwriter
Franklin Templeton Investor Services, LLC (Investor Services)	Transfer agent

a. Management Fees

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

Annualized Fee Rate	Net Assets
0.950%	Up to and including $200 million
0.935%	Over $200 million, up to and including $700 million
0.900%	Over $700 million, up to and including $1.2 billion
0.875%	Over $1.2 billion, up to and including $4 billion
0.845%	Over $4 billion, up to and including $7 billion
0.825%	Over $7 billion, up to and including $10 billion
0.805%	In excess of $10 billion

Effective May 1, 2014, the Fund combined its investment management and administration agreements as approved by the Board. The fees paid under the combined agreement do not exceed the aggregate fees that were paid under the separate agreements.

Prior to May 1, 2014, the Fund paid fees to Franklin Mutual based on the average daily net assets of the Fund as follows:

Annualized Fee Rate	Net Assets
0.800%	Up to and including $4 billion
0.770%	Over $4 billion, up to and including $7 billion
0.750%	Over $7 billion, up to and including $10 billion
0.730%	In excess of $10 billion

b. Administrative Fees

Effective May 1, 2014, under an agreement with Franklin Mutual, FT Services provides administrative services to the Fund. The fee is paid by Franklin Mutual based on the Fund’s average daily net assets, and is not an additional expense of the Fund.

Prior to May 1, 2014, the Fund paid fees to FT Services based on the average daily net assets of the Fund as follows:

Annualized Fee Rate	Net Assets
0.150%	Up to and including $200 million
0.135%	Over $200 million, up to and including $700 million
0.100%	Over $700 million, up to and including $1.2 billion
0.075%	In excess of $1.2 billion

Semiannual Report MGD-29

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual Global Discovery VIP Fund (continued)

3. Transactions With Affiliates (continued)

c. Distribution Fees

The Board has adopted distribution plans for Class 2 and Class 4 shares pursuant to Rule 12b-1 under the 1940 Act. Under the Fund’s compensation distribution plans, the Fund pays Distributors for costs incurred in connection with the servicing, sale and distribution of the Fund’s shares up to 0.35% per year of its average daily net assets of each class. Some distribution fees are not charged on shares held by affiliates. The Board has agreed to limit the current rate to 0.25% per year for Class 2. The plan year, for purposes of monitoring compliance with the maximum annual plan rates, is February 1 through January 31.

d. Transfer Agent Fees

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

4. Expense Offset Arrangement

The Fund has entered into an arrangement with its custodian whereby credits realized as a result of uninvested cash balances are used to reduce a portion of the Fund’s custodian expenses. During the period ended June 30, 2014, the custodian fees were reduced as noted in the Statement of Operations.

5. Income Taxes

At June 30, 2014, the cost of investments and net unrealized appreciation (depreciation) for income tax purposes were as follows:

Cost of investments	$578,318,568
Unrealized appreciation	$233,935,780
Unrealized depreciation	(20,564,324)
Net unrealized appreciation (depreciation)	$213,371,456

Differences between income and/or capital gains as determined on a book basis and a tax basis are primarily due to differing treatments of foreign currency transactions, tax straddles and bond discounts and premiums.

6. Investment Transactions

Purchases and sales of investments (excluding short term securities and securities sold short) for the period ended June 30, 2014, aggregated $86,605,841 and $93,293,552, respectively.

Transactions in options written during the period ended June 30, 2014, were as follows:

	Number of Contracts			Premiums Received
Options outstanding at December 31, 2013		—		$	—
Options written		40			19,962
Options expired		—			—
Options exercised		(40	)		(19,962	)
Options closed		—			—
Options outstanding at June 30, 2014		—		$	—

See Notes 1(c) and 10 regarding derivative financial instruments and other derivative information, respectively.

7. Credit Risk and Defaulted Securities

The Fund may purchase the pre-default or defaulted debt of distressed companies. Distressed companies are financially troubled and are about to be or are already involved in financial restructuring or bankruptcy. Risks associated with purchasing these securities

MGD-30 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual Global Discovery VIP Fund (continued)

include the possibility that the bankruptcy or other restructuring process takes longer than expected, or that distributions in restructuring are less than anticipated, either or both of which may result in unfavorable consequences to the Fund. If it becomes probable that the income on debt securities, including those of distressed companies, will not be collected, the Fund discontinues accruing income and recognizes an adjustment for uncollectible interest.

At June 30, 2014, the aggregate long value of distressed company securities for which interest recognition has been discontinued was $5,408,662, representing 0.68% of the Fund’s net assets. For information as to specific securities, see the accompanying Statement of Investments.

8. Concentration of Risk

Investing in foreign securities may include certain risks and considerations not typically associated with investing in U.S. securities, such as fluctuating currency values and changing local and regional economic, political and social conditions, which may result in greater market volatility. In addition, certain foreign securities may not be as liquid as U.S. securities.

9. Restricted Securities

The Fund invests in securities that are restricted under the Securities Act of 1933 (1933 Act) or which are subject to legal, contractual, or other agreed upon restrictions on resale. Restricted securities are often purchased in private placement transactions, and cannot be sold without prior registration unless the sale is pursuant to an exemption under the 1933 Act. Disposal of these securities may require greater effort and expense, and prompt sale at an acceptable price may be difficult. The Fund may have registration rights for restricted securities. The issuer generally incurs all registration costs.

At June 30, 2014, the Fund held investments in restricted securities, excluding certain securities exempt from registration under the 1933 Act deemed to be liquid, as follows:

Principal Amount/ Shares	Issuer	Acquisition Dates		Cost		Value
800,000	The Bankshares Inc.		3/22/07	$	8,000,000	$	4,109,947
595	Broadband Ventures III LLC, secured promissory note, 5.00%, 2/01/12		7/01/10 - 11/30/12		595		—
2,077,368	FIM Coinvestor Holdings I, LLC		11/20/06 - 6/02/09		—		—
2,172,000	Hightower Holding LLC, pfd., A, Series 2		6/10/10 - 5/10/12		5,430,000		4,388,309
424,073	International Automotive Components Group Brazil LLC		4/13/06 - 12/26/08		281,629		67,627
4,052,916	International Automotive Components Group North America, LLC		1/12/06 - 3/18/13		3,247,714		3,739,950
2,140	Olympus Re Holdings Ltd.		12/19/01		200,477		—
	Total Restricted Securities (Value is 1.56% of Net Assets)			$	17,160,415	$	12,305,833

10. Other Derivative Information

At June 30, 2014, the Fund’s investments in derivative contracts are reflected on the Statement of Assets and Liabilities as follows:

	Asset Derivatives		Liability Derivatives
Derivative Contracts Not Accounted for as Hedging Instruments	Statement of Assets and Liabilities Location	Fair Value Amount	Statement of Assets and Liabilities Location	Fair Value Amount
Foreign exchange contracts	Unrealized appreciation on forward exchange contracts	$264,726	Unrealized depreciation on forward exchange contracts / Net assets consist of - net unrealized appreciation (depreciation)	$3,418,082a

^aIncludes cumulative appreciation (depreciation) of futures contracts as reported in the Statement of Investments. Only current day’s variation margin is separately reported within the Statement of Assets and Liabilities.

Semiannual Report MGD-31

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual Global Discovery VIP Fund (continued)

10. Other Derivative Information (continued)

For the period June 30, 2014 ended, the effect of derivative contracts on the Fund’s Statement of Operations was as follows:

Derivative Contracts Not Accounted for as Hedging Instruments	Statement of Operations Locations	Realized Gain (Loss) for the Period	Change in Unrealized Appreciation (Depreciation) for the Period
Foreign exchange contracts	Net realized gain (loss) from foreign currency transactions and futures contracts / Net change in unrealized appreciation (depreciation) on translation of other assets and liabilities denominated in foreign currencies	$(3,635,941)	$1,486,188

For the period ended June 30, 2014, the average month end fair value of derivatives represented 0.45% of average month end net assets. The average month end number of open derivative contracts for the period was 218.

See Notes 1(c) and 6 regarding derivative financial instruments and investments transactions, respectively.

11. Holdings of 5% Voting Securities of Portfolio Companies

The 1940 Act defines “affiliated companies” to include investments in portfolio companies in which a fund owns 5% or more of the outstanding voting securities. Investments in “affiliated companies” for the Fund for the period ended June 30, 2014, were as shown below.

Name of Issuer	Number of Shares Held at Beginning of Period		Gross Additions		Gross Reductions		Number of Shares Held at End of Period		Value at End of Period		Investment Income		Realized Capital Gain (Loss)
Non-Controlled Affiliates
The Bankshares Inc. (Value is 0.52% of Net Assets)		800,000		—		—		800,000	$	4,109,947	$	—	$	—

12. Credit Facility

The Fund, together with other U.S. registered and foreign investment funds (collectively, Borrowers), managed by Franklin Templeton Investments, are borrowers in a joint syndicated senior unsecured credit facility totaling $1.5 billion (Global Credit Facility) which matures on February 13, 2015. This Global Credit Facility provides a source of funds to the Borrowers for temporary and emergency purposes, including the ability to meet future unanticipated or unusually large redemption requests.

Under the terms of the Global Credit Facility, the Fund shall, in addition to interest charged on any borrowings made by the Fund and other costs incurred by the Fund, pay its share of fees and expenses incurred in connection with the implementation and maintenance of the Global Credit Facility, based upon its relative share of the aggregate net assets of all of the Borrowers, including an annual commitment fee of 0.07% based upon the unused portion of the Global Credit Facility. These fees are reflected in other expenses on the Statement of Operations. During the period ended June 30, 2014, the Fund did not use the Global Credit Facility.

13. Fair Value Measurements

The Fund follows a fair value hierarchy that distinguishes between market data obtained from independent sources (observable inputs) and the Fund’s own market assumptions (unobservable inputs). These inputs are used in determining the value of the Fund’s financial instruments and are summarized in the following fair value hierarchy:

• Level 1 – quoted prices in active markets for identical financial instruments

• Level 2 – other significant observable inputs (including quoted prices for similar financial instruments, interest rates, prepayment speed, credit risk, etc.)

MGD-32 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual Global Discovery VIP Fund (continued)

13. Fair Value Measurements (continued)

• Level 3 – significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of financial instruments)

The input levels are not necessarily an indication of the risk or liquidity associated with financial instruments at that level.

For movements between the levels within the fair value hierarchy, the Fund has adopted a policy of recognizing the transfers as of the date of the underlying event which caused the movement.

A summary of inputs used as of June 30, 2014, in valuing the Fund’s assets and liabilities carried at fair value, is as follows:

	Level 1		Level 2		Level 3			Total
Assets:
Investments in Securities
Equity Investments:a
Auto Components	$	3,680,544	$	—	$	3,807,577		$	7,488,121
Banks		83,636,997		6,372,859		4,109,947			94,119,803
Diversified Financial Services		10,622,783		—		4,388,309			15,011,092
Paper & Forest Products		—		1,611,528		—			1,611,528
Real Estate Management & Development		—		—		3,705,733			3,705,733
All Other Equity Investmentsb		601,343,224		—		—	c		601,343,224
Corporate Notes and Senior Floating Rate Interests		—		22,987,424		—			22,987,424
Corporate Notes and Senior Floating Rate Interests in Reorganization		—		10,315,841		—	c		10,315,841
Companies in Liquidation		53,796		7,963,343		—	c		8,017,139
Municipal Bonds		—		1,991,805		—			1,991,805
Short Term Investments		19,998,314		5,100,000		—			25,098,314
Total Investments in Securities	$	719,335,658	$	56,342,800	$	16,011,566		$	791,690,024
Other Financial Instruments
Forward Exchange Contracts	$	—	$	264,726	$	—		$	264,726
Liabilities:
Other Financial Instruments
Securities Sold Short	$	4,306,247	$	—	$	—		$	4,306,247
Futures Contracts		827,881		—		—			827,881
Forward Exchange Contracts		—		2,590,201		—			2,590,201
Total Other Financial Instruments	$	5,134,128	$	2,590,201	$	—		$	7,724,329

^aIncludes common and preferred stocks as well as other equity investments.

^bFor detailed categories, see the accompanying Statement of Investments.

^cIncludes securities determined to have no value at June 30, 2014.

Semiannual Report MGD-33

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual Global Discovery VIP Fund (continued)

13. Fair Value Measurements (continued)

A reconciliation of assets in which Level 3 inputs are used in determining fair value is presented when there are significant Level 3 financial instruments at the end of the period. At June 30, 2014, the reconciliation of assets is as follows:

	Balance at Beginning of Period			Purchases		Sales			Transfers Into (Out of) Level 3		Cost Basis Adjustmentsa		Net Realized Gain (Loss)			Net Unrealized Gain (Loss)		Balance at End of Period			Net Change in Unrealized Appreciation (Depreciation) on Assets Held at Period End
Assets:
Investments in Securities:
Equity Investments:b
Auto Components	$	2,375,839		$	—	$	—		$	—	$	—	$	—		$	1,431,738	$	3,807,577		$	1,431,738
Banks		3,815,192			—		—			—		—		—			294,755		4,109,947			294,755
Diversified Financial Services		4,131,361			—		—			—		—		—			256,948		4,388,309			256,948
Insurance		410,692	c		—		(391,596	)		—		—		(184,109	)		165,013		—	c		—
Real Estate Management & Development		2,518,473			—		—			—		—		—			1,187,260		3,705,733			1,187,260
Total	$	13,251,557		$	—	$	(391,596	)	$	—	$	—	$	(184,109	)	$	3,335,714	$	16,011,566		$	3,170,701

^aMay include accretion, amortization, partnership adjustments, and/or other cost basis adjustments.

^bIncludes common and preferred stocks as well as other equity investments.

^cIncludes securities determined to have no value.

Significant unobservable valuation inputs developed by the VLOC for material Level 3 financial instruments and impact to fair value as a result of changes in unobservable valuation inputs as of June 30, 2014, are as follows:

Description	Fair Value at End of Period		Valuation Technique	Unobservable Inputs	Amount/ Range		Impact to Fair Value if Input Increasesa
Assets:
Investments in Securities
Equity Investments:b
Auto Components	$	3,739,950	Market comparables	Discount for lack of marketability EV / EBITDA multiple		10% 4.1x		Decrease Increase	c  d
Banks		4,109,947	Market comparables	Discount for lack of marketability		5%		Decrease	c
Diversified Financial Services		4,388,309	Discounted cash flow model	Cost of equity Long-term revenue growth rate Adjusted EBITDA margin		17% 6.2% - 26.6% 11.2% - 21.6%		Decrease Increase Increase	d  c
Real Estate Management & Development		3,705,733	Market comparables	Discount for lack of marketability		8%		Decrease	c
All Other Investmentse		67,627
Total	$	16,011,566

^aRepresents the directional change in the fair value of the Level 3 investments that would result from a significant and reasonable increase in the corresponding input. A significant and reasonable decrease in the input would have the opposite effect. Significant impacts, if any, to fair value and/or net assets have been indicated.

^bIncludes common and convertible preferred stocks.

^cRepresents a significant impact to fair value but not net assets.

^dRepresents a significant impact to fair value and net assets.

^eIncludes fair value of immaterial investments developed using various valuation techniques and unobservable inputs. May also include investments with values derived using prior transaction prices or third party pricing information without adjustment for which such inputs are also unobservable.

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FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual Global Discovery VIP Fund (continued)

Abbreviations List

EBITDA	Earnings before interest, taxes, depreciation and amortization
EV	Enterprise value

14. New Accounting Pronouncements

In June 2014, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) No. 2014-11, Transfers and Servicing (Topic 860), Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures. The ASU changes the accounting for certain repurchase agreements and expands disclosure requirements related to repurchase agreements, securities lending, repurchase-to-maturity and similar transactions. The ASU is effective for interim and annual reporting periods beginning after December 15, 2014. Management is currently evaluating the impact, if any, of applying this provision.

15. Subsequent Events

The Fund has evaluated subsequent events through the issuance of the financial statements and determined that no events have occurred that require disclosure.

Abbreviations

Counterparty		Currency		Selected Portfolio
BOFA	Bank of America N.A.	CHF	Swiss Franc	ADR	American Depositary Receipt
BONY	Bank of New York Mellon	EUR	Euro	FHLB	Federal Home Loan Bank
BZWS	Barclays Bank PLC	GBP	British Pound	GO	General Obligation
DBAB	Deutsche Bank AG	USD	United States Dollar	IDR	International Depositary Receipt
FBCO	Credit Suisse Group AG
HSBC	HSBC Bank USA, N.A.
SCBT	Standard Chartered Bank
SSBT	State Street Bank and Trust Co.

Semiannual Report MGD-35

Franklin Mutual Shares VIP Fund

(Formerly, Mutual Shares Securities Fund)

We are pleased to bring you Franklin Mutual Shares VIP Fund’s semiannual report for the period ended June 30, 2014.

Class 2 Performance Summary as of June 30, 2014

Franklin Mutual Shares VIP Fund – Class 2 delivered a total return of +8.04% for the six-month period ended June 30, 2014.

Performance reflects the Fund’s Class 2 operating expenses, but does not include any contract fees, expenses or sales charges. If they had been included, performance would be lower. These charges and deductions, particularly for variable life policies, can have a significant effect on contract values and insurance benefits. See the contract prospectus for a complete description of these expenses, including sales charges.

Performance data represent past performance, which does not guarantee future results. Investment return and principal value will fluctuate, and you may have a gain or loss when you sell your shares. Current performance may differ from figures shown.

Semiannual Report MS-1

FRANKLIN MUTUAL SHARES VIP FUND

Fund Goals and Main Investments: Franklin Mutual Shares VIP Fund seeks capital appreciation, with income as a secondary goal. Under normal market conditions, the Fund invests primarily in U.S. and foreign equity securities that the investment manager believes are undervalued.

Fund Risks: All investments involve risks, including possible loss of principal. Value securities may not increase in price as anticipated or may decline further in value. The Fund’s investments in foreign securities involve special risks including currency fluctuations, and economic and political uncertainties. The Fund may also invest in companies engaged in mergers, reorganizations or liquidations, which involve special risks as pending deals may not be completed on time or on favorable terms, as well as lower rated bonds, which entail higher credit risk. The Fund is actively managed but there is no guarantee that the manager’s investment decisions will produce the desired results. The Fund’s prospectus also includes a description of the main investment risks.

Performance Overview

You can find the Fund’s six-month total return in the Performance Summary. For comparison, the Fund’s benchmark, the Standard & Poor’s^® 500 Index, delivered a +7.14% total return for the period under review.¹

Economic and Market Overview

The U.S. economy showed some signs of recovery during the six-month period ended June 30, 2014, despite a first-quarter contraction in gross domestic product. Manufacturing activity expanded, and the unemployment rate declined to 6.1% in June 2014 from 6.7% in December 2013.² Except for a sharp increase in March, retail sales rose at a modest pace that missed consensus expectations. The housing market had some weather-related weakness early in 2014, but home sales picked up in the spring and home prices were higher than a year ago.

The Federal Reserve Board (Fed) began reducing bond purchases by $10 billion a month in January 2014, based on earlier largely positive economic and employment data. Although economic data in early 2014 were soft, Fed Chair Janet Yellen

kept the pace of asset-purchase tapering intact while adopting a more qualitative approach to rate-hike guidance. However, the Fed pledged to keep interest rates low for a considerable time after the asset-purchase program ends, depending on inflation and employment trends. In June, the Fed lowered projections for near- and long-term economic growth even as it maintained the pace of tapering.

The global economy grew moderately during the six months under review as many developed markets continued to recover and many emerging markets recorded continued growth. Major developed market central banks reaffirmed their accommodative monetary policies in an effort to support the ongoing recovery. In emerging markets, some central banks cut interest rates to boost economic growth, while others raised rates to control inflation and currency depreciation.

The U.K. economy grew relatively well in the first half of 2014, supported by the services and manufacturing sectors. In the second quarter, a preliminary estimate registered expansion at precrisis levels. The Japanese economy grew strongly during the first quarter of 2014 as consumption rose ahead of a sales tax increase in April. The Bank of Japan kept its monetary policy unchanged as it maintained an upbeat inflation forecast and reiterated that the economy continued to recover moderately, despite challenges resulting from the sales tax increase. Japan’s growth weakened, however, in the second quarter. Although out of recession, the eurozone experienced deflationary risks and weak employment trends. The region’s first-quarter economic growth was softer than many observers had expected. In the second quarter, concerns arose about the potential negative impacts to growth from the crisis in Ukraine and tension in the Middle East. Toward period-end, the European Central Bank reduced its main interest rate and, for the first time, set a negative deposit rate.

Stocks in developed markets advanced overall during the period amid a generally accommodative monetary policy environment, continued strength in corporate earnings and signs of an economic recovery. Global government and corporate bonds delivered solid performance as interest rates in many developed market countries remained low. Gold prices rose during the period, and oil prices increased amid supply concerns related to

1. Source: © 2014 Morningstar. One cannot invest directly in an index, and an index is not representative of the Fund’s portfolio. Please see Index Descriptions following the Fund Summaries.

2. Source: Bureau of Labor Statistics.

MS-2 Semiannual Report

FRANKLIN MUTUAL SHARES VIP FUND

geopolitical tensions. The U.S. dollar was relatively flat compared to most currencies.

Investment Strategy

At Franklin Mutual Series, we are committed to our distinctive value approach to investing. Our major investment strategy is investing in undervalued stocks. When selecting undervalued equities, we are attracted to fundamentally strong companies with healthy balance sheets, high-quality assets, substantial free cash flow and shareholder-oriented management teams and whose stocks are trading at discounts to our assessment of the companies’ intrinsic or business value. We also look for asset rich companies whose shares may be trading at depressed levels due to concerns over short-term earnings disappointments, litigation, management strategy or other perceived negatives. While the vast majority of our undervalued equity investments are made in publicly traded companies globally, we may invest occasionally in privately held companies as well.

We complement this more traditional investment strategy with two others. One is distressed investing, which is complex and can take many forms. The most common distressed investment the Fund undertakes is the purchase of financially troubled or bankrupt companies’ debt at a substantial discount to face value. After the financially distressed company is reorganized, often in bankruptcy court, the old debt is typically replaced with new securities issued by the financially stronger company.

The other piece of our investment strategy is participating in arbitrage situations, another highly specialized field. When companies announce proposed mergers or takeovers, commonly referred to as “deals,” the target company may trade at a discount to the bid it ultimately accepts. One form of arbitrage involves purchasing the target company’s stock when it is trading below the value we believe it would receive in a deal. In keeping with our commitment to a relatively conservative investment approach, we typically focus our arbitrage efforts on announced deals, and eschew rumored deals or other situations we consider relatively risky.

In addition, it is our practice to hedge the Fund’s currency exposure when we deem it advantageous for our shareholders.

What is meant by “hedge”?

To hedge an investment is to take a position intended to offset potential losses/gains that may be incurred by a companion financial instrument.

*Weightings may be negative or may not total 100% due to rounding, use of any derivatives, unsettled trades or other factors.

Manager’s Discussion

Many Fund holdings increased in value during the six-month period. Top contributors included Teva Pharmaceutical Industries, technology leader Apple and energy services firm Baker Hughes.

Shares of Israel-based Teva Pharmaceutical Industries rose notably in the first quarter of 2014, supported by positive developments related to the company’s most profitable drug, Copaxone, which is used to prevent the relapse of multiple sclerosis. In March, the U.S. Supreme Court agreed to hear Teva’s patent appeal, which could lead to potential delays in generic competition for Copaxone. In addition, the U.S. Food and Drug Administration (FDA) had delays approving a generic for Copaxone while Teva has done a good job converting more patients to its new formulation of the drug. This should help the company retain a higher portion of revenues and cash flows from this highly profitable product. Also supporting the share price was the announcement of a new chief executive officer (CEO), who the market believed could successfully execute on

Semiannual Report MS-3

FRANKLIN MUTUAL SHARES VIP FUND

Teva’s cost-cutting restructuring program. Despite Teva’s recent positive performance, at period-end, we still believed its shares had further upside potential. Our analysis suggested opportunities remained for margin expansion through restructuring efforts, especially in Teva’s generics division. We also believed that investors were not attaching appropriate value to its research and development investments.

In April, Apple reported quarterly results that beat consensus estimates, driven by its strong iPhone business. In addition, the company announced a trio of shareholder-friendly actions. Apple’s board of directors authorized an increase in the company’s share repurchase program to $90 billion from $60 billion while maintaining the December 2015 end date. The Board also approved an approximately 8% dividend increase and announced a 7-for-1 stock split that went into effect in early June.

Shares of Baker Hughes appreciated as U.S. oil shale drilling remained strong, natural gas prices jumped and customers’ international activity remained steady. In late January, management reiterated an upbeat message about progress in improving profitability in the company’s North American business. Baker Hughes reported better-than-expected quarterly results in April as margins benefited from improved efficiency and the resumption of activity in Iraq. At period-end, we believed the company could likely benefit further from internal restructuring actions and a renewed focus on capital allocation.

During the period under review, some of the Fund’s investments negatively affected performance. These included mobile telecommunications company Vodafone Group, automaker General Motors (GM) and diversified financial services firm Citigroup.

Top 10 Sectors/Industries
Based on Equity Securities
6/30/14
	% of Total Net Assets
Oil, Gas & Consumable Fuels		8.8%
Insurance		7.8%
Media		7.6%
Pharmaceuticals		7.3%
Banks		7.1%
Tobacco		5.4%
Software		4.1%
Food & Staples Retailing		4.0%
Technology Hardware, Storage & Peripherals		3.4%
Health Care Equipment & Supplies		3.1%

Top 10 Equity Holdings
6/30/14
Company Sector/Industry, Country	% of Total Net Assets
Microsoft Corp. Software, U.S.		2.7%
Medtronic Inc. Health Care Equipment & Supplies, U.S.		2.6%
Apple Inc. Technology Hardware, Storage & Peripherals, U.S.		2.5%
Merck & Co. Inc. Pharmaceuticals, U.S.		2.5%
Teva Pharmaceutical Industries Ltd., ADR Pharmaceuticals, Israel		1.9%
Cigna Corp. Health Care Providers & Services, U.S.		1.9%
PNC Financial Services Group Inc. Banks, U.S.		1.8%
Royal Dutch Shell PLC, A Oil, Gas & Consumable Fuels, U.K.		1.8%
British American Tobacco PLC Tobacco, U.K.		1.7%
Twenty-First Century Fox Inc., B Media, U.S.		1.7%

The dollar value, number of shares or principal amount, and names of all portfolio holdings are listed in the Fund’s Statement of Investments.

In May, U.K.-based Vodafone Group reported fiscal fourth-quarter results (the company has a March 31 fiscal year-end) as earnings fell short of expectations and capital spending increased significantly, following Vodafone’s strategic decision to significantly upgrade its network to offer a differentiated level of service. The company believed that consumers would be willing to pay a premium for network quality as data usage increases. We agreed with this position; however, in the near term, earnings were likely to be under pressure. With the possibility of a merger with AT&T on hold, we believed the primary near-term catalysts were potential market consolidation in Europe, disposals of non-core assets and the resolution of a tax dispute with India’s government, which could pave the way for an initial public offering of Vodafone’s India business.

GM issued an ongoing series of recalls for vehicles sold in North America due to potential problems with unexpected engine shutdowns. In February, the company reported quarterly results that fell short of consensus expectations, although the miss resulted largely from a one-time restructuring charge. The quarterly results reported in February and then in April showed continued improvement in Europe, and we believed the company

MS-4 Semiannual Report

FRANKLIN MUTUAL SHARES VIP FUND

has executed well on its European restructuring and ongoing launches of its pick-up trucks and sport utility vehicles. Additionally, we were encouraged by how GM’s new CEO, Mary Barra, has handled the recall-related concerns so far.

Citigroup announced disappointing fiscal fourth-quarter 2013 results in January reflecting weak revenue and higher expenses. Citigroup’s shares came under pressure again in March after it failed the Fed’s latest annual bank stress test, prohibiting Citigroup from repurchasing shares or increasing its dividend for 12 months. During the review period, political and economic events in emerging markets (EM) weighed on the stock price as Citigroup had more EM exposure than other U.S. banks, although exposure to particularly troubled areas such as Ukraine, Thailand and Turkey was relatively limited. Despite the company’s recent difficulties, we believed our investment thesis of modest top-line growth, positive operating leverage, the disposition of non-core assets and return of excess capital to shareholders remained intact.

During the period, the Fund held currency forwards and futures to somewhat hedge the currency risk of the portfolio’s non-U.S. dollar investments. The hedges had a minor negative impact on the Fund’s performance.

What is a currency forward contract?

A currency forward contract, also called a “currency forward,” is an agreement between the Fund and a counterparty to buy or sell a foreign currency at a specific exchange rate on a future date.

What is a futures contract?

A futures contract, also called a “future,” is an agreement between the Fund and a counterparty made through a U.S. or foreign futures exchange to buy or sell an asset at a specific price on a future date.

Thank you for your participation in Franklin Mutual Shares VIP Fund. We look forward to serving your future investment needs.

The foregoing information reflects our analysis, opinions and portfolio holdings as of June 30, 2014, the end of the reporting period. The way we implement our main investment strategies and the resulting portfolio holdings may change depending on factors such as market and economic conditions. These opinions may not be relied upon as investment advice or an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but the investment manager makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.

Semiannual Report MS-5

FRANKLIN MUTUAL SHARES VIP FUND

Class 2 Fund Expenses

As an investor in a variable insurance contract (Contract) that indirectly provides for investment in an underlying mutual fund, you can incur transaction and/or ongoing expenses at both the Fund level and the Contract level.

• Transaction expenses can include sales charges (loads) on purchases, surrender fees, transfer fees and premium taxes.

• Ongoing expenses can include management fees, distribution and service (12b-1) fees, contract fees, annual maintenance fees, mortality and expense risk fees and other fees and expenses. All mutual funds and Contracts have some types of ongoing expenses.

The expenses shown in the table are meant to highlight ongoing expenses at the Fund level only and do not include ongoing expenses at the Contract level, or transaction expenses at either the Fund or Contract levels. While the Fund does not have transaction expenses, if the transaction and ongoing expenses at the Contract level were included, the expenses shown below would be higher. You should consult your Contract prospectus or disclosure document for more information.

The table shows Fund-level ongoing expenses and can help you understand these expenses and compare them with those of other mutual funds offered through the Contract. The table assumes a $1,000 investment held for the six months indicated. Please refer to the Fund prospectus for additional information on operating expenses.

Actual Fund Expenses

The first line (Actual) of the table provides actual account values and expenses. The “Ending Account Value” is derived from the Fund’s actual return, which includes the effect of ongoing Fund expenses, but does not include the effect of ongoing Contract expenses.

You can estimate the Fund-level expenses you incurred during the period by following these steps. Of course, your account value and expenses will differ from those in this illustration:

1. Divide your account value by $1,000.

If an account had an $8,600 value, then $8,600 ÷ $1,000 = 8.6.

2. Multiply the result by the number under the heading “Fund-Level Expenses Incurred During Period.”

If Fund-Level Expenses Incurred During Period were $7.50, then 8.6 × $7.50 = $64.50.

In this illustration, the estimated expenses incurred this period at the Fund level are $64.50.

Hypothetical Example for Comparison with Other Mutual Funds

Information in the second line (Hypothetical) of the table can help you compare ongoing expenses of the Fund with those of other mutual funds offered through the Contract. This information may not be used to estimate the actual ending account balance or expenses you incurred during the period. The hypothetical “Ending Account Value” is based on the Fund’s actual expense ratio and an assumed 5% annual rate of return before expenses, which does not represent the Fund’s actual return. The figure under the heading “Fund-Level Expenses Incurred During Period” shows the hypothetical expenses your account would have incurred under this scenario. You can compare this figure with the 5% hypothetical examples that appear in shareholder reports of other funds offered through a Contract.

Class 2	Beginning Account Value 1/1/14		Ending Account Value 6/30/14		Fund-Level Expenses Incurred During Period* 1/1/14–6/30/14
Actual		$1,000		$1,080.40		$5.00
Hypothetical (5% return before expenses)		$1,000		$1,019.98		$4.86

*Expenses are calculated using the most recent six-month annualized expense ratio for the Fund’s Class 2 shares (0.97%), which does not include any ongoing expenses of the Contract for which the Fund is an investment option, multiplied by the average account value over the period, multiplied by 181/365 to reflect the one-half year period.

MS-6 Semiannual Report

SUPPLEMENT DATED AUGUST 1, 2014

TOTHE PROSPECTUS DATED MAY 1, 2014

OF

FRANKLIN MUTUAL SHARES VIP FUND

(a series of Franklin Templeton Variable Insurance Products Trust)

The prospectus is amended as follows:

I.  The “Fund Summary – Annual Fund Operating Expenses” table beginning on page MS-S1 in the Fund’s Class 1 prospectus is replaced with the following:

Annual Fund Operating Expenses

(expenses that you pay each year as a percentage of the value of your investment)

	Class 1
Management fees1		0.69%
Distribution and service (12b-1) fees		None
Other expenses1		0.02%
Total annual Fund operating expenses		0.71%

1. Management fees and other expenses have been restated to reflect current fiscal year fees and expenses as a result of the bundling of the Fund’s investment management agreement with its fund administration agreement effective May 1, 2014. Such combined investment management fees are described further under “Management” in the Fund’s prospectus. Total annual fund operating expenses are not affected by such bundling.

II.  The “Fund Summary – Annual Fund Operating Expenses” table beginning on page MS-S1 in the Fund’s Class 2 prospectus is replaced with the following:

Annual Fund Operating Expenses

(expenses that you pay each year as a percentage of the value of your investment)

	Class 2
Management fees1		0.69%
Distribution and service (12b-1) fees		0.25%
Other expenses1		0.02%
Total annual Fund operating expenses		0.96%

1. Management fees and other expenses have been restated to reflect current fiscal year fees and expenses as a result of the bundling of the Fund’s investment management agreement with its fund administration agreement effective May 1, 2014. Such combined investment management fees are described further under “Management” in the Fund’s prospectus. Total annual fund operating expenses are not affected by such bundling.

III.  The “Fund Summary – Annual Fund Operating Expenses” table beginning on page MS-S1 in the Fund’s Class 4 prospectus is replaced with the following:

Annual Fund Operating Expenses

(expenses that you pay each year as a percentage of the value of your investment)

	Class 4
Management fees1		0.69%
Distribution and service (12b-1) fees		0.35%
Other expenses1		0.02%
Total annual Fund operating expenses		1.06%

MS-7

1. Management fees and other expenses have been restated to reflect current fiscal year fees and expenses as a result of the bundling of the Fund’s investment management agreement with its fund administration agreement effective May 1, 2014. Such combined investment management fees are described further under “Management” in the Fund’s prospectus. Total annual fund operating expenses are not affected by such bundling.

IV.  The following is added as the second to last paragraph in the “Fund Details – Management” section of each Class’ prospectus beginning on page MS-D8:

Effective May 1, 2014, the Fund’s investment management agreement was bundled with its fund administration agreement, including the fees payable to the Fund’s administrator thereunder, as approved by the board of trustees. The fee payable to the administrator under the Fund’s administration agreement, prior to May 1, 2014, was a monthly fee under the following fee schedule of the Fund’s average daily net assets:

• 0.150% up to and including $200 million;

• 0.135% over $200 million, up to and including $700 million;

• 0.100% over $700 million, up to and including $1.2 billion;

• 0.075% in excess of $1.2 billion.

As of such date, the Fund’s investment management fees became a monthly fee at the annual rate of the value of the Fund’s average daily net assets as set forth below:

• 0.750% up to and including $200 million;

• 0.735% over $200 million, up to and including $700 million;

• 0.700% over $700 million, up to and including $1.2 billion;

• 0.675% over $1.2 billion, up to and including $5 billion;

• 0.645% over $5 billion, up to and including $10 billion;

• 0.625% over $10 billion, up to and including $15 billion;

• 0.605% over $15 billion, up to and including $20 billion;

• 0.585% in excess of $20 billion.

Please keep this supplement with your prospectus for future reference.

MS-8

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Financial Highlights

Franklin Mutual Shares VIP Fund

	Six Months Ended June 30, 2014 (unaudited)			Year Ended December 31,
				2013			2012			2011			2010			2009
Class 1
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$21.92			$17.45			$15.57			$16.14			$14.75			$11.92
Income from investment operationsa:
Net investment incomeb		0.46	c		0.42			0.35			0.38	d		0.40	e		0.23	f
Net realized and unrealized gains (losses)		1.33			4.52			1.92			(0.53	)		1.27			2.89
Total from investment operations		1.79			4.94			2.27			(0.15	)		1.67			3.12
Less distributions from net investment income		—			(0.47	)		(0.39	)		(0.42	)		(0.28	)		(0.29	)
Net asset value, end of period		$23.71			$21.92			$17.45			$15.57			$16.14			$14.75
Total returng		8.17%			28.53%			14.61%			(0.79)%			11.47%			26.35%
Ratios to average net assetsh
Expensesi		0.72%	j		0.71%	j		0.71%			0.73%	j		0.74%	j		0.78%	j
Expenses incurred in connection with securities sold short		0.01%			—%	k		—%	k		—%	k		0.02%			0.06%
Net investment income		4.19%	c		2.08%			2.06%			2.28%	d		2.66%	e		1.85%	f
Supplemental data
Net assets, end of period (000’s)		$644,295			$552,163			$449,343			$1,170,781			$1,301,520			$767,553
Portfolio turnover rate		11.56%			24.05%			34.07%	l		41.02%			32.05%			49.33%

^aThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.

^bBased on average daily shares outstanding.

^cNet investment income per share includes approximately $0.23 per share received in the form of special dividends paid in connection with certain Fund’s holdings. Excluding these amounts, the ratio of net investment income to average net assets would have been 2.11%.

^dNet investment income per share includes approximately $0.02 per share related to interest income received that had previously been deemed uncollectible. Excluding this amount, the ratio of net investment income to average net assets would have been 2.14%.

^eNet investment income per share includes approximately $0.11 per share received in the form of a special dividend paid in connection with a corporate real estate investment trust (REIT) conversion. Excluding this non-recurring amount, the ratio of the net investment income to average net assets would have been 1.93%.

^fNet investment income per share includes approximately $(0.03) per share related to an adjustment for uncollectible interest. Excluding the effect of this adjustment, the ratio of net investment income to average net assets would have been 2.08%.

^gTotal return does not include fees, charges or expenses imposed by the variable annuity and life insurance contracts for which the Franklin Templeton Variable Insurance Products Trust serves as an underlying investment vehicle. Total return is not annualized for periods less than one year.

^hRatios are annualized for periods less than one year.

ⁱIncludes dividend or interest expense on securities sold short and security borrowing fees, if any. See below for the ratios of such expenses to average net assets for the periods presented. See Note 1(d).

^jBenefit of expense reduction rounds to less than 0.01%.

^kRounds to less than 0.01%.

^lExcludes the value of portfolio securities delivered as a result of a redemption in-kind.

The accompanying notes are an integral part of these financial statements.    |   Semiannual Report MS-9

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL HIGHLIGHTS

Franklin Mutual Shares VIP Fund (continued)

	Six Months Ended June 30, 2014 (unaudited)			Year Ended December 31,
				2013			2012			2011			2010			2009
Class 2
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$21.63			$17.23			$15.38			$15.95			$14.58			$11.78
Income from investment operationsa:
Net investment incomeb		0.43	c		0.36			0.30			0.32	d		0.36	e		0.20	f
Net realized and unrealized gains (losses)		1.31			4.46			1.90			(0.51	)		1.25			2.85
Total from investment operations		1.74			4.82			2.20			(0.19	)		1.61			3.05
Less distributions from net investment income		—			(0.42	)		(0.35	)		(0.38	)		(0.24	)		(0.25	)
Net asset value, end of period		$23.37			$21.63			$17.23			$15.38			$15.95			$14.58
Total returng		8.04%			28.26%			14.24%			(1.04)%			11.19%			26.05%
Ratios to average net assetsh
Expensesi		0.97%j			0.96%	j		0.96%			0.98%	j		0.99%	j		1.03%	j
Expenses incurred in connection with securities sold short		0.01%			—%	k		—%	k		—%	k		0.02%			0.06%
Net investment income		3.94%	c		1.83%			1.81%			2.03%	d		2.41%	e		1.60%	f
Supplemental data
Net assets, end of period (000’s)		$4,587,477			$4,558,547			$4,069,803			$3,913,220			$4,188,821			$3,953,435
Portfolio turnover rate		11.56%			24.05%			34.07%	l		41.02%			32.05%			49.33%

^aThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.

^bBased on average daily shares outstanding.

^cNet investment income per share includes approximately $0.23 per share received in the form of special dividends paid in connection with certain Fund’s holdings. Excluding these amounts, the ratio of net investment income to average net assets would have been 1.86%.

^dNet investment income per share includes approximately $0.02 per share related to interest income received that had previously been deemed uncollectible. Excluding this amount, the ratio of net investment income to average net assets would have been 1.89%.

^eNet investment income per share includes approximately $0.11 per share received in the form of a special dividend paid in connection with a corporate REIT conversion. Excluding this non-recurring amount, the ratio of the net investment income to average net assets would have been 1.68%.

^fNet investment income per share includes approximately $(0.03) per share related to an adjustment for uncollectible interest. Excluding the effect of this adjustment, the ratio of net investment income to average net assets would have been 1.83%.

^gTotal return does not include fees, charges or expenses imposed by the variable annuity and life insurance contracts for which the Franklin Templeton Variable Insurance Products Trust serves as an underlying investment vehicle. Total return is not annualized for periods less than one year.

^hRatios are annualized for periods less than one year.

ⁱIncludes dividend or interest expense on securities sold short and security borrowing fees, if any. See below for the ratios of such expenses to average net assets for the periods presented. See Note 1(d).

^jBenefit of expense reduction rounds to less than 0.01%.

^kRounds to less than 0.01%.

^lExcludes the value of portfolio securities delivered as a result of a redemption in-kind.

MS-10 Semiannual Report   |    The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL HIGHLIGHTS

Franklin Mutual Shares VIP Fund (continued)

	Six Months Ended June 30, 2014 (unaudited)			Year Ended December 31,
				2013			2012			2011			2010			2009
Class 4
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$21.74			$17.31			$15.45			$16.03			$14.66			$11.88
Income from investment operationsa:
Net investment incomeb		0.42	c		0.34			0.28			0.30	d		0.35	e		0.19	f
Net realized and unrealized gains (losses)		1.31			4.49			1.91			(0.51	)		1.26			2.87
Total from investment operations		1.73			4.83			2.19			(0.21	)		1.61			3.06
Less distributions from net investment income		—			(0.40	)		(0.33	)		(0.37	)		(0.24	)		(0.28	)
Net asset value, end of period		$23.47			$21.74			$17.31			$15.45			$16.03			$14.66
Total returng		7.96%			28.05%			14.20%			(1.12)%			11.06%			25.94%
Ratios to average net assetsh
Expensesi		1.07%	j		1.06%	j		1.06%			1.08%	j		1.09%	j		1.13%j
Expenses incurred in connection with securities sold short		0.01%			—%	k		—%	k		—%	k		0.02%			0.06%
Net investment income		3.84%	c		1.73%			1.71%			1.93%	d		2.31%	e		1.50%	f
Supplemental data
Net assets, end of period (000’s)		$183,991			$188,153			$165,015			$162,049			$167,274			$141,446
Portfolio turnover rate		11.56%			24.05%			34.07%	l		41.02%			32.05%			49.33%

^aThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.

^bBased on average daily shares outstanding.

^cNet investment income per share includes approximately $0.23 per share received in the form of special dividends paid in connection with certain Fund’s holdings. Excluding these amounts, the ratio of net investment income to average net assets would have been 1.76%.

^dNet investment income per share includes approximately $0.02 per share related to interest income received that had previously been deemed uncollectible. Excluding this amount, the ratio of net investment income to average net assets would have been 1.79%.

^eNet investment income per share includes approximately $0.11 per share received in the form of a special dividend paid in connection with a corporate REIT conversion. Excluding this non-recurring amount, the ratio of the net investment income to average net assets would have been 1.58%.

^fNet investment income per share includes approximately $(0.03) per share related to an adjustment for uncollectible interest. Excluding the effect of this adjustment, the ratio of net investment income to average net assets would have been 1.73%.

^gTotal return does not include fees, charges or expenses imposed by the variable annuity and life insurance contracts for which the Franklin Templeton Variable Insurance Products Trust serves as an underlying investment vehicle. Total return is not annualized for periods less than one year.

^hRatios are annualized for periods less than one year.

ⁱIncludes dividend or interest expense on securities sold short and security borrowing fees, if any. See below for the ratios of such expenses to average net assets for the periods presented. See Note 1(d).

^jBenefit of expense reduction rounds to less than 0.01%.

^kRounds to less than 0.01%.

^lExcludes the value of portfolio securities delivered as a result of a redemption in-kind.

The accompanying notes are an integral part of these financial statements.    |   Semiannual Report MS-11

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Statement of Investments, June 30, 2014 (unaudited)

Franklin Mutual Shares VIP Fund
		Country		Shares		Value
	Common Stocks and Other Equity Interests 85.8%
	Aerospace & Defense 1.5%
a	B/E Aerospace Inc.		United States		371,022	$	34,315,825
	Huntington Ingalls Industries Inc.		United States		487,068		46,071,762
							80,387,587
	Auto Components 0.3%
a,b	International Automotive Components Group Brazil LLC		Brazil		1,730,515		275,965
a,b,c	International Automotive Components Group North America, LLC		United States		15,382,424		14,194,593
							14,470,558
	Automobiles 1.2%
	General Motors Co.		United States		1,769,500		64,232,850
	Banks 7.1%
	CIT Group Inc.		United States		717,853		32,848,953
	Citigroup Inc.		United States		1,063,709		50,100,694
	Columbia Banking System Inc.		United States		163,162		4,292,792
a,d	FCB Financial Holdings Inc., A, 144A		United States		493,723		8,393,291
	Guaranty Bancorp		United States		209,583		2,913,204
	JPMorgan Chase & Co.		United States		1,129,560		65,085,247
	KB Financial Group Inc.		South Korea		809,531		28,157,600
	PNC Financial Services Group Inc.		United States		1,099,079		97,872,985
	Societe Generale SA		France		214,711		11,248,346
	State Bank Financial Corp.		United States		352,200		5,955,702
	SunTrust Banks Inc.		United States		1,082,994		43,384,740
	Wells Fargo & Co.		United States		708,330		37,229,825
							387,483,379
	Beverages 1.5%
	Coca-Cola Enterprises Inc.		United States		522,207		24,951,050
	PepsiCo Inc.		United States		621,282		55,505,334
							80,456,384
	Capital Markets 1.1%
	Credit Suisse Group AG		Switzerland		1,629,282		46,590,282
	Morgan Stanley		United States		364,390		11,780,729
							58,371,011
	Chemicals 0.0%
a,e,f	Dow Corning Corp., Contingent Distribution		United States		100,000		—
	Communications Equipment 1.2%
	Cisco Systems Inc.		United States		2,600,090		64,612,237
	Consumer Finance 0.4%
a	Ally Financial Inc.		United States		1,050,600		25,119,846
	Containers & Packaging 0.9%
	MeadWestvaco Corp.		United States		1,125,526		49,815,781
	Diversified Consumer Services 0.2%
a	Cengage Learning Holdings II LP		United States		289,744		10,213,476
	Diversified Financial Services 0.6%
a	ING Groep NV, IDR		Netherlands		2,453,476		34,472,703
	Diversified Telecommunication Services 0.5%
a,e,f	Global Crossing Holdings Ltd., Contingent Distribution		United States		9,005,048		—
a	Koninklijke KPN NV		Netherlands		7,517,400		27,394,204
							27,394,204

MS-12 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Mutual Shares VIP Fund (continued)

		Country		Shares		Value
	Common Stocks and Other Equity Interests (continued)
	Electric Utilities 0.4%
	Entergy Corp.		United States		257,180	$	21,111,906
	Energy Equipment & Services 2.3%
	Baker Hughes Inc.		United States		808,658		60,204,588
	Ensco PLC, A		United States		364,874		20,276,048
	Transocean Ltd.		United States		1,011,287		45,538,254
							126,018,890
	Food & Staples Retailing 4.0%
	CVS Caremark Corp.		United States		539,003		40,624,656
	The Kroger Co.		United States		1,507,502		74,515,824
	Tesco PLC		United Kingdom		10,650,840		51,797,491
	Walgreen Co.		United States		698,015		51,743,852
							218,681,823
	Health Care Equipment & Supplies 3.1%
	Medtronic Inc.		United States		2,233,842		142,429,766
	Stryker Corp.		United States		298,778		25,192,961
							167,622,727
	Health Care Providers & Services 1.9%
	Cigna Corp.		United States		1,107,554		101,861,741
	Independent Power & Renewable Electricity Producers 0.9%
	NRG Energy Inc.		United States		1,388,884		51,666,485
	Insurance 7.8%
	ACE Ltd.		United States		762,875		79,110,138
a	Alleghany Corp.		United States		124,988		54,759,743
	The Allstate Corp.		United States		725,690		42,612,517
	American International Group Inc.		United States		1,647,106		89,899,045
	MetLife Inc.		United States		921,593		51,203,707
a,b	Olympus Re Holdings Ltd.		United States		16,280		—
	White Mountains Insurance Group Ltd.		United States		114,635		69,748,519
	Zurich Insurance Group AG		Switzerland		111,270		33,537,206
							420,870,875
	IT Services 1.4%
	Xerox Corp.		United States		6,041,544		75,156,807
	Machinery 1.5%
	Caterpillar Inc.		United States		337,816		36,710,465
	CNH Industrial NV (EUR Traded)		United Kingdom		1,444,736		14,838,702
	CNH Industrial NV, special voting (EUR Traded)		United Kingdom		1,844,814		18,947,853
	Federal Signal Corp.		United States		757,221		11,093,287
							81,590,307
	Marine 1.5%
	A.P. Moeller-Maersk AS, B		Denmark		32,450		80,636,295
	Media 7.6%
	CBS Corp., B		United States		958,571		59,565,602
	Comcast Corp., Special A		United States		278,448		14,849,632
a	DIRECTV		United States		641,479		54,532,130
	Reed Elsevier PLC		United Kingdom		4,610,810		74,166,173
	Time Warner Cable Inc.		United States		560,096		82,502,141

Semiannual Report MS-13

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Mutual Shares VIP Fund (continued)

		Country		Shares		Value
	Common Stocks and Other Equity Interests (continued)
	Media (continued)
a	Tribune Co., A		United States		205,018	$	17,436,781
a	Tribune Co., B		United States		185,976		15,817,259
	Twenty-First Century Fox Inc., B		United States		2,702,579		92,509,279
							411,378,997
	Metals & Mining 2.7%
	Anglo American PLC		United Kingdom		1,378,690		33,736,766
	Freeport-McMoRan Copper & Gold Inc., B		United States		1,917,216		69,978,384
a	ThyssenKrupp AG		Germany		1,430,635		41,711,006
							145,426,156
	Multiline Retail 0.7%
	Kohl’s Corp.		United States		685,800		36,127,944
	Oil, Gas & Consumable Fuels 8.8%
	Apache Corp.		United States		904,610		91,021,858
	BG Group PLC		United Kingdom		1,980,660		41,857,924
	BP PLC		United Kingdom		5,114,242		45,061,429
	CONSOL Energy Inc.		United States		839,405		38,671,388
	Marathon Oil Corp.		United States		1,859,308		74,223,576
	Murphy Oil Corp.		United States		502,750		33,422,820
	Petroleo Brasileiro SA, ADR		Brazil		1,541,270		22,548,780
	Royal Dutch Shell PLC, A		United Kingdom		2,350,491		97,338,923
g	Talisman Energy Inc. (CAD Traded)		Canada		202,643		2,143,385
	Talisman Energy Inc. (USD Traded)		Canada		3,047,937		32,308,132
							478,598,215
	Paper & Forest Products 1.3%
	International Paper Co.		United States		1,398,676		70,591,178
	Personal Products 0.7%
	Avon Products Inc.		United States		2,664,426		38,927,264
	Pharmaceuticals 7.3%
	AstraZeneca PLC		United Kingdom		598,110		44,424,405
	AstraZeneca PLC, ADR		United Kingdom		246,630		18,327,075
	Eli Lilly & Co.		United States		779,532		48,463,504
a	Hospira Inc.		United States		835,339		42,911,364
	Merck & Co. Inc.		United States		2,362,728		136,683,815
	Teva Pharmaceutical Industries Ltd., ADR		Israel		1,990,576		104,345,994
							395,156,157
	Real Estate Investment Trusts (REITs) 0.3%
	Alexander’s Inc.		United States		40,126		14,825,353
	Real Estate Management & Development 0.3%
f	Canary Wharf Group PLC		United Kingdom		1,535,898		11,679,350
a	Forestar Group Inc.		United States		185,159		3,534,685
							15,214,035
	Semiconductors & Semiconductor Equipment 0.7%
	Samsung Electronics Co. Ltd.		South Korea		28,252		36,906,269
	Software 4.1%
	Microsoft Corp.		United States		3,479,007		145,074,592
	Symantec Corp.		United States		3,304,335		75,669,271
							220,743,863

MS-14 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Mutual Shares VIP Fund (continued)

		Country		Shares		Value
	Common Stocks and Other Equity Interests (continued)
	Technology Hardware, Storage & Peripherals 3.4%
	Apple Inc.		United States		1,483,090	$	137,823,554
	Hewlett-Packard Co.		United States		1,342,537		45,216,646
							183,040,200
	Tobacco 5.4%
	Altria Group Inc.		United States		1,312,068		55,028,132
	British American Tobacco PLC		United Kingdom		1,569,507		93,410,055
	Imperial Tobacco Group PLC		United Kingdom		1,211,827		54,537,743
	Lorillard Inc.		United States		1,057,573		64,480,226
	Philip Morris International Inc.		United States		315,520		26,601,491
							294,057,647
	Wireless Telecommunication Services 1.2%
	Vodafone Group PLC		United Kingdom		19,137,764		63,859,660
	Total Common Stocks and Other Equity Interests (Cost $3,238,699,126)						4,647,100,810
	Preferred Stocks (Cost $38,376,811) 0.7%
	Automobiles 0.7%
	Volkswagen AG, pfd.		Germany		147,089		38,634,470
				Principal Amount*
	Corporate Bonds, Notes and Senior Floating Rate Interests 4.8%
d	American Airlines Inc., senior secured note, 144A, 7.50%, 3/15/16		United States		27,778,000		28,906,481
	Avaya Inc.,
	d senior note, 144A, 10.50%, 3/01/21		United States		14,061,000		13,041,578
	d senior secured note, 144A, 7.00%, 4/01/19		United States		12,923,000		12,987,615
	h,i Tranche B-3 Term Loan, 4.727%, 10/26/17		United States		19,579,590		19,219,462
	h,i 1.Tranche B-6 Term Loan, 6.50%, 3/31/18		United States		4,775,102		4,787,875
h,i	Caesars Entertainment Operating Co. Inc., Senior Tranche Term Loan,
	B5, first lien, 4.402%, 1/28/18		United States		3,440,000		3,183,913
	B6, first lien, 5.402%, 1/28/18		United States		16,401,000		15,340,528
h,i	Cengage Learning Acquisitions Inc., First Lien Exit Term Loan, 7.00%, 3/31/20		United States		1,834,403		1,860,581
	Clear Channel Communications Inc.,
	senior secured note, first lien, 9.00%, 12/15/19		United States		26,449,000		28,300,430
	h,i Tranche B Term Loan, 3.80%, 1/29/16		United States		537,126		533,935
	h,i Tranche C Term Loan, 3.80%, 1/29/16		United States		61,187		60,636
	h,i Tranche D Term Loan, 6.90%, 1/30/19		United States		34,746,619		34,664,096
	h,i Tranche E Term Loan, 7.65%, 7/30/19		United States		11,168,253		11,215,562
	First Data Corp.,
	senior bond, 12.625%, 1/15/21		United States		3,679,000		4,538,966
	senior note, 11.75%, 8/15/21		United States		15,674,000		18,652,060
d,j	First Data Holdings Inc., 144A, PIK, 14.50%, 9/24/19		United States		10,091,571		10,898,897
h,i	Harrah’s Operating Co. Inc., Senior Tranche Term Loan, first lien, 9.75%, 3/01/17		United States		1,817,000		1,795,992
h,i	JC Penney Corp. Inc., Term Loan, 6.00%, 5/22/18		United States		26,324,459		26,627,664
	NGPL PipeCo LLC,
	d secured note, 144A, 7.119%, 12/15/17		United States		9,756,000		9,951,120
	d senior secured note, 144A, 9.625%, 6/01/19		United States		14,481,000		15,929,100

Semiannual Report MS-15

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Mutual Shares VIP Fund (continued)

		Country		Principal Amount*			Value
	Corporate Bonds, Notes and Senior Floating Rate Interests (continued)
	h,i Term Loan B, 6.75%, 9/15/17		United States		826,939		$	824,613
	Total Corporate Bonds, Notes and Senior Floating Rate Interests (Cost $243,924,713)							263,321,104
	Corporate Notes and Senior Floating Rate Interests in Reorganization 2.1%
b,k	Broadband Ventures III LLC, secured promissory note, 5.00%, 2/01/12		United States		1,754			—
h,i	Texas Competitive Electric Holdings Co. LLC, Extended Term Loan, 4.651%, 10/10/17		United States		90,618,405			75,213,276
d,k	Texas Competitive Electric Holdings Co. LLC/Texas Competitive Electric Holdings Finance Inc., senior secured note, 144A, 11.50%, 10/01/20		United States		39,308,000			36,065,090
	Total Corporate Notes and Senior Floating Rate Interests in Reorganization (Cost $116,326,796)							111,278,366
				Shares
	Companies in Liquidation 1.2%
a	Adelphia Recovery Trust		United States		29,283,354			292,834
a,e	Adelphia Recovery Trust, Arahova Contingent Value Vehicle, Contingent Distribution		United States		1,955,453			23,465
a,b,c,l	CB FIM Coinvestors LLC		United States		6,400,507			—
a,e,f	Century Communications Corp., Contingent Distribution		United States		5,487,000			—
a,b	FIM Coinvestor Holdings I, LLC		United States		8,006,950			—
a,m	Lehman Brothers Holdings Inc., Bankruptcy Claim		United States		144,058,799			66,086,974
a,e,f	Tribune Litigation Trust, Contingent Distribution		United States		393,761			—
a,e,f	Tropicana Litigation Trust, Contingent Distribution		United States		18,305,000			—
				Principal Amount*
f,k	Peregrine Investments Holdings Ltd., 6.70%, 1/15/98		Hong Kong		5,000,000	JPY		—
f,k	PIV Investment Finance (Cayman) Ltd., 4.50%, 12/01/00		Hong Kong		12,200,000			—
	Total Companies in Liquidation (Cost $66,366,158)							66,403,273
	Municipal Bonds (Cost $14,653,163) 0.3%
	Puerto Rico Commonwealth GO, Refunding, Series A, 8.00%, 7/01/35		United States		15,709,000			13,838,686
	Total Investments before Short Term Investments (Cost $3,718,346,767)							5,140,576,709
	Short Term Investments 4.9%
	U.S. Government and Agency Securities 4.9%
n	FHLB, 7/01/14		United States		12,500,000			12,500,000
n,o	U.S. Treasury Bills, 7/17/14 - 12/26/14		United States		254,100,000			254,074,467
	Total U.S. Government and Agency Securities (Cost $266,560,610)							266,574,467
	Total Investments before Money Market Funds (Cost $3,984,907,377)							5,407,151,176

MS-16 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Mutual Shares VIP Fund (continued)

		Country		Shares		Value
p	Investments from Cash Collateral Received for Loaned Securities (Cost $546,198) 0.0%†
	Money Market Funds 0.0%†
q	BNY Mellon Overnight Government Fund, 0.082%		United States		546,198	$	546,198
	Total Investments (Cost $3,985,453,575) 99.8%						5,407,697,374
	Securities Sold Short (0.5)%						(29,487,482	)
	Other Assets, less Liabilities 0.7%						37,552,219
	Net Assets 100.0%					$	5,415,762,111
r	Securities Sold Short (Proceeds $29,277,284) (0.5)%
	Common Stocks (0.5)%
	Diversified Telecommunication Services (0.5)%
	AT&T Inc.		United States		833,922	$	(29,487,482	)

^†Rounds to less than 0.1% of net assets.

*The principal amount is stated in U.S. dollars unless otherwise indicated.

^aNon-income producing.

^bSee Note 8 regarding restricted securities.

^cAt June 30, 2014, pursuant to the Fund’s policies and the requirements of applicable securities law, the Fund may be restricted from trading these securities for a limited or extended period of time due to ownership limits and/or potential possession of material non-public information.

^dSecurity was purchased pursuant to Rule 144A under the Securities Act of 1933 and may be sold in transactions exempt from registration only to qualified institutional buyers or in a public offering registered under the Securities Act of 1933. These securities have been deemed liquid under guidelines approved by the Trust’s Board of Trustees. At June 30, 2014, the aggregate value of these securities was $136,173,172, representing 2.51% of net assets.

^eContingent distributions represent the right to receive additional distributions, if any, during the reorganization of the underlying company. Shares represent total underlying principal of debt securities.

^fSecurity has been deemed illiquid because it may not be able to be sold within seven days. At June 30, 2014, the aggregate value of these securities was $11,679,350, representing 0.22% of net assets.

^gA portion or all of the security is on loan at June 30, 2014. See Note 1(e).

^hSee Note 1(f) regarding senior floating rate interests.

ⁱThe coupon rate shown represents the rate at period end.

^jIncome may be received in additional securities and/or cash.

^kSee Note 7 regarding credit risk and defaulted securities.

^lSee Note 10 regarding holdings of 5% voting securities.

^mBankruptcy claims represent the right to receive distributions, if any, during the liquidation of the underlying pool of assets. Shares represent amount of allowed unsecured claims.

ⁿThe security is traded on a discount basis with no stated coupon rate.

^oSecurity or a portion of the security has been pledged as collateral for securities sold short, open futures and forward contracts. At June 30, 2014, the aggregate value of these securities and/or cash pledged as collateral was $43,260,625, representing 0.80% of net assets.

^pSee Note 1(e) regarding securities on loan.

^qThe rate shown is the annualized seven-day yield at period end.

^rSee Note 1(d) regarding securities sold short.

Semiannual Report MS-17

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Mutual Shares VIP Fund (continued)

At June 30, 2014, the Fund had the following futures contracts outstanding. See Note 1(c).

Futures Contracts

Description	Type		Number of Contracts		Notional Value		Expiration Date		Unrealized Appreciation		Unrealized Depreciation
Currency Contracts
CHF/USD		Short		18	$	2,539,575		9/15/14	$	—	$	(19,839	)
EUR/USD		Short		491		84,071,475		9/15/14		—		(908,724	)
GBP/USD		Short		1,030		110,049,063		9/15/14		—		(2,039,401	)
Net unrealized appreciation (depreciation)											$	(2,967,964	)

At June 30, 2014, the Fund had the following forward exchange contracts outstanding. See Note 1(c).

Forward Exchange Contracts

Currency	Counterpartya		Type		Quantity		Contract Amount		Settlement Date		Unrealized Appreciation		Unrealized Depreciation
Euro		BOFA		Buy		24,293,214	$	33,498,897		7/17/14	$	1,390	$	(229,641	)
Euro		BOFA		Sell		25,795,816		35,080,373		7/17/14		146		(248,299	)
Euro		BZWS		Buy		17,805,254		24,580,550		7/17/14		671		(196,128	)
Euro		BZWS		Sell		329,993		448,113		7/17/14		—		(3,828	)
Euro		BONY		Buy		296,301		405,280		7/17/14		634		(116	)
Euro		HSBC		Buy		3,664,789		5,033,436		7/17/14		368		(14,712	)
Euro		HSBC		Sell		3,671,658		4,998,612		7/17/14		464		(30,353	)
Euro		SCBT		Buy		2,800,912		3,866,494		7/17/14		736		(31,255	)
Euro		SCBT		Sell		20,545,611		27,942,031		7/17/14		—		(196,104	)
Euro		SSBT		Buy		1,753,952		2,420,744		7/17/14		591		(19,219	)
Euro		SSBT		Sell		271,344		371,489		7/17/14		—		(129	)
British Pound		BOFA		Buy		1,050,215		1,745,882		7/21/14		50,928		—
British Pound		BOFA		Sell		18,318,525		29,886,674		7/21/14		—		(1,454,454	)
British Pound		BZWS		Buy		1,277,326		2,121,131		7/21/14		64,243		—
British Pound		BZWS		Sell		41,328,694		68,092,989		7/21/14		—		(2,616,192	)
British Pound		FBCO		Buy		183,618		307,245		7/21/14		6,906		—
British Pound		HSBC		Buy		1,703,102		2,832,880		7/21/14		80,954		—
British Pound		HSBC		Sell		5,171,604		8,486,603		7/21/14		—		(361,485	)
British Pound		SSBT		Buy		1,798,084		2,989,863		7/21/14		86,475		—
South Korean Won		BOFA		Buy		7,094,380,532		6,810,277		8/12/14		188,235		—
South Korean Won		BOFA		Sell		16,483,765,392		15,375,614		8/12/14		—		(885,402	)
South Korean Won		FBCO		Buy		2,719,133,817		2,600,728		8/12/14		81,661		—
South Korean Won		FBCO		Sell		32,361,290,513		30,138,394		8/12/14		—		(1,785,591	)
South Korean Won		HSBC		Buy		4,374,620,932		4,179,047		8/12/14		136,459		—
South Korean Won		HSBC		Sell		31,079,325,326		28,969,601		8/12/14		—		(1,689,742	)
Swiss Franc		BOFA		Sell		5,420,377		6,115,341		8/12/14		50,120		(9,009	)
Swiss Franc		BZWS		Sell		2,795,770		3,179,349		8/12/14		30,133		(4,436	)
Swiss Franc		BONY		Sell		103,406		117,031		8/12/14		388		—
Swiss Franc		FBCO		Buy		450,000		503,253		8/12/14		4,351		—
Swiss Franc		DBAB		Buy		496,400		555,750		8/12/14		4,193		—
Swiss Franc		HSBC		Sell		71,818		81,947		8/12/14		935		—
Swiss Franc		SSBT		Buy		175,230		196,088		8/12/14		1,573		—
Swiss Franc		SSBT		Sell		2,836,400		3,207,835		8/12/14		13,746		(5,394	)
British Pound		BOFA		Buy		6,616,425		11,190,205		8/19/14		127,451		(286	)
British Pound		BOFA		Sell		17,123,596		28,709,472		8/19/14		—		(580,375	)
British Pound		BZWS		Buy		4,700,602		7,926,962		8/19/14		113,399		—
British Pound		BZWS		Sell		29,137,504		48,778,891		8/19/14		—		(1,060,700	)
British Pound		FBCO		Buy		2,234,682		3,810,479		8/19/14		12,135		(199	)
British Pound		DBAB		Buy		3,259,956		5,541,372		8/19/14		34,770		—
British Pound		HSBC		Buy		1,421,799		2,386,708		8/19/14		45,274		—
British Pound		HSBC		Sell		23,317,794		39,049,496		8/19/14		—		(835,503	)
British Pound		SCBT		Buy		420,327		706,685		8/19/14		12,282		—
British Pound		SSBT		Buy		3,732,384		6,300,637		8/19/14		83,592		—
British Pound		SSBT		Sell		212,187		357,527		8/19/14		—		(5,418	)

MS-18 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Mutual Shares VIP Fund (continued)

Forward Exchange Contracts (continued)

Currency	Counterpartya		Type		Quantity		Contract Amount		Settlement Date		Unrealized Appreciation		Unrealized Depreciation
Euro		BOFA		Buy		7,689,652	$	10,503,918		8/29/14	$	44,348	$	(15,450	)
Euro		BOFA		Sell		14,170,121		19,386,568		8/29/14		—		(22,800	)
Euro		BZWS		Buy		6,398,135		8,751,462		8/29/14		21,608		(9,296	)
Euro		BZWS		Sell		14,170,257		19,372,725		8/29/14		—		(36,828	)
Euro		BONY		Buy		1,822,736		2,494,589		8/29/14		3,033		(950	)
Euro		HSBC		Buy		4,535,135		6,193,355		8/29/14		19,540		(943	)
Euro		SCBT		Buy		1,818,018		2,486,905		8/29/14		3,497		(192	)
Euro		SSBT		Buy		4,442,719		6,096,787		8/29/14		3,684		(15,106	)
Euro		BOFA		Buy		4,006,052		5,433,361		10/16/14		55,057		—
Euro		BZWS		Buy		4,081,483		5,552,648		10/16/14		39,111		—
Euro		DBAB		Buy		1,398,466		1,903,954		10/16/14		11,988		—
Euro		HSBC		Buy		3,336,676		4,539,122		10/16/14		32,228		—
Euro		SCBT		Sell		14,900,000		20,324,643		10/16/14		—		(88,824	)
Euro		SSBT		Buy		1,193,430		1,626,702		10/16/14		8,335		—
British Pound		BOFA		Sell		24,093,987		40,424,891		10/22/14		—		(761,703	)
British Pound		HSBC		Buy		437,133		744,363		10/22/14		2,878		—
British Pound		SSBT		Buy		119,309		202,728		10/22/14		1,220		—
British Pound		SSBT		Sell		28,173,363		47,254,697		10/22/14		—		(905,239	)
Euro		BOFA		Sell		28,623,774		39,233,003		11/17/14		47,860		(36,019	)
Euro		BZWS		Sell		34,758,953		47,673,691		11/17/14		66,315		(20,392	)
Euro		DBAB		Sell		1,696,915		2,317,392		11/17/14		—		(7,772	)
Euro		HSBC		Sell		7,325,122		10,011,929		11/17/14		6,921		(32,096	)
Euro		SCBT		Sell		370,000		504,003		11/17/14		—		(2,982	)
Euro		SSBT		Sell		64,103		87,417		11/17/14		—		(419	)
British Pound		BOFA		Sell		16,031,607		26,949,131		11/21/14		—		(445,870	)
British Pound		SSBT		Sell		14,211,118		23,888,889		11/21/14		—		(395,239	)
Unrealized appreciation (depreciation)												1,602,826		(15,062,090	)
Net unrealized appreciation (depreciation)													$	(13,459,264	)

^aMay be comprised of multiple contracts using the same currency and settlement date.

See Abbreviations on page MS-34.

The accompanying notes are an integral part of these financial statements.    |   Semiannual Report MS-19

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Financial Statements

Statement of Assets and Liabilities

June 30, 2014 (unaudited)

	Franklin Mutual Shares VIP Fund
Assets:
Investments in securities:
Cost - Unaffiliated issuers	$	3,985,453,575
Value - Unaffiliated issuers (includes securities loaned in the amount of $520,470)	$	5,407,697,374
Cash		1,039,814
Foreign currency, at value (cost $7,079,447)		7,099,780
Receivables:
Investment securities sold		15,045,070
Capital shares sold		3,681,836
Dividends and interest		12,826,651
Due from brokers		30,120,744
Unrealized appreciation on forward exchange contracts		1,602,826
Other assets		2,366
Total assets		5,479,116,461
Liabilities:
Payables:
Capital shares redeemed		11,347,544
Management fees		3,046,384
Distribution fees		2,018,770
Variation margin		854,539
Securities sold short, at value (proceeds $29,277,284)		29,487,482
Payable upon return of securities loaned		546,198
Unrealized depreciation on forward exchange contracts		15,062,090
Accrued expenses and other liabilities		991,343
Total liabilities		63,354,350
Net assets, at value	$	5,415,762,111
Net assets consist of:
Paid-in capital	$	3,594,818,545
Undistributed net investment income		194,669,467
Net unrealized appreciation (depreciation)		1,405,720,985
Accumulated net realized gain (loss)		220,553,114
Net assets, at value	$	5,415,762,111

MS-20 Semiannual Report   |    The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL STATEMENTS

Statement of Assets and Liabilities (continued)

June 30, 2014 (unaudited)

	Franklin Mutual Shares VIP Fund
Class 1:
Net assets, at value	$	644,294,501
Shares outstanding		27,169,570
Net asset value and maximum offering price per share	$	23.71
Class 2:
Net assets, at value	$	4,587,476,501
Shares outstanding		196,269,945
Net asset value and maximum offering price per share	$	23.37
Class 4:
Net assets, at value	$	183,991,109
Shares outstanding		7,838,291
Net asset value and maximum offering price per share	$	23.47

The accompanying notes are an integral part of these financial statements.    |   Semiannual Report MS-21

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL STATEMENTS

Statement of Operations

for the six months ended June 30, 2014 (unaudited)

	Franklin Mutual Shares VIP Fund
Investment income:
Dividends	$	111,530,278
Interest		16,663,268
Income from securities loaned		13,790
Total investment income		128,207,336
Expenses:
Management fees (Note 3a)		16,411,148
Administrative fees (Note 3b)		1,475,520
Distribution fees: (Note 3c)
Class 2		5,574,088
Class 4		322,295
Custodian fees (Note 4)		72,696
Reports to shareholders		395,433
Professional fees		78,364
Trustees’ fees and expenses		9,852
Dividends on securities sold short		255,185
Other		44,047
Total expenses		24,638,628
Expense reductions (Note 4)		(103	)
Net expenses		24,638,525
Net investment income		103,568,811
Realized and unrealized gains (losses):
Net realized gain (loss) from:
Investments		225,067,178
Foreign currency transactions		(26,682,349	)
Futures contracts		(1,296,510	)
Securities sold short		226,144
Net realized gain (loss)		197,314,463
Net change in unrealized appreciation (depreciation) on:
Investments		98,646,945
Translation of other assets and liabilities denominated in foreign currencies		11,798,892
Net change in unrealized appreciation (depreciation)		110,445,837
Net realized and unrealized gain (loss)		307,760,300
Net increase (decrease) in net assets resulting from operations	$	411,329,111

MS-22 Semiannual Report   |    The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL STATEMENTS

Statements of Changes in Net Assets

	Franklin Mutual Shares VIP Fund
	Six Months Ended June 30, 2014 (unaudited)			Year Ended December 31, 2013
Increase (decrease) in net assets:
Operations:
Net investment income	$	103,568,811		$	93,933,333
Net realized gain (loss) from investments, written options, foreign currency transactions, futures contracts and securities sold short		197,314,463			369,009,836
Net change in unrealized appreciation (depreciation) on investments and translation of other assets and liabilities denominated in foreign currencies		110,445,837			786,825,157
Net increase (decrease) in net assets resulting from operations		411,329,111			1,249,768,326
Distributions to shareholders from:
Net investment income:
Class 1		—			(11,380,461	)
Class 2		—			(90,294,700	)
Class 4		—			(3,535,676	)
Total distributions to shareholders		—			(105,210,837	)
Capital share transactions: (Note 2)
Class 1		44,486,222			(9,960,888	)
Class 2		(320,351,870	)		(502,396,967	)
Class 4		(18,564,034	)		(17,497,568	)
Total capital share transactions		(294,429,682	)		(529,855,423	)
Net increase (decrease) in net assets		116,899,429			614,702,066
Net assets:
Beginning of period		5,298,862,682			4,684,160,616
End of period	$	5,415,762,111		$	5,298,862,682
Undistributed net investment income included in net assets:
End of period	$	194,669,467		$	91,100,656

The accompanying notes are an integral part of these financial statements.    |   Semiannual Report MS-23

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Notes to Financial Statements (unaudited)

Franklin Mutual Shares VIP Fund

1. Organization and Significant Accounting Policies

Franklin Templeton Variable Insurance Products Trust (Trust) is registered under the Investment Company Act of 1940, as amended, (1940 Act) as an open-end management investment company, consisting of twenty separate funds and applies the specialized accounting and reporting guidance in U.S. Generally Accepted Accounting Principles (U.S. GAAP). The Franklin Mutual Shares VIP Fund (Fund) is included in this report. The financial statements of the remaining funds in the Trust are presented separately. Shares of the Fund are generally sold only to insurance company separate accounts to fund the benefits of variable life insurance policies or variable annuity contracts. The Fund offers three classes of shares: Class 1, Class 2, and Class 4. Each class of shares differs by its distribution fees, voting rights on matters affecting a single class and its exchange privilege.

Effective May 1, 2014, the Mutual Shares Securities Fund was renamed the Franklin Mutual Shares VIP Fund.

The following summarizes the Fund’s significant accounting policies.

a. Financial Instrument Valuation

The Fund’s investments in financial instruments are carried at fair value daily. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. The Fund calculates the net asset value (NAV) per share at the close of the New York Stock Exchange (NYSE), generally at 4 p.m. Eastern time (NYSE close) on each day the NYSE is open for trading. Under compliance policies and procedures approved by the Trust’s Board of Trustees (the Board), the Fund’s administrator has responsibility for oversight of valuation, including leading the cross-functional Valuation and Liquidity Oversight Committee (VLOC). The VLOC provides administration and oversight of the Fund’s valuation policies and procedures, which are approved annually by the Board. Among other things, these procedures allow the Fund to utilize independent pricing services, quotations from securities and financial instrument dealers, and other market sources to determine fair value.

Equity securities and derivative financial instruments (derivatives) listed on an exchange or on the NASDAQ National Market System are valued at the last quoted sale price or the

official closing price of the day, respectively. Foreign equity securities are valued as of the close of trading on the foreign stock exchange on which the security is primarily traded or as of the NYSE close, whichever is earlier. The value is then converted into its U.S. dollar equivalent at the foreign exchange rate in effect at the NYSE close on the day that the value of the security is determined. Over-the-counter (OTC) securities are valued within the range of the most recent quoted bid and ask prices. Securities that trade in multiple markets or on multiple exchanges are valued according to the broadest and most representative market. Certain equity securities are valued based upon fundamental characteristics or relationships to similar securities. Investments in non-registered money market funds are valued at the closing net asset value.

Debt securities generally trade in the OTC market rather than on a securities exchange. The Fund’s pricing services use multiple valuation techniques to determine fair value. In instances where sufficient market activity exists, the pricing services may utilize a market-based approach through which quotes from market makers are used to determine fair value. In instances where sufficient market activity may not exist or is limited, the pricing services also utilize proprietary valuation models which may consider market characteristics such as benchmark yield curves, credit spreads, estimated default rates, anticipated market interest rate volatility, coupon rates, anticipated timing of principal repayments, underlying collateral, and other unique security features in order to estimate the relevant cash flows, which are then discounted to calculate the fair value. Securities denominated in a foreign currency are converted into their U.S. dollar equivalent at the foreign exchange rate in effect at the NYSE close on the date that the values of the foreign debt securities are determined.

Certain derivatives trade in the OTC market. The Fund’s pricing services use various techniques including industry standard option pricing models and proprietary discounted cash flow models to determine the fair value of those instruments. The Fund’s net benefit or obligation under the derivative contract, as measured by the fair value of the contract, is included in net assets.

The Fund has procedures to determine the fair value of financial instruments for which market prices are not reliable or readily available. Under these procedures, the VLOC convenes on a regular basis to review such financial instruments and considers a number of factors, including significant unobservable

MS-24 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual Shares VIP Fund (continued)

valuation inputs, when arriving at fair value. The VLOC primarily employs a market-based approach which may use related or comparable assets or liabilities, recent transactions, market multiples, book values, and other relevant information for the investment to determine the fair value of the investment. An income-based valuation approach may also be used in which the anticipated future cash flows of the investment are discounted to calculate fair value. Discounts may also be applied due to the nature or duration of any restrictions on the disposition of the investments. Due to the inherent uncertainty of valuations of such investments, the fair values may differ significantly from the values that would have been used had an active market existed. The VLOC employs various methods for calibrating these valuation approaches including a regular review of key inputs and assumptions, transactional back-testing or disposition analysis, and reviews of any related market activity.

Trading in securities on foreign securities stock exchanges and OTC markets may be completed before the daily NYSE close. In addition, trading in certain foreign markets may not take place on every NYSE business day. Occasionally, events occur between the time at which trading in a foreign security is completed and the close of the NYSE that might call into question the reliability of the value of a portfolio security held by the Fund. As a result, differences may arise between the value of the Fund’s portfolio securities as determined at the foreign market close and the latest indications of value at the close of the NYSE. In order to minimize the potential for these differences, the VLOC monitors price movements following the close of trading in foreign stock markets through a series of country specific market proxies (such as baskets of American Depositary Receipts, futures contracts and exchange traded funds). These price movements are measured against established trigger thresholds for each specific market proxy to assist in determining if an event has occurred that may call into question the reliability of the values of the foreign securities held by the Fund. If such an event occurs, the securities may be valued using fair value procedures, which may include the use of independent pricing services.

Also, when the last day of the reporting period is a non-business day, certain foreign markets may be open on those days that the NYSE is closed, which could result in differences between the value of the Fund’s portfolio securities on the last business day and the last calendar day of the reporting period. Any significant security valuation changes due to an open foreign market are adjusted and reflected by the Fund for financial reporting purposes.

b. Foreign Currency Translation

Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars based on the exchange rate of such currencies against U.S. dollars on the date of valuation. The Fund may enter into foreign currency exchange contracts to facilitate transactions denominated in a foreign currency. Purchases and sales of securities, income and expense items denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date. Portfolio securities and assets and liabilities denominated in foreign currencies contain risks that those currencies will decline in value relative to the U.S. dollar. Occasionally, events may impact the availability or reliability of foreign exchange rates used to convert the U.S. dollar equivalent value. If such an event occurs, the foreign exchange rate will be valued at fair value using procedures established and approved by the Board.

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

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

c. Derivative Financial Instruments

The Fund invested in derivatives in order to manage risk or gain exposure to various other investments or markets. Derivatives are financial contracts based on an underlying or notional amount, require no initial investment or an initial net investment that is smaller than would normally be required to have a similar response to changes in market factors, and require or permit net settlement. Derivatives contain various risks including the potential inability of the counterparty to fulfill their obligations under the terms of the contract, the potential for an illiquid secondary market, and/or the potential for market movements which expose the Fund to gains or losses in excess of the amounts shown on the Statement of Assets and Liabilities.

Semiannual Report MS-25

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual Shares VIP Fund (continued)

1. Organization and Significant Accounting Policies (continued)

c. Derivative Financial Instruments (continued)

Realized gain and loss and unrealized appreciation and depreciation on these contracts for the period are included in the Statement of Operations.

Derivative counterparty credit risk is managed through a formal evaluation of the creditworthiness of all potential counterparties. The Fund attempts to reduce its exposure to counterparty credit risk on OTC derivatives, whenever possible, by entering into International Swaps and Derivatives Association (ISDA) master agreements with certain counterparties. These agreements contain various provisions, including but not limited to collateral requirements, events of default, or early termination. Termination events applicable to the counterparty include certain deteriorations in the credit quality of the counterparty. Termination events applicable to the Fund include failure of the Fund to maintain certain net asset levels and/or limit the decline in net assets over various periods of time. In the event of default or early termination, the ISDA master agreement gives the non-defaulting party the right to net and close-out all transactions traded, whether or not arising under the ISDA agreement, to one net amount payable by one counterparty to the other. However, absent an event of default or early termination, OTC derivative assets and liabilities are presented gross and not offset in the Statement of Assets and Liabilities. Early termination by the counterparty may result in an immediate payment by the Fund of any net liability owed to that counterparty under the ISDA agreement. At June 30, 2014, the Fund had OTC derivatives in a net liability position of $12,358,485 and the aggregate value of collateral pledged for such contracts was $9,677,237.

Collateral requirements differ by type of derivative. Collateral or initial margin requirements are set by the broker or exchange clearing house for exchange traded and centrally cleared derivatives. Initial margin deposited is held at the exchange and can be in the form of cash and/or securities. For OTC derivatives traded under an ISDA master agreement, posting of collateral is required by either the fund or the applicable counterparty if the total net exposure of all OTC derivatives with the applicable counterparty exceeds the minimum transfer amount, which typically ranges from $100,000 to $250,000, and can vary depending on the counterparty and the type of the agreement. Generally, collateral is determined at the close of fund business each day and any additional collateral required

due to changes in derivative values may be delivered by the fund or the counterparty within a few business days. Collateral pledged and/or received by the fund for OTC derivatives, if any, is held in segregated accounts with the fund’s custodian/counterparty broker and can be in the form of cash and/or securities. Unrestricted cash may be invested according to the Fund’s investment objectives.

The Fund entered into exchange traded futures contracts primarily to manage exposure to certain foreign currencies. A futures contract is an agreement between the Fund and a counterparty to buy or sell an asset for a specified price on a future date. Required initial margins are pledged by the Fund, and the daily change in fair value is accounted for as a variation margin payable or receivable on the Statement of Assets and Liabilities.

The Fund entered into OTC forward exchange contracts primarily to manage exposure to certain foreign currencies. A forward exchange contract is an agreement between the Fund and a counterparty to buy or sell a foreign currency at a specific exchange rate on a future date.

The Fund purchased or wrote exchange traded option contracts primarily to manage exposure to equity price risk. An option is a contract entitling the holder to purchase or sell a specific amount of shares or units of an asset or notional amount of a swap (swaption), at a specified price. Options purchased are recorded as an asset while options written are recorded as a liability. Upon exercise of an option, the acquisition cost or sales proceeds of the underlying investment is adjusted by any premium received or paid. Upon expiration of an option, any premium received or paid is recorded as a realized gain or loss. Upon closing an option other than through expiration or exercise, the difference between the premium and the cost to close the position is recorded as a realized gain or loss.

See Note 9 regarding other derivative information.

d. Securities Sold Short

The Fund is engaged in selling securities short, which obligates the Fund to replace a borrowed security with the same security at current fair value. The Fund incurs a loss if the price of the security increases between the date of the short sale and the date on which the Fund replaces the borrowed security. The Fund realizes a gain if the price of the security declines between those dates. Gains are limited to the price at which the Fund sold the security short, while losses are potentially unlimited in size.

MS-26 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual Shares VIP Fund (continued)

The Fund is required to establish a margin account with the broker lending the security sold short. While the short sale is outstanding, the broker retains the proceeds of the short sale to the extent necessary to meet margin requirements until the short position is closed out. A deposit must also be maintained with the Fund’s custodian/counterparty broker consisting of cash and/or securities having a value equal to a specified percentage of the value of the securities sold short. The Fund is obligated to pay fees for borrowing the securities sold short and is required to pay the counterparty any dividends and/or interest due on securities sold short. Such dividends or interest and any security borrowing fees are recorded as an expense to the Fund.

e. Securities Lending

The Fund participates in an agency based securities lending program. The Fund receives cash collateral against the loaned securities in an amount equal to at least 102% of the fair value of the loaned securities. Collateral is maintained over the life of the loan in an amount not less than 100% of the fair value of loaned securities, as determined at the close of fund business each day; any additional collateral required due to changes in security values is delivered to the Fund on the next business day. The collateral is invested in a non-registered money fund. The Fund receives income from the investment of cash collateral, in addition to lending fees and rebates paid by the borrower. The Fund bears the market risk with respect to the collateral investment, securities loaned, and the risk that the agent may default on its obligations to the Fund. The securities lending agent has agreed to indemnify the Fund in the event of default by a third party borrower.

f. Senior Floating Rate Interests

The Fund invests in senior secured corporate loans that pay interest at rates which are periodically reset by reference to a base lending rate plus a spread. These base lending rates are generally the prime rate offered by a designated U.S. bank or the London InterBank Offered Rate (LIBOR). Senior secured corporate loans often require prepayment of principal from excess cash flows or at the discretion of the borrower. As a result, actual maturity may be substantially less than the stated maturity. Senior secured corporate loans in which the Fund invests are generally readily marketable, but may be subject to certain restrictions on resale.

g. Income and Deferred Taxes

It is the Fund’s policy to qualify as a regulated investment company under the Internal Revenue Code. The Fund intends to

distribute to shareholders substantially all of its taxable income and net realized gains to relieve it from federal income and if applicable, excise taxes. As a result, no provision for U.S. federal income taxes is required.

The Fund may be subject to foreign taxation related to income received, capital gains on the sale of securities and certain foreign currency transactions in the foreign jurisdictions in which it invests. Foreign taxes, if any, are recorded based on the tax regulations and rates that exist in the foreign markets in which the Fund invests. When a capital gain tax is determined to apply the Fund records an estimated deferred tax liability in an amount that would be payable if the securities were disposed of on the valuation date.

The Fund recognizes the tax benefits of uncertain tax positions only when the position is “more likely than not” to be sustained upon examination by the tax authorities based on the technical merits of the tax position. As of June 30, 2014, and for all open tax years, the Fund has determined that no liability for unrecognized tax benefits is required in the Fund’s financial statements related to uncertain tax positions taken on a tax return (or expected to be taken on future tax returns). Open tax years are those that remain subject to examination and are based on each tax jurisdiction statute of limitation.

h. Security Transactions, Investment Income, Expenses and Distributions

Security transactions are accounted for on trade date. Realized gains and losses on security transactions are determined on a specific identification basis. Interest income and estimated expenses are accrued daily. Amortization of premium and accretion of discount on debt securities are included in interest income. Dividend income and dividends declared on securities sold short are recorded on the ex-dividend date except that certain dividends from foreign securities are recognized as soon as the Fund is notified of the ex-dividend date. Distributions to shareholders are recorded on the ex-dividend date and are determined according to income tax regulations (tax basis). Distributable earnings determined on a tax basis may differ from earnings recorded in accordance with accounting principles generally accepted in the United States of America. These differences may be permanent or temporary. Permanent differences are reclassified among capital accounts to reflect their tax character. These reclassifications have no impact on net assets or the results of operations. Temporary differences are not reclassified, as they may reverse in subsequent periods.

Semiannual Report MS-27

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual Shares VIP Fund (continued)

1. Organization and Significant Accounting Policies (continued)

h. Security Transactions, Investment Income, Expenses and Distributions (continued)

Common expenses incurred by the Trust are allocated among the funds based on the ratio of net assets of each fund to the combined net assets of the Trust. Fund specific expenses are charged directly to the fund that incurred the expense.

Realized and unrealized gains and losses and net investment income, not including class specific expenses, are allocated daily to each class of shares based upon the relative proportion of net assets of each class. Differences in per share distributions, by class, are generally due to differences in class specific expenses.

i. Accounting Estimates

The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions

that affect the reported amounts of assets and liabilities at the date of the financial statements and the amounts of income and expenses during the reporting period. Actual results could differ from those estimates.

j. Guarantees and Indemnifications

Under the Trust’s organizational documents, its officers and trustees are indemnified by the Trust against certain liabilities arising out of the performance of their duties to the Trust. Additionally, in the normal course of business, the Trust, on behalf of the Fund, enters into contracts with service providers that contain general indemnification clauses. The Trust’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Trust that have not yet occurred. Currently, the Trust expects the risk of loss to be remote.

2. Shares of Beneficial Interest

At June 30, 2014, there were an unlimited number of shares authorized (without par value). Transactions in the Fund’s shares were as follows:

	Six Months Ended June 30, 2014						Year Ended December 31, 2013
	Shares			Amount			Shares			Amount
Class 1 Shares:
Shares sold		2,656,114		$	59,761,419			1,271,063		$	25,943,160
Shares issued in reinvestment of distributions		—			—			565,348			11,380,461
Shares redeemed		(676,467	)		(15,275,197	)		(2,402,608	)		(47,284,509	)
Net increase (decrease)		1,979,647		$	44,486,222			(566,197	)	$	(9,960,888	)
Class 2 Shares:
Shares sold		1,841,049		$	40,446,500			9,115,759		$	176,951,746
Shares issued in reinvestment of distributions		—			—			4,541,987			90,294,700
Shares redeemed		(16,302,299	)		(360,798,370	)		(39,198,203	)		(769,643,413	)
Net increase (decrease)		(14,461,250	)	$	(320,351,870	)		(25,540,457	)	$	(502,396,967	)
Class 4 Shares:
Shares sold		112,314		$	2,485,376			622,201		$	12,228,440
Shares issued on reinvestment of distributions		—			—			176,961			3,535,676
Shares redeemed		(930,517	)		(21,049,410	)		(1,677,249	)		(33,261,684	)
Net increase (decrease)		(818,203	)	$	(18,564,034	)		(878,087	)	$	(17,497,568	)

MS-28 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual Shares VIP Fund (continued)

3. Transactions With Affiliates

Franklin Resources, Inc. is the holding company for various subsidiaries that together are referred to as Franklin Templeton Investments. Certain officers and trustees of the Fund are also officers and/or directors of the following subsidiaries:

Subsidiary	Affiliation
Franklin Mutual Advisers, LLC (Franklin Mutual)	Investment manager
Franklin Templeton Services, LLC (FT Services)	Administrative manager
Franklin Templeton Distributors, Inc. (Distributors)	Principal underwriter
Franklin Templeton Investor Services, LLC (Investor Services)	Transfer agent

a. Management Fees

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

Annualized Fee Rate	Net Assets
0.750%	Up to and including $200 million
0.735%	Over $200 million, up to and including $700 million
0.700%	Over $700 million, up to and including $1.2 billion
0.675%	Over $1.2 billion, up to and including $5 billion
0.645%	Over $5 billion, up to and including $10 billion
0.625%	Over $10 billion, up to and including $15 billion
0.605%	Over $15 billion, up to and including $20 billion
0.585%	In excess of $20 billion

Effective May 1, 2014, the Fund combined its investment management and administration agreements as approved by the Board. The fees paid under the combined agreement do not exceed the aggregate fees that were paid under the separate agreements.

Prior to May 1, 2014, the Fund paid fees to Franklin Mutual based on the average daily net assets of the Fund as follows:

Annualized Fee Rate	Net Assets
0.600%	Up to and including $5 billion
0.570%	Over $5 billion, up to and including $10 billion
0.550%	Over $10 billion, up to and including $15 billion
0.530%	Over $15 billion, up to and including $20 billion
0.510%	In excess of $20 billion

b. Administrative Fees

Effective May 1, 2014, under an agreement with Franklin Mutual, FT Services provides administrative services to the Fund. The fee is paid by Franklin Mutual based on the Fund’s average daily net assets, and is not an additional expense of the Fund.

Prior to May 1, 2014, the Fund paid fees to FT Services based on the average daily net assets of the Fund as follows:

Annualized Fee Rate	Net Assets
0.150%	Up to and including $200 million
0.135%	Over $200 million, up to and including $700 million
0.100%	Over $700 million, up to and including $1.2 billion
0.075%	In excess of $1.2 billion

Semiannual Report MS-29

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual Shares VIP Fund (continued)

3. Transactions With Affiliates (continued)

c. Distribution Fees

The Board has adopted distribution plans for Class 2 and Class 4 shares pursuant to Rule 12b-1 under the 1940 Act. Under the Fund’s compensation distribution plans, the Fund pays Distributors for costs incurred in connection with the servicing, sale and distribution of the Fund’s shares up to 0.35% per year of its average daily net assets. Some distribution fees are not charged on shares held by affiliates. The Board has agreed to limit the current rate to 0.25% per year for Class 2. The plan year, for purposes of monitoring compliance with the maximum annual plan rates, is February 1 through January 31.

d. Transfer Agent Fees

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

e. Other Affiliated Transactions

At June 30, 2014, Franklin Templeton Variable Insurance Products Trust – Franklin Founding Funds Allocation VIP Fund owned 8.19% of the Fund’s outstanding shares.

4. Expense Offset Arrangement

The Fund has entered into an arrangement with its custodian whereby credits realized as a result of uninvested cash balances are used to reduce a portion of the Fund’s custodian expenses. During the period ended June 30, 2014, the custodian fees were reduced as noted in the Statement of Operations.

5. Income Taxes

At June 30, 2014, the cost of investments and net unrealized appreciation (depreciation) for income tax purposes were as follows:

Cost of investments	$4,016,321,905
Unrealized appreciation	$1,510,093,857
Unrealized depreciation	(118,718,388)
Net unrealized appreciation (depreciation)	$1,391,375,469

Differences between income and/or capital gains as determined on a book basis and a tax basis are primarily due to differing treatments of foreign currency transactions, bond discounts and premiums, and wash sales.

6. Investment Transactions

Purchases and sales of investments (excluding short term securities and securities sold short) for the period ended June 30, 2014, aggregated $573,601,822 and $817,139,691, respectively.

7. Credit Risk and Defaulted Securities

The Fund may purchase the pre-default or defaulted debt of distressed companies. Distressed companies are financially troubled and are about to be or are already involved in financial restructuring or bankruptcy. Risks associated with purchasing these securities include the possibility that the bankruptcy or other restructuring process takes longer than expected, or that distributions in restructuring are less than anticipated, either or both of which may result in unfavorable consequences to the Fund. If it becomes probable that the income on debt securities, including those of distressed companies, will not be collected, the Fund discontinues accruing income and recognizes an adjustment for uncollectible interest.

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FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual Shares VIP Fund (continued)

At June 30, 2014, the aggregate value of distressed company securities for which interest recognition has been discontinued was $36,065,090, representing 0.67% of the Fund’s net assets. For information as to specific securities, see the accompanying Statement of Investments.

8. Restricted Securities

The Fund invests in securities that are restricted under the Securities Act of 1933 (1933 Act) or which are subject to legal, contractual, or other agreed upon restrictions on resale. Restricted securities are often purchased in private placement transactions, and cannot be sold without prior registration unless the sale is pursuant to an exemption under the 1933 Act. Disposal of these securities may require greater effort and expense, and prompt sale at an acceptable price may be difficult. The Fund may have registration rights for restricted securities. The issuer generally incurs all registration costs.

At June 30, 2014, the Fund held investments in restricted securities, excluding certain securities exempt from registration under the 1933 Act deemed to be liquid, as follows:

Principal Amount/ Shares		Issuer	Acquisition Dates		Cost		Value
	1,754	Broadband Ventures III LLC, secured promissory note, 5.00%, 2/01/12		7/01/10 - 11/30/12	$	1,754	$	—
	6,400,507	CB FIM Coinvestors LLC		1/15/09 - 6/02/09		—		—
	8,006,950	FIM Coinvestor Holdings I, LLC		11/20/06 - 6/02/09		—		—
	1,730,515	International Automotive Components Group Brazil LLC		4/13/06 - 12/26/08		1,149,241		275,965
	15,382,424	International Automotive Components Group North America, LLC		1/12/06 - 3/18/13		12,591,586		14,194,593
	16,280	Olympus Re Holdings Ltd.		12/19/01		1,525,128		—
		Total Restricted Securities (Value is 0.27% of Net Assets)			$	15,267,709	$	14,470,558

9. Other Derivative Information

At June 30, 2014, the Fund’s investments in derivative contracts are reflected on the Statement of Assets and Liabilities as follows:

	Asset Derivatives		Liability Derivatives
Derivative Contracts Not Accounted for as Hedging Instruments	Statement of Assets and Liabilities Location	Fair Value Amount	Statement of Assets and Liabilities Location	Fair Value Amount
Foreign exchange contracts	Unrealized appreciation on forward exchange contracts	$1,602,826	Unrealized depreciation on forward exchange contracts / Net assets consist of – net unrealized appreciation (depreciation)	$	18,030,054	a

^aIncludes cumulative appreciation (depreciation) of futures contracts as reported in the Statement of Investments. Only current day’s variation margin is separately reported within the Statement of Assets and Liabilities.

For the period ended June 30, 2014, the effect of derivative contracts on the Fund’s Statement of Operations was as follows:

Derivative Contracts Not Accounted for as Hedging Instruments	Statement of Operations Locations	Realized Gain (Loss) for the Period			Change in Unrealized Appreciation (Depreciation) for the Period
Foreign exchange contracts	Net realized gain (loss) from foreign currency transactions and futures contracts / Net change in unrealized appreciation (depreciation) on translation of other assets and liabilities denominated in foreign currencies	$	(28,314,448	)	$	11,779,806

Semiannual Report MS-31

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual Shares VIP Fund (continued)

9. Other Derivative Information (continued)

For the period ended June 30, 2014, the average month end fair value of derivatives represented 0.26% of average month end net assets. The average month end number of open derivative contracts for the period was 210.

See Note 1(c) regarding derivative financial instruments.

10. Holdings of 5% Voting Securities of Portfolio Companies

The 1940 Act defines “affiliated companies” to include investments in portfolio companies in which a fund owns 5% or more of the outstanding voting securities. Investments in “affiliated companies” for the Fund for the period ended June 30, 2014, were as shown below.

Name of Issuer	Number of Shares Held at Beginning of Period		Gross Additions		Gross Reductions		Number of Shares Held at End of Period		Value at End of Period		Investment Income		Realized Capital Gain (Loss)
Non-Controlled Affiliates
CB FIM Coinvestors LLC (Value is 0.00% of Net Assets)		6,400,507		—		—		6,400,507	$	—	$	—	$	—

11. Credit Facility

The Fund, together with other U.S. registered and foreign investment funds (collectively, Borrowers), managed by Franklin Templeton Investments, are borrowers in a joint syndicated senior unsecured credit facility totaling $1.5 billion (Global Credit Facility) which matures on February 13, 2015. This Global Credit Facility provides a source of funds to the Borrowers for temporary and emergency purposes, including the ability to meet future unanticipated or unusually large redemption requests.

Under the terms of the Global Credit Facility, the Fund shall, in addition to interest charged on any borrowings made by the Fund and other costs incurred by the Fund, pay its share of fees and expenses incurred in connection with the implementation and maintenance of the Global Credit Facility, based upon its relative share of the aggregate net assets of all of the Borrowers, including an annual commitment fee of 0.07% based upon the unused portion of the Global Credit Facility. These fees are reflected in other expenses on the Statement of Operations. During the period ended June 30, 2014, the Fund did not use the Global Credit Facility.

12. Fair Value Measurements

The Fund follows a fair value hierarchy that distinguishes between market data obtained from independent sources (observable inputs) and the Fund’s own market assumptions (unobservable inputs). These inputs are used in determining the value of the Fund’s financial instruments and are summarized in the following fair value hierarchy:

• Level 1 – quoted prices in active markets for identical financial instruments

• Level 2 – other significant observable inputs (including quoted prices for similar financial instruments, interest rates, prepayment speed, credit risk, etc.)

• Level 3 – significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of financial instruments)

The input levels are not necessarily an indication of the risk or liquidity associated with financial instruments at that level.

For movements between the levels within the fair value hierarchy, the Fund has adopted a policy of recognizing the transfers as of the date of the underlying event which caused the movement.

MS-32 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual Shares VIP Fund (continued)

A summary of inputs used as of June 30, 2014, in valuing the Fund’s assets and liabilities carried at fair value, is as follows:

	Level 1		Level 2		Level 3			Total
Assets:
Investments in Securities
Equity Investments:a
Auto Components	$	—	$	—	$	14,470,558		$	14,470,558
Banks		379,090,088		—		8,393,291			387,483,379
Machinery		62,642,454		18,947,853		—			81,590,307
Real Estate Management & Development		3,534,685		—		11,679,350			15,214,035
Other Equity Investmentsb		4,186,977,001		—		—	c		4,186,977,001
Corporate Bonds, Notes and Senior Floating Rate Interests		—		263,321,104		—			263,321,104
Corporate Notes and Senior Floating Rate Interests in Reorganization		—		111,278,366		—	c		111,278,366
Companies in Liquidation		292,834		66,110,439		—	c		66,403,273
Municipal Bonds		—		13,838,686		—			13,838,686
Short Term Investments		254,074,467		13,046,198		—			267,120,665
Total Investments in Securities	$	4,886,611,529	$	486,542,646	$	34,543,199		$	5,407,697,374
Other Financial Instruments
Forward Exchange Contracts	$	—	$	1,602,826	$	—		$	1,602,826
Liabilities:
Other Financial Instruments
Securities Sold Short	$	29,487,482	$	—	$	—		$	29,487,482
Futures Contracts		2,967,964							2,967,964
Forward Exchange Contracts		—		15,062,090		—			15,062,090
Total Other Financial Instruments	$	32,455,446	$	15,062,090	$	—		$	47,517,536

^aIncludes common and preferred stocks as well as other equity investments.

^bFor detailed categories, see the accompanying Statement of Investments.

^cIncludes securities determined to have no value at June 30, 2014.

A reconciliation of assets in which Level 3 inputs are used in determining fair value is presented when there are significant Level 3 financial instruments at the end of the period.

13. New Accounting Pronouncements

In June 2014, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) No. 2014-11, Transfers and Servicing (Topic 860), Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures. The ASU changes the accounting for certain repurchase agreements and expands disclosure requirements related to repurchase agreements, securities lending, repurchase-to-maturity and similar transactions. The ASU is effective for interim and annual reporting periods beginning after December 15, 2014. Management is currently evaluating the impact, if any, of applying the provision.

Semiannual Report MS-33

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual Shares VIP Fund (continued)

14. Subsequent Events

The Fund has evaluated subsequent events through the issuance of the financial statements and determined that no events have occurred that require disclosure.

Abbreviations

Counterparty		Currency		Selected Portfolio
BOFA	Bank of America Corp.	CAD	Canadian Dollar	ADR	American Depositary Receipt
BONY	Bank of New York Mellon	CHF	Swiss Franc	FHLB	Federal Home Loan Bank
BZWS	Barclays Bank PLC	EUR	Euro	GO	General Obligation
DBAB	Deutsche Bank AG	GBP	British Pound	IDR	International Depositary Receipt
FBCO	Credit Suisse Group AG	JPY	Japanese Yen	PIK	Payment-In-Kind
HSBC	HSBC Bank USA, N.A.	USD	United States Dollar
SCBT	Standard Chartered Bank
SSBT	State Street Bank and Trust Co.

MS-34 Semiannual Report

Franklin Rising Dividends VIP Fund

(Formerly, Franklin Rising Dividends Securities Fund)

This semiannual report for Franklin Rising Dividends VIP Fund covers the period ended June 30, 2014.

Class 2 Performance Summary as of June 30, 2014

Franklin Rising Dividends VIP Fund – Class 2 delivered a +4.23% total return* for the six-month period ended June 30, 2014.

*The Fund has a fee waiver associated with its investments in a Franklin Templeton money fund, contractually guaranteed through at least its current fiscal year-end. Fund investment results reflect the fee waiver, to the extent applicable; without this reduction, the results would have been lower.

Performance reflects the Fund’s Class 2 operating expenses, but does not include any contract fees, expenses or sales charges. If they had been included, performance would be lower. These charges and deductions, particularly for variable life policies, can have a significant effect on contract values and insurance benefits. See the contract prospectus for a complete description of these expenses, including sales charges.

Performance data represent past performance, which does not guarantee future results. Investment return and principal value will fluctuate, and you may have a gain or loss when you sell your shares. Current performance may differ from figures shown.

Semiannual Report FRD-1

FRANKLIN RISING DIVIDENDS VIP FUND

Fund Goal and Main Investments: Franklin Rising Dividends VIP Fund seeks long-term capital appreciation, with preservation of capital as an important consideration. Under normal market conditions, the Fund invests at least 80% of its net assets in equity securities of companies that have paid rising dividends.

Fund Risks: All investments involve risks, including possible loss of principal. Value securities may not increase in price as anticipated or may decline further in value. While smaller and midsized companies may offer substantial opportunities for capital growth, they also involve heightened risks and should be considered speculative. Historically, smaller- and midsized-company securities have been more volatile in price than larger company securities, especially over the short term. The Fund is actively managed but there is no guarantee that the manager’s investment decisions will produce the desired results. The Fund’s prospectus also includes a description of the main investment risks.

Performance Overview

You can find the Fund’s six-month total return in the Performance Summary. In comparison, the Standard & Poor’s^® 500 Index (S&P 500^®) rose 7.14% for the same period.¹ Please note the Fund employs a bottom-up stock selection process, and the managers invest in securities without regard to benchmark comparisons.

Economic and Market Overview

The U.S. economy showed some signs of recovery during the six-month period ended June 30, 2014, despite a first-quarter contraction in gross domestic product. Manufacturing activity expanded, and the unemployment rate declined to 6.1% in June 2014 from 6.7% in December 2013.² Except for a sharp increase in March, retail sales rose at a modest pace that missed consensus expectations. The housing market had some weather-related weakness early in 2014, but home sales picked up in the spring and home prices were higher than a year ago.

The Federal Reserve Board (Fed) began reducing bond purchases by $10 billion a month in January 2014, based on earlier largely positive economic and employment data. Although economic data in early 2014 were soft, Fed Chair Janet Yellen

1. Source: © 2014 Morningstar. One cannot invest directly in an index, and an index is not representative of the Fund’s portfolio. Please see Index Descriptions following the Fund Summaries.

2. Source: Bureau of Labor Statistics.

FRD-2 Semiannual Report

FRANKLIN RISING DIVIDENDS VIP FUND

kept the pace of asset-purchase tapering intact while adopting a more qualitative approach to rate-hike guidance. However, the Fed pledged to keep interest rates low for a considerable time after the asset-purchase program ends, depending on inflation and employment trends. In June, the Fed lowered projections for near- and long-term economic growth even as it maintained the pace of tapering.

Investors’ confidence grew as corporate profits rose and generally favorable economic data indicated continued recovery despite brief sell-offs when many investors reacted to the Fed’s statements, political instability in certain emerging markets and China’s slowing economy. U.S. stocks continued to gain for the six months under review as the S&P 500 and Dow Jones Industrial Average reached all-time highs.³

Investment Strategy

We are a research-driven, fundamental investment adviser, pursuing a disciplined value-oriented strategy. As bottom-up investors concentrating primarily on individual securities, we seek fundamentally sound companies that we believe meet our screening criteria, which include consistent, substantial dividend increases; reinvested earnings; and strong balance sheets. We attempt to acquire such stocks at attractive prices, often when they are out of favor with other investors. In following these criteria, we do not necessarily focus on companies whose securities pay a high dividend but rather on companies that consistently raise their dividends.

Manager’s Discussion

During the six months under review, three holdings that helped absolute Fund performance were Air Products and Chemicals, Johnson & Johnson and Walgreen. Shares of Air Products and Chemicals, an industrial gas producer, benefited from solid earnings and positive sentiment surrounding the ongoing involvement of an activist shareholder. In mid-June, shares rose sharply after the appointment of Seifi Ghasemi to replace the outgoing chief executive officer, John McGlade. The company has a 32-year history of increasing dividends. Johnson & Johnson’s stock rallied as a result of investor excitement about the fruition of its pharmaceutical pipeline. Although management indicated it was unlikely to break up the company, investors may have anticipated a possible separation of the company’s

medical devices and pharmaceutical businesses because of similar actions taken by competitors. The company has increased its dividend for the past 52 years. Walgreen’s sales growth was solid year-to-date, despite weak customer traffic trends. Management delivered on promised procurement synergies from the company’s merger with Switzerland-based Alliance Boots, and it expected potential further benefits from the expansion of Boots’ private label products in the U.S. Based on Walgreen’s latest comments, we believe the company is considering a potential tax inversion via the acquisition of the remaining equity stake in Alliance Boots and moving its domicile outside the U.S. Walgreen has 38 consecutive years of dividend increases.

Detractors from absolute Fund performance included West Pharmaceutical Services, Pentair and Wal-Mart Stores. Results were solid for West Pharmaceutical Services, a medical devices manufacturer, and the company’s underlying growth prospects remain unchanged, but investors may have taken profits, given the stock’s price appreciation. Investor rotation into other segments within health care may have also contributed to the company’s lower stock price. West Pharmaceutical Services has 21 years of dividend increases. Shares of Pentair, a water delivery and thermal systems manufacturer, declined largely driven by weaker-than-expected first-quarter results. Ongoing weakness in emerging market infrastructure investment negatively impacted the company’s Australian pipe business. Although these headwinds have been ongoing since the business was acquired as a non-core portion of the Tyco Flow merger, Pentair’s management was surprised by the magnitude of decline and focused on restructuring and resizing this business. The company also reported ongoing strength in its food and beverage and North American residential and commercial segments. Pentair had significant improvement in its operating margins as a result of cost control initiatives and ongoing synergy realization from the Tyco Flow merger. Pentair has 38 years of dividend increases. Wal-Mart Stores, a global discount retailer, reported soft sales trends in its past two quarters, partly resulting from severe weather, but slowing consumer traffic and other secular negative trends also contributed. The company’s management has since taken a proactive stance in addressing underperforming stores, improving its merchandise mix and better integrating its retail store and e-commerce distribution channels, but the results of these initiatives are yet to be seen.

3. Please see Index Descriptions following the Fund Summaries.

Semiannual Report FRD-3

FRANKLIN RISING DIVIDENDS VIP FUND

Top 10 Holdings
6/30/14
Company Sector/Industry	% of Total Net Assets
Roper Industries Inc. Industrial Conglomerates		4.2%
Praxair Inc. Materials		4.2%
Dover Corp. Machinery		4.1%
Chevron Corp. Energy		4.1%
United Technologies Corp. Aerospace & Defense		4.0%
Johnson & Johnson Pharmaceuticals, Biotechnology & Life Sciences		4.0%
Becton, Dickinson and Co. Health Care Equipment & Services		3.5%
Pentair PLC Machinery		3.2%
Air Products and Chemicals Inc. Materials		3.1%
The Procter & Gamble Co. Household & Personal Products		2.9%

The dollar value, number of shares or principal amount, and names of all portfolio holdings are listed in the Fund’s Statement of Investments.

During the period, we initiated new positions in Accenture, a management consulting, technology and outsourcing services firm with nine years of consecutive dividend increases; Perrigo, a global pharmaceuticals supplier (11 years); DENTSPLY International, a dental health care products manufacturer with a long history of dividend increases; Microsoft, a global software and services provider (10 years); CVS Caremark, an integrated pharmacy health care provider (11 years); and Schlumberger, an oilfield services company with a substantial history of dividend increases. We liquidated our holdings in Cohu and Kid Brands and reduced our holdings in International Business Machines, Air Products and Chemicals, and United Technologies, among others.

Our 10 largest positions on June 30, 2014, represented 37.3% of the Fund’s total net assets. It is interesting to note how these 10 companies would respond, in aggregate, to the Fund’s screening criteria based on a simple average of statistical measures. On

average, these 10 companies have raised their dividends 37 years in a row and by 213% in the past 10 years. Their most recent year-over-year dividend increases averaged 10.6% with a yield of 2.1% on June 30, 2014, and a dividend payout ratio of 38.1%, based on estimates of calendar year 2014 operating earnings. The average price/earnings ratio was 18.6 times calendar year 2014 estimates versus 16.5 for that of the unmanaged S&P 500.

Thank you for your participation in Franklin Rising Dividends VIP Fund. We look forward to continuing to serve your investment needs.

The foregoing information reflects our analysis, opinions and portfolio holdings as of June 30, 2014, the end of the reporting period. The way we implement our main investment strategies and the resulting portfolio holdings may change depending on factors such as market and economic conditions. These opinions may not be relied upon as investment advice or an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but the investment manager makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.

FRD-4 Semiannual Report

FRANKLIN RISING DIVIDENDS VIP FUND

Class 2 Fund Expenses

As an investor in a variable insurance contract (Contract) that indirectly provides for investment in an underlying mutual fund, you can incur transaction and/or ongoing expenses at both the Fund level and the Contract level.

• Transaction expenses can include sales charges (loads) on purchases, surrender fees, transfer fees and premium taxes.

• Ongoing expenses can include management fees, distribution and service (12b-1) fees, contract fees, annual maintenance fees, mortality and expense risk fees and other fees and expenses. All mutual funds and Contracts have some types of ongoing expenses.

The expenses shown in the table are meant to highlight ongoing expenses at the Fund level only and do not include ongoing expenses at the Contract level, or transaction expenses at either the Fund or Contract levels. While the Fund does not have transaction expenses, if the transaction and ongoing expenses at the Contract level were included, the expenses shown below would be higher. You should consult your Contract prospectus or disclosure document for more information.

The table shows Fund-level ongoing expenses and can help you understand these expenses and compare them with those of other mutual funds offered through the Contract. The table assumes a $1,000 investment held for the six months indicated. Please refer to the Fund prospectus for additional information on operating expenses.

Actual Fund Expenses

The first line (Actual) of the table provides actual account values and expenses. The “Ending Account Value” is derived from the Fund’s actual return, which includes the effect of ongoing Fund expenses, but does not include the effect of ongoing Contract expenses.

You can estimate the Fund-level expenses you incurred during the period by following these steps. Of course, your account value and expenses will differ from those in this illustration:

1. Divide your account value by $1,000.

If an account had an $8,600 value, then $8,600 ÷ $1,000 = 8.6.

2. Multiply the result by the number under the heading “Fund-Level Expenses Incurred During Period.”

If Fund-Level Expenses Incurred During Period were $7.50, then 8.6 × $7.50 = $64.50.

In this illustration, the estimated expenses incurred this period at the Fund level are $64.50.

Hypothetical Example for Comparison with Other Mutual Funds

Information in the second line (Hypothetical) of the table can help you compare ongoing expenses of the Fund with those of other mutual funds offered through the Contract. This information may not be used to estimate the actual ending account balance or expenses you incurred during the period. The hypothetical “Ending Account Value” is based on the Fund’s actual expense ratio and an assumed 5% annual rate of return before expenses, which does not represent the Fund’s actual return. The figure under the heading “Fund-Level Expenses Incurred During Period” shows the hypothetical expenses your account would have incurred under this scenario. You can compare this figure with the 5% hypothetical examples that appear in shareholder reports of other funds offered through a Contract.

Class 2	Beginning Account Value 1/1/14		Ending Account Value 6/30/14		Fund-Level Expenses Incurred During Period* 1/1/14–6/30/14
Actual		$1,000		$1,042.30		$4.39
Hypothetical (5% return before expenses)		$1,000		$1,020.48		$4.34

*Expenses are calculated using the most recent six-month annualized expense ratio, net of expense waivers, for the Fund’s Class 2 shares (0.87%), which does not include any ongoing expenses of the Contract for which the Fund is an investment option, multiplied by the average account value over the period, multiplied by 181/365 to reflect the one-half year period.

Semiannual Report FRD-5

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Financial Highlights

Franklin Rising Dividends VIP Fund

	Six Months Ended June 30, 2014 (unaudited)			Year Ended December 31,
				2013			2012			2011			2010			2009
Class 1
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$28.14			$22.03			$20.01			$19.15			$16.13			$13.96
Income from investment operationsa:
Net investment incomeb		0.21			0.40			0.41			0.36			0.32			0.14	c
Net realized and unrealized gains (losses)		1.00			6.16			2.00			0.83			3.01			2.28
Total from investment operations		1.21			6.56			2.41			1.19			3.33			2.42
Less distributions from:
Net investment income		(0.44	)		(0.45	)		(0.39	)		(0.33	)		(0.31	)		(0.25	)
Net realized gains		(0.55	)		—			—			—			—			—
Total distributions		(0.99	)		(0.45	)		(0.39	)		(0.33	)		(0.31	)		(0.25	)
Net asset value, end of period		$28.36			$28.14			$22.03			$20.01			$19.15			$16.13
Total returnd		4.33%			30.05%			12.18%			6.29%			20.94%			17.67%
Ratios to average net assetse
Expenses		0.62%	f		0.61%			0.63%			0.63%			0.64%			0.65%	g
Net investment income		1.51%			1.59%			1.96%			1.87%			1.88%			0.99%	c
Supplemental data
Net assets, end of period (000’s)		$163,713			$168,380			$141,455			$140,297			$148,544			$139,816
Portfolio turnover rate		0.06%			0.07%			11.19%			12.76%			8.97%			16.99%

^aThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.

^bBased on average daily shares outstanding.

^cNet investment income per share includes approximately $(0.15) per share as a return of capital adjustment to a previously recorded special dividend received by the Fund. Excluding this non-recurring amount, the ratio of net investment income to average net assets would have been 2.07%.

^dTotal return does not include fees, charges or expenses imposed by the variable annuity and life insurance contracts for which the Franklin Templeton Variable Insurance Products Trust serves as an underlying investment vehicle. Total return is not annualized for periods less than one year.

^eRatios are annualized for periods less than one year.

^fBenefit of waiver and payment by affiliate rounds to less than 0.01%.

^gBenefit of expense reduction rounds to less than 0.01%.

FRD-6 Semiannual Report   |    The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL HIGHLIGHTS

Franklin Rising Dividends VIP Fund (continued)

	Six Months Ended June 30, 2014 (unaudited)			Year Ended December 31,
				2013			2012			2011			2010			2009
Class 2
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$27.62			$21.64			$19.65			$18.82			$15.86			$13.72
Income from investment operationsa:
Net investment incomeb		0.17			0.33			0.35			0.31			0.28			0.10	c
Net realized and unrealized gains (losses)		0.99			6.04			1.98			0.81			2.95			2.24
Total from investment operations		1.16			6.37			2.33			1.12			3.23			2.34
Less distributions from:
Net investment income		(0.37	)		(0.39	)		(0.34	)		(0.29	)		(0.27	)		(0.20	)
Net realized gains		(0.55	)		—			—			—			—			—
Total distributions		(0.92	)		(0.39	)		(0.34	)		(0.29	)		(0.27	)		(0.20	)
Net asset value, end of period		$27.86			$27.62			$21.64			$19.65			$18.82			$15.86
Total returnd		4.23%			29.69%			11.96%			6.00%			20.64%			17.34%
Ratios to average net assetse
Expenses		0.87%	f		0.86%			0.88%			0.88%			0.89%			0.90%	g
Net investment income		1.26%			1.34%			1.71%			1.62%			1.63%			0.74%	c
Supplemental data
Net assets, end of period (000’s)		$1,720,335			$1,752,012			$1,550,084			$1,523,396			$1,572,732			$1,371,351
Portfolio turnover rate		0.06%			0.07%			11.19%			12.76%			8.97%			16.99%

^aThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.

^bBased on average daily shares outstanding.

^cNet investment income per share includes approximately $(0.15) per share as a return of capital adjustment to a previously recorded special dividend received by the Fund. Excluding this non-recurring amount, the ratio of net investment income to average net assets would have been 1.82%.

^dTotal return does not include fees, charges or expenses imposed by the variable annuity and life insurance contracts for which the Franklin Templeton Variable Insurance Products Trust serves as an underlying investment vehicle. Total return is not annualized for periods less than one year.

^eRatios are annualized for periods less than one year.

^fBenefit of waiver and payment by affiliate rounds to less than 0.01%.

^gBenefit of expense reduction rounds to less than 0.01%.

The accompanying notes are an integral part of these financial statements.    |   Semiannual Report FRD-7

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL HIGHLIGHTS

Franklin Rising Dividends VIP Fund (continued)

	Six Months Ended June 30, 2014 (unaudited)			Year Ended December 31,
				2013			2012			2011			2010			2009
Class 4
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$27.76			$21.78			$19.83			$19.04			$16.09			$13.92
Income from investment operationsa:
Net investment incomeb		0.16			0.32			0.35			0.31			0.32			0.13	c
Net realized and unrealized gains (losses)		0.99			6.07			1.96			0.80			2.94			2.24
Total from investment operations		1.15			6.39			2.31			1.11			3.26			2.37
Less distributions from:
Net investment income		(0.37	)		(0.41	)		(0.36	)		(0.32	)		(0.31	)		(0.20	)
Net realized gains		(0.55	)		—			—			—			—			—
Total distributions		(0.92	)		(0.41	)		(0.36	)		(0.32	)		(0.31	)		(0.20	)
Net asset value, end of period		$27.99			$27.76			$21.78			$19.83			$19.04			$16.09
Total returnd		4.15%			29.57%			11.78%			5.89%			20.62%			17.22%
Ratios to average net assetse
Expenses		0.97%	f		0.96%			0.98%			0.98%			0.99%			1.00%	g
Net investment income		1.16%			1.24%			1.61%			1.52%			1.53%			0.64%	c
Supplemental data
Net assets, end of period (000’s)		$12,897			$12,028			$6,432			$3,020			$1,007			$15
Portfolio turnover rate		0.06%			0.07%			11.19%			12.76%			8.97%			16.99%

^aThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.

^bBased on average daily shares outstanding.

^cNet investment income per share includes approximately $(0.15) per share as a return of capital adjustment to a previously recorded special dividend received by the Fund. Excluding this non-recurring amount, the ratio of net investment income to average net assets would have been 1.72%.

^dTotal return does not include fees, charges or expenses imposed by the variable annuity and life insurance contracts for which the Franklin Templeton Variable Insurance Products Trust serves as an underlying investment vehicle. Total return is not annualized for periods less than one year.

^eRatios are annualized for periods less than one year.

^fBenefit of waiver and payment by affiliate rounds to less than 0.01%.

^gBenefit of expense reduction rounds to less than 0.01%.

FRD-8 Semiannual Report   |    The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Statement of Investments, June 30, 2014 (unaudited)

Franklin Rising Dividends VIP Fund
		Shares		Value
	Common Stocks 98.8%
	Aerospace & Defense 4.3%
	General Dynamics Corp.		38,000	$	4,428,900
	Honeywell International Inc.		2,500		232,375
	United Technologies Corp.		658,900		76,070,005
					80,731,280
	Automobiles & Components 2.7%
	Johnson Controls Inc.		1,040,500		51,952,165
	Commercial & Professional Services 3.2%
	ABM Industries Inc.		919,288		24,802,390
	Brady Corp., A		733,579		21,912,005
	Cintas Corp.		225,700		14,340,978
					61,055,373
	Consumer Durables & Apparel 3.3%
	Leggett & Platt Inc.		471,800		16,173,304
	NIKE Inc., B		548,500		42,536,175
	Superior Uniform Group Inc.		227,967		3,695,345
					62,404,824
	Consumer Services 3.3%
	Hillenbrand Inc.		1,091,300		35,598,206
	Matthews International Corp., A		39,000		1,621,230
	McDonald’s Corp.		254,345		25,622,715
					62,842,151
	Diversified Financials 0.4%
	State Street Corp.		110,500		7,432,230
	Energy 7.6%
	Chevron Corp.		597,700		78,029,735
	Exxon Mobil Corp.		330,500		33,274,740
	Occidental Petroleum Corp.		312,190		32,040,060
	Schlumberger Ltd.		2,000		235,900
					143,580,435
	Food & Staples Retailing 5.0%
	CVS Caremark Corp.		2,500		188,425
	Wal-Mart Stores Inc.		728,800		54,711,016
	Walgreen Co.		531,300		39,385,269
					94,284,710
	Food, Beverage & Tobacco 5.1%
	Archer-Daniels-Midland Co.		713,000		31,450,430
	Bunge Ltd.		5,000		378,200
	McCormick & Co. Inc.		441,000		31,571,190
	PepsiCo Inc.		363,900		32,510,826
					95,910,646
	Health Care Equipment & Services 15.3%
	Abbott Laboratories		681,800		27,885,620
	Becton, Dickinson and Co.		565,143		66,856,417
	DENTSPLY International Inc.		4,000		189,400
	Hill-Rom Holdings Inc.		22,279		924,801
	Medtronic Inc.		730,000		46,544,800
	Stryker Corp.		630,400		53,155,328

Semiannual Report FRD-9

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Rising Dividends VIP Fund (continued)

	Shares		Value
Common Stocks (continued)
Health Care Equipment & Services (continued)
Teleflex Inc.		471,753	$	49,817,117
West Pharmaceutical Services Inc.		1,086,534		45,830,004
				291,203,487
Household & Personal Products 3.6%
Colgate-Palmolive Co.		191,000		13,022,380
The Procter & Gamble Co.		707,600		55,610,284
				68,632,664
Industrial Conglomerates 4.6%
Carlisle Cos. Inc.		96,261		8,338,128
Roper Industries Inc.		541,850		79,115,518
				87,453,646
Insurance 6.0%
Aflac Inc.		276,200		17,193,450
Arthur J. Gallagher & Co.		744,000		34,670,400
The Chubb Corp.		45,000		4,147,650
Erie Indemnity Co., A		526,085		39,593,157
Mercury General Corp.		18,148		853,682
Old Republic International Corp.		678,708		11,225,830
RLI Corp.		124,142		5,683,221
				113,367,390
Machinery 8.1%
Donaldson Co. Inc.		350,068		14,814,878
Dover Corp.		865,000		78,671,750
Pentair PLC (United Kingdom)		844,000		60,869,280
				154,355,908
Materials 12.2%
Air Products and Chemicals Inc.		451,800		58,110,516
Albemarle Corp.		694,700		49,671,050
Bemis Co. Inc.		323,300		13,145,378
Ecolab Inc.		66,000		7,348,440
Nucor Corp.		499,002		24,575,849
Praxair Inc.		593,460		78,835,226
				231,686,459
Media 0.4%
John Wiley & Sons Inc., A		116,500		7,058,735
Pharmaceuticals, Biotechnology & Life Sciences 7.9%
AbbVie Inc.		472,300		26,656,612
Johnson & Johnson		726,100		75,964,582
Perrigo Co. PLC		1,500		218,640
Pfizer Inc.		1,570,100		46,600,568
				149,440,402
Retailing 2.5%
Family Dollar Stores Inc.		706,835		46,750,067
Ross Stores Inc.		3,000		198,390
Target Corp.		3,000		173,850
				47,122,307

FRD-10 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Rising Dividends VIP Fund (continued)

		Shares		Value
	Common Stocks (continued)
	Semiconductors & Semiconductor Equipment 0.0%†
	Texas Instruments Inc.		4,500	$	215,055
	Software & Services 2.7%
	Accenture PLC, A		2,500		202,100
	International Business Machines Corp.		280,200		50,791,854
	Microsoft Corp.		5,000		208,500
					51,202,454
	Technology Hardware & Equipment 0.6%
a	Knowles Corp.		358,300		11,014,142
	QUALCOMM Inc.		3,000		237,600
					11,251,742
	Trading Companies & Distributors 0.0%†
	W.W. Grainger Inc.		1,000		254,270
	Transportation 0.0%†
	United Parcel Service Inc., B		2,000		205,320
	Total Common Stocks (Cost $934,699,024)				1,873,643,653
	Short Term Investments (Cost $24,746,100) 1.3%
	Money Market Funds 1.3%
a,b	Institutional Fiduciary Trust Money Market Portfolio		24,746,100		24,746,100
	Total Investments (Cost $959,445,124) 100.1%				1,898,389,753
	Other Assets, less Liabilities (0.1)%				(1,444,991	)
	Net Assets 100.0%			$	1,896,944,762

^†Rounds to less than 0.1% of net assets.

^aNon-income producing.

^bSee Note 3(e) regarding investments in the Institutional Fiduciary Trust Money Market Portfolio.

The accompanying notes are an integral part of these financial statements.    |   Semiannual Report FRD-11

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Financial Statements

Statement of Assets and Liabilities

June 30, 2014 (unaudited)

	Franklin Rising Dividends VIP Fund
Assets:
Investments in securities:
Cost - Unaffiliated issuers	$	934,699,024
Cost - Sweep Money Fund (Note 3e)		24,746,100
Total cost of investments	$	959,445,124
Value - Unaffiliated issuers	$	1,873,643,653
Value - Sweep Money Fund (Note 3e)		24,746,100
Total value of investments		1,898,389,753
Receivables:
Investment securities sold		1,689,332
Capital shares sold		494,498
Dividends		1,972,521
Other assets		849
Total assets		1,902,546,953
Liabilities:
Payables:
Capital shares redeemed		3,704,883
Management fees		932,340
Distribution fees		723,165
Accrued expenses and other liabilities		241,803
Total liabilities		5,602,191
Net assets, at value	$	1,896,944,762
Net assets consist of:
Paid-in capital	$	913,919,832
Undistributed net investment income		11,930,991
Net unrealized appreciation (depreciation)		938,944,629
Accumulated net realized gain (loss)		32,149,310
Net assets, at value	$	1,896,944,762

FRD-12 Semiannual Report   |    The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL STATEMENTS

Statement of Assets and Liabilities (continued)

June 30, 2014 (unaudited)

	Franklin Rising Dividends VIP Fund
Class 1:
Net assets, at value	$	163,713,031
Shares outstanding		5,772,442
Net asset value and maximum offering price per share	$	28.36
Class 2:
Net assets, at value	$	1,720,335,000
Shares outstanding		61,759,139
Net asset value and maximum offering price per share	$	27.86
Class 4:
Net assets, at value	$	12,896,731
Shares outstanding		460,705
Net asset value and maximum offering price per share	$	27.99

The accompanying notes are an integral part of these financial statements.    |   Semiannual Report FRD-13

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL STATEMENTS

Statement of Operations

for the six months ended June 30, 2014 (unaudited)

	Franklin Rising Dividends VIP Fund
Investment income:
Dividends	$	19,812,718
Expenses:
Management fees (Note 3a)		5,590,885
Distribution fees: (Note 3c)
Class 2		2,112,027
Class 4		21,458
Custodian fees (Note 4)		8,065
Reports to shareholders		103,154
Professional fees		29,398
Trustees’ fees and expenses		3,770
Other		15,821
Total expenses		7,884,578
Expenses waived/paid by affiliates (Note 3e)		(8,417	)
Net expenses		7,876,161
Net investment income		11,936,557
Realized and unrealized gains (losses):
Net realized gain (loss) from investments		33,737,525
Net change in unrealized appreciation (depreciation) on investments		31,373,978
Net realized and unrealized gain (loss)		65,111,503
Net increase (decrease) in net assets resulting from operations	$	77,048,060

FRD-14 Semiannual Report   |    The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL STATEMENTS

Statements of Changes in Net Assets

	Franklin Rising Dividends VIP Fund
	Six Months Ended June 30, 2014 (unaudited)			Year Ended December 31, 2013
Increase (decrease) in net assets:
Operations:
Net investment income	$	11,936,557		$	25,051,212
Net realized gain (loss) from investments		33,737,525			109,495,187
Net change in unrealized appreciation (depreciation) on investments		31,373,978			341,536,473
Net increase (decrease) in net assets resulting from operations		77,048,060			476,082,872
Distributions to shareholders from:
Net investment income:
Class 1		(2,478,710	)		(2,772,388	)
Class 2		(22,406,447	)		(26,490,890	)
Class 4		(165,391	)		(163,605	)
Net realized gains:
Class 1		(3,072,165	)		—
Class 2		(32,971,551	)		—
Class 4		(247,432	)		—
Total distributions to shareholders		(61,341,696	)		(29,426,883	)
Capital share transactions: (Note 2)
Class 1		(5,961,538	)		(11,198,645	)
Class 2		(45,965,433	)		(204,341,308	)
Class 4		746,249			3,331,799
Total capital share transactions		(51,180,722	)		(212,208,154	)
Net increase (decrease) in net assets		(35,474,358	)		234,447,835
Net assets:
Beginning of period		1,932,419,120			1,697,971,285
End of period	$	1,896,944,762		$	1,932,419,120
Undistributed net investment income included in net assets:
End of period	$	11,930,991		$	25,044,982

The accompanying notes are an integral part of these financial statements.    |   Semiannual Report FRD-15

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Notes to Financial Statements (unaudited)

Franklin Rising Dividends VIP Fund

1. Organization and Significant Accounting Policies

Franklin Templeton Variable Insurance Products Trust (Trust) is registered under the Investment Company Act of 1940, as amended, (1940 Act) as an open-end management investment company, consisting of twenty separate funds and applies the specialized accounting and reporting guidance in U.S. Generally Accepted Accounting Principles (U.S. GAAP). The Franklin Rising Dividends VIP Fund (Fund) is included in this report. The financial statements of the remaining funds in the Trust are presented separately. Shares of the Fund are generally sold only to insurance company separate accounts to fund the benefits of variable life insurance policies or variable annuity contracts. At June 30, 2014, 42.85% of the Fund’s shares were held through one insurance company. Investment activities of these insurance company separate accounts could have a material impact on the Fund. The Fund offers three classes of shares: Class 1, Class 2, and Class 4. Each class of shares differs by its distribution fees, voting rights on matters affecting a single class and its exchange privilege.

Effective May 1, 2014, the Franklin Rising Dividends Securities Fund was renamed Franklin Rising Dividends VIP Fund.

The following summarizes the Fund’s significant accounting policies.

a. Financial Instrument Valuation

The Fund’s investments in financial instruments are carried at fair value daily. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. The Fund calculates the net asset value (NAV) per share at the close of the New York Stock Exchange (NYSE), generally at 4 p.m. Eastern time (NYSE close) on each day the NYSE is open for trading. Under compliance policies and procedures approved by the Trust’s Board of Trustees (the Board), the Fund’s administrator has responsibility for oversight of valuation, including leading the cross-functional Valuation and Liquidity Oversight Committee (VLOC). The VLOC provides administration and oversight of the Fund’s valuation policies and procedures, which are approved annually by the Board. Among other things, these procedures allow the Fund to utilize independent pricing services, quotations from securities and financial instrument dealers, and other market sources to determine fair value.

Equity securities listed on an exchange or on the NASDAQ National Market System are valued at the last quoted sale price

or the official closing price of the day, respectively. Over-the-counter securities are valued within the range of the most recent quoted bid and ask prices. Securities that trade in multiple markets or on multiple exchanges are valued according to the broadest and most representative market. Certain equity securities are valued based upon fundamental characteristics or relationships to similar securities. Investments in open-end mutual funds are valued at the closing net asset value.

The Fund has procedures to determine the fair value of financial instruments for which market prices are not reliable or readily available. Under these procedures, the VLOC convenes on a regular basis to review such financial instruments and considers a number of factors, including significant unobservable valuation inputs, when arriving at fair value. The VLOC primarily employs a market-based approach which may use related or comparable assets or liabilities, recent transactions, market multiples, book values, and other relevant information for the investment to determine the fair value of the investment. An income-based valuation approach may also be used in which the anticipated future cash flows of the investment are discounted to calculate fair value. Discounts may also be applied due to the nature or duration of any restrictions on the disposition of the investments. Due to the inherent uncertainty of valuations of such investments, the fair values may differ significantly from the values that would have been used had an active market existed. The VLOC employs various methods for calibrating these valuation approaches including a regular review of key inputs and assumptions, transactional back-testing or disposition analysis, and reviews of any related market activity.

b. Income Taxes

It is the Fund’s policy to qualify as a regulated investment company under the Internal Revenue Code. The Fund intends to distribute to shareholders substantially all of its taxable income and net realized gains to relieve it from federal income and if applicable, excise taxes. As a result, no provision for U.S. federal income taxes is required.

The Fund recognizes the tax benefits of uncertain tax positions only when the position is “more likely than not” to be sustained upon examination by the tax authorities based on the technical merits of the tax position. As of June 30, 2014, and for all open tax years, the Fund has determined that no liability for unrecognized tax benefits is required in the Fund’s financial statements related to uncertain tax positions taken on a tax return (or expected to be taken on future tax returns). Open tax years are

FRD-16 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

those that remain subject to examination and are based on each tax jurisdiction statute of limitation.

c. Security Transactions, Investment Income, Expenses and Distributions

Security transactions are accounted for on trade date. Realized gains and losses on security transactions are determined on a specific identification basis. Estimated expenses are accrued daily. Dividend income is recorded on the ex-dividend date. Distributions to shareholders are recorded on the ex-dividend date and are determined according to income tax regulations (tax basis). Distributable earnings determined on a tax basis may differ from earnings recorded in accordance with accounting principles generally accepted in the United States of America. These differences may be permanent or temporary. Permanent differences are reclassified among capital accounts to reflect their tax character. These reclassifications have no impact on net assets or the results of operations. Temporary differences are not reclassified, as they may reverse in subsequent periods.

Common expenses incurred by the Trust are allocated among the funds based on the ratio of net assets of each fund to the combined net assets of the Trust. Fund specific expenses are charged directly to the fund that incurred the expense.

Realized and unrealized gains and losses and net investment income, not including class specific expenses, are allocated daily

to each class of shares based upon the relative proportion of net assets of each class. Differences in per share distributions, by class, are generally due to differences in class specific expenses.

d. Accounting Estimates

The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the amounts of income and expenses during the reporting period. Actual results could differ from those estimates.

e. Guarantees and Indemnifications

Under the Trust’s organizational documents, its officers and trustees are indemnified by the Trust against certain liabilities arising out of the performance of their duties to the Trust. Additionally, in the normal course of business, the Trust, on behalf of the Fund, enters into contracts with service providers that contain general indemnification clauses. The Trust’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Trust that have not yet occurred. Currently, the Trust expects the risk of loss to be remote.

2. Shares of Beneficial Interest

At June 30, 2014, there were an unlimited number of shares authorized (without par value). Transactions in the Fund’s shares were as follows:

	Six Months Ended June 30, 2014						Year Ended December 31, 2013
	Shares			Amount			Shares			Amount
Class 1 Shares:
Shares sold		93,873		$	2,592,211			425,367		$	10,754,937
Shares issued in reinvestment of distributions		197,681			5,550,875			111,610			2,772,388
Shares redeemed		(502,550	)		(14,104,624	)		(973,756	)		(24,725,970	)
Net increase (decrease)		(210,996	)	$	(5,961,538	)		(436,779	)	$	(11,198,645	)
Class 2 Shares:
Shares sold		2,265,357		$	62,334,563			6,187,499		$	153,726,999
Shares issued in reinvestment of distributions		2,007,904			55,377,998			1,085,247			26,490,890
Shares redeemed		(5,939,960	)		(163,677,994	)		(15,483,753	)		(384,559,197	)
Net increase (decrease)		(1,666,699	)	$	(45,965,433	)		(8,211,007	)	$	(204,341,308	)

Semiannual Report FRD-17

Franklin Rising Dividends VIP Fund (continued)

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Rising Dividends VIP Fund (continued)

2. Shares of Beneficial Interest (continued)

	Six Months Ended June 30, 2014						Year Ended December 31, 2013
	Shares			Amount			Shares			Amount
Class 4 Shares:
Shares sold		46,868		$	1,289,017			216,130		$	5,332,125
Shares issued on reinvestment of distributions		14,893			412,823			6,664			163,605
Shares redeemed		(34,285	)		(955,591	)		(84,878	)		(2,163,931	)
Net increase (decrease)		27,476		$	746,249			137,916		$	3,331,799

3. Transactions With Affiliates

Franklin Resources, Inc. is the holding company for various subsidiaries that together are referred to as Franklin Templeton Investments. Certain officers and trustees of the Fund are also officers and/or directors of the following subsidiaries:

Subsidiary	Affiliation
Franklin Advisory Services, LLC (Advisory Services)	Investment manager
Franklin Templeton Services, LLC (FT Services)	Administrative manager
Franklin Templeton Distributors, Inc. (Distributors)	Principal underwriter
Franklin Templeton Investor Services, LLC (Investor Services)	Transfer agent

a. Management Fees

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

Annualized Fee Rate	Net Assets
0.750%	Up to and including $500 million
0.625%	Over $500 million, up to and including $1 billion
0.500%	In excess of $1 billion

b. Administrative Fees

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

c. Distribution Fees

The Board has adopted distribution plans for Class 2 and Class 4 shares pursuant to Rule 12b-1 under the 1940 Act. Under the Fund’s compensation distribution plans, the Fund pays Distributors for costs incurred in connection with the servicing, sale and distribution of the Fund’s shares up to 0.35% per year of its average daily net assets. Some distribution fees are not charged on shares held by affiliates. The Board has agreed to limit the current rate to 0.25% per year for Class 2. The plan year, for purposes of monitoring compliance with the maximum annual plan rates, is February 1 through January 31.

d. Transfer Agent Fees

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

FRD-18 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Rising Dividends VIP Fund (continued)

e. Investment in Institutional Fiduciary Trust Money Market Portfolio

The Fund invests in the Institutional Fiduciary Trust Money Market Portfolio (Sweep Money Fund), an affiliated open-end management investment company. Management fees paid by the Fund are waived on assets invested in the Sweep Money Fund, in an amount not to exceed the management and administrative fees paid directly or indirectly by the Sweep Money Fund, as noted on the Statement of Operations. Prior to January 1, 2014, the waiver was accounted for as a reduction to management fees.

4. Expense Offset Arrangement

The Fund has entered into an arrangement with its custodian whereby credits realized as a result of uninvested cash balances are used to reduce a portion of the Fund’s custodian expenses. During the period ended June 30, 2014, there were no credits earned.

5. Income Taxes

At June 30, 2014, the cost of investments and net unrealized appreciation (depreciation) for income tax purposes were as follows:

Cost of investments	$	961,031,794
Unrealized appreciation	$	937,395,566
Unrealized depreciation		(37,607)
Net unrealized appreciation (depreciation)	$	937,357,959

Differences between income and/or capital gains as determined on a book basis and a tax basis are primarily due to differing treatment of wash sales.

6. Investment Transactions

Purchases and sales of investments (excluding short term securities) for the period ended June 30, 2014, aggregated $1,143,295 and $93,437,788, respectively.

7. Credit Facility

The Fund, together with other U.S. registered and foreign investment funds (collectively, Borrowers), managed by Franklin Templeton Investments, are borrowers in a joint syndicated senior unsecured credit facility totaling $1.5 billion (Global Credit Facility) which matures on February 13, 2015. This Global Credit Facility provides a source of funds to the Borrowers for temporary and emergency purposes, including the ability to meet future unanticipated or unusually large redemption requests.

Under the terms of the Global Credit Facility, the Fund shall, in addition to interest charged on any borrowings made by the Fund and other costs incurred by the Fund, pay its share of fees and expenses incurred in connection with the implementation and maintenance of the Global Credit Facility, based upon its relative share of the aggregate net assets of all of the Borrowers, including an annual commitment fee of 0.07% based upon the unused portion of the Global Credit Facility. These fees are reflected in other expenses on the Statement of Operations. During the period ended June 30, 2014, the Fund did not use the Global Credit Facility

8. Fair Value Measurements

The Fund follows a fair value hierarchy that distinguishes between market data obtained from independent sources (observable inputs) and the Fund’s own market assumptions (unobservable inputs). These inputs are used in determining the value of the Fund’s financial instruments and are summarized in the following fair value hierarchy:

• Level 1 – quoted prices in active markets for identical financial instruments

• Level 2 – other significant observable inputs (including quoted prices for similar financial instruments, interest rates, prepayment speed, credit risk, etc.)

Semiannual Report FRD-19

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Rising Dividends VIP Fund (continued)

• Level 3 – significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of financial instruments)

The input levels are not necessarily an indication of the risk or liquidity associated with financial instruments at that level.

For movements between the levels within the fair value hierarchy, the Fund has adopted a policy of recognizing the transfers as of the date of the underlying event which caused the movement.

At June 30, 2014, all of the Fund’s investments in financial instruments carried at fair value were valued using Level 1 inputs. For detailed categories, see the accompanying Statement of Investments.

9. New Accounting Pronouncements

In June 2014, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) No. 2014-11, Transfers and Servicing (Topic 860), Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures. The ASU changes the accounting for certain repurchase agreements and expands disclosure requirements related to repurchase agreements, securities lending, repurchase-to-maturity and similar transactions. The ASU is effective for interim and annual reporting periods beginning after December 15, 2014. Management is currently evaluating the impact, if any, of applying this provision.

10. Subsequent Events

The Fund has evaluated subsequent events through the issuance of the financial statements and determined that no events have occurred that require disclosure.

FRD-20 Semiannual Report

Franklin Small Cap Value VIP Fund

(Formerly, Franklin Small Cap Value Securities Fund)

This semiannual report for Franklin Small Cap Value VIP Fund covers the period ended June 30, 2014.

Class 2 Performance Summary as of June 30, 2014

Franklin Small Cap Value VIP Fund – Class 2 delivered a +4.54% total return* for the six-month period ended June 30, 2014.

*The Fund has a fee waiver associated with its investments in a Franklin Templeton money fund, contractually guaranteed through at least its current fiscal year-end. Fund investment results reflect the fee waiver, to the extent applicable; without this reduction, the results would have been lower.

Performance reflects the Fund’s Class 2 operating expenses, but does not include any contract fees, expenses or sales charges. If they had been included, performance would be lower. These charges and deductions, particularly for variable life policies, can have a significant effect on contract values and insurance benefits. See the contract prospectus for a complete description of these expenses, including sales charges.

Performance data represent past performance, which does not guarantee future results. Investment return and principal value will fluctuate, and you may have a gain or loss when you sell your shares. Current performance may differ from figures shown.

Semiannual Report FSV-1

FRANKLIN SMALL CAP VALUE VIP FUND

Fund Goal and Main Investments: Franklin Small Cap Value VIP Fund seeks long-term total return. Under normal market conditions, the Fund invests at least 80% of its net assets in investments of small capitalization companies. For this Fund, small capitalization companies are those with market capitalizations under $3.5 billion at the time of purchase. The Fund generally invests in equity securities of companies that the manager believes are undervalued and have the potential for capital appreciation.

Fund Risks: All investments involve risks, including possible loss of principal. The Fund’s investments in smaller company stocks carry special risks as such stocks have historically exhibited greater price volatility than large-company stocks, particularly over the short term. Additionally, smaller companies often have relatively small revenues, limited product lines and a small market share. In addition, the Fund may invest up to 25% of its total assets in foreign securities, which involve special risks, including currency fluctuations and economic and political uncertainty. The Fund is actively managed but there is no guarantee that the manager’s investment decisions will produce the desired results. The Fund’s prospectus also includes a description of the main investment risks.

Performance Overview

You can find the Fund’s six-month total return in the Performance Summary. For comparison, the Fund’s benchmark, the Russell 2500^TM Value Index, rose 7.87% for the same period.¹ Please note the Fund employs a bottom-up stock selection process, and the managers invest in securities without regard to benchmark comparisons.

Economic and Market Overview

The U.S. economy showed some signs of recovery during the six-month period ended June 30, 2014, despite a first-quarter contraction in gross domestic product. Manufacturing activity expanded, and the unemployment rate declined to 6.1% in June 2014 from 6.7% in December 2013.² Except for a sharp increase in March, retail sales rose at a modest pace that missed consensus expectations. The housing market had some weather-related weakness early in 2014, but home sales picked up in the spring and home prices were higher than a year ago.

1. Source: © 2014 Morningstar. One cannot invest directly in an index, and an index is not representative of the Fund’s portfolio. Please see Index Descriptions following the Fund Summaries.

2. Source: Bureau of Labor Statistics.

FSV-2 Semiannual Report

FRANKLIN SMALL CAP VALUE VIP FUND

The Federal Reserve Board (Fed) began reducing bond purchases by $10 billion a month in January 2014, based on earlier largely positive economic and employment data. Although economic data in early 2014 were soft, Fed Chair Janet Yellen kept the pace of asset-purchase tapering intact while adopting a more qualitative approach to rate-hike guidance. However, the Fed pledged to keep interest rates low for a considerable time after the asset-purchase program ends, depending on inflation and employment trends. In June, the Fed lowered projections for near- and long-term economic growth even as it maintained the pace of tapering.

Investors’ confidence grew as corporate profits rose and generally favorable economic data indicated continued recovery despite brief sell-offs when many investors reacted to the Fed’s statements, political instability in certain emerging markets and China’s slowing economy. U.S. stocks continued to gain for the six months under review as the Standard & Poor’s^® 500 Index and Dow Jones Industrial Average reached all-time highs.³

Investment Strategy

We generally invest in stocks that we believe are undervalued and have the potential for capital appreciation. We consider a stock price a “value” when it trades at less than the price at which we believe it would trade if the market reflected all factors relating to the company’s worth. Accordingly, we invest in companies that we believe have, for example, stock prices that are low relative to current or historical or future earnings, book value, cash flow or sales; recent sharp price declines but the potential for good long-term earnings prospects; and valuable intangibles not reflected in the stock price. Companies in which we may invest include those that may be considered out of favor, such as companies attempting to recover from bankruptcy, business setbacks, adverse events or cyclical downturns, or that may be considered potential takeover targets.

Manager’s Discussion

Contributors to absolute Fund performance included Trinity Industries, Protective Life and Unit Corp. Trinity Industries, a railcar manufacturer, benefited from strong demand for crude oil tank railcars related to a surge in domestic energy production, a broadening of orders for other rail car types such as hoppers and auto racks, accretive asset sales and the potential for acquisitions and other shareholder-friendly capital

Top 10 Holdings
6/30/14
Company Sector/Industry	% of Total Net Assets
Thor Industries Inc. Automobiles & Components		2.3%
Group 1 Automotive Inc. Retailing		2.1%
Unit Corp. Energy		2.1%
Bristow Group Inc. Energy		1.9%
Cabot Corp. Materials		1.8%
StanCorp Financial Group Inc. Insurance		1.8%
Regal-Beloit Corp. Electrical Equipment		1.7%
RPM International Inc. Materials		1.7%
STERIS Corp. Health Care Equipment & Services		1.7%
H.B. Fuller Co. Materials		1.7%

The dollar value, number of shares or principal amount, and names of all portfolio holdings are listed in the Fund’s Statement of Investments.

allocations. Protective Life was the subject of a takeover offer from Dai-ichi Life Insurance at a 34% premium to the company’s unaffected share price on May 30, 2014. Unit Corp., an onshore oil and gas exploration, production and services company, was helped by an increase in natural gas prices because of the cold winter and improved demand for land-based drilling rigs to support the North American energy revolution.

Detractors from absolute Fund performance included La-Z-Boy, GameStop and Gentex. La-Z-Boy, a furniture retailer, had weaker-than-expected sales as severe winter weather seemingly hurt results, and management indicated that sales were likely to remain soft during the usually slow summer season. GameStop, a video game retailer, reported weaker-than-expected new software sales and lowered guidance as the industry shifted its focus to new video game consoles developed by Microsoft and Sony. Gentex experienced earnings-multiple compression as its earnings growth rate, although strong, was expected to slow from 2013 levels.

3. Please see Index Descriptions following the Fund Summaries.

Semiannual Report FSV-3

FRANKLIN SMALL CAP VALUE VIP FUND

During the period, we initiated new positions in four new holdings: Maple Leaf Foods, a packaged consumer foods manufacturer; GrainCorp, a grain products and services provider; Axiall, a chemicals and building products manufacturer; and Minerals Technologies, a global producer of value-added specialty minerals. We also added to our holdings in Genesco, a specialty footwear and apparel retailer; Lindsay, a manufacturer of irrigation equipment and road construction products; and Atwood Oceanics, a global offshore drilling contractor, among others. We eliminated positions in Harman International Industries, Benchmark Electronics, Jos. A. Bank Clothiers, AMCOL International and Schawk, among others. Schawk was the subject of an acquisition by Matthews International. Some holdings we reduced included Autoliv and the aforementioned Trinity Industries and Protective Life.

Thank you for your participation in Franklin Small Cap Value VIP Fund. We look forward to serving your future investment needs.

The foregoing information reflects our analysis, opinions and portfolio holdings as of June 30, 2014, the end of the reporting period. The way we implement our main investment strategies and the resulting portfolio holdings may change depending on factors such as market and economic conditions. These opinions may not be relied upon as investment advice or an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but the investment manager makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.

FSV-4 Semiannual Report

FRANKLIN SMALL CAP VALUE VIP FUND

Class 2 Fund Expenses

As an investor in a variable insurance contract (Contract) that indirectly provides for investment in an underlying mutual fund, you can incur transaction and/or ongoing expenses at both the Fund level and the Contract level.

• Transaction expenses can include sales charges (loads) on purchases, surrender fees, transfer fees and premium taxes.

• Ongoing expenses can include management fees, distribution and service (12b-1) fees, contract fees, annual maintenance fees, mortality and expense risk fees and other fees and expenses. All mutual funds and Contracts have some types of ongoing expenses.

The expenses shown in the table are meant to highlight ongoing expenses at the Fund level only and do not include ongoing expenses at the Contract level, or transaction expenses at either the Fund or Contract levels. While the Fund does not have transaction expenses, if the transaction and ongoing expenses at the Contract level were included, the expenses shown below would be higher. You should consult your Contract prospectus or disclosure document for more information.

The table shows Fund-level ongoing expenses and can help you understand these expenses and compare them with those of other mutual funds offered through the Contract. The table assumes a $1,000 investment held for the six months indicated. Please refer to the Fund prospectus for additional information on operating expenses.

Actual Fund Expenses

The first line (Actual) of the table provides actual account values and expenses. The “Ending Account Value” is derived from the Fund’s actual return, which includes the effect of ongoing Fund expenses, but does not include the effect of ongoing Contract expenses.

You can estimate the Fund-level expenses you incurred during the period by following these steps. Of course, your account value and expenses will differ from those in this illustration:

1. Divide your account value by $1,000.

If an account had an $8,600 value, then $8,600 ÷ $1,000 = 8.6.

2. Multiply the result by the number under the heading “Fund-Level Expenses Incurred During Period.”

If Fund-Level Expenses Incurred During Period were $7.50, then 8.6 × $7.50 = $64.50.

In this illustration, the estimated expenses incurred this period at the Fund level are $64.50.

Hypothetical Example for Comparison with Other Mutual Funds

Information in the second line (Hypothetical) of the table can help you compare ongoing expenses of the Fund with those of other mutual funds offered through the Contract. This information may not be used to estimate the actual ending account balance or expenses you incurred during the period. The hypothetical “Ending Account Value” is based on the Fund’s actual expense ratio and an assumed 5% annual rate of return before expenses, which does not represent the Fund’s actual return. The figure under the heading “Fund-Level Expenses Incurred During Period” shows the hypothetical expenses your account would have incurred under this scenario. You can compare this figure with the 5% hypothetical examples that appear in shareholder reports of other funds offered through a Contract.

Class 2	Beginning Account Value 1/1/14		Ending Account Value 6/30/14		Fund-Level Expenses Incurred During Period* 1/1/14–6/30/14
Actual		$1,000		$1,045.40		$4.41
Hypothetical (5% return before expenses)		$1,000		$1,020.48		$4.36

*Expenses are calculated using the most recent six-month annualized expense ratio, net of expense waivers, for the Fund’s Class 2 shares (0.87%), which does not include any ongoing expenses of the Contract for which the Fund is an investment option, multiplied by the average account value over the period, multiplied by 181/365 to reflect the one-half year period.

Semiannual Report FSV-5

SUPPLEMENT DATED MAY 1, 2014

TO THE PROSPECTUSES DATED MAY 1, 2014

OF

FRANKLIN SMALL CAP VALUE VIP FUND

(A series of Franklin Templeton Variable Insurance Products Trust)

The prospectus is amended as follows:

I.  The “Fund Summaries – Portfolio Managers” section on page FSV-S4 is revised to read as follows:

Portfolio Managers

STEVEN B. RAINERI  Portfolio Manager of Advisory Services and portfolio manager of the Fund since 2012.

DONALD G. TAYLOR, CPA  Chief Investment Officer of Advisory Services and portfolio manager of the Fund since inception (1998).

BRUCE C. BAUGHMAN, CPA  Senior Vice President of Advisory Services and portfolio manager of the Fund since inception (1998).

WILLIAM J. LIPPMAN  President of Advisory Services and portfolio manager of the Fund since inception (1998).

II.  The “Fund Details – Management” section disclosure concerning the portfolio management team beginning on page FSV-D4 is revised to read as follows:

The Fund is managed by a team of dedicated professionals focused on investments of small cap value companies. The portfolio managers of the team are as follows:

STEVEN B. RAINERI Portfolio Manager of Advisory Services	Mr. Raineri has been a co-lead portfolio manager of the Fund since 2012. He joined Franklin Templeton Investments in 2005.
DONALD G. TAYLOR, CPA Chief Investment Officer of Advisory Services	Mr. Taylor has been a portfolio manager of the Fund since its inception (1998). He joined Franklin Templeton Investments in 1996.
BRUCE C. BAUGHMAN, CPA Senior Vice President of Advisory Services	Mr. Baughman has been a portfolio manager of the Fund since its inception (1998). He joined Franklin Templeton Investments in 1988.
WILLIAM J. LIPPMAN President of Advisory Services	Mr. Lippman has been the lead portfolio manager of the Fund since its inception and became a co-lead in 2007. He joined Franklin Templeton Investments in 1988.

Please keep this supplement with your prospectus for future reference.

FSV-6

SUPPLEMENT DATED AUGUST 1, 2014

TOTHE PROSPECTUS DATED MAY 1, 2014

OF

FRANKLIN SMALL CAP VALUE VIP FUND

(a series of Franklin Templeton Variable Insurance Products Trust)

The prospectus is amended as follows:

I.  The “Fund Summary – Annual Fund Operating Expenses” table beginning on page FSV-S1 in the Fund’s Class 1 prospectus is replaced with the following:

Annual Fund Operating Expenses

(expenses that you pay each year as a percentage of the value of your investment)

	Class 1
Management fees1		0.61%
Distribution and service (12b-1) fees		None
Other expenses1		0.02%
Total annual Fund operating expenses		0.63%

1. Management fees and other expenses have been restated to reflect current fiscal year fees and expenses as a result of the bundling of the Fund’s investment management agreement with its fund administration agreement effective May 1, 2014. Such combined investment management fees are described further under “Management” in the Fund’s prospectus. Total annual fund operating expenses are not affected by such bundling.

II.  The “Fund Summary – Annual Fund Operating Expenses” table beginning on page FSV-S1 in the Fund’s Class 2 prospectus is replaced with the following:

Annual Fund Operating Expenses

(expenses that you pay each year as a percentage of the value of your investment)

	Class 2
Management fees1		0.61%
Distribution and service (12b-1) fees		0.25%
Other expenses1		0.02%
Total annual Fund operating expenses		0.88%

1. Management fees and other expenses have been restated to reflect current fiscal year fees and expenses as a result of the bundling of the Fund’s investment management agreement with its fund administration agreement effective May 1, 2014. Such combined investment management fees are described further under “Management” in the Fund’s prospectus. Total annual fund operating expenses are not affected by such bundling.

III.  The “Fund Summary – Annual Fund Operating Expenses” table beginning on page FSV-S1 in the Fund’s Class 4 prospectus is replaced with the following:

Annual Fund Operating Expenses

(expenses that you pay each year as a percentage of the value of your investment)

	Class 4
Management fees1		0.61%
Distribution and service (12b-1) fees		0.35%
Other expenses1		0.02%
Total annual Fund operating expenses		0.98%

FSV-7

1. Management fees and other expenses have been restated to reflect current fiscal year fees and expenses as a result of the bundling of the Fund’s investment management agreement with its fund administration agreement effective May 1, 2014. Such combined investment management fees are described further under “Management” in the Fund’s prospectus. Total annual fund operating expenses are not affected by such bundling.

IV.  The following is added as the second to last paragraph in the “Fund Details – Management” section of each Class’ prospectus beginning on page FSV-D4:

Effective May 1, 2014, the Fund’s investment management agreement was bundled with its fund administration agreement, including the fees payable to the Fund’s administrator thereunder, as approved by the board of trustees. The fee payable to the administrator under the Fund’s administration agreement, prior to May 1, 2014, was a monthly fee under the following fee schedule of the Fund’s average daily net assets:

• 0.150% up to and including $200 million;

• 0.135% over $200 million, up to and including $700 million;

• 0.100% over $700 million, up to and including $1.2 billion;

• 0.075% in excess of $1.2 billion.

As of such date, the Fund’s investment management fees became a monthly fee at the annual rate of the value of the Fund’s average daily net assets as set forth below:

• 0.750% up to and including $200 million;

• 0.635% over $200 million, up to and including $700 million;

• 0.600% over $700 million, up to and including $1.2 billion;

• 0.575% over $1.2 billion, up to and including $1.3 billion;

• 0.475% in excess of $1.3 billion.

Please keep this supplement with your prospectus for future reference.

FSV-8

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Financial Highlights

Franklin Small Cap Value VIP Fund

	Six Months Ended June 30, 2014 (unaudited)			Year Ended December 31,
				2013			2012			2011			2010			2009
Class 1
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$24.54			$18.58			$15.82			$16.55			$13.00			$10.73
Income from investment operationsa:
Net investment incomeb		0.09			0.19			0.29	c		0.16			0.14			0.15
Net realized and unrealized gains (losses)		1.03			6.45			2.64			(0.74	)		3.54			2.86
Total from investment operations		1.12			6.64			2.93			(0.58	)		3.68			3.01
Less distributions from:
Net investment income		(0.20	)		(0.32	)		(0.17	)		(0.15	)		(0.13	)		(0.22	)
Net realized gains		(1.78	)		(0.36	)		—			—			—			(0.52	)
Total distributions		(1.98	)		(0.68	)		(0.17	)		(0.15	)		(0.13	)		(0.74	)
Net asset value, end of period		$23.68			$24.54			$18.58			$15.82			$16.55			$13.00
Total returnd		4.73%			36.50%			18.75%			(3.53)%			28.49%			29.54%
Ratios to average net assetse
Expenses		0.62%	f,g		0.63%			0.67%			0.66%			0.67%			0.68%	f
Net investment income		0.72%			0.90%			1.70%	c		1.02%			0.98%			1.29%
Supplemental data
Net assets, end of period (000’s)		$61,774			$62,408			$40,133			$39,374			$47,300			$42,428
Portfolio turnover rate		9.81%			10.44%			5.84%			14.39%			15.92%			6.68%

^aThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.

^bBased on average daily shares outstanding.

^cNet investment income per share includes approximately $0.10 per share received in the form of special dividends. Excluding these amounts, the ratio of net investment income to average net assets would have been 1.10%.

^dTotal return does not include fees, charges or expenses imposed by the variable annuity and life insurance contracts for which the Franklin Templeton Variable Insurance Products Trust serves as an underlying investment vehicle. Total return is not annualized for periods less than one year.

^eRatios are annualized for periods less than one year.

^fBenefit of expense reduction rounds to less than 0.01%.

^gBenefit of waiver and payment by affiliate rounds to less than 0.01%.

The accompanying notes are an integral part of these financial statements.    |   Semiannual Report FSV-9

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL HIGHLIGHTS

Franklin Small Cap Value VIP Fund (continued)

	Six Months Ended June 30, 2014 (unaudited)			Year Ended December 31,
				2013			2012			2011			2010			2009
Class 2
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$24.07			$18.23			$15.53			$16.25			$12.77			$10.55
Income from investment operationsa:
Net investment incomeb		0.06			0.14			0.24	c		0.12			0.10			0.12
Net realized and unrealized gains (losses)		1.00			6.34			2.59			(0.73	)		3.48			2.81
Total from investment operations		1.06			6.48			2.83			(0.61	)		3.58			2.93
Less distributions from:
Net investment income		(0.15	)		(0.28	)		(0.13	)		(0.11	)		(0.10	)		(0.19	)
Net realized gains		(1.78	)		(0.36	)		—			—			—			(0.52	)
Total distributions		(1.93	)		(0.64	)		(0.13	)		(0.11	)		(0.10	)		(0.71	)
Net asset value, end of period		$23.20			$24.07			$18.23			$15.53			$16.25			$12.77
Total returnd		4.54%			36.24%			18.39%			(3.76)%			28.22%			29.16%
Ratios to average net assetse
Expenses		0.87%	f,g		0.88%			0.92%			0.91%			0.92%			0.93%	f
Net investment income		0.47%			0.65%			1.45%	c		0.77%			0.73%			1.04%
Supplemental data
Net assets, end of period (000’s)		$1,590,037			$1,606,802			$1,286,573			$1,211,168			$1,362,292			$1,109,855
Portfolio turnover rate		9.81%			10.44%			5.84%			14.39%			15.92%			6.68%

^aThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.

^bBased on average daily shares outstanding.

^cNet investment income per share includes approximately $0.10 per share received in the form of special dividends. Excluding these amounts, the ratio of net investment income to average net assets would have been 0.85%

^dTotal return does not include fees, charges or expenses imposed by the variable annuity and life insurance contracts for which the Franklin Templeton Variable Insurance Products Trust serves as an underlying investment vehicle. Total return is not annualized for periods less than one year.

^eRatios are annualized for periods less than one year.

^fBenefit of expense reduction rounds to less than 0.01%.

^gBenefit of waiver and payment by affiliate rounds to less than 0.01%.

FSV-10 Semiannual Report   |    The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL HIGHLIGHTS

Franklin Small Cap Value VIP Fund (continued)

	Six Months Ended June 30, 2014 (unaudited)			Year Ended December 31,
				2013			2012			2011			2010			2009
Class 4
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$24.37			$18.44			$15.71			$16.44			$12.92			$10.70
Income from investment operationsa:
Net investment incomeb		0.04			0.12			0.22	c		0.11			0.09			0.11
Net realized and unrealized gains (losses)		1.03			6.42			2.63			(0.75	)		3.53			2.84
Total from investment operations		1.07			6.54			2.85			(0.64	)		3.62			2.95
Less distributions from:
Net investment income		(0.12	)		(0.25	)		(0.12	)		(0.09	)		(0.10	)		(0.21	)
Net realized gains		(1.78	)		(0.36	)		—			—			—			(0.52	)
Total distributions		(1.90	)		(0.61	)		(0.12	)		(0.09	)		(0.10	)		(0.73	)
Net asset value, end of period		$23.54			$24.37			$18.44			$15.71			$16.44			$12.92
Total returnd		4.52%			36.12%			18.27%			(3.87)%			28.14%			29.04%
Ratios to average net assetse
Expenses		0.97%	f,g		0.98%			1.02%			1.01%			1.02%			1.03%	f
Net investment income		0.37%			0.55%			1.35%	c		0.67%			0.63%			0.94%
Supplemental data
Net assets, end of period (000’s)		$33,628			$35,936			$32,424			$34,284			$39,075			$28,599
Portfolio turnover rate		9.81%			10.44%			5.84%			14.39%			15.92%			6.68%

^aThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.

^bBased on average daily shares outstanding.

^cNet investment income per share includes approximately $0.10 per share received in the form of special dividends. Excluding these amounts, the ratio of net investment income to average net assets would have been 0.75%.

^dTotal return does not include fees, charges or expenses imposed by the variable annuity and life insurance contracts for which the Franklin Templeton Variable Insurance Products Trust serves as an underlying investment vehicle. Total return is not annualized for periods less than one year.

^eRatios are annualized for periods less than one year.

^fBenefit of expense reduction rounds to less than 0.01%.

^gBenefit of waiver and payment by affiliate rounds to less than 0.01%.

The accompanying notes are an integral part of these financial statements.    |   Semiannual Report FSV-11

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Statement of Investments, June 30, 2014 (unaudited)

Franklin Small Cap Value VIP Fund
		Shares		Value
	Common Stocks 96.6%
	Aerospace & Defense 1.6%
	AAR Corp.		983,300	$	27,099,748
	Automobiles & Components 5.6%
	Autoliv Inc.		161,300		17,191,354
	Drew Industries Inc.		220,000		11,002,200
	Gentex Corp.		715,900		20,825,531
	Thor Industries Inc.		680,900		38,722,783
a	Winnebago Industries Inc.		300,600		7,569,108
					95,310,976
	Banks 2.2%
	Chemical Financial Corp.		398,954		11,202,628
	OFG Bancorp.		602,000		11,082,820
	Peoples Bancorp Inc.		158,000		4,179,100
	TrustCo Bank Corp. NY		1,690,000		11,289,200
					37,753,748
	Building Products 4.4%
	Apogee Enterprises Inc.		610,000		21,264,600
a	Gibraltar Industries Inc.		842,300		13,064,073
	Simpson Manufacturing Co. Inc.		433,400		15,758,424
	Universal Forest Products Inc.		504,700		24,361,869
					74,448,966
	Commercial & Professional Services 4.1%
	Brady Corp., A		350,500		10,469,435
a	Civeo Corp.		606,600		15,183,198
	Insperity Inc.		263,100		8,682,300
	McGrath RentCorp		396,918		14,586,737
	MSA Safety Inc.		358,300		20,595,084
					69,516,754
	Construction & Engineering 2.6%
	EMCOR Group Inc.		367,400		16,360,322
	Granite Construction Inc.		775,000		27,884,500
					44,244,822
	Consumer Durables & Apparel 4.2%
	Brunswick Corp.		445,000		18,747,850
	Hooker Furniture Corp.		445,000		7,182,300
	La-Z-Boy Inc.		1,188,900		27,546,813
	M.D.C. Holdings Inc.		213,800		6,476,002
a	M/I Homes Inc.		435,900		10,579,293
					70,532,258
	Consumer Services 1.1%
	Hillenbrand Inc.		545,200		17,784,424
	Electrical Equipment 3.5%
	EnerSys		24,100		1,657,839
	Franklin Electric Co. Inc.		389,264		15,699,017
	Powell Industries Inc.		195,000		12,749,100
	Regal-Beloit Corp.		374,700		29,436,432
					59,542,388

FSV-12 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Small Cap Value VIP Fund (continued)

		Shares		Value
	Common Stocks (continued)
	Energy 11.2%
a	Atwood Oceanics Inc.		500,000	$	26,240,000
	Bristow Group Inc.		400,000		32,248,000
	Energen Corp.		220,000		19,553,600
a	Helix Energy Solutions Group Inc.		794,400		20,900,664
a	Oil States International Inc.		224,300		14,375,387
	Rowan Cos. PLC		529,000		16,890,970
	Tidewater Inc.		415,000		23,302,250
a	Unit Corp.		515,000		35,447,450
					188,958,321
	Food, Beverage & Tobacco 2.4%
	GrainCorp Ltd. (Australia)		1,725,000		13,669,142
	Maple Leaf Foods Inc. (Canada)		1,412,700		26,308,052
					39,977,194
	Health Care Equipment & Services 3.9%
	Hill-Rom Holdings Inc.		344,000		14,279,440
	STERIS Corp.		530,000		28,344,400
	Teleflex Inc.		218,497		23,073,283
					65,697,123
	Industrial Conglomerates 1.6%
	Carlisle Cos. Inc.		308,900		26,756,918
	Insurance 9.2%
	Arthur J. Gallagher & Co.		168,200		7,838,120
	Aspen Insurance Holdings Ltd.		407,800		18,522,276
	Assurant Inc.		51,800		3,395,490
	The Hanover Insurance Group Inc.		345,000		21,786,750
	HCC Insurance Holdings Inc.		188,200		9,210,508
	Montpelier Re Holdings Ltd.		455,000		14,537,250
	Old Republic International Corp.		1,296,900		21,450,726
	Protective Life Corp.		241,500		16,743,195
	StanCorp Financial Group Inc.		467,400		29,913,600
	Validus Holdings Ltd.		317,800		12,152,672
					155,550,587
	Machinery 11.2%
	Astec Industries Inc.		488,100		21,417,828
	Briggs & Stratton Corp.		601,800		12,312,828
a	EnPro Industries Inc.		245,000		17,924,200
	Kennametal Inc.		452,100		20,923,188
	Lincoln Electric Holdings Inc.		347,800		24,304,264
b	Lindsay Corp.		165,900		14,013,573
	Mueller Industries Inc.		685,200		20,151,732
	Trinity Industries Inc.		640,400		27,998,288
a	Wabash National Corp.		1,705,000		24,296,250
	Watts Water Technologies Inc., A		78,200		4,827,286
					188,169,437
	Materials 14.2%
	A. Schulman Inc.		511,966		19,813,084
	AptarGroup Inc.		65,000		4,355,650
	Axiall Corp.		268,200		12,677,814

Semiannual Report FSV-13

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Small Cap Value VIP Fund (continued)

		Shares		Value
	Common Stocks (continued)
	Materials (continued)
	Cabot Corp.		522,400	$	30,293,976
	Carpenter Technology Corp.		356,600		22,554,950
	H.B. Fuller Co.		584,700		28,124,070
	Minerals Technologies Inc.		186,900		12,256,902
	Reliance Steel & Aluminum Co.		379,600		27,980,316
	RPM International Inc.		620,000		28,631,600
	Sensient Technologies Corp.		482,800		26,901,616
	Steel Dynamics Inc.		1,024,300		18,386,185
	Stepan Co.		135,000		7,136,100
					239,112,263
	Retailing 8.7%
	Brown Shoe Co. Inc.		800,000		22,888,000
	The Cato Corp., A		438,600		13,552,740
	GameStop Corp., A		218,100		8,826,507
a	Genesco Inc.		261,908		21,510,504
	Group 1 Automotive Inc.		425,400		35,865,474
	The Men’s Wearhouse Inc.		430,100		23,999,580
a	The Pep Boys - Manny, Moe & Jack		1,173,600		13,449,456
a	West Marine Inc.		610,700		6,265,782
					146,358,043
	Semiconductors & Semiconductor Equipment 0.5%
	Cohu Inc.		736,000		7,875,200
	Technology Hardware & Equipment 2.0%
a	Ingram Micro Inc., A		507,100		14,812,391
a	Multi-Fineline Electronix Inc.		180,400		1,991,616
a	Rofin-Sinar Technologies Inc.		674,900		16,224,596
					33,028,603
	Trading Companies & Distributors 0.6%
	Applied Industrial Technologies Inc.		205,200		10,409,796
	Transportation 1.8%
a	Genesee & Wyoming Inc.		191,200		20,076,000
	SkyWest Inc.		851,000		10,399,220
					30,475,220
	Total Common Stocks (Cost $958,887,070)				1,628,602,789
	Short Term Investments 4.0%
	Money Market Funds (Cost $54,880,539) 3.3%
a,c	Institutional Fiduciary Trust Money Market Portfolio		54,880,539		54,880,539
		Principal Amount
d	Investments from Cash Collateral Received for Loaned Securities 0.7%
e	Repurchase Agreements 0.7%
	Barclays Capital Inc., 0.07%, 7/01/14 (Maturity Value $2,970,427)	$	2,970,421		2,970,421
	Collateralized by U.S. Treasury Bonds, 3.375% - 3.75%, 11/15/43 - 5/15/44; U.S. Treasury Notes, 1.625% - 2.25%, 5/31/15 - 4/30/21; and U.S. Treasury Strips, 11/15/17 - 5/15/44 (valued at $3,029,830)

FSV-14 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Small Cap Value VIP Fund (continued)

		Principal Amount		Value
d	Investments from Cash Collateral Received for Loaned Securities (continued)
e	Repurchase Agreements (continued)
	Citigroup Global Markets Inc., 0.06%, 7/01/14 (Maturity Value $2,970,426)	$	2,970,421	$	2,970,421
	Collateralized by U.S. Treasury Bonds, 4.375%, 5/14/40; U.S. Treasury Bonds, Index Linked, 0.625% - 2.375%, 1/15/25 - 2/15/44; U.S. Treasury Notes, 0.25% - 4.50%, 12/31/14 - 11/15/23; U.S. Treasury Notes, Index Linked, 0.125% - 1.25%, 7/15/20 -1/15/23; and U.S. Treasury Strips, 8/15/15 - 11/15/39 (valued at $3,029,830)
	Deutsche Bank Securities Inc., 0.05%, 7/01/14 (Maturity Value $2,970,425)		2,970,421		2,970,421
	Collateralized by fU.S. Treasury Bills, 7/03/14 - 4/30/15; U.S. Treasury Bonds, 2.75% - 11.25%, 2/15/15 - 5/15/44; U.S. Treasury Bonds, Index Linked, 0.625% - 2.375%, 1/15/25 - 2/15/43; U.S. Treasury Notes, 0.085% - 4.875%, 7/15/14 - 5/15/24; U.S. Treasury Notes, Index Linked, 0.125% - 1.625%, 1/15/15 - 4/15/18; and U.S. Treasury Strips, 11/15/27 - 5/15/35 (valued at $3,029,829)
	HSBC Securities (USA) Inc., 0.07%, 7/01/14 (Maturity Value $2,970,427)		2,970,421		2,970,421
	Collateralized by fU.S. Treasury Bills, 7/10/14 - 6/25/15; U.S. Treasury Bonds, 2.75% -6.375%, 8/15/27 - 8/15/42; and U.S. Treasury Notes, 0.50% - 2.375%, 6/30/16 - 12/31/20 (valued at $3,029,838)
	Merrill Lynch, Pierce, Fenner & Smith Inc., 0.06%, 7/01/14 (Maturity Value $625,268)		625,267		625,267
	Collateralized by U.S. Treasury Bonds, 3.75% - 8.00%, 11/15/21 - 11/15/43; and U.S. Treasury Notes, 0.25%, 8/15/15 (valued at $637,773)
	Total Repurchase Agreements (Cost $12,506,951)				12,506,951
	Total Investments (Cost $1,026,274,560) 100.6%				1,695,990,279
	Other Assets, less Liabilities (0.6)%				(10,550,631	)
	Net Assets 100.0%			$	1,685,439,648

^aNon-income producing.

^bA portion or all of the security is on loan at June 30, 2014. See Note 1(d).

^cSee Note 3(e) regarding investments in the Institutional Fiduciary Trust Money Market Portfolio.

^dSee Note 1(d) regarding securities on loan.

^eSee Note 1(c) regarding repurchase agreements.

^fThe security is traded on a discount basis with no stated coupon rate.

The accompanying notes are an integral part of these financial statements.    |   Semiannual Report FSV-15

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Financial Statements

Statement of Assets and Liabilities

June 30, 2014 (unaudited)

	Franklin Small Cap Value VIP Fund
Assets:
Investments in securities:
Cost - Unaffiliated issuers	$	958,887,070
Cost - Sweep Money Fund (Note 3e)		54,880,539
Cost - Repurchase agreements		12,506,951
Total cost of investments	$	1,026,274,560
Value - Unaffiliated issuers	$	1,628,602,789
Value - Sweep Money Fund (Note 3e)		54,880,539
Value - Repurchase agreements		12,506,951
Total value of investments (includes securities loaned in the amount of $12,248,150)		1,695,990,279
Receivables:
Investment securities sold		6,463,335
Capital shares sold		268,516
Dividends		870,656
Other assets		742
Total assets		1,703,593,528
Liabilities:
Payables:
Investment securities purchased		2,189,088
Capital shares redeemed		1,657,737
Management fees		812,933
Distribution fees		667,190
Payable upon return of securities loaned		12,506,951
Accrued expenses and other liabilities		319,981
Total liabilities		18,153,880
Net assets, at value	$	1,685,439,648
Net assets consist of:
Paid-in capital	$	898,360,491
Undistributed net investment income		3,356,222
Net unrealized appreciation (depreciation)		669,715,719
Accumulated net realized gain (loss)		114,007,216
Net assets, at value	$	1,685,439,648

FSV-16 Semiannual Report   |    The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL STATEMENTS

Statement of Asset and Liabilities (continued)

June 30, 2014 (unaudited)

	Franklin Small Cap Value VIP Fund
Class 1:
Net assets, at value	$	61,774,035
Shares outstanding		2,609,141
Net asset value and maximum offering price per share	$	23.68
Class 2:
Net assets, at value	$	1,590,037,444
Shares outstanding		68,524,093
Net asset value and maximum offering price per share	$	23.20
Class 4:
Net assets, at value	$	33,628,169
Shares outstanding		1,428,637
Net asset value and maximum offering price per share	$	23.54

The accompanying notes are an integral part of these financial statements.    |   Semiannual Report FSV-17

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL STATEMENTS

Statement of Operations

for the six months ended June 30, 2014 (unaudited)

	Franklin Small Cap Value VIP Fund
Investment income:
Dividends	$	10,679,127
Income from securities loaned		313,618
Total investment income		10,992,745
Expenses:
Management fees (Note 3a)		4,312,254
Administrative fees (Note 3b)		596,175
Distribution fees: (Note 3c)
Class 2		1,924,580
Class 4		58,826
Custodian fees (Note 4)		7,143
Reports to shareholders		150,040
Professional fees		26,945
Trustees’ fees and expenses		3,106
Other		14,458
Total expenses		7,093,527
Expense reductions (Note 4)		(177	)
Expenses waived/paid by affiliates (Note 3e)		(22,603	)
Net expenses		7,070,747
Net investment income		3,921,998
Realized and unrealized gains (losses):
Net realized gain (loss) from:
Investments		114,227,196
Foreign currency transactions		(129,239	)
Net realized gain (loss)		114,097,957
Net change in unrealized appreciation (depreciation) on investments		(44,760,712	)
Net realized and unrealized gain (loss)		69,337,245
Net increase (decrease) in net assets resulting from operations	$	73,259,243

FSV-18 Semiannual Report   |    The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL STATEMENTS

Statements of Changes in Net Assets

	Franklin Small Cap Value VIP Fund
	Six Months Ended June 30, 2014 (unaudited)			Year Ended December 31, 2013
Increase (decrease) in net assets:
Operations:
Net investment income	$	3,921,998		$	10,009,153
Net realized gain (loss) from investments and foreign currency transactions		114,097,957			119,472,862
Net change in unrealized appreciation (depreciation) on investments		(44,760,712	)		344,133,096
Net increase (decrease) in net assets resulting from operations		73,259,243			473,615,111
Distributions to shareholders from:
Net investment income:
Class 1		(493,372	)		(615,112	)
Class 2		(9,349,846	)		(18,772,536	)
Class 4		(160,210	)		(406,547	)
Net realized gains:
Class 1		(4,292,308	)		(681,161	)
Class 2		(112,743,662	)		(24,226,581	)
Class 4		(2,435,910	)		(585,151	)
Total distributions to shareholders		(129,475,308	)		(45,287,088	)
Capital share transactions: (Note 2)
Class 1		1,412,963			7,328,882
Class 2		36,274,317			(83,608,654	)
Class 4		(1,177,350	)		(6,031,999	)
Total capital share transactions		36,509,930			(82,311,771	)
Net increase (decrease) in net assets		(19,706,135	)		346,016,252
Net assets:
Beginning of period		1,705,145,783			1,359,129,531
End of period	$	1,685,439,648		$	1,705,145,783
Undistributed net investment income included in net assets:
End of period	$	3,356,222		$	9,437,652

The accompanying notes are an integral part of these financial statements.    |   Semiannual Report FSV-19

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Notes to Financial Statements (unaudited)

Franklin Small Cap Value VIP Fund

1. Organization and Significant Accounting Policies

Franklin Templeton Variable Insurance Products Trust (Trust) is registered under the Investment Company Act of 1940, as amended, (1940 Act) as an open-end management investment company, consisting of twenty separate funds and applies the specialized accounting and reporting guidance in U.S. Generally Accepted Accounting Principles (U.S. GAAP). The Franklin Small Cap Value VIP Fund (Fund) is included in this report. The financial statements of the remaining funds in the Trust are presented separately. Shares of the Fund are generally sold only to insurance company separate accounts to fund the benefits of variable life insurance policies or variable annuity contracts. The Fund offers three classes of shares: Class 1, Class 2 and Class 4. Each class of shares differs by its distribution fees, voting rights on matters affecting a single class and its exchange privilege.

Effective May 1, 2014, the Franklin Small Cap Value Securities Fund was renamed the Franklin Small Cap Value VIP Fund.

The following summarizes the Fund’s significant accounting policies.

a. Financial Instrument Valuation

The Fund’s investments in financial instruments are carried at fair value daily. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. The Fund calculates the net asset value (NAV) per share at the close of the New York Stock Exchange (NYSE), generally at 4 p.m. Eastern time (NYSE close) on each day the NYSE is open for trading. Under compliance policies and procedures approved by the Trust’s Board of Trustees (the Board), the Fund’s administrator has responsibility for oversight of valuation, including leading the cross-functional Valuation and Liquidity Oversight Committee (VLOC). The VLOC provides administration and oversight of the Fund’s valuation policies and procedures, which are approved annually by the Board. Among other things, these procedures allow the Fund to utilize independent pricing services, quotations from securities and financial instrument dealers, and other market sources to determine fair value.

Equity securities listed on an exchange or on the NASDAQ National Market System are valued at the last quoted sale price or the official closing price of the day, respectively. Foreign

equity securities are valued as of the close of trading on the foreign stock exchange on which the security is primarily traded or as of the NYSE close, whichever is earlier. The value is then converted into its U.S. dollar equivalent at the foreign exchange rate in effect at the NYSE close on the day that the value of the security is determined. Over-the-counter (OTC) securities are valued within the range of the most recent quoted bid and ask prices. Securities that trade in multiple markets or on multiple exchanges are valued according to the broadest and most representative market. Certain equity securities are valued based upon fundamental characteristics or relationships to similar securities. Investments in open-end mutual funds are valued at the closing net asset value. Repurchase agreements are valued at cost, which approximates fair value.

The Fund has procedures to determine the fair value of financial instruments for which market prices are not reliable or readily available. Under these procedures, the VLOC convenes on a regular basis to review such financial instruments and considers a number of factors, including significant unobservable valuation inputs, when arriving at fair value. The VLOC primarily employs a market-based approach which may use related or comparable assets or liabilities, recent transactions, market multiples, book values, and other relevant information for the investment to determine the fair value of the investment. An income-based valuation approach may also be used in which the anticipated future cash flows of the investment are discounted to calculate fair value. Discounts may also be applied due to the nature or duration of any restrictions on the disposition of the investments. Due to the inherent uncertainty of valuations of such investments, the fair values may differ significantly from the values that would have been used had an active market existed. The VLOC employs various methods for calibrating these valuation approaches including a regular review of key inputs and assumptions, transactional back-testing or disposition analysis, and reviews of any related market activity.

Trading in securities on foreign securities stock exchanges and OTC markets may be completed before the daily NYSE close. In addition, trading in certain foreign markets may not take place on every NYSE business day. Occasionally, events occur between the time at which trading in a foreign security is completed and the close of the NYSE that might call into question the reliability of the value of a portfolio security held by the Fund. As a result, differences may arise between the value of the Fund’s portfolio securities as determined at the foreign

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FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Small Cap Value VIP Fund (continued)

market close and the latest indications of value at the close of the NYSE. In order to minimize the potential for these differences, the VLOC monitors price movements following the close of trading in foreign stock markets through a series of country specific market proxies (such as baskets of American Depositary Receipts, futures contracts and exchange traded funds). These price movements are measured against established trigger thresholds for each specific market proxy to assist in determining if an event has occurred that may call into question the reliability of the values of the foreign securities held by the Fund. If such an event occurs, the securities may be valued using fair value procedures, which may include the use of independent pricing services.

Also, when the last day of the reporting period is a non-business day, certain foreign markets may be open on those days that the NYSE is closed, which could result in differences between the value of the Fund’s portfolio securities on the last business day and the last calendar day of the reporting period. Any significant security valuation changes due to an open foreign market are adjusted and reflected by the Fund for financial reporting purposes.

b. Foreign Currency Translation

Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars based on the exchange rate of such currencies against U.S. dollars on the date of valuation. The Fund may enter into foreign currency exchange contracts to facilitate transactions denominated in a foreign currency. Purchases and sales of securities, income and expense items denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date. Portfolio securities and assets and liabilities denominated in foreign currencies contain risks that those currencies will decline in value relative to the U.S. dollar. Occasionally, events may impact the availability or reliability of foreign exchange rates used to convert the U.S. dollar equivalent value. If such an event occurs, the foreign exchange rate will be valued at fair value using procedures established and approved by the Board.

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

Realized foreign exchange gains or losses arise from sales of foreign currencies, currency gains or losses realized between the

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

c. Repurchase Agreements

The Fund enters into repurchase agreements, which are accounted for as a loan by the Fund to the seller, collateralized by securities which are delivered to the Fund’s custodian. The fair value, including accrued interest, of the initial collateralization is required to be at least 102% of the dollar amount invested by the Fund, with the value of the underlying securities marked to market daily to maintain coverage of at least 100%. Repurchase agreements are subject to the terms of Master Repurchase Agreements (MRAs) with approved counterparties (sellers). The MRAs contain various provisions, including but not limited to events of default and maintenance of collateral for repurchase agreements. In the event of default by either the seller or the Fund, certain MRAs may permit the non-defaulting party to net and close-out all transactions, if any, traded under such agreements. The Fund may sell securities it holds as collateral and apply the proceeds towards the repurchase price and any other amounts owed by the seller to the Fund in the event of default by the seller. This could involve costs or delays in addition to a loss on the securities if their value falls below the repurchase price owed by the seller. All repurchase agreements held by the Fund at period end, as indicated in the Statement of Investments, had been entered into on June 30, 2014.

d. Securities Lending

The Fund participates in an agency based securities lending program. The Fund receives cash collateral against the loaned securities in an amount equal to at least 102% of the fair value of the loaned securities. Collateral is maintained over the life of the loan in an amount not less than 100% of the fair value of loaned securities, as determined at the close of fund business each day; any additional collateral required due to changes in security values is delivered to the Fund on the next business day. The collateral is invested in repurchase agreements as indicated on the Statement of Investments. The Fund receives income from the investment of cash collateral, in addition to lending fees and rebates paid by the borrower. The Fund bears the market risk

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FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Small Cap Value VIP Fund (continued)

1. Organization and Significant Accounting Policies (continued)

d. Securities Lending (continued)

with respect to the collateral investment, securities loaned, and the risk that the agent may default on its obligations to the Fund. The securities lending agent has agreed to indemnify the Fund in the event of default by a third party borrower.

e. Income and Deferred Taxes

It is the Fund’s policy to qualify as a regulated investment company under the Internal Revenue Code. The Fund intends to distribute to shareholders substantially all of its taxable income and net realized gains to relieve it from federal income and if applicable, excise taxes. As a result, no provision for U.S. federal income taxes is required.

The Fund may be subject to foreign taxation related to income received, capital gains on the sale of securities and certain foreign currency transactions in the foreign jurisdictions in which it invests. Foreign taxes, if any, are recorded based on the tax regulations and rates that exist in the foreign markets in which the Fund invests. When a capital gain tax is determined to apply the Fund records an estimated deferred tax liability in an amount that would be payable if the securities were disposed of on the valuation date.

The Fund recognizes the tax benefits of uncertain tax positions only when the position is “more likely than not” to be sustained upon examination by the tax authorities based on the technical merits of the tax position. As of June 30, 2014, and for all open tax years, the Fund has determined that no liability for unrecognized tax benefits is required in the Fund’s financial statements related to uncertain tax positions taken on a tax return (or expected to be taken on future tax returns). Open tax years are those that remain subject to examination and are based on each tax jurisdiction statute of limitation.

f. Security Transactions, Investment Income, Expenses and Distributions

Security transactions are accounted for on trade date. Realized gains and losses on security transactions are determined on a specific identification basis. Estimated expenses are accrued daily. Dividend income recorded on the ex-dividend date except

that certain dividends from foreign securities are recognized as soon as the Fund is notified of the ex-dividend date. Distributions to shareholders are recorded on the ex-dividend date and are determined according to income tax regulations (tax basis). Distributable earnings determined on a tax basis may differ from earnings recorded in accordance with accounting principles generally accepted in the United States of America. These differences may be permanent or temporary. Permanent differences are reclassified among capital accounts to reflect their tax character. These reclassifications have no impact on net assets or the results of operations. Temporary differences are not reclassified, as they may reverse in subsequent periods.

Common expenses incurred by the Trust are allocated among the funds based on the ratio of net assets of each fund to the combined net assets of the Trust. Fund specific expenses are charged directly to the fund that incurred the expense.

Realized and unrealized gains and losses and net investment income, not including class specific expenses, are allocated daily to each class of shares based upon the relative proportion of net assets of each class. Differences in per share distributions, by class, are generally due to differences in class specific expenses.

g. Accounting Estimates

The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the amounts of income and expenses during the reporting period. Actual results could differ from those estimates.

h. Guarantees and Indemnifications

Under the Trust’s organizational documents, its officers and trustees are indemnified by the Trust against certain liabilities arising out of the performance of their duties to the Trust. Additionally, in the normal course of business, the Trust, on behalf of the Fund, enters into contracts with service providers that contain general indemnification clauses. The Trust’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Trust that have not yet occurred. Currently, the Trust expects the risk of loss to be remote.

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FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Small Cap Value VIP Fund (continued)

2. Shares of Beneficial Interest

At June 30, 2014, there were an unlimited number of shares authorized (without par value). Transactions in the Fund’s shares were as follows:

	Six Months Ended June 30, 2014						Year Ended December 31, 2013
	Shares			Amount			Shares			Amount
Class 1 Shares:
Shares sold		62,421		$	1,504,950			854,519		$	17,437,814
Shares issued in reinvestment of distributions		206,102			4,785,680			64,172			1,296,273
Shares redeemed		(202,214	)		(4,877,667	)		(536,406	)		(11,405,205	)
Net increase (decrease)		66,309		$	1,412,963			382,285		$	7,328,882
Class 2 Shares:
Shares sold		1,986,661		$	46,908,812			6,730,565		$	138,529,743
Shares issued in reinvestment of distributions		5,364,390			122,093,507			2,167,294			42,999,117
Shares redeemed		(5,593,601	)		(132,728,002	)		(12,704,970	)		(265,137,514	)
Net increase (decrease)		1,757,450		$	36,274,317			(3,807,111	)	$	(83,608,654	)
Class 4 Shares:
Shares sold		44,169		$	1,068,555			205,689		$	4,293,023
Shares issued on reinvestment of distributions		112,435			2,596,120			49,338			991,698
Shares redeemed		(202,696	)		(4,842,025	)		(538,222	)		(11,316,720	)
Net increase (decrease)		(46,092	)	$	(1,177,350	)		(283,195	)	$	(6,031,999	)

3. Transactions With Affiliates

Franklin Resources, Inc. is the holding company for various subsidiaries that together are referred to as Franklin Templeton Investments. Certain officers and trustees of the Fund are also officers and/or directors of the following subsidiaries:

Subsidiary	Affiliation
Franklin Advisory Services, LLC (Advisory Services)	Investment manager
Franklin Templeton Services, LLC (FT Services)	Administrative manager
Franklin Templeton Distributors, Inc. (Distributors)	Principal underwriter
Franklin Templeton Investor Services, LLC (Investor Services)	Transfer agent

a. Management Fees

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

Annualized Fee Rate	Net Assets
0.750%	Up to and including $200 million
0.635%	Over $200 million, up to and including $700 million
0.600%	Over $700 million, up to and including $1.2 billion
0.575%	Over $1.2 billion, up to and including $1.3 billion
0.475%	In excess of $1.3 billion

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FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Small Cap Value VIP Fund (continued)

3. Transactions With Affiliates (continued)

a. Management Fees (continued)

Effective May 1, 2014, the Fund combined its investment management and administration agreements as approved by the Board. The fees paid under the combined agreement do not exceed the aggregate fees that were paid under the separate agreements.

Prior to May 1, 2014, the Fund paid fees to Advisory Services based on the average daily net assets of the Fund as follows:

Annualized Fee Rate	Net Assets
0.600%	Up to and including $200 million
0.500%	Over $200 million, up to and including $1.3 billion
0.400%	In excess of $1.3 billion

b. Administrative Fees

Effective May 1, 2014, under an agreement with Advisory Services, FT Services provides administrative services to the Fund. The fee is paid by Advisory Services based on the Fund’s average daily net assets, and is not an additional expense of the Fund.

Prior to May 1, 2014, the Fund paid administrative fees to FT Services based on the average daily net assets of the Fund as follows:

Annualized Fee Rate	Net Assets
0.150%	Up to and including $200 million
0.135%	Over $200 million, up to and including $700 million
0.100%	Over $700 million, up to and including $1.2 billion
0.075%	In excess of $1.2 billion

c. Distribution Fees

The Board has adopted distribution plans for Class 2 and Class 4 shares pursuant to Rule 12b-1 under the 1940 Act. Under the Fund’s compensation distribution plans, the Fund pays Distributors for costs incurred in connection with the servicing, sale and distribution of the Fund’s shares up to 0.35% per year of its average daily net assets of each class. Some distribution fees are not charged on shares held by affiliates. The Board has agreed to limit the current rate to 0.25% per year for Class 2. The plan year, for purposes of monitoring compliance with the maximum annual plan rates, is February 1 through January 31.

d. Transfer Agent Fees

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

e. Investment in Institutional Fiduciary Trust Money Market Portfolio

The Fund invests in the Institutional Fiduciary Trust Money Market Portfolio (Sweep Money Fund), an affiliated open-end management investment company. Management fees paid by the Fund are waived on assets invested in the Sweep Money Fund, in an amount not to exceed the management and administrative fees paid directly or indirectly by the Sweep Money Fund, as noted on the Statement of Operations. Prior to January 1, 2014, the waiver was accounted for as a reduction to management fees.

4. Expense Offset Arrangement

The Fund has entered into an arrangement with its custodian whereby credits realized as a result of uninvested cash balances are used to reduce a portion of the Fund’s custodian expenses. During the period ended June 30, 2014, the custodian fees were reduced as noted in the Statement of Operations.

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FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Small Cap Value VIP Fund (continued)

5. Income Taxes

At June 30, 2014, the cost of investments and net unrealized appreciation (depreciation) for income tax purposes were as follows:

Cost of investments	$1,029,321,550
Unrealized appreciation	$   697,820,603
Unrealized depreciation	(31,151,874)
Net unrealized appreciation (depreciation)	$   666,668,729

Differences between income and/or capital gains as determined on a book basis and a tax basis are primarily due to differing treatment of passive foreign investment company shares.

6. Investment Transactions

Purchases and sales of investments (excluding short term securities) for the period ended June 30, 2014, aggregated $156,775,859 and $236,227,735, respectively.

7. Credit Facility

The Fund, together with other U.S. registered and foreign investment funds (collectively, Borrowers), managed by Franklin Templeton Investments, are borrowers in a joint syndicated senior unsecured credit facility totaling $1.5 billion (Global Credit Facility) which matures on February 13, 2015. This Global Credit Facility provides a source of funds to the Borrowers for temporary and emergency purposes, including the ability to meet future unanticipated or unusually large redemption requests.

Under the terms of the Global Credit Facility, the Fund shall, in addition to interest charged on any borrowings made by the Fund and other costs incurred by the Fund, pay its share of fees and expenses incurred in connection with the implementation and maintenance of the Global Credit Facility, based upon its relative share of the aggregate net assets of all of the Borrowers, including an annual commitment fee of 0.07% based upon the unused portion of the Global Credit Facility. These fees are reflected in other expenses on the Statement of Operations. During the period ended June 30, 2014, the Fund did not use the Global Credit Facility.

8. Fair Value Measurements

The Fund follows a fair value hierarchy that distinguishes between market data obtained from independent sources (observable inputs) and the Fund’s own market assumptions (unobservable inputs). These inputs are used in determining the value of the Fund’s financial instruments and are summarized in the following fair value hierarchy:

• Level 1 – quoted prices in active markets for identical financial instruments

• Level 2 – other significant observable inputs (including quoted prices for similar financial instruments, interest rates, prepayment speed, credit risk, etc.)

• Level 3 – significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of financial instruments)

The input levels are not necessarily an indication of the risk or liquidity associated with financial instruments at that level.

For movements between the levels within the fair value hierarchy, the Fund has adopted a policy of recognizing the transfers as of the date of the underlying event which caused the movement.

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FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Small Cap Value VIP Fund (continued)

8. Fair Value Measurements (continued)

A summary of inputs used as of June 30, 2014, in valuing the Fund’s assets carried at fair value, is as follows:

	Level 1		Level 2		Level 3		Total
Assets:
Investments in Securities:
Equity Investmentsa	$	1,628,602,789	$	—	$	—	$	1,628,602,789
Short Term Investments		54,880,539		12,506,951		—		67,387,490
Total Investments in Securities	$	1,683,483,328	$	12,506,951	$	—	$	1,695,990,279

^aFor detailed categories, see the accompanying Statement of Investments.

9. New Accounting Pronouncements

In June 2014, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) No. 2014-11, Transfers and Servicing (Topic 860), Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures. The ASU changes the accounting for certain repurchase agreements and expands disclosure requirements related to repurchase agreements, securities lending, repurchase-to-maturity and similar transactions. The ASU is effective for interim and annual reporting periods beginning after December 15, 2014. Management is currently evaluating the impact, if any, of applying this provision.

10. Subsequent Events

The Fund has evaluated subsequent events through the issuance of the financial statements and determined that no events have occurred that require disclosure.

FSV-26 Semiannual Report

Franklin Small-Mid Cap Growth VIP Fund

(Formerly, Franklin Small-Mid Cap Growth Securities Fund)

This semiannual report for Franklin Small-Mid Cap Growth VIP Fund covers the

period ended June 30, 2014.

Class 2 Performance Summary as of June 30, 2014

Franklin Small-Mid Cap Growth VIP Fund – Class 2 delivered a +5.37% total return* for the six-month period ended June 30, 2014.

*The Fund has a fee waiver associated with its investments in a Franklin Templeton money fund, contractually guaranteed through at least its current fiscal year-end. Fund investment results reflect the fee waiver, to the extent applicable; without this reduction, the results would have been lower.

Performance reflects the Fund’s Class 2 operating expenses, but does not include any contract fees, expenses or sales charges. If they had been included, performance would be lower. These charges and deductions, particularly for variable life policies, can have a significant effect on contract values and insurance benefits. See the contract prospectus for a complete description of these expenses, including sales charges.

Performance data represent past performance, which does not guarantee future results. Investment return and principal value will fluctuate, and you may have a gain or loss when you sell your shares. Current performance may differ from figures shown.

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FRANKLIN SMALL-MID CAP GROWTH VIP FUND

Fund Goal and Main Investments: Franklin Small-Mid Cap Growth VIP Fund seeks long-term capital growth. Under normal market conditions, the Fund invests at least 80% of its net assets in equity securities of small capitalization and mid-capitalization companies. For this Fund, small cap companies are those within the market capitalization range of companies in the Russell 2500^TM Index at the time of purchase, and midcap companies are those within the market capitalization range of companies in the Russell Midcap^® Index at the time of purchase.¹

Fund Risks: All investments involve risks, including possible loss of principal. Growth stock prices reflect projections of future earnings or revenues, and can, therefore, fall dramatically if the company fails to meet those projections. Smaller, midsized or relatively new or unseasoned companies can be particularly sensitive to changing economic conditions, and their prospects for growth are less certain than those of larger, more established companies. Historically, these securities have experienced more price volatility than larger company stocks, especially over the short term. To the extent the Fund focuses on particular countries, regions, industries, sectors or types of investment from time to time, it may be subject to greater risk of adverse developments in such areas of focus than a fund that invests in a wider variety of countries, regions, industries, sectors or investments. From time to time, the trading market for a particular security or type of security in which the Fund invests may become less liquid or even illiquid. The Fund is actively managed but there is no guarantee that the manager’s investment decisions will produce the desired results. The Fund’s prospectus also includes a description of the main investment risks.

Performance Overview

You can find the Fund’s six-month total return in the Performance Summary. In comparison, the Fund’s narrow benchmark, the Russell Midcap Growth Index, generated a +6.51% total return, and its broad benchmark, the Standard & Poor’s^® 500 Index (S&P 500^®), produced a +7.14% total return, for the same period.²

Economic and Market Overview

The U.S. economy showed some signs of recovery during the six-month period ended June 30, 2014, despite a first-quarter

contraction in gross domestic product. Manufacturing activity expanded, and the unemployment rate declined to 6.1% in June 2014 from 6.7% in December 2013.³ Except for a sharp increase in March, retail sales rose at a modest pace that missed consensus expectations. The housing market had some weather-related weakness early in 2014, but home sales picked up in the spring and home prices were higher than a year ago.

The Federal Reserve Board (Fed) began reducing bond purchases by $10 billion a month in January 2014, based on largely positive economic and employment data in late 2013. Although economic data in early 2014 were soft, Fed Chair Janet Yellen kept the pace of asset-purchase tapering intact while adopting a more qualitative approach to rate-hike guidance. However, the Fed pledged to keep interest rates low for a considerable time after the asset-purchase program ends, depending on inflation and employment trends. In June, the Fed lowered projections for near- and long-term economic growth even as it maintained the pace of tapering.

Investors’ confidence grew as corporate profits rose and generally favorable economic data indicated continued recovery despite brief sell-offs when many investors reacted to the Fed’s statements, political instability in certain emerging markets and China’s slowing economy. U.S. stocks continued to gain for the six-months under review as the S&P 500 and Dow Jones Industrial Average reached all-time highs.¹

Investment Strategy

We use fundamental, bottom-up research to seek companies meeting our criteria of growth potential, quality and valuation. In seeking sustainable growth characteristics, we look for companies we believe can produce sustainable earnings and cash flow growth, evaluating the long-term market opportunity and competitive structure of an industry to target leaders and emerging leaders. We define quality companies as those with strong and improving competitive positions in attractive markets. We also believe important attributes of quality are experienced and talented management teams as well as financial strength reflected in the capital structure, gross and operating margins, free cash flow generation and returns on capital employed. Our valuation analysis includes a range of potential outcomes based on an assessment of multiple scenarios. In

1. Please see Index Descriptions following the Fund Summaries.

2. Source: © 2014 Morningstar. One cannot invest directly in an index, and an index is not representative of the Fund’s portfolio. Please see Index Descriptions following the Fund Summaries.

3. Source: Bureau of Labor Statistics.

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FRANKLIN SMALL-MID CAP GROWTH VIP FUND

assessing value, we consider whether security prices fully reflect the balance of the sustainable growth opportunities relative to business and financial risks.

Manager’s Discussion

Most sectors represented in the Fund’s portfolio delivered positive returns and contributed to absolute performance during the six months under review as the broad market rallied. Relative to the Russell Midcap Growth Index, key contributors to performance included stock selection in the information technology (IT) and energy sectors.

In the IT sector, off-benchmark positions in integrated circuit manufacturers NXP Semiconductors and Intersil contributed to relative returns. Netherlands-based NXP Semiconductors delivered stronger-than-expected first-quarter 2014 earnings that included double-digit revenue growth and higher margins resulting from stronger-than-seasonal product demand and solid cost reductions. The company expected an improving 2014 demand environment and remained focused on increasing margins, as well as deleveraging its balance sheet while expanding its share repurchase program. Intersil reported better-than-expected first-quarter 2014 earnings results, driven by strength in the automotive and industrial markets, stabilization in personal computer demand and execution of its restructuring initiatives. The company remained debt free and has one of the semiconductor industry’s highest dividend yields.

The energy sector performed well during the period as crude oil prices rose because of supply concerns stemming from geopolitical tensions in certain oil producing and transit regions. Among the Fund’s energy holdings, notable contributors included oil and gas exploration companies, particularly our new position in Oasis Petroleum and off-benchmark investment in Diamondback Energy. Oasis Petroleum’s first-quarter 2014 earnings were better than expectations, driven by higher production. The company also provided higher production guidance for the second quarter. Diamondback Energy reported solid quarterly earnings and raised its full-year 2014 production guidance. Further boosting its shares were a subsidiary’s initial public offering and market speculation that it could be an acquisition target of Spanish multinational oil and gas company Repsol.

Notable individual contributors included positions in apparel and footwear maker Under Armour, crane and foodservice

equipment manufacturer Manitowoc and equipment rental company United Rentals. Under Armour reported better-than-expected quarterly earnings, resulting from its customers’ increasing health consciousness and the rising popularity of sportswear for women. The company raised its full-year 2014 guidance, supported by broad-based strength in its apparel and footwear segments and solid growth in international markets. Manitowoc reported solid quarterly earnings, resulting from new product introductions, cost control measures and its foodservice division’s performance. Manitowoc’s stock price surged near period-end following news that an activist investment firm sought to break up the company, which indicated it would review the potential long-term benefits of separating its crane and foodservice businesses. United Rentals continued to deliver stronger-than-expected quarterly earnings, driven by growth in equipment rentals and sales.

In contrast, key detractors from the Fund’s relative performance included stock selection in the consumer staples, consumer discretionary and health care sectors. In consumer staples, Whole Foods Market hurt relative results as heightened competition in the organic food market led the natural and organic foods retailer

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FRANKLIN SMALL-MID CAP GROWTH VIP FUND

to deliver disappointing fiscal second-quarter revenues and earnings and lower its fiscal year 2014 guidance.

Among the Fund’s consumer discretionary holdings, our off-benchmark investment in Wolverine World Wide, a designer and manufacturer of branded footwear, apparel and accessories, and positions in Dick’s Sporting Goods, a sports and fitness retailer, and GNC Holdings, a specialty retailer of health and wellness products, hurt relative results. Wolverine World Wide’s share price declined earlier in the period after the company provided lower-than-expected preliminary fiscal-year 2013 revenue results. The company subsequently provided weaker-than-expected fiscal-year 2014 guidance as it expected international efforts for newly acquired brands to begin showing results in the latter half of the year. Dick’s Sporting Goods’ share price fell after the company reported disappointing first-quarter 2014 earnings results and lowered its fiscal year 2014 guidance amid weakness in its golf and hunting businesses. Similarly, GNC Holdings’ shares suffered from the company’s weaker-than-expected first-quarter 2014 earnings results and lower full-year 2014 guidance, as domestic sales were negatively affected by severe winter weather in January and February.

In the health care sector, our off-benchmark investment in Celldex Therapeutics hindered relative performance as the company’s share price corrected after the biopharmaceutical firm delivered triple-digit returns in 2013. Also pressuring the stock was Celldex’s larger-than-expected loss in the first quarter of 2014, resulting from lower royalty revenues and higher research and development expenses.

Key individual detractors included our off-benchmark investment in satellite imagery service provider DigitalGlobe and position in asset management company Affiliated Managers Group. DigitalGlobe’s share price declined after the company delivered weaker-than-expected fourth-quarter 2013 revenues and fiscal year 2014 revenue outlook. News that Google would acquire a competitor also weighed on the stock. After ending 2013 at an all-time high, Affiliated Managers Group’s share price corrected during the first half of the period, although the company reported stronger-than-expected fiscal year 2013 earnings. Its shares recovered most of the early losses after the company reported better-than-expected first-quarter 2014 earnings results and announced a major international acquisition. Further boosting investor sentiment was the company’s addition to the S&P 500 at period-end.

Top 10 Holdings
6/30/14
Company Sector/Industry	% of Total Net Assets
Roper Industries Inc. Industrials		1.7%
Oasis Petroleum Inc. Energy		1.5%
NXP Semiconductors NV Information Technology		1.4%
AMETEK Inc. Industrials		1.4%
Affiliated Managers Group Inc. Financials		1.3%
Concho Resources Inc. Energy		1.3%
Mead Johnson Nutrition Co., A Consumer Staples		1.3%
IHS Inc., A Industrials		1.2%
Actavis PLC Health Care		1.2%
Signature Bank/New York NY Financials		1.2%

The dollar value, number of shares or principal amount, and names of all portfolio holdings are listed in the Fund’s Statement of Investments.

Thank you for your participation in Franklin Small-Mid Cap Growth VIP Fund. We look forward to serving your future investment needs.

The foregoing information reflects our analysis, opinions and portfolio holdings as of June 30, 2014, the end of the reporting period. The way we implement our main investment strategies and the resulting portfolio holdings may change depending on factors such as market and economic conditions. These opinions may not be relied upon as investment advice or an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but the investment manager makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.

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FRANKLIN SMALL-MID CAP GROWTH VIP FUND

Class 2 Fund Expenses

As an investor in a variable insurance contract (Contract) that indirectly provides for investment in an underlying mutual fund, you can incur transaction and/or ongoing expenses at both the Fund level and the Contract level.

• Transaction expenses can include sales charges (loads) on purchases, surrender fees, transfer fees and premium taxes.

• Ongoing expenses can include management fees, distribution and service (12b-1) fees, contract fees, annual maintenance fees, mortality and expense risk fees and other fees and expenses. All mutual funds and Contracts have some types of ongoing expenses.

The expenses shown in the table are meant to highlight ongoing expenses at the Fund level only and do not include ongoing expenses at the Contract level, or transaction expenses at either the Fund or Contract levels. While the Fund does not have transaction expenses, if the transaction and ongoing expenses at the Contract level were included, the expenses shown below would be higher. You should consult your Contract prospectus or disclosure document for more information.

The table shows Fund-level ongoing expenses and can help you understand these expenses and compare them with those of other mutual funds offered through the Contract. The table assumes a $1,000 investment held for the six months indicated. Please refer to the Fund prospectus for additional information on operating expenses.

Actual Fund Expenses

The first line (Actual) of the table provides actual account values and expenses. The “Ending Account Value” is derived from the Fund’s actual return, which includes the effect of ongoing Fund expenses, but does not include the effect of ongoing Contract expenses.

You can estimate the Fund-level expenses you incurred during the period by following these steps. Of course, your account value and expenses will differ from those in this illustration:

1. Divide your account value by $1,000.

If an account had an $8,600 value, then $8,600 ÷ $1,000 = 8.6.

2. Multiply the result by the number under the heading “Fund-Level Expenses Incurred During Period.”

If Fund-Level Expenses Incurred During Period were $7.50, then 8.6 × $7.50 = $64.50.

In this illustration, the estimated expenses incurred this period at the Fund level are $64.50.

Hypothetical Example for Comparison with Other Mutual Funds

Information in the second line (Hypothetical) of the table can help you compare ongoing expenses of the Fund with those of other mutual funds offered through the Contract. This information may not be used to estimate the actual ending account balance or expenses you incurred during the period. The hypothetical “Ending Account Value” is based on the Fund’s actual expense ratio and an assumed 5% annual rate of return before expenses, which does not represent the Fund’s actual return. The figure under the heading “Fund-Level Expenses Incurred During Period” shows the hypothetical expenses your account would have incurred under this scenario. You can compare this figure with the 5% hypothetical examples that appear in shareholder reports of other funds offered through a Contract.

Class 2	Beginning Account Value 1/1/14		Ending Account Value 6/30/14		Fund-Level Expenses Incurred During Period* 1/1/14–6/30/14
Actual		$1,000		$1,053.70		$5.35
Hypothetical (5% return before expenses)		$1,000		$1,019.59		$5.26

*Expenses are calculated using the most recent six-month annualized expense ratio, net of expense waivers, for the Fund’s Class 2 shares (1.05%), which does not include any ongoing expenses of the Contract for which the Fund is an investment option, multiplied by the average account value over the period, multiplied by 181/365 to reflect the one-half year period.

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FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Financial Highlights

Franklin Small-Mid Cap Growth VIP Fund

	Six Months Ended June 30, 2014 (unaudited)			Year Ended December 31,
				2013			2012			2011			2010			2009
Class 1
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$28.38			$21.87			$21.19			$22.21			$17.36			$12.06
Income from investment operationsa:
Net investment income (loss)b		(0.04	)		(0.09	)		(0.01	)c		(0.05	)		(0.01	)		(0.10	)d
Net realized and unrealized gains (losses)		1.49			8.19			2.27			(0.97	)		4.86			5.40
Total from investment operations		1.45			8.10			2.26			(1.02	)		4.85			5.30
Less distributions from net realized gains		(5.40	)		(1.59	)		(1.58	)		—			—			—
Net asset value, end of period		$24.43			$28.38			$21.87			$21.19			$22.21			$17.36
Total returne		5.53%			38.50%			11.12%			(4.59)%			27.94%			43.95%
Ratios to average net assetsf
Expenses		0.80%	g		0.80%	h		0.80%			0.79%			0.79%			0.80%	h
Net investment income (loss)		(0.32)%			(0.35)%			(0.03)%	c		(0.21)%			(0.07)%			(0.72)%	d
Supplemental data
Net assets, end of period (000’s)		$100,425			$98,020			$75,977			$76,384			$89,826			$79,670
Portfolio turnover rate		25.05%			42.77%			41.44%			45.00%			46.69%			63.93%

^aThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.

^bBased on average daily shares outstanding.

^cNet investment income per share includes approximately $0.03 per share received in the form of special dividends. Excluding these amounts, the ratio of net investment income to average net assets would have been (0.16)%.

^dNet investment income per share includes approximately $(0.06) per share as a return of capital adjustment to a previously recorded special dividend received by the Fund. Excluding this non-recurring amount, the ratio of net investment income to average net assets would have been (0.22)%.

^eTotal return does not include fees, charges or expenses imposed by the variable annuity and life insurance contracts for which the Franklin Templeton Variable Insurance Products Trust serves as an underlying investment vehicle. Total return is not annualized for periods less than one year.

^fRatios are annualized for periods less than one year.

^gBenefit of waiver and payment by affiliate rounds to less than 0.01%.

^hBenefit of expense reduction rounds to less than 0.01%.

FSC-6 Semiannual Report   |    The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL HIGHLIGHTS

Franklin Small-Mid Cap Growth VIP Fund (continued)

	Six Months Ended June 30, 2014 (unaudited)			Year Ended December 31,
				2013			2012			2011			2010			2009
Class 2
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$27.16			$21.04			$20.49			$21.54			$16.87			$11.75
Income from investment operationsa:
Net investment income (loss)b		(0.08	)		(0.14	)		(0.06	)c		(0.10	)		(0.06	)		(0.13	)d
Net realized and unrealized gains (losses)		1.42			7.85			2.19			(0.95	)		4.73			5.25
Total from investment operations		1.34			7.71			2.13			(1.05	)		4.67			5.12
Less distributions from net realized gains		(5.40	)		(1.59	)		(1.58	)		—			—			—
Net asset value, end of period		$23.10			$27.16			$21.04			$20.49			$21.54			$16.87
Total returne		5.37%			38.15%			10.85%			(4.87)%			27.68%			43.57%
Ratios to average net assetsf
Expenses		1.05%	g		1.05%	h		1.05%			1.04%			1.04%			1.05%	h
Net investment income (loss)		(0.57)%			(0.60)%			(0.28)%	c		(0.46)%			(0.32)%			(0.92)%	d
Supplemental data
Net assets, end of period (000’s)		$630,357			$660,806			$670,193			$717,086			$939,481			$813,480
Portfolio turnover rate		25.05%			42.77%			41.44%			45.00%			46.69%			63.93%

^aThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.

^bBased on average daily shares outstanding.

^cNet investment income per share includes approximately $0.03 per share received in the form of special dividends. Excluding these amounts, the ratio of net investment income to average net assets would have been (0.41)%.

^dNet investment income per share includes approximately $(0.06) per share as a return of capital adjustment to a previously recorded special dividend received by the Fund. Excluding this non-recurring amount, the ratio of net investment income to average net assets would have been (0.47)%.

^eTotal return does not include fees, charges or expenses imposed by the variable annuity and life insurance contracts for which the Franklin Templeton Variable Insurance Products Trust serves as an underlying investment vehicle. Total return is not annualized for periods less than one year.

^fRatios are annualized for periods less than one year.

^gBenefit of waiver and payment by affiliate rounds to less than 0.01%.

^hBenefit of expense reduction rounds to less than 0.01%.

The accompanying notes are an integral part of these financial statements.    |   Semiannual Report FSC-7

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL HIGHLIGHTS

Franklin Small-Mid Cap Growth VIP Fund (continued)

	Six Months Ended June 30, 2014 (unaudited)			Year Ended December 31,
				2013			2012			2011			2010			2009
Class 4
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$27.72			$21.47			$20.90			$21.98			$17.24			$12.02
Income from investment operationsa:
Net investment income (loss)b		(0.09	)		(0.17	)		(0.09	)c		(0.12	)		(0.07	)		(0.15	)d
Net realized and unrealized gains (losses)		1.44			8.01			2.24			(0.96	)		4.81			5.37
Total from investment operations		1.35			7.84			2.15			(1.08	)		4.74			5.22
Less distributions from net realized gains		(5.40	)		(1.59	)		(1.58	)		—			—			—
Net asset value, end of period		$23.67			$27.72			$21.47			$20.90			$21.98			$17.24
Total returne		5.30%			37.99%			10.79%			(4.91)%			27.49%			43.43%
Ratios to average net assetsf
Expenses		1.15%	g		1.15%	h		1.15%			1.14%			1.14%			1.15%	h
Net investment income (loss)		(0.67)%			(0.70)%			(0.38)%	c		(0.56)%			(0.42)%			(1.07)%	d
Supplemental data
Net assets, end of period (000’s)		$18,390			$19,132			$12,000			$12,664			$15,413			$11,029
Portfolio turnover rate		25.05%			42.77%			41.44%			45.00%			46.69%			63.93%

^aThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.

^bBased on average daily shares outstanding.

^cNet investment income per share includes approximately $0.03 per share received in the form of special dividends. Excluding these amounts, the ratio of net investment income to average net assets would have been (0.51)%.

^dNet investment income per share includes approximately $(0.06) per share as a return of capital adjustment to a previously recorded special dividend received by the Fund. Excluding this non-recurring amount, the ratio of net investment income to average net assets would have been (0.57)%.

^eTotal return does not include fees, charges or expenses imposed by the variable annuity and life insurance contracts for which the Franklin Templeton Variable Insurance Products Trust serves as an underlying investment vehicle. Total return is not annualized for periods less than one year.

^fRatios are annualized for periods less than one year.

^gBenefit of waiver and payment by affiliate rounds to less than 0.01%.

^hBenefit of expense reduction rounds to less than 0.01%.

FSC-8 Semiannual Report   |    The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Statement of Investments, June 30, 2014 (unaudited)

Franklin Small-Mid Cap Growth VIP Fund
		Shares		Value
	Common Stocks 98.2%
	Consumer Discretionary 20.6%
a	AMC Networks Inc., A		41,800	$	2,570,282
	BorgWarner Inc.		108,000		7,040,520
a	BRP Inc. (Canada)		118,400		2,919,893
a	Buffalo Wild Wings Inc.		33,500		5,551,285
a	Charter Communications Inc., A		26,900		4,260,422
a	Chipotle Mexican Grill Inc.		11,600		6,873,116
	Dick’s Sporting Goods Inc.		149,000		6,937,440
	GNC Holdings Inc., A		43,700		1,490,170
a	Grand Canyon Education Inc.		103,300		4,748,701
	Harman International Industries Inc.		44,200		4,748,406
a	HomeAway Inc.		116,300		4,049,566
a,b	Imax Corp. (Canada)		136,800		3,896,064
a	Jarden Corp.		127,900		7,590,865
a	Kate Spade & Co.		75,200		2,868,128
	KB Home		416,800		7,785,824
a	Liberty Media Corp., A		46,100		6,300,948
a	Liberty Ventures, A		62,400		4,605,120
	Marriott International Inc., A		77,900		4,993,390
a	Michael Kors Holdings Ltd.		36,100		3,200,265
a	Netflix Inc.		16,300		7,181,780
a	Norwegian Cruise Line Holdings Ltd.		155,600		4,932,520
	The Ryland Group Inc.		100,300		3,955,832
a	Shutterfly Inc.		88,700		3,819,422
	Starwood Hotels & Resorts Worldwide Inc.		79,200		6,400,944
a	Tenneco Inc.		130,000		8,541,000
	Tractor Supply Co.		69,500		4,197,800
a	Under Armour Inc., A		127,876		7,607,343
	Wolverine World Wide Inc.		273,100		7,116,986
	Wynn Resorts Ltd.		40,700		8,447,692
					154,631,724
	Consumer Staples 4.1%
a	Boston Beer Inc., A		22,700		5,073,904
	Mead Johnson Nutrition Co., A		102,400		9,540,608
a	Monster Beverage Corp.		74,300		5,277,529
a	TreeHouse Foods Inc.		79,200		6,341,544
	Whole Foods Market Inc.		116,900		4,515,847
					30,749,432
	Energy 6.9%
	Cabot Oil & Gas Corp., A		193,300		6,599,262
a	Cameron International Corp.		39,700		2,688,087
a	Concho Resources Inc.		67,300		9,724,850
a	Diamondback Energy Inc.		67,100		5,958,480
a	Eclipse Resources Corp.		84,400		2,120,972
a	Memorial Resource Development Corp.		81,900		1,995,084
a	Oasis Petroleum Inc.		195,400		10,920,906
	Oceaneering International Inc.		41,100		3,211,143
a	Rex Energy Corp.		193,300		3,423,343
	Superior Energy Services Inc.		131,900		4,766,866
					51,408,993

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FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Small-Mid Cap Growth VIP Fund (continued)

		Shares		Value
	Common Stocks (continued)
	Financials 6.0%
a	Affiliated Managers Group Inc.		48,400	$	9,941,360
	Brown & Brown Inc.		129,800		3,986,158
	Intercontinental Exchange Inc.		43,808		8,275,331
	Jones Lang LaSalle Inc.		26,600		3,361,974
	Lazard Ltd., A		107,400		5,537,544
a	Signature Bank		68,500		8,643,330
	T. Rowe Price Group Inc.		62,100		5,241,861
					44,987,558
	Health Care 19.9%
a	Actavis PLC		40,600		9,055,830
	Agilent Technologies Inc.		95,000		5,456,800
a	Alexion Pharmaceuticals Inc.		36,100		5,640,625
a	Alnylam Pharmaceuticals Inc.		51,100		3,227,987
a	BioMarin Pharmaceutical Inc.		28,100		1,748,101
a	CareFusion Corp.		105,900		4,696,665
a	Catamaran Corp.		121,300		5,356,608
a	Celldex Therapeutics Inc.		209,800		3,423,936
a	Cerner Corp.		102,800		5,302,424
	The Cooper Cos. Inc.		54,800		7,427,044
a	DaVita HealthCare Partners Inc.		105,700		7,644,224
	DENTSPLY International Inc.		112,500		5,326,875
a	DexCom Inc.		54,400		2,157,504
a	Edwards Lifesciences Corp.		35,200		3,021,568
a	Envision Healthcare Holdings Inc.		144,200		5,178,222
a	HCA Holdings Inc.		148,300		8,361,154
a	HeartWare International Inc.		30,806		2,726,331
a	HMS Holdings Corp.		129,300		2,639,013
a	Illumina Inc.		30,100		5,374,054
a	Incyte Corp.		57,500		3,245,300
a	Insulet Corp.		51,000		2,023,170
a	Karyopharm Therapeutics Inc.		66,213		3,082,215
a	Medivation Inc.		51,546		3,973,166
a	Mettler-Toledo International Inc.		29,700		7,519,446
	Perrigo Co. PLC		57,885		8,437,317
a	Puma Biotechnology Inc.		14,100		930,600
a	Quintiles Transnational Holdings Inc.		140,300		7,476,587
a	Sagent Pharmaceuticals Inc.		154,800		4,003,128
	St. Jude Medical Inc.		74,700		5,172,975
a	Tandem Diabetes Care Inc.		87,968		1,430,360
a	Vertex Pharmaceuticals Inc.		26,100		2,471,148
	Zoetis Inc.		173,100		5,585,937
					149,116,314
	Industrials 19.1%
	Acuity Brands Inc.		39,500		5,460,875
a	The Advisory Board Co.		81,300		4,211,340
	Allegiant Travel Co.		53,612		6,313,885
	AMETEK Inc.		195,500		10,220,740
a	Colfax Corp.		104,300		7,774,522
a	DigitalGlobe Inc.		170,100		4,728,780
	Flowserve Corp.		111,000		8,252,850

FSC-10 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Small-Mid Cap Growth VIP Fund (continued)

		Shares		Value
	Common Stocks (continued)
	Industrials (continued)
a	Genesee & Wyoming Inc.		56,700	$	5,953,500
a	Hexcel Corp.		134,000		5,480,600
a	IHS Inc., A		68,200		9,252,694
	Interface Inc.		142,400		2,682,816
	J.B. Hunt Transport Services Inc.		63,100		4,655,518
a	Jacobs Engineering Group Inc.		74,200		3,953,376
	Kansas City Southern		37,700		4,053,127
	The Manitowoc Co. Inc.		187,000		6,144,820
a	Proto Labs Inc.		36,400		2,981,888
	Robert Half International Inc.		149,200		7,122,808
	Rockwell Automation Inc.		31,700		3,967,572
	Roper Industries Inc.		84,770		12,377,268
a	Spirit Airlines Inc.		94,200		5,957,208
	Towers Watson & Co.		23,100		2,407,713
a	United Rentals Inc.		76,900		8,053,737
a	Verisk Analytics Inc., A		51,300		3,079,026
	W.W. Grainger Inc.		12,600		3,203,802
a	WABCO Holdings Inc.		43,200		4,614,624
					142,905,089
	Information Technology 19.1%
a	Alliance Data Systems Corp.		22,500		6,328,125
a	ANSYS Inc.		91,500		6,937,530
	Applied Materials Inc.		346,400		7,811,320
	Avago Technologies Ltd. (Singapore)		111,300		8,021,391
a	Bottomline Technologies Inc.		112,500		3,366,000
a	Cognex Corp.		180,100		6,915,840
a	Demandware Inc.		52,500		3,641,925
a	Electronic Arts Inc.		125,000		4,483,750
a	Equinix Inc.		25,000		5,252,250
a	FleetCor Technologies Inc.		58,100		7,657,580
a	Global Eagle Entertainment Inc.		233,700		2,897,880
	Intersil Corp., A		544,900		8,146,255
a	JDS Uniphase Corp.		316,400		3,945,508
	Lam Research Corp.		57,700		3,899,366
a	LinkedIn Corp., A		39,100		6,704,477
	Maxim Integrated Products Inc.		146,600		4,956,546
a	NetSuite Inc.		33,400		2,901,792
a	NXP Semiconductors NV (Netherlands)		156,200		10,337,316
a	Pandora Media Inc.		71,000		2,094,500
a	Red Hat Inc.		56,100		3,100,647
a	Semtech Corp.		94,700		2,476,405
a	ServiceNow Inc.		34,700		2,150,012
a,b	Stratasys Ltd.		22,004		2,500,315
a	Trimble Navigation Ltd.		210,400		7,774,280
a	Twitter Inc.		55,600		2,277,932
a	ViaSat Inc.		101,900		5,906,124
a	Workday Inc.		19,600		1,761,256
	Xilinx Inc.		76,100		3,600,291
a	Yelp Inc.		66,300		5,083,884
					142,930,497

Semiannual Report FSC-11

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Small-Mid Cap Growth VIP Fund (continued)

		Shares		Value
	Common Stocks (continued)
	Materials 1.9%
	Cytec Industries Inc.		52,900	$	5,576,718
	H.B. Fuller Co.		79,013		3,800,525
	Martin Marietta Materials Inc.		36,400		4,806,620
					14,183,863
	Utilities 0.6%
a	Calpine Corp.		191,000		4,547,710
	Total Common Stocks (Cost $471,135,034)				735,461,180
	Short Term Investments 3.1%
	Money Market Funds (Cost $19,150,716) 2.5%
a,c	Institutional Fiduciary Trust Money Market Portfolio		19,150,716		19,150,716
d	Investments from Cash Collateral Received for Loaned Securities (Cost $4,321,503) 0.6%
	Money Market Funds 0.6%
e	BNY Mellon Overnight Government Fund, 0.082%		4,321,503		4,321,503
	Total Investments (Cost $494,607,253) 101.3%				758,933,399
	Other Assets, less Liabilities (1.3)%				(9,761,998	)
	Net Assets 100.0%			$	749,171,401

^aNon-income producing.

^bA portion or all of the security is on loan at June 30, 2014. See Note 1(c).

^cSee Note 3(e) regarding investments in the Institutional Fiduciary Trust Money Market Portfolio.

^dSee Note 1(c) regarding securities on loan.

^eThe rate shown is the annualized seven-day yield at period end.

FSC-12 Semiannual Report   |    The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Financial Statements

Statement of Assets and Liabilities

June 30, 2014 (unaudited)

	Franklin Small-Mid Cap Growth VIP Fund
Assets:
Investments in securities:
Cost - Unaffiliated issuers	$	475,456,537
Cost - Sweep Money Fund (Note 3e)		19,150,716
Total cost of investments	$	494,607,253
Value - Unaffiliated issuers	$	739,782,683
Value - Sweep Money Fund (Note 3e)		19,150,716
Total value of investments (includes securities loaned in the amount of $4,301,966)		758,933,399
Receivables:
Investment securities sold		2,521,723
Capital shares sold		53,985
Dividends and interest		140,936
Other assets		353
Total assets		761,650,396
Liabilities:
Payables:
Investment securities purchased		6,065,467
Capital shares redeemed		1,137,750
Management fees		459,462
Distribution fees		267,264
Payable upon return of securities loaned		4,321,503
Accrued expenses and other liabilities		227,549
Total liabilities		12,478,995
Net assets, at value	$	749,171,401
Net assets consist of:
Paid-in capital	$	389,571,414
Undistributed net investment income (loss)		(1,988,255	)
Net unrealized appreciation (depreciation)		264,326,146
Accumulated net realized gain (loss)		97,262,096
Net assets, at value	$	749,171,401

The accompanying notes are an integral part of these financial statements.    |   Semiannual Report FSC-13

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL STATEMENTS

Statement of Assets and Liabilities (continued)

June 30, 2014 (unaudited)

	Franklin Small-Mid Cap Growth VIP Fund
Class 1:
Net assets, at value	$	100,424,646
Shares outstanding		4,111,516
Net asset value and maximum offering price per share	$	24.43
Class 2:
Net assets, at value	$	630,356,534
Shares outstanding		27,292,576
Net asset value and maximum offering price per share	$	23.10
Class 4:
Net assets, at value	$	18,390,221
Shares outstanding		776,889
Net asset value and maximum offering price per share	$	23.67

FSC-14 Semiannual Report   |    The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL STATEMENTS

Statement of Operations

for the six months ended June 30, 2014 (unaudited)

	Franklin Small-Mid Cap Growth VIP Fund
Investment income:
Dividends	$	1,799,989
Income from securities loaned		18,389
Total investment income		1,818,378
Expenses:
Management fees (Note 3a)		2,851,950
Distribution fees: (Note 3c)
Class 2		786,304
Class 4		32,520
Custodian fees (Note 4)		3,475
Reports to shareholders		106,043
Professional fees		22,121
Trustees’ fees and expenses		1,531
Other		9,157
Total expenses		3,813,101
Expenses waived/paid by affiliates (Note 3e)		(3,806	)
Net expenses		3,809,295
Net investment income (loss)		(1,990,917	)
Realized and unrealized gains (losses):
Net realized gain (loss) from:
Investments		97,768,125
Foreign currency transactions		(4,711	)
Net realized gain (loss)		97,763,414
Net change in unrealized appreciation (depreciation) on investments		(57,175,326	)
Net realized and unrealized gain (loss)		40,588,088
Net increase (decrease) in net assets resulting from operations	$	38,597,171

The accompanying notes are an integral part of these financial statements.    |   Semiannual Report FSC-15

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL STATEMENTS

Statements of Changes in Net Assets

	Franklin Small-Mid Cap Growth VIP Fund
	Six Months Ended June 30, 2014 (unaudited)			Year Ended December 31, 2013
Increase (decrease) in net assets:
Operations:
Net investment income (loss)	$	(1,990,917	)	$	(4,372,919	)
Net realized gain (loss) from investments and foreign currency transactions		97,763,414			148,360,735
Net change in unrealized appreciation (depreciation) on investments		(57,175,326	)		103,931,403
Net increase (decrease) in net assets resulting from operations		38,597,171			247,919,219
Distributions to shareholders from:
Net realized gains:
Class 1		(18,164,400	)		(5,305,025	)
Class 2		(120,447,127	)		(39,304,696	)
Class 4		(3,536,394	)		(836,392	)
Total distributions to shareholders		(142,147,921	)		(45,446,113	)
Capital share transactions: (Note 2)
Class 1		15,347,680			(739,844	)
Class 2		57,572,256			(185,107,692	)
Class 4		1,843,731			3,163,185
Total capital share transactions		74,763,667			(182,684,351	)
Net increase (decrease) in net assets		(28,787,083	)		19,788,755
Net assets:
Beginning of period		777,958,484			758,169,729
End of period	$	749,171,401		$	777,958,484
Undistributed net investment income (loss) included in net assets:
End of period	$	(1,988,255	)	$	2,662

FSC-16 Semiannual Report   |    The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Notes to Financial Statements (unaudited)

Franklin Small-Mid Cap Growth VIP Fund

1. Organization and Significant Accounting Policies

Franklin Templeton Variable Insurance Products Trust (Trust) is registered under the Investment Company Act of 1940, as amended, (1940 Act) as an open-end management investment company, consisting of twenty separate funds and applies the specialized accounting and reporting guidance in U.S. Generally Accepted Accounting Principles (U.S. GAAP). The Franklin Small-Mid Cap Growth VIP Fund (Fund) is included in this report. The financial statements of the remaining funds in the Trust are presented separately. Shares of the Fund are generally sold only to insurance company separate accounts to fund the benefits of variable life insurance policies or variable annuity contracts. At June 30, 2014, 43.70% of the Fund’s shares were held through one insurance company. Investment activities of these insurance company separate accounts could have a material impact on the Fund. The Fund offers three classes of shares: Class 1, Class 2, and Class 4. Each class of shares differs by its distribution fees, voting rights on matters affecting a single class and its exchange privilege.

Effective May 1, 2014, the Franklin Small-Mid Cap Growth Securities Fund was renamed the Franklin Small-Mid Cap Growth VIP Fund.

The following summarizes the Fund’s significant accounting policies.

a. Financial Instrument Valuation

The Fund’s investments in financial instruments are carried at fair value daily. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. The Fund calculates the net asset value (NAV) per share at the close of the New York Stock Exchange (NYSE), generally at 4 p.m. Eastern time (NYSE close) on each day the NYSE is open for trading. Under compliance policies and procedures approved by the Trust’s Board of Trustees (the Board), the Fund’s administrator has responsibility for oversight of valuation, including leading the cross-functional Valuation and Liquidity Oversight Committee (VLOC). The VLOC provides administration and oversight of the Fund’s valuation policies and procedures, which are approved annually by the Board. Among other things, these procedures allow the Fund to utilize independent pricing services, quotations from securities and financial instrument dealers, and other market sources to determine fair value.

Equity securities listed on an exchange or on the NASDAQ National Market System are valued at the last quoted sale price or the official closing price of the day, respectively. Foreign equity securities are valued as of the close of trading on the foreign stock exchange on which the security is primarily traded or as of the NYSE close, whichever is earlier. The value is then converted into its U.S. dollar equivalent at the foreign exchange rate in effect at the NYSE close on the day that the value of the security is determined. Over-the-counter (OTC) securities are valued within the range of the most recent quoted bid and ask prices. Securities that trade in multiple markets or on multiple exchanges are valued according to the broadest and most representative market. Certain equity securities are valued based upon fundamental characteristics or relationships to similar securities. Investments in open-end mutual funds and non-registered money market funds are valued at the closing net asset value.

The Fund has procedures to determine the fair value of financial instruments for which market prices are not reliable or readily available. Under these procedures, the VLOC convenes on a regular basis to review such financial instruments and considers a number of factors, including significant unobservable valuation inputs, when arriving at fair value. The VLOC primarily employs a market-based approach which may use related or comparable assets or liabilities, recent transactions, market multiples, book values, and other relevant information for the investment to determine the fair value of the investment. An income-based valuation approach may also be used in which the anticipated future cash flows of the investment are discounted to calculate fair value. Discounts may also be applied due to the nature or duration of any restrictions on the disposition of the investments. Due to the inherent uncertainty of valuations of such investments, the fair values may differ significantly from the values that would have been used had an active market existed. The VLOC employs various methods for calibrating these valuation approaches including a regular review of key inputs and assumptions, transactional back-testing or disposition analysis, and reviews of any related market activity.

Trading in securities on foreign securities stock exchanges and OTC markets may be completed before the daily NYSE close. In addition, trading in certain foreign markets may not take place on every NYSE business day. Occasionally, events occur between the time at which trading in a foreign security is completed and the close of the NYSE that might call into question the reliability of the value of a portfolio security held by the

Semiannual Report FSC-17

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Small-Mid Cap Growth VIP Fund (continued)

1. Organization and Significant Accounting Policies (continued)

a. Financial Instrument Valuation (continued)

Fund. As a result, differences may arise between the value of the Fund’s portfolio securities as determined at the foreign market close and the latest indications of value at the close of the NYSE. In order to minimize the potential for these differences, the VLOC monitors price movements following the close of trading in foreign stock markets through a series of country specific market proxies (such as baskets of American Depositary Receipts, futures contracts and exchange traded funds). These price movements are measured against established trigger thresholds for each specific market proxy to assist in determining if an event has occurred that may call into question the reliability of the values of the foreign securities held by the Fund. If such an event occurs, the securities may be valued using fair value procedures, which may include the use of independent pricing services.

Also, when the last day of the reporting period is a non-business day, certain foreign markets may be open on those days that the NYSE is closed, which could result in differences between the value of the Fund’s portfolio securities on the last business day and the last calendar day of the reporting period. Any significant security valuation changes due to an open foreign market are adjusted and reflected by the Fund for financial reporting purposes.

b. Foreign Currency Translation

Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars based on the exchange rate of such currencies against U.S. dollars on the date of valuation. The Fund may enter into foreign currency exchange contracts to facilitate transactions denominated in a foreign currency. Purchases and sales of securities, income and expense items denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date. Portfolio securities and assets and liabilities denominated in foreign currencies contain risks that those currencies will decline in value relative to the U.S. dollar. Occasionally, events may impact the availability or reliability of foreign exchange rates used to convert the U.S. dollar equivalent value. If such an event occurs, the foreign exchange rate will be valued at fair value using procedures established and approved by the Board.

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

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

c. Securities Lending

The Fund participates in an agency based securities lending program. The Fund receives cash collateral against the loaned securities in an amount equal to at least 102% of the fair value of the loaned securities. Collateral is maintained over the life of the loan in an amount not less than 100% of the fair value of loaned securities, as determined at the close of fund business each day; any additional collateral required due to changes in security values is delivered to the Fund on the next business day. The collateral is invested in a non-registered money fund as indicated on the Statement of Investments. The Fund receives income from the investment of cash collateral, in addition to lending fees and rebates paid by the borrower. The Fund bears the market risk with respect to the collateral investment, securities loaned, and the risk that the agent may default on its obligations to the Fund. The securities lending agent has agreed to indemnify the Fund in the event of default by a third party borrower.

d. Income and Deferred Taxes

It is the Fund’s policy to qualify as a regulated investment company under the Internal Revenue Code. The Fund intends to distribute to shareholders substantially all of its taxable income and net realized gains to relieve it from federal income and if applicable, excise taxes. As a result, no provision for U.S. federal income taxes is required.

The Fund may be subject to foreign taxation related to income received, capital gains on the sale of securities and certain for-

FSC-18 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Small-Mid Cap Growth VIP Fund (continued)

eign currency transactions in the foreign jurisdictions in which it invests. Foreign taxes, if any, are recorded based on the tax regulations and rates that exist in the foreign markets in which the Fund invests. When a capital gain tax is determined to apply the Fund records an estimated deferred tax liability in an amount that would be payable if the securities were disposed of on the valuation date.

The Fund recognizes the tax benefits of uncertain tax positions only when the position is “more likely than not” to be sustained upon examination by the tax authorities based on the technical merits of the tax position. As of June 30, 2014, and for all open tax years, the Fund has determined that no liability for unrecognized tax benefits is required in the Fund’s financial statements related to uncertain tax positions taken on a tax return (or expected to be taken on future tax returns). Open tax years are those that remain subject to examination and are based on each tax jurisdiction statute of limitation.

e. Security Transactions, Investment Income, Expenses and Distributions

Security transactions are accounted for on trade date. Realized gains and losses on security transactions are determined on a specific identification basis. Estimated expenses are accrued daily. Dividend income is recorded on the ex-dividend date except that certain dividends from foreign securities are recognized as soon as the Fund is notified of the ex-dividend date. Distributions to shareholders are recorded on the ex-dividend date and are determined according to income tax regulations (tax basis). Distributable earnings determined on a tax basis may differ from earnings recorded in accordance with accounting principles generally accepted in the United States of America. These differences may be permanent or temporary. Permanent differences are reclassified among capital accounts to reflect their tax character. These reclassifications have no impact on net

assets or the results of operations. Temporary differences are not reclassified, as they may reverse in subsequent periods.

Common expenses incurred by the Trust are allocated among the funds based on the ratio of net assets of each fund to the combined net assets of the Trust. Fund specific expenses are charged directly to the fund that incurred the expense.

Realized and unrealized gains and losses and net investment income, not including class specific expenses, are allocated daily to each class of shares based upon the relative proportion of net assets of each class. Differences in per share distributions, by class, are generally due to differences in class specific expenses.

f. Accounting Estimates

The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the amounts of income and expenses during the reporting period. Actual results could differ from those estimates.

g. Guarantees and Indemnifications

Under the Trust’s organizational documents, its officers and trustees are indemnified by the Trust against certain liabilities arising out of the performance of their duties to the Trust. Additionally, in the normal course of business, the Trust, on behalf of the Fund, enters into contracts with service providers that contain general indemnification clauses. The Trust’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Trust that have not yet occurred. Currently, the Trust expects the risk of loss to be remote.

Semiannual Report FSC-19

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Small-Mid Cap Growth VIP Fund (continued)

2. Shares of Beneficial Interest

At June 30, 2014, there were an unlimited number of shares authorized (without par value). Transactions in the Fund’s shares were as follows:

	Six Months Ended June 30, 2014						Year Ended December 31, 2013
	Shares			Amount			Shares			Amount
Class 1 Shares:
Shares sold		138,957		$	3,929,222			208,707		$	5,257,737
Shares issued in reinvestment of distributions		759,699			18,164,400			224,030			5,305,025
Shares redeemed		(240,456	)		(6,745,942	)		(452,875	)		(11,302,606	)
Net increase (decrease)		658,200		$	15,347,680			(20,138	)	$	(739,844	)
Class 2 Shares:
Shares sold		387,852		$	10,529,480			1,537,143		$	36,852,173
Shares issued in reinvestment of distributions		5,327,162			120,447,127			1,732,248			39,304,696
Shares redeemed		(2,752,692	)		(73,404,351	)		(10,791,872	)		(261,264,561	)
Net increase (decrease)		2,962,322		$	57,572,256			(7,522,481	)	$	(185,107,692	)
Class 4 Shares:
Shares sold		31,151		$	882,799			272,840		$	6,706,822
Shares issued on reinvestment of distributions		152,628			3,536,394			36,098			836,392
Shares redeemed		(97,102	)		(2,575,462	)		(177,757	)		(4,380,029	)
Net increase (decrease)		86,677		$	1,843,731			131,181		$	3,163,185

3. Transactions With Affiliates

Franklin Resources, Inc. is the holding company for various subsidiaries that together are referred to as Franklin Templeton Investments. Certain officers and trustees of the Fund are also officers and/or directors of the following subsidiaries:

Subsidiary	Affiliation
Franklin Advisers, Inc. (Advisers)	Investment manager
Franklin Templeton Services, LLC (FT Services)	Administrative manager
Franklin Templeton Distributors, Inc. (Distributors)	Principal underwriter
Franklin Templeton Investor Services, LLC (Investor Services)	Transfer agent

FSC-20 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Small-Mid Cap Growth VIP Fund (continued)

a. Management Fees

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

Annualized Fee Rate	Net Assets
0.800%	Up to and including $500 million
0.700%	Over $500 million, up to and including $1 billion
0.650%	Over $1 billion, up to and including $1.5 billion
0.600%	Over $1.5 billion, up to and including $6.5 billion
0.575%	Over $6.5 billion, up to and including $11.5 billion
0.550%	Over $11.5 billion, up to and including $16.5 billion
0.540%	Over $16.5 billion, up to and including $19 billion
0.530%	Over $19 billion, up to and including $21.5 billion
0.520%	In excess of $21.5 billion

b. Administrative Fees

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

c. Distribution Fees

The Board has adopted distribution plans for Class 2 and Class 4 shares pursuant to Rule 12b-1 under the 1940 Act. Under the Fund’s compensation distribution plans, the Fund pays Distributors for costs incurred in connection with the servicing, sale and distribution of the Fund’s shares up to 0.35% per year of its average daily net assets of each class. Some distribution fees are not charged on shares held by affiliates. The Board has agreed to limit the current rate to 0.25% per year for Class 2. The plan year, for purposes of monitoring compliance with the maximum annual plan rates, is February 1 through January 31.

d. Transfer Agent Fees

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

e. Investment in Institutional Fiduciary Trust Money Market Portfolio

The Fund invests in the Institutional Fiduciary Trust Money Market Portfolio (Sweep Money Fund), an affiliated open-end management investment company. Management fees paid by the Fund are waived on assets invested in the Sweep Money Fund, in an amount not to exceed the management and administrative fees paid directly or indirectly by the Sweep Money Fund, as noted on the Statement of Operations. Prior to January 1, 2014, the waiver was accounted for as a reduction to management fees.

4. Expense Offset Arrangement

The Fund has entered into an arrangement with its custodian whereby credits realized as a result of uninvested cash balances are used to reduce a portion of the Fund’s custodian expenses. During the period ended June 30, 2014, there were no credits earned.

Semiannual Report FSC-21

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Small-Mid Cap Growth VIP Fund (continued)

5. Income Taxes

At June 30, 2014, the cost of investments and net unrealized appreciation (depreciation) for income tax purposes were as follows:

Cost of investments	$495,150,218
Unrealized appreciation	$271,126,675
Unrealized depreciation	(7,343,494)
Net unrealized appreciation (depreciation)	$263,783,181

Differences between income and/or capital gains as determined on a book basis and a tax basis are primarily due to differing treatments of wash sales.

6. Investment Transactions

Purchases and sales of investments (excluding short term securities) for the period ended June 30, 2014, aggregated $187,105,896 and $261,171,372, respectively.

7. Credit Facility

The Fund, together with other U.S. registered and foreign investment funds (collectively, Borrowers), managed by Franklin Templeton Investments, are borrowers in a joint syndicated senior unsecured credit facility totaling $1.5 billion (Global Credit Facility) which matures on February 13, 2015. This Global Credit Facility provides a source of funds to the Borrowers for temporary and emergency purposes, including the ability to meet future unanticipated or unusually large redemption requests.

Under the terms of the Global Credit Facility, the Fund shall, in addition to interest charged on any borrowings made by the Fund and other costs incurred by the Fund, pay its share of fees and expenses incurred in connection with the implementation and maintenance of the Global Credit Facility, based upon its relative share of the aggregate net assets of all of the Borrowers, including an annual commitment fee of 0.07% based upon the unused portion of the Global Credit Facility. These fees are reflected in other expenses on the Statement of Operations. During the period ended June 30, 2014, the Fund did not use the Global Credit Facility.

8. Fair Value Measurements

The Fund follows a fair value hierarchy that distinguishes between market data obtained from independent sources (observable inputs) and the Fund’s own market assumptions (unobservable inputs). These inputs are used in determining the value of the Fund’s financial instruments and are summarized in the following fair value hierarchy:

• Level 1 – quoted prices in active markets for identical financial instruments

• Level 2 – other significant observable inputs (including quoted prices for similar financial instruments, interest rates, prepayment speed, credit risk, etc.)

• Level 3 – significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of financial instruments)

The input levels are not necessarily an indication of the risk or liquidity associated with financial instruments at that level.

For movements between the levels within the fair value hierarchy, the Fund has adopted a policy of recognizing the transfers as of the date of the underlying event which caused the movement.

FSC-22 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Small-Mid Cap Growth VIP Fund (continued)

A summary of inputs used as of June 30, 2014, in valuing the Fund’s assets carried at fair value, is as follows:

	Level 1		Level 2		Level 3		Total
Assets:
Investments in Securities:
Equity Investmentsa	$	735,461,180	$	—	$	—	$	735,461,180
Short Term Investments		19,150,716		4,321,503		—		23,472,219
Total Investments in Securities	$	754,611,896	$	4,321,503	$	—	$	758,933,399

^aFor detailed categories, see the accompanying Statement of Investments.

9. New Accounting Pronouncements

In June 2014, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) No. 2014-11, Transfers and Servicing (Topic 860), Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures. The ASU changes the accounting for certain repurchase agreements and expands disclosure requirements related to repurchase agreements, securities lending, repurchase-to-maturity and similar transactions. The ASU is effective for interim and annual reporting periods beginning after December 15, 2014. Management is currently evaluating the impact, if any, of applying this provision.

10. Subsequent Events

The Fund has evaluated subsequent events through the issuance of the financial statements and determined that no events have occurred that require disclosure.

Semiannual Report FSC-23

Franklin Strategic Income VIP Fund

(Formerly, Franklin Strategic Income Securities Fund)

This semiannual report for Franklin Strategic Income VIP Fund covers the period ended June 30, 2014.

Class 2 Performance Summary as of June 30, 2014

Franklin Strategic Income VIP Fund – Class 2 delivered a +4.15% total return* for the six-month period ended June 30, 2014.

*The Fund has a fee waiver associated with its investments in a Franklin Templeton money fund, contractually guaranteed through at least its current fiscal year-end. Fund investment results reflect the fee waiver, to the extent applicable; without this reduction, the results would have been lower.

Performance reflects the Fund’s Class 2 operating expenses, but does not include any contract fees, expenses or sales charges. If they had been included, performance would be lower. These charges and deductions, particularly for variable life policies, can have a significant effect on contract values and insurance benefits. See the contract prospectus for a complete description of these expenses, including sales charges.

Performance data represent past performance, which does not guarantee future results. Investment return and principal value will fluctuate, and you may have a gain or loss when you sell your shares. Current performance may differ from figures shown.

Semiannual Report FSI-1

FRANKLIN STRATEGIC INCOME VIP FUND

Fund Goals and Main Investments: Franklin Strategic Income VIP Fund seeks a high level of current income, with capital appreciation over the long term as a secondary goal. Under normal market conditions, the Fund invests primarily to predominantly in U.S. and foreign debt securities, including those in emerging markets.

Fund Risks: All investments involve risks, including possible loss of principal. Bond prices generally move in the opposite direction of interest rates. Thus, as prices of bonds in the Fund adjust to a rise in interest rates, the Fund’s share price may decline. Changes in the financial strength of a bond issuer or in a bond’s credit rating may affect its value. High yields reflect the higher credit risks associated with certain lower rated securities held in the portfolio. Floating rate loans and high yield corporate bonds are rated below investment grade and are subject to greater risk of default, which could result in loss of principal — a risk that may be heightened in a slowing economy. The risks of foreign securities include currency fluctuations and political uncertainty. Investments in developing markets involve heightened risks related to the same factors, in addition to those associated with their relatively small size and lesser liquidity. Investing in derivative securities and the use of foreign currency techniques involve special risks as such may not achieve the anticipated benefits and/or may result in losses to the Fund. The Fund is actively managed but there is no guarantee that the manager’s investment decisions will produce the desired results. The Fund’s prospectus also includes a description of the main investment risks.

Performance Overview

You can find the Fund’s six-month total return in the Performance Summary. For comparison, the Fund’s benchmark, the Barclays U.S. Aggregate Index, delivered a +3.93% total return for the period under review.¹ The Fund’s peers, as measured by the Lipper Multi-Sector Income Funds Classification Average, produced a +4.66% return.²

Economic and Market Overview

The U.S. economy continued to show signs of recovery during the six-month period ended June 30, 2014. Economic activity increased toward period-end after severe weather conditions and

a slowdown in health care spending led to a contraction in the first quarter of 2014. Manufacturing activity expanded during the period under review, despite a slowdown in January. Except for a sharp rebound in March, retail sales rose at a modest pace that missed consensus expectations. The housing market had some weather-related weakness early in 2014, but home sales picked up in the spring and home prices were higher than a year ago. The unemployment rate declined to 6.1% in June 2014 from 6.7% in December 2013.³ Inflation, as measured by the Consumer Price Index, picked up toward the end of the period.

The Federal Reserve Board (Fed) began reducing bond purchases by $10 billion a month in January 2014, based on earlier largely positive economic and employment data. Although economic data in early 2014 were soft, Fed Chair Janet Yellen kept the pace of asset-purchase tapering intact in the March meeting while adopting a more qualitative approach to rate-hike guidance. In June, the Fed lowered projections for near- and long-term economic growth even as it maintained the pace of tapering and remained committed to keeping interest rates low for a considerable amount of time after the asset-purchase program ends.

The 10-year Treasury yield declined from 3.04% at the beginning of the period to 2.53% on June 30, 2014, given subdued economic data, the crises in Ukraine and Iraq, growth concerns about emerging markets and lower Treasury issuance.

Outside the U.S., the recovery was mixed during the period under review. The recovery in emerging markets moderated from fairly strong levels. Although some developed economies, such as those of Australia and some Scandinavian countries, also enjoyed relatively strong recoveries, the eurozone and Japan continued to experience growth that was slow by the standards of previous recoveries. As fears eased surrounding the issues of European sovereign debt, the possibility of another U.S. recession and a potential Chinese “hard landing,” financial market performance was positive. Improving sentiment, relatively strong fundamentals and continued provision of global liquidity supported risk assets as equity markets performed well. Policymakers in the largest developed economies adjusted their unprecedented efforts to supply liquidity. The European Central Bank took the unusual step of charging banks to hold

1. Source: © 2014 Morningstar.

2. Source: Lipper, a Thomson Reuters Company.

One cannot invest directly in an index, and an index is not representative of the Fund’s portfolio. Please see Index Descriptions following the Fund Summaries.

3. Source: Bureau of Labor Statistics.

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FRANKLIN STRATEGIC INCOME VIP FUND

their deposits. Actions elsewhere in the world were mixed, with

some policymakers less willing to reverse previous tightening efforts in response to the external environment. During the period, investors became concerned with geopolitical issues surrounding rising tensions between Russia and Ukraine.

Investment Strategy

We allocate our investments among the various types of debt available based on our assessment of changing economic, global market, industry and issuer conditions. We use a top-down analysis of macroeconomic trends, combined with a bottom-up fundamental analysis of market sectors, industries and issuers, seeking to take advantage of varying sector reactions to economic events. For example, we may evaluate business cycles, yield curves, country risk, and the relative interest rates among currencies, and values between and within markets. In selecting debt securities, we generally conduct our own analysis of the security’s intrinsic value rather than simply relying on the coupon rate or rating. We may also enter into various transactions involving certain currency-, interest rate- or credit-related derivative instruments for hedging purposes, to enhance returns or to obtain exposure to various market sectors.

Manager’s Discussion

In somewhat of a reversal of the trend set during 2013, during the first half of 2014, longer term U.S. interest rates declined because of weaker first-quarter economic growth, supported by expectations for the Fed to remain on hold with its target short-term rate well into 2015. Even with the prospect for the Fed to discontinue purchases of government securities as part of its quantitative easing program by the end of 2014, the 10-year Treasury yield fell from 3.04% to 2.53% by period-end. Notwithstanding geopolitical flare-ups with Russia and Ukraine and in the Middle East, equity markets continued to post gains during the period, with the Standard & Poor’s^® 500 Index gaining 7.14%, supported by corporate earnings and an improving U.S. economic growth outlook for the balance of the year.¹

The Fund posted a positive total return for the review period, performing in line with the Barclays U.S. Aggregate Index, while slightly trailing the Lipper Multi-Sector peer average. Given the decline in longer term rates during the period, longer duration U.S. fixed income securities performed well. Additionally, some compression in the spread sectors, including for corporate credit, supported the corporate sectors of the fixed

*Weightings may be negative or may not total 100% due to rounding, use of any derivatives, unsettled trades or other factors. The breakdown may not match the Statement of Investments (SOI).

The dollar value, number of shares or principal amount, and names of all portfolio holdings are listed in the Fund’s SOI.

income market. Relative to the Fund’s benchmarks, exposure to high yield and longer duration municipal securities added to performance, while the Fund’s generally shorter duration positioning detracted from relative returns.

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FRANKLIN STRATEGIC INCOME VIP FUND

Within the corporate credit sector, fundamentals remained broadly supportive, with below-average default and distress rates, access to low-cost debt refinancing, rising equity markets and generally growing corporate earnings. However, as is typical several years into an economic recovery, many corporations have begun to focus their activities on more shareholder friendly actions, such as stock buybacks, dividends, and mergers and acquisitions. Also, the quality, structure and covenant protection of certain new corporate bond and leveraged loan new issues have also declined. Nonetheless, although spread valuations for the corporate credit markets have narrowed since the financial crisis, given a constructive fundamental backdrop, we still see value in these sectors. In addition, high yield corporates and leveraged loans have tended to be less sensitive to rate changes than traditional fixed income sectors, which may allow those sectors to be more defensive investments if U.S. rates were to increase in the future. However, given the total return outperformance for high yield bonds since mid-2013, we began to pare high yield weightings in favor of leveraged loans. Relative to high yield and loans, the Fund held a lesser weighting to investment grade corporates, given greater sensitivity to interest rates and current yield spread valuations.

Looking outside the U.S., although the broad trade-weighted U.S. dollar ended the period relatively flat for the first half of 2014, performance varied broadly by country and currency. In terms of the Fund’s positioning, exposures to the Brazilian real, South Korean won, Malaysian ringgit and Indian rupee added to returns. On the other hand, exposures to the Chilean peso and Uruguayan peso detracted as those currencies declined during the period. In addition, the Fund’s long exposure in the Hungarian forint and Swedish krona negatively impacted returns, as those currencies declined more than the euro (which the Fund had sold against them in a proxy hedge using currency forward contracts). The Fund’s short position in the Japanese yen, achieved through currency forward contracts, also constrained performance as that currency appreciated partly due to lower U.S. interest rate expectations. The Fund maintained a fairly modest exposure to hard currency emerging market bonds considering current valuations.

The portfolio utilized derivatives, including currency forwards and credit derivatives. Currency forwards are typically used to take long and short positions in currencies and as a tool to hedge currency risk. Credit derivatives can be used to hedge against credit risk or to otherwise enhance Fund returns by taking long or short positions in individual credits or baskets of

credits in various sectors including in the corporate, municipal, sovereign and securitized markets.

What is a currency forward contract?

A currency forward contract, also called a “currency forward,” is an agreement between the Fund and a counterparty to buy or sell a foreign currency at a specific exchange rate on a future date.

What is a credit derivative?

A credit derivative is a contract agreement between the Fund and a counterparty that is principally used by the Fund to gain or increase exposure to certain high yield securities or segments of the high yield bond market and/or to hedge against credit risk.

With the decline in U.S. intermediate and longer term rates, the more rate-sensitive fixed income sectors (Treasuries, agencies and mortgage-backed securities) generally posted positive returns during the period. The Fund maintained a lower exposure to these sectors relative to our corporate and global positionings, preferring what we deemed as higher income opportunities in those spread and currency sectors.

The combination of lower U.S. rates and some inflows into dedicated municipal bond funds helped support performance in this sector. However, although Puerto Rico was able to issue bonds earlier in the period, by period-end the prospect that Puerto Rico might try to actively restructure certain of its quasi-government debt obligations pushed bond prices lower, including those held by the Fund from that commonwealth.

Thank you for your participation in Franklin Strategic Income VIP Fund. We look forward to serving your future investment needs.

The foregoing information reflects our analysis, opinions and portfolio holdings as of June 30, 2014, the end of the reporting period. The way we implement our main investment strategies and the resulting portfolio holdings may change depending on factors such as market and economic conditions. These opinions may not be relied upon as investment advice or an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but the investment manager makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.

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FRANKLIN STRATEGIC INCOME VIP FUND

Class 2 Fund Expenses

As an investor in a variable insurance contract (Contract) that indirectly provides for investment in an underlying mutual fund, you can incur transaction and/or ongoing expenses at both the Fund level and the Contract level.

• Transaction expenses can include sales charges (loads) on purchases, surrender fees, transfer fees and premium taxes.

• Ongoing expenses can include management fees, distribution and service (12b-1) fees, contract fees, annual maintenance fees, mortality and expense risk fees and other fees and expenses. All mutual funds and Contracts have some types of ongoing expenses.

The expenses shown in the table are meant to highlight ongoing expenses at the Fund level only and do not include ongoing expenses at the Contract level, or transaction expenses at either the Fund or Contract levels. While the Fund does not have transaction expenses, if the transaction and ongoing expenses at the Contract level were included, the expenses shown below would be higher. You should consult your Contract prospectus or disclosure document for more information.

The table shows Fund-level ongoing expenses and can help you understand these expenses and compare them with those of other mutual funds offered through the Contract. The table assumes a $1,000 investment held for the six months indicated. Please refer to the Fund prospectus for additional information on operating expenses.

Actual Fund Expenses

The first line (Actual) of the table provides actual account values and expenses. The “Ending Account Value” is derived from the Fund’s actual return, which includes the effect of ongoing Fund expenses, but does not include the effect of ongoing Contract expenses.

You can estimate the Fund-level expenses you incurred during the period by following these steps. Of course, your account value and expenses will differ from those in this illustration:

1. Divide your account value by $1,000.

If an account had an $8,600 value, then $8,600 ÷ $1,000 = 8.6.

2. Multiply the result by the number under the heading “Fund-Level Expenses Incurred During Period.”

If Fund-Level Expenses Incurred During Period were $7.50, then 8.6 × $7.50 = $64.50.

In this illustration, the estimated expenses incurred this period at the Fund level are $64.50.

Hypothetical Example for Comparison with Other Mutual Funds

Information in the second line (Hypothetical) of the table can help you compare ongoing expenses of the Fund with those of other mutual funds offered through the Contract. This information may not be used to estimate the actual ending account balance or expenses you incurred during the period. The hypothetical “Ending Account Value” is based on the Fund’s actual expense ratio and an assumed 5% annual rate of return before expenses, which does not represent the Fund’s actual return. The figure under the heading “Fund-Level Expenses Incurred During Period” shows the hypothetical expenses your account would have incurred under this scenario. You can compare this figure with the 5% hypothetical examples that appear in shareholder reports of other funds offered through a Contract.

Class 2	Beginning Account Value 1/1/14		Ending Account Value 6/30/14		Fund-Level Expenses Incurred During Period* 1/1/14–6/30/14
Actual		$1,000		$1,041.50		$4.60
Hypothetical (5% return before expenses)		$1,000		$1,020.48		$4.36

*Expenses are calculated using the most recent six-month annualized expense ratio, net of expense waivers, for the Fund’s Class 2 shares (0.87%), which does not include any ongoing expenses of the Contract for which the Fund is an investment option, multiplied by the average account value over the period, multiplied by 181/365 to reflect the one-half year period.

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FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Financial Highlights

Franklin Strategic Income VIP Fund

	Six Months Ended June 30, 2014 (unaudited)			Year Ended December 31,
				2013			2012			2011			2010			2009
Class 1
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$12.64			$13.17			$12.55			$12.99			$12.28			$10.58
Income from investment operationsa:
Net investment incomeb		0.28			0.59			0.65			0.69			0.72			0.70
Net realized and unrealized gains (losses)		0.26			(0.15	)		0.92			(0.32	)		0.61			1.95
Total from investment operations		0.54			0.44			1.57			0.37			1.33			2.65
Less distributions from:
Net investment income and net foreign currency gains		(0.78	)		(0.80	)		(0.93	)		(0.81	)		(0.62	)		(0.95	)
Net realized gains		(0.25	)		(0.17	)		(0.02	)		—			—			—
Total distributions		(1.03	)		(0.97	)		(0.95	)		(0.81	)		(0.62	)		(0.95	)
Net asset value, end of period		$12.15			$12.64			$13.17			$12.55			$12.99			$12.28
Total returnc		4.27%			3.52%			13.12%			2.78%			11.21%			26.11%
Ratios to average net assetsd
Expenses		0.62%	e,f		0.60%	e		0.58%			0.60%	e		0.59%	e		0.58%	e
Net investment income		4.37%			4.58%			5.04%			5.36%			5.71%			6.13%
Supplemental data
Net assets, end of period (000’s)		$656,691			$705,493			$1,019,537			$1,043,690			$1,195,149			$1,173,313
Portfolio turnover rate		24.60%			48.06%			49.98%			55.65%			56.46%			56.19%
Portfolio turnover rate excluding mortgage dollar rollsg		24.60%			47.01%			48.75%			55.65%			56.46%			56.19%

^aThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.

^bBased on average daily shares outstanding.

^cTotal return does not include fees, charges or expenses imposed by the variable annuity and life insurance contracts for which the Franklin Templeton Variable Insurance Products Trust serves as an underlying investment vehicle. Total return is not annualized for periods less than one year.

^dRatios are annualized for periods less than one year.

^eBenefit of expense reduction rounds to less than 0.01%.

^fBenefit of waiver and payments by affiliates rounds to less than 0.01%.

^gSee Note 1(h) regarding mortgage dollar rolls.

FSI-6 Semiannual Report   |    The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL HIGHLIGHTS

Franklin Strategic Income VIP Fund (continued)

	Six Months Ended June 30, 2014 (unaudited)			Year Ended December 31,
				2013			2012			2011			2010			2009
Class 2
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$12.30			$12.84			$12.27			$12.72			$12.05			$10.41
Income from investment operationsa:
Net investment incomeb		0.25			0.54			0.60			0.64			0.68			0.66
Net realized and unrealized gains (losses)		0.26			(0.13	)		0.89			(0.30	)		0.59			1.91
Total from investment operations		0.51			0.41			1.49			0.34			1.27			2.57
Less distributions from:
Net investment income and net foreign currency gains		(0.75	)		(0.78	)		(0.90	)		(0.79	)		(0.60	)		(0.93	)
Net realized gains		(0.25	)		(0.17	)		(0.02	)		—			—			—
Total distributions		(1.00	)		(0.95	)		(0.92	)		(0.79	)		(0.60	)		(0.93	)
Net asset value, end of period		$11.81			$12.30			$12.84			$12.27			$12.72			$12.05
Total returnc		4.15%			3.32%			12.75%			2.57%			10.91%			25.75%
Ratios to average net assetsd
Expenses		0.87%	e,f		0.85%	e		0.83%			0.85%	e		0.84%	e		0.83%	e
Net investment income		4.12%			4.33%			4.79%			5.11%			5.46%			5.88%
Supplemental data
Net assets, end of period (000’s)		$193,514			$175,307			$158,451			$123,749			$101,347			$68,240
Portfolio turnover rate		24.60%			48.06%			49.98%			55.65%			56.46%			56.19%
Portfolio turnover rate excluding mortgage dollar rollsg		24.60%			47.01%			48.75%			55.65%			56.46%			56.19%

^aThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.

^bBased on average daily shares outstanding.

^cTotal return does not include fees, charges or expenses imposed by the variable annuity and life insurance contracts for which the Franklin Templeton Variable Insurance Products Trust serves as an underlying investment vehicle. Total return is not annualized for periods less than one year.

^dRatios are annualized for periods less than one year.

^eBenefit of expense reduction rounds to less than 0.01%.

^fBenefit of waiver and payments by affiliates rounds to less than 0.01%.

^gSee Note 1(h) regarding mortgage dollar rolls.

The accompanying notes are an integral part of these financial statements.    |   Semiannual Report FSI-7

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL HIGHLIGHTS

Franklin Strategic Income VIP Fund (continued)

	Six Months Ended June 30, 2014 (unaudited)			Year Ended December 31,
				2013			2012			2011			2010				2009
Class 4
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$12.51			$13.04			$12.44			$12.88			$12.20				$10.54
Income from investment operationsa:
Net investment incomeb		0.25			0.54			0.60			0.64			0.67				0.66
Net realized and unrealized gains (losses)		0.26			(0.14	)		0.91			(0.31	)		0.60				1.94
Total from investment operations		0.51			0.40			1.51			0.33			1.27				2.60
Less distributions from:
Net investment income and net foreign currency gains		(0.72	)		(0.76	)		(0.89	)		(0.77	)		(0.59	)			(0.94	)
Net realized gains		(0.25	)		(0.17	)		(0.02	)		—			—				—
Total distributions		(0.97	)		(0.93	)		(0.91	)		(0.77	)		(0.59	)	��		(0.94	)
Net asset value, end of period		$12.05			$12.51			$13.04			$12.44			$12.88				$12.20
Total returnc		4.09%			3.17%			12.67%			2.46%			10.88%				25.52%
Ratios to average net assetsd
Expenses		0.97%	e,f		0.95%	e		0.93%			0.95%	e		0.94%	e			0.93%	e
Net investment income		4.02%			4.23%			4.69%			5.01%			5.36%				5.78%
Supplemental data
Net assets, end of period (000’s)		$132,122			$134,970			$196,479			$188,786			$188,178				$162,074
Portfolio turnover rate		24.60%			48.06%			49.98%			55.65%			56.46%				56.19%
Portfolio turnover rate excluding mortgage dollar rollsg		24.60%			47.01%			48.75%			55.65%			56.46%				56.19%

^aThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.

^bBased on average daily shares outstanding.

^cTotal return does not include fees, charges or expenses imposed by the variable annuity and life insurance contracts for which the Franklin Templeton Variable Insurance Products Trust serves as an underlying investment vehicle. Total return is not annualized for periods less than one year.

^dRatios are annualized for periods less than one year.

^eBenefit of expense reduction rounds to less than 0.01%.

^fBenefit of waiver and payments by affiliates rounds to less than 0.01%.

^gSee Note 1(h) regarding mortgage dollar rolls.

FSI-8 Semiannual Report   |    The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Statement of Investments, June 30, 2014 (unaudited)

Franklin Strategic Income VIP Fund
		Country		Shares			Value
	Common Stocks 0.4%
	Consumer Services 0.3%
a,b,c	Turtle Bay Resort		United States		1,901,449		$	2,852,173
	Materials 0.1%
	NewPage Holdings Inc.		United States		5,000			415,000
	Transportation 0.0%†
a	CEVA Holdings LLC		United Kingdom		224			246,708
	Total Common Stocks (Cost $3,434,985)							3,513,881
	Convertible Preferred Stocks 0.1%
	Transportation 0.1%
a	CEVA Holdings LLC, cvt. pfd., A-1		United Kingdom		6			8,700
a	CEVA Holdings LLC, cvt. pfd., A-2		United Kingdom		486			534,061
	Total Convertible Preferred Stocks (Cost $731,856)							542,761
	Preferred Stocks (Cost $625,000) 0.1%
	Diversified Financials 0.1%
	GMAC Capital Trust I, 8.125%, pfd.		United States		25,000			682,500
				Principal Amount*
	Corporate Bonds 36.2%
	Automobiles & Components 0.7%
d	Avis Budget Finance PLC, senior note, 144A, 6.00%, 3/01/21		United States		1,400,000	EUR		2,045,445
d	General Motors Co., senior bond, 144A, 4.875%, 10/02/23		United States		2,400,000			2,538,000
	The Goodyear Tire & Rubber Co., senior note, 6.50%, 3/01/21		United States		2,000,000			2,180,000
								6,763,445
	Banks 2.8%
	Bank of America Corp.,
	ejunior sub. bond, M, 8.125% to 5/15/18, FRN thereafter, Perpetual		United States		2,500,000			2,825,995
	senior note, 5.65%, 5/01/18		United States		1,500,000			1,701,137
	CIT Group Inc., senior note,
	5.375%, 5/15/20		United States		1,000,000			1,077,187
	5.00%, 8/15/22		United States		2,500,000			2,596,875
	Citigroup Inc.,
	ejunior sub. bond, M, 6.30% to 5/15/24, FRN thereafter, Perpetual		United States		700,000			716,181
	senior note, 3.875%, 10/25/23		United States		3,000,000			3,077,043
	sub. bond, 5.50%, 9/13/25		United States		1,500,000			1,675,737
	sub. note, 4.05%, 7/30/22		United States		300,000			307,724
	JPMorgan Chase & Co.,
	ejunior sub. bond, 5.00% to 7/30/19, FRN thereafter, Perpetual		United States		200,000			199,840
	ejunior sub. bond, 6.00% to 8/01/23, FRN thereafter, Perpetual		United States		1,500,000			1,537,500
	senior note, 4.25%, 10/15/20		United States		2,000,000			2,172,280
	sub. note, 3.375%, 5/01/23		United States		1,000,000			982,841
	Regions Bank, sub. note, 7.50%, 5/15/18		United States		1,000,000			1,190,089
	Royal Bank of Scotland Group PLC, sub. note, 6.125%, 12/15/22		United Kingdom		1,000,000			1,095,625
	The Royal Bank of Scotland PLC, sub. note, 6.934%, 4/09/18		United Kingdom		1,500,000	EUR		2,384,127
e	Wells Fargo & Co., S, junior sub. bond, 5.90% to 6/15/14, FRN thereafter, Perpetual		United States		3,500,000			3,714,375
								27,254,556

Semiannual Report FSI-9

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Strategic Income VIP Fund (continued)

		Country		Principal Amount*			Value
	Corporate Bonds (continued)
	Capital Goods 0.8%
d	Abengoa Finance SAU, senior note, 144A,
	8.875%, 11/01/17		Spain		2,000,000		$	2,263,750
	7.75%, 2/01/20		Spain		200,000			223,125
d	KM Germany Holdings GmbH, secured note, 144A, 8.75%, 12/15/20		Germany		1,500,000	EUR		2,314,798
	Navistar International Corp., senior note, 8.25%, 11/01/21		United States		1,500,000			1,571,250
	Terex Corp., senior note, 6.00%, 5/15/21		United States		1,000,000			1,082,500
d	TransDigm Inc.,
	senior sub. bond, 144A, 6.50%, 7/15/24		United States		500,000			521,250
	senior sub. note, 144A, 6.00%, 7/15/22		United States		400,000			411,500
								8,388,173
	Consumer Durables & Apparel 0.8%
d	Financiere Gaillon 8 SAS, senior note, 144A, 7.00%, 9/30/19		France		1,200,000	EUR		1,673,125
	KB Home, senior note,
	4.75%, 5/15/19		United States		1,000,000			1,010,000
	7.00%, 12/15/21		United States		1,600,000			1,748,000
	M/I Homes Inc., senior note, 8.625%, 11/15/18		United States		800,000			856,000
	Toll Brothers Finance Corp., senior bond, 5.625%, 1/15/24		United States		1,100,000			1,177,000
	Visant Corp., senior note, 10.00%, 10/01/17		United States		1,400,000			1,312,500
								7,776,625
	Consumer Services 1.0%
	Caesars Entertainment Operating Co. Inc., senior secured note, 11.25%, 6/01/17		United States		3,000,000			2,760,000
d,f	Financiere Quick SAS, 144A, FRN, 7.825%, 10/15/19		France		1,600,000	EUR		2,209,394
d,g	Fontainebleau Las Vegas, senior secured note, first lien, 144A, 11.00%, 6/15/15		United States		2,500,000			15,625
	MGM Resorts International, senior note,
	6.625%, 7/15/15		United States		3,000,000			3,157,500
	6.75%, 10/01/20		United States		200,000			223,750
	6.625%, 12/15/21		United States		500,000			556,875
	Pinnacle Entertainment Inc., senior note, 6.375%, 8/01/21		United States		700,000			742,000
								9,665,144
	Diversified Financials 2.6%
	Ally Financial Inc., senior note, 7.50%, 9/15/20		United States		3,000,000			3,626,250
	Deutsche Bank AG, sub. bond, 4.296% to 5/24/23, FRN thereafter, 5/24/28		Germany		4,000,000			3,939,000
	E*TRADE Financial Corp., senior note, 6.375%, 11/15/19		United States		1,400,000			1,522,500
	General Electric Capital Corp.,
	senior note, A, 8.50%, 4/06/18		United States		29,000,000	MXN		2,530,385
	sub. note, 5.30%, 2/11/21		United States		500,000			569,131
	General Motors Financial Co. Inc., senior note, 3.25%, 5/15/18		United States		900,000			913,500
	GMAC Inc., sub. note, 8.00%, 12/31/18		United States		500,000			596,250
d	KKR Group Finance Co., senior note, 144A, 6.375%, 9/29/20		United States		2,500,000			2,951,462
	Morgan Stanley, senior note,
	6.00%, 4/28/15		United States		1,000,000			1,046,686
	5.50%, 7/24/20		United States		1,500,000			1,725,723
d	Neuberger Berman Group LLC/Finance Corp., senior note, 144A,
	5.625%, 3/15/20		United States		600,000			637,500
	5.875%, 3/15/22		United States		1,400,000			1,501,500

FSI-10 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Strategic Income VIP Fund (continued)

		Country		Principal Amount*		Value
	Corporate Bonds (continued)
	Diversified Financials (continued)
	SLM Corp., senior note,
	8.45%, 6/15/18		United States		1,800,000	$	2,131,875
	5.50%, 1/15/19		United States		1,500,000		1,597,500
							25,289,262
	Energy 8.1%
	Access Midstream Partner LP/ACMP Finance Corp., senior note,
	5.875%, 4/15/21		United States		1,500,000		1,612,500
	6.125%, 7/15/22		United States		600,000		666,000
	CGG SA, senior note,
	7.75%, 5/15/17		France		159,000		161,783
	6.50%, 6/01/21		France		2,000,000		1,995,000
	d 144A, 6.875%, 1/15/22		France		700,000		701,750
	CHC Helicopter SA,
	senior note, 9.375%, 6/01/21		Canada		400,000		429,000
	senior secured note, first lien, 9.25%, 10/15/20		Canada		2,250,000		2,463,750
	Chesapeake Energy Corp., senior note,
	6.625%, 8/15/20		United States		1,500,000		1,732,500
	6.125%, 2/15/21		United States		1,500,000		1,687,500
	5.75%, 3/15/23		United States		1,000,000		1,116,200
	Clayton Williams Energy Inc., senior note, 7.75%, 4/01/19		United States		1,500,000		1,597,500
d	CONSOL Energy Inc., senior note, 144A, 5.875%, 4/15/22		United States		1,900,000		1,995,000
	El Paso Corp., senior bond, 6.50%, 9/15/20		United States		1,500,000		1,668,750
	Energy Transfer Equity LP, senior note, 7.50%, 10/15/20		United States		3,500,000		4,060,000
	Energy Transfer Partners LP, senior note, 5.20%, 2/01/22		United States		1,000,000		1,107,819
	Energy XXI Gulf Coast Inc., senior note,
	9.25%, 12/15/17		United States		2,000,000		2,140,000
	d 144A, 6.875%, 3/15/24		United States		1,000,000		1,022,500
d	EnQuest PLC, senior note, 144A, 7.00%, 4/15/22		United Kingdom		900,000		934,313
	Enterprise Products Operating LLC, junior sub. note, 7.034% to 1/15/18, FRN thereafter, 1/15/68		United States		1,500,000		1,713,457
d	Expro Finance Luxembourg, senior secured note, 144A, 8.50%, 12/15/16		United Kingdom		2,000,000		2,091,250
d,h	Gaz Capital SA, (OJSC Gazprom), loan participation,
	senior bond, 144A, 6.51%, 3/07/22		Russia		500,000		544,250
	senior note, 144A, 5.092%, 11/29/15		Russia		1,500,000		1,571,572
	senior note, 144A, 3.85%, 2/06/20		Russia		1,000,000		975,335
	Halcon Resources Corp., senior note,
	9.75%, 7/15/20		United States		200,000		219,250
	8.875%, 5/15/21		United States		2,000,000		2,160,000
	9.25%, 2/15/22		United States		800,000		878,000
d	Kinder Morgan Finance Co. LLC, senior secured note, 144A, 6.00%, 1/15/18		United States		2,000,000		2,195,000
	Linn Energy LLC/Finance Corp., senior note,
	8.625%, 4/15/20		United States		2,000,000		2,170,000
	7.75%, 2/01/21		United States		1,500,000		1,625,625
d	LUKOIL International Finance BV, senior note, 144A, 4.563%, 4/24/23		Russia		3,000,000		2,911,005
	Martin Midstream Partners LP/Martin Midstream Finance Corp., senior note, 7.25%, 2/15/21		United States		1,800,000		1,917,000
	Midstates Petroleum Co. Inc./LLC, senior note, 9.25%, 6/01/21		United States		1,500,000		1,657,500
d	Oasis Petroleum Inc., senior note, 144A, 6.875%, 3/15/22		United States		1,300,000		1,423,500

Semiannual Report FSI-11

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Strategic Income VIP Fund (continued)

		Country		Principal Amount*			Value
	Corporate Bonds (continued)
	Energy (continued)
	Offshore Group Investment Ltd.,
	senior bond, first lien, 7.125%, 4/01/23		United States		700,000		$	715,750
	senior secured note, first lien, 7.50%, 11/01/19		United States		2,000,000			2,118,750
	Peabody Energy Corp., senior note,
	6.50%, 9/15/20		United States		2,500,000			2,531,250
	6.25%, 11/15/21		United States		1,500,000			1,501,875
	Penn Virginia Corp., senior note, 8.50%, 5/01/20		United States		1,000,000			1,122,500
	Penn Virginia Resource Partners LP/Finance Corp., senior note, 8.375%, 6/01/20		United States		1,426,000			1,620,292
	Penn Virginia Resource Partners LP/Penn Virginia Resource Finance Corp., senior note, 6.50%, 5/15/21		United States		400,000			438,000
	Plains Exploration & Production Co., senior note,
	6.125%, 6/15/19		United States		600,000			666,000
	6.875%, 2/15/23		United States		1,000,000			1,175,000
	QR Energy LP/QRE Finance, senior note, 9.25%, 8/01/20		United States		2,000,000			2,195,000
	Quicksilver Resources Inc.,
	d,f secured note, second lien, 144A, FRN, 7.00%, 6/21/19		United States		1,800,000			1,764,000
	senior note, 9.125%, 8/15/19		United States		500,000			466,250
	Regency Energy Partners LP/Regency Energy Finance Corp., senior note, 5.875%, 3/01/22		United States		200,000			217,750
	Sabine Pass Liquefaction LLC,
	first lien, 5.625%, 2/01/21		United States		2,500,000			2,656,250
	first lien, 5.625%, 4/15/23		United States		900,000			940,500
	d senior secured note, first lien, 144A, 5.75%, 5/15/24		United States		300,000			313,125
d	Samson Investment Co., senior note, 144A, 9.75%, 2/15/20		United States		2,500,000			2,646,875
d	Sanchez Energy Corp., senior note, 144A,
	7.75%, 6/15/21		United States		1,700,000			1,853,000
	6.125%, 1/15/23		United States		500,000			517,500
	W&T Offshore Inc., senior note, 8.50%, 6/15/19		United States		2,500,000			2,712,500
								79,316,776
	Food & Staples Retailing 0.2%
d	Cencosud SA, senior note, 144A, 4.875%, 1/20/23		Chile		2,500,000			2,525,500
	Food, Beverage & Tobacco 1.2%
d	Boparan Finance PLC, senior note, 144A, 9.75%, 4/30/18		United Kingdom		200,000	EUR		294,945
	Constellation Brands Inc., senior note, 4.25%, 5/01/23		United States		1,000,000			1,003,750
	Del Monte Corp., senior note, 7.625%, 2/15/19		United States		1,736,000			1,811,256
d	JBS USA LLC/Finance Inc., senior note, 144A,
	8.25%, 2/01/20		United States		2,400,000			2,616,000
	7.25%, 6/01/21		United States		300,000			323,250
	Kraft Foods Group Inc., senior bond, 3.50%, 6/06/22		United States		2,500,000			2,570,065
d	Post Holdings Inc., senior note, 144A,
	6.75%, 12/01/21		United States		1,600,000			1,702,000
	6.00%, 12/15/22		United States		400,000			409,000
d	Smithfield Foods Inc., senior note, 144A, 5.875%, 8/01/21		United States		600,000			637,875
								11,368,141
	Health Care Equipment & Services 1.5%
	Alere Inc., senior sub. note, 6.50%, 6/15/20		United States		800,000			844,000
d	Cegedim SA, senior note, 144A, 6.75%, 4/01/20		France		900,000	EUR		1,348,052
	CHS/Community Health Systems Inc.,
	senior note, 8.00%, 11/15/19		United States		1,500,000			1,646,250
	d senior note, 144A, 6.875%, 2/01/22		United States		400,000			426,000
	senior secured note, 5.125%, 8/15/18		United States		600,000			630,750

FSI-12 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Strategic Income VIP Fund (continued)

		Country		Principal Amount*			Value
	Corporate Bonds (continued)
	Health Care Equipment & Services (continued)
	DaVita HealthCare Partners Inc.,
	senior bond, 5.125%, 7/15/24		United States		500,000		$	504,063
	senior note, 5.75%, 8/15/22		United States		1,500,000			1,608,750
	HCA Inc.,
	senior note, 7.50%, 2/15/22		United States		1,500,000			1,734,375
	senior note, 5.875%, 5/01/23		United States		1,500,000			1,573,125
	senior secured note, 5.875%, 3/15/22		United States		1,400,000			1,522,500
	Tenet Healthcare Corp., senior note,
	8.125%, 4/01/22		United States		1,700,000			1,972,000
	d 144A, 5.00%, 3/01/19		United States		500,000			508,125
								14,317,990
	Insurance 0.6%
	MetLife Inc., junior sub. note, 6.40% to 12/15/36, FRN thereafter, 12/15/66		United States		2,500,000			2,806,250
d	Mitsui Sumitomo Insurance Co. Ltd., junior sub. note, 144A, 7.00% to 3/15/22, FRN thereafter, 3/15/72		Japan		2,500,000			2,982,788
								5,789,038
	Materials 4.5%
	ArcelorMittal, senior note,
	6.00%, 3/01/21		Luxembourg		3,500,000			3,788,662
	6.75%, 2/25/22		Luxembourg		500,000			561,513
d	Ardagh Packaging Finance PLC, senior note, 144A, 9.125%, 10/15/20		Luxembourg		900,000			1,000,125
d	Ardagh Packaging Finance PLC/Ardagh MP Holdings USA Inc.,
	senior note, 144A, 6.25%, 1/31/19		Luxembourg		200,000			205,500
	senior note, 144A, 7.00%, 11/15/20		Luxembourg		105,882			109,985
	senior note, 144A, 6.75%, 1/31/21		Luxembourg		200,000			207,750
	i senior note, 144A, 6.00%, 6/30/21		Luxembourg		1,300,000			1,299,188
	senior secured note, first lien, 144A, 7.375%, 10/15/17		Luxembourg		600,000			634,125
d	Barminco Finance Pty. Ltd., senior note, 144A, 9.00%, 6/01/18		Australia		1,500,000			1,473,750
d	Cemex Finance LLC, senior secured note, 144A, 6.00%, 4/01/24		Mexico		1,000,000			1,044,375
d	Cemex SAB de CV,
	secured note, 144A, 5.875%, 3/25/19		Mexico		1,000,000			1,046,250
	senior secured note, 144A, 9.00%, 1/11/18		Mexico		2,000,000			2,157,500
d	Faenza GmbH, senior note, 144A, 8.25%, 8/15/21		Germany		900,000	EUR		1,375,013
d	First Quantum Minerals Ltd., senior note, 144A,
	6.75%, 2/15/20		Canada		1,725,000			1,785,375
	7.00%, 2/15/21		Canada		1,725,000			1,783,219
d	FMG Resources (August 2006) Pty. Ltd., senior note, 144A,
	6.875%, 2/01/18		Australia		2,500,000			2,631,250
	8.25%, 11/01/19		Australia		1,000,000			1,092,500
d	Glencore Funding LLC,
	144A, 4.625%, 4/29/24		Switzerland		500,000			517,500
	senior note, 144A, 4.125%, 5/30/23		Switzerland		1,000,000			1,005,665
d	Ineos Finance PLC, senior secured note, 144A,
	8.375%, 2/15/19		Switzerland		200,000			219,500
	7.50%, 5/01/20		Switzerland		300,000			327,750
d	Ineos Group Holdings SA, senior note, 144A,
	6.125%, 8/15/18		Switzerland		700,000			727,125
	6.50%, 8/15/18		Switzerland		700,000	EUR		1,001,753
	5.75%, 2/15/19		Switzerland		300,000	EUR		425,471

Semiannual Report FSI-13

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Strategic Income VIP Fund (continued)

		Country		Principal Amount*			Value
	Corporate Bonds (continued)
	Materials (continued)
d	Kerling PLC, senior secured note, 144A, 10.625%, 2/01/17		United Kingdom		1,000,000	EUR	$	1,456,773
	Novelis Inc., senior note,
	8.375%, 12/15/17		Canada		500,000			533,625
	8.75%, 12/15/20		Canada		1,600,000			1,784,000
d	Orion Engineered Carbons Bondco GmbH, senior secured bond, 144A, 10.00%, 6/15/18		Germany		2,000,000	EUR		2,958,012
d,j	Orion Engineered Carbons Finance & Co. SCA, senior note, 144A, PIK, 9.25%, 8/01/19		Germany		200,000			209,100
	Reynolds Group Issuer Inc./LLC/SA,
	first lien, 5.75%, 10/15/20		United States		900,000			954,000
	senior note, 8.50%, 5/15/18		United States		1,500,000			1,571,250
	senior note, 8.25%, 2/15/21		United States		1,000,000			1,092,500
	senior secured note, 7.125%, 4/15/19		United States		1,000,000			1,050,000
d	Sealed Air Corp., senior note, 144A,
	8.125%, 9/15/19		United States		1,000,000			1,106,250
	8.375%, 9/15/21		United States		800,000			920,000
d	U.S. Coatings Acquisition Inc./Flash Dutch 2 BV, 144A, 5.75%, 2/01/21		United States		1,000,000	EUR		1,467,879
d	Xstrata Finance Canada Ltd., senior note, 144A, 4.95%, 11/15/21		Canada		2,500,000			2,700,087
								44,224,320
	Media 3.4%
	CCO Holdings LLC/CCO Holdings Capital Corp., senior bond, 5.25%, 9/30/22		United States		1,400,000			1,428,000
	Clear Channel Communications Inc., senior secured bond, first lien, 9.00%, 3/01/21		United States		2,500,000			2,684,375
	Clear Channel Worldwide Holdings Inc.,
	senior note, 6.50%, 11/15/22		United States		1,000,000			1,082,500
	senior sub. note, 7.625%, 3/15/20		United States		200,000			215,000
	senior sub. note, 7.625%, 3/15/20		United States		500,000			541,875
	CSC Holdings LLC, senior note, 6.75%, 11/15/21		United States		3,000,000			3,311,250
	DISH DBS Corp., senior note,
	7.125%, 2/01/16		United States		2,500,000			2,709,375
	6.75%, 6/01/21		United States		500,000			571,250
	5.875%, 7/15/22		United States		500,000			543,750
d	Gannett Co. Inc.,
	senior bond, 144A, 6.375%, 10/15/23		United States		1,900,000			2,033,000
	senior note, 144A, 5.125%, 7/15/20		United States		1,000,000			1,031,250
d,i	Nielsen Finance LLC/Co., senior note, 144A, 5.00%, 4/15/22		United States		1,700,000			1,718,063
d	Sirius XM Radio Inc., senior bond, 144A, 6.00%, 7/15/24		United States		1,700,000			1,772,250
	Time Warner Inc., 7.625%, 4/15/31		United States		1,500,000			2,064,007
d	Unitymedia Hessen GmbH & Co.KG/Unitymedia NRW GmbH, senior secured note, 144A, 5.625%, 4/15/23		Germany		800,000	EUR		1,196,401
d	Univision Communications Inc.,
	senior secured bond, 144A, 6.75%, 9/15/22		United States		436,000			484,505
	senior secured note, 144A, 7.875%, 11/01/20		United States		2,000,000			2,210,000
d	UPC Holding BV, senior note, 144A, 6.375%, 9/15/22		Netherlands		500,000	EUR		748,490
d	UPCB Finance II Ltd., senior secured note, 144A, 6.375%, 7/01/20		Netherlands		2,000,000	EUR		2,914,737
d	Videotron Ltd., senior bond, 144A, 5.375%, 6/15/24		Canada		800,000			822,000
d	Virgin Media Secured Finance PLC, senior secured bond, first lien, 144A, 5.50%, 1/15/25		United Kingdom		1,900,000			1,973,625
d	VTR Finance BV, senior secured note, 144A, 6.875%, 1/15/24		Chile		900,000			968,247
								33,023,950

FSI-14 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Strategic Income VIP Fund (continued)

			Country		Principal Amount*			Value
	Corporate Bonds (continued)
	Pharmaceuticals, Biotechnology & Life Sciences 0.8%
d	Grifols Worldwide Operations Ltd., senior note, 144A, 5.25%, 4/01/22			United States		700,000		$	728,000
c,d,j	Jaguar Holding Co. I, senior note, 144A, PIK, 9.375%, 10/15/17			United States		1,500,000			1,560,000
d	Valeant Pharmaceuticals International Inc., senior note, 144A, 7.50%, 7/15/21			United States		1,200,000			1,333,500
d	VPI Escrow Corp., senior note, 144A, 6.375%, 10/15/20	��		United States		2,400,000			2,559,000
	Zoetis Inc., senior bond, 3.25%, 2/01/23			United States		2,000,000			1,981,008
									8,161,508
	Real Estate 0.1%
	Crown Castle International Corp., senior bond, 5.25%, 1/15/23			United States		500,000			523,750
	Retailing 0.5%
d	Edcon Pty. Ltd., secured note, 144A, 9.50%, 3/01/18			South Africa		1,800,000	EUR		2,492,519
d	New Look Bondco I PLC, 144A, 8.75%, 5/14/18			United Kingdom		1,300,000	GBP		2,389,078
									4,881,597
	Software & Services 1.1%
d	BMC Software Finance Inc., senior note, 144A, 8.125%, 7/15/21			United States		2,000,000			2,067,500
	Equinix Inc., senior bond, 5.375%, 4/01/23			United States		2,500,000			2,568,750
	First Data Corp.,
	senior bond, 12.625%, 1/15/21			United States		300,000			370,125
	d senior secured bond, 144A, 8.25%, 1/15/21			United States		4,000,000			4,400,000
	Sterling International Inc., senior note, 11.00%, 10/01/19			United States		1,100,000			1,185,250
									10,591,625
	Technology Hardware & Equipment 0.2%
d	Alcatel-Lucent USA Inc., senior note, 144A, 6.75%, 11/15/20			France		2,000,000			2,140,000
d,j	CommScope Holdings Co. Inc., senior note, 144A, PIK, 6.625%, 6/01/20			United States		200,000			214,500
									2,354,500
	Telecommunication Services 3.5%
	CenturyLink Inc.,
	senior bond, 6.75%, 12/01/23			United States		200,000			219,500
	senior note, 6.00%, 4/01/17			United States		1,000,000			1,108,750
	senior note, 6.45%, 6/15/21			United States		1,000,000			1,090,000
d	Digicel Group Ltd., senior note, 144A, 8.25%, 9/30/20			Bermuda		2,000,000			2,205,000
d	Digicel Ltd., senior note, 144A, 6.00%, 4/15/21			Bermuda		800,000			828,500
d	eAccess Ltd., senior note, 144A, 8.25%, 4/01/18			Japan		1,400,000			1,518,125
	Frontier Communications Corp.,
	senior bond, 7.625%, 4/15/24			United States		600,000			648,750
	senior note, 8.50%, 4/15/20			United States		2,000,000			2,370,000
	senior note, 8.75%, 4/15/22			United States		1,000,000			1,165,000
	senior note, 7.875%, 1/15/27			United States		400,000			415,500
	Intelsat Jackson Holdings SA,
	senior bond, 6.625%, 12/15/22			Luxembourg		1,600,000			1,674,000
	senior note, 7.25%, 10/15/20			Luxembourg		1,000,000			1,080,000
	senior note, 7.50%, 4/01/21			Luxembourg		1,000,000			1,100,000
d	Millicom International Cellular SA, senior note, 144A, 6.625%, 10/15/21			Luxembourg		1,300,000			1,412,125
d,j	Mobile Challenger Intermediate Group SA, secured note, 144A, PIK, 8.75%, 3/15/19			Switzerland		600,000	EUR		846,320

Semiannual Report FSI-15

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Strategic Income VIP Fund (continued)

		Country		Principal Amount*			Value
	Corporate Bonds (continued)
	Telecommunication Services (continued)
d	Play Finance 1 SA, senior note, 144A, 6.50%, 8/01/19		Poland		500,000	EUR	$	736,935
d	Play Finance 2 SA, senior secured note, 144A, 5.25%, 2/01/19		Poland		800,000	EUR		1,152,748
d	Sprint Corp., senior note, 144A, 7.875%, 9/15/23		United States		500,000			557,500
	Sprint Nextel Corp., senior note,
	8.375%, 8/15/17		United States		2,000,000			2,342,500
	6.00%, 11/15/22		United States		500,000			512,500
	d 144A, 9.00%, 11/15/18		United States		1,500,000			1,822,500
	d 144A, 7.00%, 3/01/20		United States		800,000			924,000
	T-Mobile USA Inc.,
	senior bond, 6.50%, 1/15/24		United States		300,000			321,375
	senior note, 6.542%, 4/28/20		United States		1,400,000			1,517,250
	senior note, 6.125%, 1/15/22		United States		200,000			213,000
	Verizon Communications Inc., senior note, 5.15%, 9/15/23		United States		3,000,000			3,361,719
d	Wind Acquisition Finance SA, senior secured note, 144A,
	i 4.00%, 7/15/20		Italy		600,000	EUR		822,184
	7.00%, 4/23/21		Italy		2,000,000	EUR		2,949,740
								34,915,521
	Transportation 0.7%
d	Florida East Coast Holdings Corp.,
	secured note, first lien, 144A, 6.75%, 5/01/19		United States		900,000			952,875
	senior note, 144A, 9.75%, 5/01/20		United States		400,000			424,500
	Hertz Corp., senior note,
	6.75%, 4/15/19		United States		1,500,000			1,597,500
	6.25%, 10/15/22		United States		1,500,000			1,595,625
d	Stena AB, senior bond, 144A, 7.00%, 2/01/24		Sweden		900,000			960,750
d	Stena International SA, secured bond, 144A, 5.75%, 3/01/24		Sweden		1,100,000			1,119,250
								6,650,500
	Utilities 1.1%
d	Calpine Corp.,
	senior secured bond, first lien, 144A, 5.875%, 1/15/24		United States		600,000			636,000
	senior secured note, 144A, 7.875%, 7/31/20		United States		454,000			494,860
	senior secured note, 144A, 7.50%, 2/15/21		United States		1,492,000			1,620,685
	senior secured note, first lien, 144A, 6.00%, 1/15/22		United States		100,000			108,250
d,e	EDF SA,
	junior sub. bond, 144A, 5.625% to 1/22/24, FRN thereafter, Perpetual		France		500,000			523,295
	sub. note, 144A, 5.25% to 1/29/23, FRN thereafter, Perpetual		France		3,000,000			3,063,450
d	InterGen NV, secured bond, 144A, 7.00%, 6/30/23		Netherlands		2,000,000			2,080,000
d,g	Texas Competitive Electric Holdings Co. LLC/Texas Competitive Electric Holdings Finance Inc., senior secured note, 144A, 11.50%,     10/01/20		United States		3,000,000			2,752,500
								11,279,040
	Total Corporate Bonds (Cost $329,953,928)							355,060,961
f,k	Senior Floating Rate Interests 16.3%
	Automobiles & Components 0.6%
i	August LuxUK Holding Co.,
	First Lien Term Loan, 6.25%, 4/27/18		Luxembourg		519,132			526,270
	Lux Second Lien, 11.25%, 4/27/19		Luxembourg		114,872			116,021

FSI-16 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Strategic Income VIP Fund (continued)

		Country		Principal Amount*		Value
f,k	Senior Floating Rate Interests (continued)
	Automobiles & Components (continued)
i	August U.S. Holding Co. Inc.,
	First Term Loan, 6.25%, 4/27/18		United States		156,162	$	158,309
	U.S. Second Lien, 11.50%, 4/27/19		United States		37,613		37,989
	FRAM Group Holdings Inc. (Autoparts Holdings),
	Second Lien Term Loan, 10.50%, 1/29/18		United States		2,083,899		1,979,704
	Term Loan, 6.50%, 7/29/17		United States		1,303,518		1,306,776
i	Gates Global LLC, Term Loan B, 5.50%, 7/20/21		United States		383,269		382,520
i	Grede Holdings LLC, Initial Term Loan, 6.00%, 6/02/21		United States		590,600		593,430
i	Henniges Automotive Holdings Inc., Term Loans, 7.25%, 6/12/21		United States		458,822		464,557
							5,565,576
	Capital Goods 1.0%
i	Alfred Fueling Systems Inc. (Wayne Fueling),
	Second Lien Term Loan, 9.75%, 6/18/22		United States		621,400		623,989
	Term Loan B, 6.00%, 6/18/21		United States		436,400		438,400
	Doncasters U.S. Finance LLC, Term B Loans, 4.50%, 4/09/20		United States		273,010		274,034
l	Erickson Inc., Purchase Price Notes, 6.00%, 11/02/20		United States		190,406		170,002
	Husky Injection Molding Systems Ltd., Term Loan, 5.50%, 6/30/21		United States		108,500		109,178
	Quikrete Holdings Inc., First Lien Initial Loan, 4.00%, 9/26/20		United States		1,421,949		1,425,949
	Sensus USA Inc., Second Lien Term Loan, 8.50%, 5/09/18		United States		2,582,186		2,596,710
	Signode Industrial Group U.S. Inc., Initial Term B Loan, 4.00%, 5/01/21		United States		1,007,000		1,004,902
	TransDigm Inc.,
	Tranche C Term Loan, 3.75%, 2/28/20		United States		670,490		668,773
	Tranche D Term Loan, 3.75%, 6/04/21		United States		688,600		686,276
	Wesco Distribution Inc., Tranche B-1 Loan, 3.75%, 12/12/19		United States		1,311,607		1,314,394
i	WireCo Worldgroup Inc., Term Loan, 7.00%, 2/15/17		United States		48,976		49,435
							9,362,042
	Commercial & Professional Services 0.8%
i	AlixPartners LLP, Second Lien 2013 Recapitalization Term Loan, 9.00%, 7/10/21		United States		374,569		380,812
	Altegrity Inc., Tranche D Term Loan, 7.75%, 2/21/15		United States		2,846,512		2,835,837
	EnergySolutions LLC, Term Advance, 6.75%, 5/29/20		United States		336,100		341,141
	Interactive Data Corp., Term Loan, 4.75%, 5/02/21		United States		4,239,620		4,281,355
							7,839,145
	Consumer Durables & Apparel 0.3%
i	Visant Corp. (Jostens), New Loan, 5.25%, 12/22/16		United States		2,757,913		2,748,434
	Consumer Services 1.2%
i	24 Hour Fitness Worldwide Inc., Term Loan, 4.75%, 5/30/21		United States		1,651,572		1,663,616
i	Caesars Entertainment Resort Properties LLC, Term B Loans, 7.00%, 10/11/20		United States		2,504,370		2,521,414
	Diamond Resorts Corp., Term Loans, 5.50%, 5/09/21		United States		345,900		348,062
	Fitness International LLC, Term Loan B, 6.75%, 6/30/20		United States		1,431,700		1,428,718
	TGI Friday’s Inc., Term Loan B, 6.50%, 6/24/20		United States		173,500		173,934
c,j	Turtle Bay Holdings LLC, Term Loan B, PIK, 3.00%, 6/30/16		United States		6,326,938		6,026,408
							12,162,152
	Diversified Financials 0.5%
	Guggenheim Partners Investment Management Holdings LLC, Initial Term Loan, 4.25%, 7/22/20		United States		544,353		546,848
	Trans Union LLC, 2014 Replacement Term Loan, 4.00%, 4/09/21		United States		4,180,612		4,187,928
							4,734,776

Semiannual Report FSI-17

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Strategic Income VIP Fund (continued)

		Country		Principal Amount*		Value
f,k	Senior Floating Rate Interests (continued)
	Energy 0.1%
	Bowie Resource Holdings LLC, 2nd Lien Initial Term Loan, 11.75%, 2/16/21		United States		285,714	$	292,857
	McJunkin Red Man Corp., 2013 Term Loan, 5.00%, 11/11/19		United States		727,457		733,186
i	Utex Industries Inc., First Lien Initial Term Loan, 5.00%, 5/22/21		United States		368,856		372,775
							1,398,818
	Food & Staples Retailing 0.2%
	AdvancePierre Foods Inc., Second Lien Term Loan, 9.50%, 10/10/17		United States		1,805,558		1,753,648
	Food, Beverage & Tobacco 0.2%
	Big Heart Pet Brands (Del Monte Pet), Initial Term Loans, 3.50%, 2/24/20		United States		1,673,454		1,665,086
	CSM Bakery Supplies LLC (U.S. Acquisition), Second Lien Term Loan, 8.50%, 7/03/21		United States		128,913		131,653
	Post Holdings Inc., Series A Incremental Term Loan, 3.75%, 6/02/21		United States		313,400		316,314
							2,113,053
	Health Care Equipment & Services 2.0%
	Carestream Health Inc., Second Lien Loan, 9.50%, 12/07/19		United States		641,944		656,923
	CDRH Merger Sub II Inc. (Healogics, Inc.), Initial Term Loan, 6.50%, 7/01/21		United States		135,800		134,442
	Community Health Systems Inc., 2021 Term D Loan, 4.25%, 1/27/21		United States		4,127,114		4,157,745
	Connolly LLC,
	2nd Lien Initial Term Loan, 8.00%, 5/14/22		United States		423,200		431,135
	i Initial Term Loan, 5.00%, 5/14/21		United States		1,775,865		1,801,393
i	DaVita HealthCare Partners Inc., Tranche B Term Loan, 5.00%, 6/24/21		United States		3,390,833		3,411,117
	Dialysis Newco Inc.,
	Second Lien Term Loan B, 7.75%, 10/22/21		United States		267,300		269,305
	Term Loan B, 4.75%, 4/23/21		United States		469,633		471,394
i	Millennium Laboratories LLC, Tranche B Term Loan, 5.25%, 4/16/21		United States		4,101,400		4,144,087
	Surgery Centers Holdings Inc., Incremental Second Lien Term Loan, 9.75%, 4/10/20		United States		8,339		8,381
	Truven Health Analytics Inc., New Tranche B Term Loan, 4.50%, 6/06/19		United States		1,118,625		1,109,536
	U.S. Renal Care Inc., Tranche B-2 Term Loan, 4.25%, 7/03/19		United States		2,927,246		2,940,969
							19,536,427
	Household & Personal Products 0.7%
	FGI Operating Co. LLC (Freedom Group), Term B Loans, 5.50%, 4/19/19		United States		3,500,837		3,535,845
i	Sun Products Corp., Tranche B Term Loan, 5.50%, 3/23/20		United States		3,535,804		3,478,347
							7,014,192
	Materials 3.0%
	Arysta Lifescience SPC LLC,
	Initial Term Loan, 4.50%, 5/29/20		United States		3,471,366		3,495,190
	Second Lien Initial Term Loan, 8.25%, 11/30/20		United States		2,864,234		2,932,259
	Atkore International Inc., Second Lien Initial Term Loan, 7.75%, 10/09/21		United States		219,800		221,723
	Axalta Coating Systems U.S. Holdings Inc., 2014 Specified Refinancing Term, 4.00%, 2/01/20		United States		1,659,762		1,662,759

FSI-18 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Strategic Income VIP Fund (continued)

		Country		Principal Amount*		Value
f,k	Senior Floating Rate Interests (continued)
	Materials (continued)
i	AZ Chem US Inc., First Lien Initial Term Loan, 5.75%, 6/12/21		United States		1,582,980	$	1,599,470
	Caraustar Industries Inc., Initial Term Loan, 7.50%, 5/01/19		United States		341,297		346,523
	CD&R Millennium US Acquico LLC,
	Second Lien Term Loan, 9.50%, 7/15/22		United States		585,000		579,150
	USD First Lien Term Loan, 5.75%, 7/15/21		United States		202,700		201,687
	Cyanco Intermediate Corp., Initial Term Loan, 5.50%, 5/01/20		United States		1,976,331		1,981,272
i	Exopack Holdings SA, USD Term Loan, 5.25%, 5/08/19		Luxembourg		2,974,684		3,025,813
	FMG America Finance Inc. (Fortescue Metals Group), Loans, 3.75%, 6/30/19		United States		2,151,776		2,156,258
	HII Holding Corp. (Houghton International), Second Lien Term Loan, 9.50%, 12/20/20		United States		475,175		487,648
	MacDermid Holdings LLC, First Lien Tranche B Term Loan, 4.00%, 6/07/20		United States		2,098,063		2,102,259
	OCI Beaumont LLC, Term B-3 Loan, 5.00%, 8/20/19		United States		1,069,550		1,086,930
	Oxbow Carbon LLC,
	First Lien Tranche B Term Loan, 4.25%, 7/19/19		United States		1,265,464		1,269,155
	i Second Lien Initial Term Loan, 9.25%, 1/19/20		United States		311,538		319,716
	OXEA GmbH, Second Lien Term Loan, 8.25%, 7/15/20		Luxembourg		838,599		850,130
	Prescrix Inc., 2nd Lien Term Loan, 8.00%, 5/02/22		United States		663,243		667,389
	Reynolds Group Holdings Inc., U.S. Term Loan, 4.00%, 12/01/18		United States		2,766,634		2,773,725
	Tronox Pigments (Netherlands) BV, Term Loan, 4.00%, 3/19/20		Netherlands		986,076		988,079
i	Walter Energy Inc., B Term Loan, 7.25%, 4/01/18		United States		789,251		764,939
							29,512,074
	Media 1.3%
	Cengage Learning Acquisitions Inc., First Lien Exit Term Loan, 7.00%, 3/31/20		United States		3,188,859		3,234,367
	Cumulus Media Holdings Inc., Term Loans, 4.25%, 12/23/20		United States		480,977		483,322
i	Gray Television Inc., Term Loan B, 5.25%, 6/13/21		United States		46,747		47,049
	NEP/NCP Holdco Inc., Second Lien Term Loan, 9.50%, 7/22/20		United States		678,796		698,736
i	Radio One Inc., Term Loan, 7.50%, 3/31/16		United States		631,685		643,529
	William Morris Endeavor Entertainment LLC,
	i Term Loans First Lien, 5.25%, 3/21/21		United States		5,095,882		5,142,066
	Term Loans Second Lien, 8.25%, 3/21/22		United States		2,310,400		2,349,388
	Zuffa LLC, Initial Term Loan, 3.75%, 2/25/20		United States		381,285		382,715
							12,981,172
	Pharmaceuticals, Biotechnology & Life Sciences 0.2%
i	Akorn Inc., Loans, 5.75%, 4/17/21		United States		199,500		200,664
	Valeant Pharmaceuticals International Inc., Series E-1 Tranche B Term Loan, 3.75%, 8/05/20		Canada		1,764,074		1,764,736
							1,965,400
	Real Estate 0.0%†
i	RHP Hotel Properties LP, Tranche B Term Loan, 5.25%, 1/15/21		United States		169,400		170,424
	Retailing 2.3%
	BJ’s Wholesale Club Inc.,
	2013 (Nov) Replacement Loans, 4.50%, 9/26/19		United States		4,260,244		4,272,484
	Second Lien 2013 (Nov) Replacment Loans, 8.50%, 3/26/20		United States		1,790,788		1,840,407
	Evergreen AcqCo. 1 LP (Savers), Term Loan, 5.00%, 7/09/19		United States		2,609,625		2,612,073
	Harbor Freight Tools USA Inc., Loans, 4.75%, 7/26/19		United States		1,072,279		1,082,197
i	JC Penney Corp. Inc., Term Loan, 6.25%, 6/20/19		United States		1,664,286		1,669,071

Semiannual Report FSI-19

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Strategic Income VIP Fund (continued)

		Country		Principal Amount*			Value
f,k	Senior Floating Rate Interests (continued)
	Retailing (continued)
	The Men’s Wearhouse Inc., Tranche B Term Loan, 4.50%, 6/18/21		United States		1,569,100		$	1,576,741
	Party City Holdings Inc., 2014 Replacement Term Loan, 4.00%, 7/27/19		United States		1,409,195			1,402,904
i	Sears Roebuck Acceptance Corp., Term Loan, 5.50%, 6/30/18		United States		4,891,708			4,954,165
i	Sungard Availability Services Capital Inc., Tranche B Term Loan, 6.00%, 3/31/19		United States		3,263,109			3,243,736
								22,653,778
	Semiconductors & Semiconductor Equipment 0.1%
	M/A-COM Technology Solutions Holdings Inc., Initial Term Loan, 4.50%, 5/07/21		United States		523,600			527,867
	Software & Services 1.1%
i	BMC Software Finance Inc., Initial U.S. Term Loans, 5.00%, 9/10/20		United States		4,583,124			4,581,694
	MoneyGram International Inc., Term Loan, 4.25%, 3/28/20		United States		4,085,759			4,035,197
	Vertafore Inc., Second Lien Term Loan, 9.75%, 10/27/17		United States		2,015,657			2,056,601
								10,673,492
	Technology Hardware & Equipment 0.4%
	Alcatel-Lucent USA Inc., US Term Loan C (TLC), 4.50%, 1/30/19		France		1,498,356			1,501,790
	Dell International LLC, Term B Loan, 4.50%, 4/29/20		United States		1,312,865			1,320,847
	Presidio Inc., Term Loan, 5.00%, 3/31/17		United States		804,628			811,794
								3,634,431
	Telecommunication Services 0.1%
	Intelsat Jackson Holdings SA, Tranche B-2 Term Loan, 3.75%, 6/30/19		Luxembourg		1,485,191			1,489,600
	Transportation 0.2%
i	Global Tip Finance BV/Finance America LLC, Facility C Commitment, 7.00%, 10/16/20		United States		2,424,189			2,439,340
	Total Senior Floating Rate Interests (Cost $158,881,528)							160,275,841
	Foreign Government and Agency Securities 19.2%
	Government of Canada,
	2.25%, 8/01/14		Canada		701,000	CAD		658,057
	1.00%, 11/01/14		Canada		591,000	CAD		554,164
	2.00%, 12/01/14		Canada		1,420,000	CAD		1,337,246
	1.00%, 5/01/15		Canada		5,080,000	CAD		4,764,087
	Government of Hungary,
	5.50%, 2/12/16		Hungary		1,864,700,000	HUF		8,675,831
	5.50%, 12/22/16		Hungary		46,690,000	HUF		220,657
	6.50%, 6/24/19		Hungary		206,000,000	HUF		1,040,919
	7.50%, 11/12/20		Hungary		313,570,000	HUF		1,676,632
	5.375%, 2/21/23		Hungary		1,020,000			1,098,081
	A, 6.75%, 11/24/17		Hungary		104,470,000	HUF		519,368
	A, 5.50%, 12/20/18		Hungary		34,100,000	HUF		165,074
	A, 7.00%, 6/24/22		Hungary		930,000	HUF		4,919
	A, 6.00%, 11/24/23		Hungary		1,270,000	HUF		6,369
	senior note, 6.25%, 1/29/20		Hungary		4,597,000			5,208,976
	senior note, 6.375%, 3/29/21		Hungary		1,550,000			1,772,812

FSI-20 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Strategic Income VIP Fund (continued)

		Country		Principal Amount*			Value
	Foreign Government and Agency Securities (continued)
	Government of Indonesia,
	FR26, 11.00%, 10/15/14		Indonesia		1,800,000,000	IDR	$	153,869
	FR34, 12.80%, 6/15/21		Indonesia		17,235,000,000	IDR		1,822,724
	Government of Ireland,
	5.00%, 10/18/20		Ireland		3,000,000	EUR		5,015,473
	senior bond, 5.40%, 3/13/25		Ireland		2,883,710	EUR		5,008,323
	Government of Malaysia,
	3.434%, 8/15/14		Malaysia		6,410,000	MYR		1,997,461
	3.741%, 2/27/15		Malaysia		12,310,000	MYR		3,850,182
	3.835%, 8/12/15		Malaysia		4,675,000	MYR		1,465,979
	4.72%, 9/30/15		Malaysia		10,268,000	MYR		3,255,317
	3.197%, 10/15/15		Malaysia		4,730,000	MYR		1,472,178
	senior bond, 3.814%, 2/15/17		Malaysia		2,500,000	MYR		784,880
	senior bond, 4.24%, 2/07/18		Malaysia		600,000	MYR		190,931
	senior note, 3.172%, 7/15/16		Malaysia		17,100,000	MYR		5,305,207
	Government of Mexico,
	9.50%, 12/18/14		Mexico		679,620	m MXN		5,393,726
	6.00%, 6/18/15		Mexico		18,020	m MXN		142,737
	8.00%, 12/17/15		Mexico		573,560	m MXN		4,724,262
	6.25%, 6/16/16		Mexico		199,310	m MXN		1,620,875
	7.25%, 12/15/16		Mexico		790,330	m MXN		6,611,785
	Government of Poland,
	5.50%, 4/25/15		Poland		7,018,000	PLN		2,368,685
	6.25%, 10/24/15		Poland		9,134,000	PLN		3,155,962
	4.75%, 10/25/16		Poland		37,000,000	PLN		12,794,158
	f FRN, 2.72%, 1/25/17		Poland		1,660,000	PLN		546,459
	f FRN, 2.72%, 1/25/21		Poland		1,683,000	PLN		546,479
	Strip, 7/25/14		Poland		295,000	PLN		97,018
	Strip, 7/25/15		Poland		2,052,000	PLN		659,264
	Strip, 1/25/16		Poland		1,066,000	PLN		338,174
d	Government of Russia, senior bond, 144A, 7.50%, 3/31/30		Russia		1,439,185			1,671,074
d	Government of Serbia, senior note, 144A,
	4.875%, 2/25/20		Serbia		4,410,000			4,487,175
	7.25%, 9/28/21		Serbia		1,820,000			2,084,828
	Government of Singapore, senior note, 1.125%, 4/01/16		Singapore		6,750,000	SGD		5,486,670
	Government of Sri Lanka,
	A, 11.75%, 3/15/15		Sri Lanka		1,160,000	LKR		9,193
	A, 6.50%, 7/15/15		Sri Lanka		28,980,000	LKR		221,239
	A, 11.00%, 8/01/15		Sri Lanka		116,400,000	LKR		929,159
	A, 6.40%, 8/01/16		Sri Lanka		19,500,000	LKR		147,038
	A, 8.00%, 11/15/18		Sri Lanka		70,220,000	LKR		529,677
	A, 9.00%, 5/01/21		Sri Lanka		73,580,000	LKR		555,301
	B, 6.40%, 10/01/16		Sri Lanka		16,000,000	LKR		120,313
	B, 8.50%, 7/15/18		Sri Lanka		15,280,000	LKR		117,989
	C, 8.50%, 4/01/18		Sri Lanka		8,070,000	LKR		62,472
	D, 8.50%, 6/01/18		Sri Lanka		54,050,000	LKR		417,839
	Government of Sweden, 4.50%, 8/12/15		Sweden		13,000,000	SEK		2,034,583
	Government of the Philippines, senior note, 1.625%, 4/25/16		Philippines		120,000,000	PHP		2,724,266
d	Government of Ukraine,
	144A, 7.75%, 9/23/20		Ukraine		3,850,000			3,690,860
	senior bond, 144A, 7.80%, 11/28/22		Ukraine		2,790,000			2,650,500
	senior note, 144A, 7.95%, 2/23/21		Ukraine		2,120,000			2,032,550
	senior note, 144A, 7.50%, 4/17/23		Ukraine		1,000,000			945,540

Semiannual Report FSI-21

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Strategic Income VIP Fund (continued)

		Country		Principal Amount*				Value
	Foreign Government and Agency Securities (continued)
n	Government of Uruguay, senior bond, Index Linked, 4.375%, 12/15/28		Uruguay		185,558,941	UYU		$	9,068,133
	Korea Monetary Stabilization Bond,
	senior bond, 2.47%, 4/02/15		South Korea		4,622,600,000	KRW			4,563,972
	senior bond, 2.80%, 8/02/15		South Korea		1,324,510,000	KRW			1,311,527
	senior bond, 2.81%, 10/02/15		South Korea		6,000,000,000	KRW			5,943,148
	senior note, 2.82%, 8/02/14		South Korea		509,400,000	KRW			503,470
	senior note, 2.78%, 10/02/14		South Korea		2,030,900,000	KRW			2,007,868
	senior note, 2.84%, 12/02/14		South Korea		841,710,000	KRW			832,627
	senior note, 2.74%, 2/02/15		South Korea		117,220,000	KRW			115,930
	senior note, 2.76%, 6/02/15		South Korea		5,045,300,000	KRW			4,992,773
	Korea Treasury Bond, senior note,
	3.25%, 12/10/14		South Korea		1,261,950,000	KRW			1,250,586
	3.25%, 6/10/15		South Korea		210,800,000	KRW			209,567
	2.75%, 12/10/15		South Korea		4,897,900,000	KRW			4,849,739
	3.00%, 12/10/16		South Korea		5,500,000,000	KRW			5,477,489
	Nota Do Tesouro Nacional,
	10.00%, 1/01/17 Brazil		Brazil		6,200	o BRL			2,716,688
	n Index Linked, 6.00%, 5/15/15		Brazil		1,390	o BRL			1,557,928
	n Index Linked, 6.00%, 8/15/16		Brazil		1,604	o BRL			1,803,832
	n Index Linked, 6.00%, 8/15/18		Brazil		6,525	o BRL			7,327,097
	Uruguay Notas del Tesoro,
	10.50%, 3/21/15		Uruguay		1,700,000	UYU			71,783
	10.25%, 8/22/15		Uruguay		59,720,000	UYU			2,488,241
	9.50%, 1/27/16		Uruguay		9,220,000	UYU			367,917
	p 18, Index Linked, 2.25%, 8/23/17		Uruguay		25,238,789	UYU			1,012,739
	Uruguay Treasury Bill, Strip,
	7/02/15		Uruguay		510,000	UYU			19,274
	8/20/15		Uruguay		65,364,000	UYU			2,427,398
	Total Foreign Government and Agency Securities (Cost $183,533,057)								188,863,292
	U.S. Government and Agency Securities 1.9%
	U.S. Treasury Bond,
	4.50%, 2/15/16		United States		3,000,000				3,204,375
	7.875%, 2/15/21		United States		900,000				1,230,574
	U.S. Treasury Note,
	4.625%, 2/15/17		United States		600,000				661,289
	4.75%, 8/15/17		United States		2,900,000				3,241,884
	3.75%, 11/15/18		United States		7,000,000				7,699,727
	p Index Linked, 0.125%, 4/15/16		United States		2,470,015				2,535,915
	Total U.S. Government and Agency Securities (Cost $17,856,201)								18,573,764
	Asset-Backed Securities and Commercial Mortgage-Backed Securities 5.2%
	Banks 3.6%
	Banc of America Commercial Mortgage Trust, 2006-4, AJ, 5.695%, 7/10/46		United States		1,807,000				1,895,683
	Bear Stearns Commercial Mortgage Securities Inc.,
	f 2006-PW11, AJ, FRN, 5.44%, 3/11/39		United States		1,000,000		��		1,046,130
	f 2006-PW12, AJ, FRN, 5.751%, 9/11/38		United States		1,440,000				1,518,662

FSI-22 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Strategic Income VIP Fund (continued)

		Country		Principal Amount*			Value
	Asset-Backed Securities and Commercial Mortgage-Backed Securities (continued)
	Banks (continued)
	2006-PW13, AJ, 5.611%, 9/11/41		United States		5,100,000		$	5,342,663
	f 2007-PW16, AM, FRN, 5.706%, 6/11/40		United States		520,000			577,746
	Citigroup Commercial Mortgage Trust,
	2006-C5, AJ, 5.482%, 10/15/49		United States		2,520,000			2,557,229
	f 2007-C6, AM, FRN, 5.706%, 6/10/17		United States		4,900,000			5,408,542
f	Citigroup/Deutsche Bank Commercial Mortgage Trust, 2006-CD3, AJ, FRN, 5.688%, 10/15/48		United States		2,700,000			2,641,148
	Countrywide Asset-Backed Certificates, 2005-11, AF4, 5.21%, 3/25/34		United States		1,275,000			1,053,558
	Greenwich Capital Commercial Funding Corp.,
	f 2006-GG7, AJ, FRN, 5.82%, 7/10/38		United States		2,560,000			2,683,957
	2007-GG9, AM, 5.475%, 3/10/39		United States		1,030,000			1,111,186
	JPMorgan Chase Commercial Mortgage Securities Corp.,
	2006-CB17, AM, 5.464%, 12/12/43		United States		760,000			805,305
	f 2006-LDP7, AJ, FRN, 5.873%, 4/15/45		United States		1,680,000			1,726,699
f	LB-UBS Commercial Mortgage Trust, 2006-C4, AM, FRN, 5.857%, 6/15/38		United States		1,550,000			1,683,619
f	Morgan Stanley Capital I Trust,
	2006-HQ8, AJ, FRN, 5.497%, 3/12/44		United States		200,000			204,817
	2007-IQ16, AM, FRN, 6.099%, 12/12/49		United States		510,000			576,051
	2007-IQ16, AMA, FRN, 6.094%, 12/12/49		United States		2,050,000			2,296,946
	Wells Fargo Mortgage Backed Securities Trust,
	f 04-W, A9, FRN, 2.762%, 11/25/34		United States		1,320,775			1,367,917
	2007-3, 3A1, 5.50%, 4/25/37		United States		461,294			478,712
								34,976,570
	Diversified Financials 1.6%
d,f	ARES CLO Funds, 2007-12A, B, 144A, FRN, 1.227%, 11/25/20		United States		1,380,000			1,350,247
d,f	Atrium CDO Corp., 10A, C, 144A, FRN, 2.829%, 7/16/25		United States		1,400,000			1,370,838
d,f	Catamaran CLO Ltd., 2013-1A, C, 144A, FRN, 2.828%, 1/27/25		Cayman Islands		1,130,000			1,094,529
d,f	Cent CDO Ltd., 2007-15A, A2B, 144A, FRN, 0.571%, 3/11/21		United States		1,251,000			1,180,556
d,f	Cent CLO LP, 2013-17A, D, 144A, FRN, 3.225%, 1/30/25		Cayman Islands		784,314			782,942
d,f	CIFC Funding Ltd., 2007-3A, A1J, 144A, FRN, 0.628%, 7/26/21		United States		960,000			917,789
d,f	ColumbusNova CLO Ltd., 2007-2A, A2, 144A, FRN, 1.227%, 10/15/21		United States		860,000			837,313
d,f	CT CDO IV Ltd., 2006-4A, A1, 144A, FRN, 0.463%, 10/20/43		United States		1,629,470			1,598,274
d	G-Force LLC, 2005-RRA, C, 144A, 5.20%, 8/22/36		United States		2,000,000			1,859,450
d,f	ING Investment Management CLO Ltd.,
	2013-1A, B, 144A, FRN, 3.127%, 4/15/24		Cayman Islands		270,000			269,600
	2013-1A, C, 144A, FRN, 3.727%, 4/15/24		Cayman Islands		440,000			421,084
	2013-2A, B, 144A, FRN, 2.909%, 4/25/25		United States		1,080,000			1,065,237
d,f	Newcastle CDO Ltd., 2004-5A, 1, 144A, FRN, 0.571%, 12/24/39		United States		734,499			706,401
	Residential Asset Securities Corp., 2004-KS1, AI4, 4.213%, 4/25/32		United States		49,941			49,924
f,q	Talisman 6 Finance, Reg S, FRN, 0.507%, 10/22/16		Germany		2,050,674	EUR		2,741,598
								16,245,782
	Total Asset-Backed Securities and Commercial Mortgage-Backed Securities (Cost $48,197,301)							51,222,352
	Mortgage-Backed Securities 3.5%
f	Federal Home Loan Mortgage Corp. (FHLMC) Adjustable Rate 0.0%†
	FHLMC, 2.348%, 1/01/33		United States		61,216			63,844

Semiannual Report FSI-23

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Strategic Income VIP Fund (continued)

		Country		Principal Amount*		Value
	Mortgage-Backed Securities (continued)
	Federal Home Loan Mortgage Corp. (FHLMC) Fixed Rate 0.6%
	FHLMC Gold 15 Year, 4.50%, 10/01/18 - 6/01/19		United States		428,262	$	454,365
	FHLMC Gold 15 Year, 5.00%, 12/01/17 - 9/01/19		United States		618,556		656,893
	FHLMC Gold 15 Year, 5.50%, 7/01/17 - 7/01/19		United States		108,844		116,083
	FHLMC Gold 15 Year, 6.00%, 5/01/17		United States		4,969		5,174
	FHLMC Gold 15 Year, 6.50%, 5/01/16		United States		635		655
	FHLMC Gold 30 Year, 3.00%, 11/01/42		United States		2,635,673		2,603,896
	FHLMC Gold 30 Year, 3.50%, 4/01/42		United States		154,702		159,270
	FHLMC Gold 30 Year, 5.00%, 4/01/34 - 8/01/35		United States		428,341		474,479
	FHLMC Gold 30 Year, 5.50%, 3/01/33 - 1/01/35		United States		399,844		448,433
	FHLMC Gold 30 Year, 6.00%, 4/01/33 - 2/01/36		United States		346,555		391,276
	FHLMC Gold 30 Year, 6.50%, 12/01/23 - 6/01/36		United States		83,440		94,255
	FHLMC Gold 30 Year, 7.00%, 9/01/21 - 4/01/30		United States		35,061		39,590
	FHLMC Gold 30 Year, 7.50%, 3/01/30 - 7/01/31		United States		1,341		1,424
							5,445,793
f	Federal National Mortgage Association (FNMA) Adjustable Rate 0.0%†
	FNMA, 2.31% - 2.33%, 4/01/20 - 12/01/34		United States		239,721		253,313
	Federal National Mortgage Association (FNMA) Fixed Rate 2.6%
	FNMA 15 Year, 2.50%, 7/01/22 - 6/01/27		United States		652,311		664,653
	FNMA 15 Year, 3.00%, 10/01/27		United States		6,272,401		6,525,510
	FNMA 15 Year, 3.50%, 1/01/26		United States		370,672		393,430
	FNMA 15 Year, 4.50%, 6/01/19 - 3/01/20		United States		144,319		153,362
	FNMA 15 Year, 5.00%, 10/01/17 - 6/01/18		United States		118,351		125,595
	FNMA 15 Year, 5.50%, 9/01/14 - 11/01/18		United States		701,934		746,085
	FNMA 15 Year, 6.00%, 4/01/16 - 7/01/16		United States		1,153		1,162
	FNMA 30 Year, 3.00%, 12/01/42 - 5/01/43		United States		4,699,638		4,649,639
	FNMA 30 Year, 3.50%, 5/01/43		United States		2,851,449		2,940,691
	FNMA 30 Year, 4.00%, 2/01/41		United States		8,383,825		8,912,666
	FNMA 30 Year, 5.00%, 4/01/30		United States		147,259		164,042
	FNMA 30 Year, 6.50%, 6/01/28 - 10/01/37		United States		479,892		541,648
							25,818,483
	Government National Mortgage Association (GNMA) Fixed Rate 0.3%
	GNMA I SF 30 Year, 5.00%, 11/15/33 - 7/15/34		United States		480,767		533,300
	GNMA I SF 30 Year, 5.50%, 12/15/32 - 6/15/36		United States		659,209		738,769
	GNMA I SF 30 Year, 6.50%, 2/15/32		United States		2,200		2,512
	GNMA I SF 30 Year, 7.00%, 10/15/28 - 6/15/32		United States		36,878		39,157
	GNMA I SF 30 Year, 7.50%, 9/15/30		United States		1,663		1,923
	GNMA II SF 30 Year, 3.50%, 5/20/42		United States		1,361,412		1,421,290
	GNMA II SF 30 Year, 5.00%, 9/20/33 - 11/20/33		United States		143,153		158,935
	GNMA II SF 30 Year, 6.00%, 11/20/34		United States		167,282		193,330
	GNMA II SF 30 Year, 6.50%, 4/20/31 - 2/20/34		United States		75,056		86,669
	GNMA II SF 30 Year, 7.50%, 1/20/28 - 4/20/32		United States		18,420		21,575
							3,197,460
	Total Mortgage-Backed Securities (Cost $34,515,473)						34,778,893
	Municipal Bonds 6.0%
	Arkansas State GO, Four-Lane Highway Construction and Improvement Bonds, 3.25%, 6/15/22		United States		1,300,000		1,370,330

FSI-24 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Strategic Income VIP Fund (continued)

	Country		Principal Amount*		Value
Municipal Bonds (continued)
California State GO, Various Purpose,
6.00%, 4/01/38		United States		2,500,000	$	2,951,625
6.00%, 11/01/39		United States		160,000		192,186
5.25%, 11/01/40		United States		560,000		631,075
Refunding, 5.25%, 3/01/38		United States		1,500,000		1,632,720
Refunding, 5.00%, 4/01/38		United States		3,000,000		3,255,750
Refunding, NATL Insured, 4.50%, 12/01/32		United States		300,000		311,772
Refunding, Series 1, AGMC Insured, 4.75%, 9/01/31		United States		290,000		301,507
Colorado State ISD, GO, Mitchell and Scurry Counties, School Building, PSF Guarantee, 5.00%, 8/15/43		United States		300,000		333,369
Evansville Local Public Improvement Bond Bank Revenue, Sewage Works Project, Series A, 5.00%, 7/01/36		United States		675,000		743,580
Florida Hurricane Catastrophe Fund Finance Corp. Revenue, Series A, 2.995%, 7/01/20		United States		4,700,000		4,687,592
Hawaii State GO, Series EH, 5.00%, 8/01/30		United States		700,000		809,914
Illinois State GO,
5.877%, 3/01/19		United States		3,000,000		3,382,590
Build America Bonds, 7.35%, 7/01/35		United States		1,000,000		1,211,830
Kansas State Development Finance Authority Revenue, Wichita State University Union Corp. Student Housing Project, Refunding,     Series F-1,
5.25%, 6/01/38		United States		820,000		891,127
5.25%, 6/01/42		United States		800,000		867,368
5.00%, 6/01/46		United States		1,000,000		1,054,270
Marco Island Utility System Revenue, Refunding, 4.625%,
10/01/30		United States		350,000		381,430
10/01/31		United States		325,000		352,313
Massachusetts State GO, Consolidated Loan of 2014, Series A, 4.50%, 12/01/43		United States		2,300,000		2,427,397
Metropolitan Boston Transit Parking Corp. Systemwide Parking Revenue, senior lien, 5.00%, 7/01/41		United States		500,000		541,335
Minnesota State GO, Various Purpose, Refunding, Series F, 4.00%, 10/01/24		United States		2,650,000		2,985,516
Mississippi State GO, Series B, 5.00%, 12/01/31		United States		780,000		902,218
Nassau County GO, General Improvement Bonds, Series B, 5.00%,
4/01/39		United States		1,500,000		1,610,820
4/01/43		United States		1,600,000		1,713,328
New Jersey EDA Revenue, School Facilities Construction, Refunding, Series NN, 5.00%, 3/01/30		United States		700,000		765,247
New York City HDC Revenue, Series B1, 5.00%, 7/01/33		United States		500,000		547,745
New York City Municipal Water Finance Authority Water and Sewer System Revenue, Second General Resolution, Fiscal 2014,     Refunding, Series BB, 5.00%, 6/15/46		United States		2,430,000		2,659,076
New York GO, Sub. Series G-1, 5.00%, 4/01/27		United States		1,750,000		1,994,090
New York State Urban Development Corp. Revenue, State Personal Income Tax, General Purpose, Series C, 5.00%, 3/15/29		United States		1,500,000		1,718,265
Puerto Rico Electric Power Authority Power Revenue,
Series A, 6.75%, 7/01/36		United States		3,465,000		1,602,562
Series XX, 5.25%, 7/01/40		United States		165,000		72,643
Puerto Rico Sales Tax FICO Sales Tax Revenue,
Capital Appreciation, Series A, zero cpn., 8/01/25		United States		320,000		144,246
first subordinate, Series A, 5.75%, 8/01/37		United States		1,000,000		816,750

Semiannual Report FSI-25

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Strategic Income VIP Fund (continued)

		Country		Principal Amount*			Value
	Municipal Bonds (continued)
	Puerto Rico Sales Tax FICO Sales Tax Revenue, (continued)
	first subordinate, Series A, 6.50%, 8/01/44		United States		2,500,000		$	2,173,725
	Refunding, Series A, NATL RE, FGIC Insured, zero cpn., 8/01/45		United States		3,700,000			502,275
	Refunding, Series B, 6.05%, 8/01/37		United States		915,000			798,768
	Refunding, Series B, 6.05%, 8/01/38		United States		1,120,000			969,741
	Red River Education Financing Corp. Education Revenue, Higher Education, Texas Christian University, 5.00%, 3/15/43		United States		625,000			678,638
	South Carolina State Public Service Authority Revenue, Refunding, Series B, 5.00%, 12/01/38		United States		1,000,000			1,085,100
	University of California Revenues, General, Series AK, 5.00%, 5/15/48		United States		4,320,000			5,250,614
	Washington State GO, Various Purpose,
	Refunding, Series R-C, 5.00%, 7/01/24		United States		900,000			1,084,257
	Series D, 5.00%, 2/01/23		United States		775,000			922,111
	Total Municipal Bonds (Cost $56,978,650)							59,328,815
				Shares
	Escrows and Litigation Trusts 0.0%
	Aerospace & Defense 0.0%
a,l	Comfort Co. Inc., Escrow Account		United States		13,427			—
a,l	NewPage Corp., Litigation Trust		United States		2,500,000			—
	Total Escrows and Litigation Trusts (Cost $ —)							—
	Total Investments before Short Term Investments (Cost $834,707,979)							872,843,060
				Principal Amount*
	Short Term Investments 10.6%
	Foreign Government and Agency Securities 0.8%
r	Bank of Negara Monetary Notes, 7/08/14 - 11/06/14		Malaysia		9,365,000	MYR		2,911,269
	Government of Singapore, senior note, 3.625%, 7/01/14		Singapore		600,000	SGD		481,290
r	Philippine Treasury Bills, 7/02/14 - 11/05/14		Philippines		212,265,000	PHP		4,856,403
r	Uruguay Treasury Bill, 8/29/14		Uruguay		7,578,000	UYU		324,607
	Total Foreign Government and Agency Securities (Cost $8,547,631)							8,573,569
	Total Investments before Money Market Funds (Cost $843,255,610)							881,416,629

FSI-26 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Strategic Income VIP Fund (continued)

		Country		Shares		Value
	Money Market Funds (Cost $96,249,322) 9.8%
a,s	Institutional Fiduciary Trust Money Market Portfolio		United States		96,249,322	$	96,249,322
	Total Investments (Cost $939,504,932) 99.5%						977,665,951
	Other Assets, less Liabilities 0.5%						4,660,867
	Net Assets 100.0%					$	982,326,818

^†Rounds to less than 0.1% of net assets.

*The principal amount is stated in U.S. dollars unless otherwise indicated.

^aNon-income producing.

^bThe security is owned by FT Holdings Corporation III, a wholly-owned subsidiary of the Fund. See Note 1(g).

^cAt June 30, 2014, pursuant to the Fund’s policies and the requirements of applicable securities law, the Fund may be restricted from trading these securities for a limited or extended period of time due to ownership limits and/or potential possession of material non-public information.

^dSecurity was purchased pursuant to Rule 144A under the Securities Act of 1933 and may be sold in transactions exempt from registration only to qualified institutional buyers or in a public offering registered under the Securities Act of 1933. These securities have been deemed liquid under guidelines approved by the Trust’s Board of Trustees. At June 30, 2014, the aggregate value of these securities was $188,714,298, representing 19.21% of net assets.

^ePerpetual security with no stated maturity date.

^fThe coupon rate shown represents the rate at period end.

^gSee Note 7 regarding defaulted securities.

^hSee Note 1(f) regarding loan participation notes.

ⁱA portion or all of the security purchased on a when-issued or delayed delivery basis.

^jIncome may be received in additional securities and/or cash.

^kSee Note 1(i) regarding senior floating rate interests.

^lSecurity has been deemed illiquid because it may not be able to be sold within seven days. At June 30, 2014, the aggregate value of these securities was $170,002, representing 0.02% of net assets.

^mPrincipal amount is stated in 100 Mexican Peso Units.

ⁿPrincipal amount of security is adjusted for inflation. See Note 1(k).

^oPrincipal amount is stated in 1,000 Brazilian Real Units.

^pRedemption price at maturity is adjusted for inflation. See Note 1(k).

^qSecurity was purchased pursuant to Regulation S under the Securities Act of 1933, which exempts from registration securities offered and sold outside of the United States. Such a security cannot be sold in the United States without either an effective registration statement filed pursuant to the Securities Act of 1933, or pursuant to an exemption from registration. This security has been deemed liquid under guidelines approved by the Trust’s Board of Trustees. At June 30, 2014, the value of this security was $2,741,598, representing 0.28% of net assets.

^rThe security is traded on a discount basis with no stated coupon rate.

^sSee Note 3(e) regarding investments in the Institutional Fiduciary Trust Money Market Portfolio.

Semiannual Report FSI-27

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Strategic Income VIP Fund (continued)

At June 30, 2014, the Fund had the following forward exchange contracts outstanding. See Note 1(d).

Forward Exchange Contracts

Currency	Counterpartya		Type		Quantity		Contract Amount		Settlement Date		Unrealized Appreciation		Unrealized Depreciation
Japanese Yen		DBAB		Buy		97,929,000	$	960,371		7/01/14	$	6,312	$	—
Japanese Yen		DBAB		Sell		97,929,000		1,000,000		7/01/14		33,317		—
British Pound		DBAB		Buy		297,656		506,760		7/09/14		2,551		—
British Pound		DBAB		Sell		297,656		444,222		7/09/14		—		(65,089	)
Euro		DBAB		Buy		312,984		425,513		7/10/14		3,121		—
Euro		DBAB		Sell		312,984		404,094		7/10/14		—		(24,540	)
Euro		DBAB		Sell		190,862		252,893		7/25/14		—		(8,510	)
Euro		BZWS		Sell		1,993,000		2,639,529		7/28/14		—		(90,096	)
Euro		CITI		Sell		648,569		858,916		7/28/14		—		(29,368	)
British Pound		DBAB		Sell		169,385		257,905		7/30/14		—		(31,873	)
Euro		DBAB		Buy		656,385		899,717		8/01/14		2,178		(2,894	)
Euro		DBAB		Sell		900,000		1,191,825		8/01/14		—		(40,838	)
Euro		JPHQ		Sell		667,276		882,608		8/06/14		—		(31,324	)
Euro		CITI		Sell		317,220		422,315		8/08/14		—		(12,167	)
Chilean Peso		BZWS		Buy		743,650,000		1,382,121		8/11/14		—		(43,383	)
Euro		CITI		Sell		92,411		123,136		8/11/14		—		(3,436	)
Chilean Peso		JPHQ		Buy		1,141,336,600		2,148,196		8/20/14		—		(95,407	)
Japanese Yen		HSBC		Sell		65,957,000		679,969		8/20/14		28,645		—
Japanese Yen		JPHQ		Sell		47,983,000		493,588		8/20/14		19,758		—
Euro		JPHQ		Sell		3,500,000		4,678,783		8/21/14		—		(115,190	)
Japanese Yen		BZWS		Sell		15,895,000		163,934		8/22/14		6,969		—
Euro		BZWS		Sell		704,462		944,395		8/25/14		—		(20,523	)
Japanese Yen		CITI		Sell		31,757,000		326,915		8/25/14		13,305		—
Japanese Yen		HSBC		Sell		31,524,000		323,685		8/25/14		12,376		—
Euro		DBAB		Sell		527,245		704,399		8/26/14		—		(17,782	)
Japanese Yen		BZWS		Sell		44,152,000		449,156		8/26/14		13,139		—
Japanese Yen		JPHQ		Sell		31,689,000		322,365		8/26/14		9,425		—
Euro		JPHQ		Sell		211,135		281,762		8/27/14		—		(7,436	)
Japanese Yen		DBAB		Sell		27,184,000		275,420		8/27/14		6,967		—
Japanese Yen		HSBC		Sell		50,145,000		508,122		8/27/14		12,918		—
Japanese Yen		JPHQ		Sell		15,991,000		162,242		8/27/14		4,324		—
Singapore Dollar		DBAB		Buy		940,000		735,352		8/27/14		18,682		—
Euro		DBAB		Sell		1,174,984		1,568,731		8/28/14		—		(40,685	)
Japanese Yen		JPHQ		Sell		15,743,000		162,024		8/29/14		6,553		—
Euro		BZWS		Sell		178,354		238,281		9/19/14		—		(6,040	)
Euro		UBSW		Sell		2,137,312		2,856,732		9/22/14		—		(71,137	)
Euro		DBAB		Sell		275,651		374,008		9/23/14		—		(3,603	)
Euro		BZWS		Sell		469,210		635,198		9/24/14		—		(7,571	)
Euro		DBAB		Sell		1,550,000		2,093,074		9/30/14		—		(30,321	)
Euro		JPHQ		Sell		2,850,000		3,886,730		10/07/14		—		(17,700	)
Euro		DBAB		Sell		185,654		251,914		10/08/14		—		(2,429	)
Euro		BZWS		Sell		2,749,000		3,718,627		10/14/14		—		(47,555	)
Euro		DBAB		Sell		121,043		163,672		10/15/14		—		(2,160	)
Euro		DBAB		Sell		587,951		795,880		10/17/14		—		(9,635	)
Malaysian Ringgit		JPHQ		Buy		763,000		235,851		10/20/14		316		—
Chilean Peso		CITI		Buy		377,668,000		724,891		10/24/14		—		(49,916	)
Japanese Yen		JPHQ		Sell		270,990,000		2,763,554		10/24/14		86,144		—
Malaysian Ringgit		DBAB		Buy		6,892,000		2,140,040		10/24/14		—		(7,321	)
Malaysian Ringgit		HSBC		Buy		6,809,796		2,103,087		10/24/14		4,194		—
Euro		BZWS		Sell		217,715		299,754		10/27/14		1,463		—
Euro		GSCO		Sell		369,000		509,146		10/29/14		3,575		—
Euro		DBAB		Sell		243,767		329,122		10/30/14		—		(4,868	)
Euro		DBAB		Sell		744,524		1,028,195		10/31/14		8,104		—
Euro		BZWS		Sell		529,706		716,374		11/05/14		—		(9,405	)
Japanese Yen		JPHQ		Sell		360,360,000		3,678,695		11/05/14		117,894		—
Euro		DBAB		Sell		740,000		997,705		11/07/14		—		(16,219	)
Japanese Yen		DBAB		Sell		245,702,500		2,500,000		11/07/14		72,110		—
Euro		JPHQ		Sell		473,670		631,611		11/12/14		—		(17,412	)
Euro		DBAB		Sell		800,000		1,076,736		11/14/14		—		(19,433	)

FSI-28 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Strategic Income VIP Fund (continued)

Forward Exchange Contracts (continued)

Currency	Counterpartya		Type		Quantity		Contract Amount		Settlement Date		Unrealized Appreciation			Unrealized Depreciation
Japanese Yen		MSCO		Sell		12,500,000	$	125,800		11/14/14	$	2,274		$	—
Euro		DBAB		Sell		227,970		306,442		11/17/14		—			(5,930	)
Euro		DBAB		Sell		63,419		85,419		11/19/14		—			(1,480	)
Malaysian Ringgit		DBAB		Buy		623,200		191,242		11/19/14		1,305			—
Euro		JPHQ		Sell		1,702,433		2,304,430		11/20/14		—			(28,327	)
Malaysian Ringgit		HSBC		Buy		376,000		115,479		11/20/14		685			—
Euro		DBAB		Sell		1,245,000		1,688,936		12/04/14		—			(17,132	)
Euro		DBAB		Buy		2,872,000		4,001,414		12/09/14		—			(65,720	)
Euro		DBAB		Sell		3,400,000		4,645,114		12/09/14		—			(14,134	)
Euro		DBAB		Buy		548,290		745,307		12/11/14		6,058			—
Euro		DBAB		Sell		800,000		1,097,800		12/11/14		1,496			—
Euro		DBAB		Sell		1,200,000		1,652,520		12/12/14		8,057			—
Japanese Yen		JPHQ		Sell		187,760,000		1,833,764		12/12/14		—			(22,188	)
Euro		CITI		Sell		3,868,000		5,309,874		12/17/14		9,102			—
Euro		DBAB		Sell		486,875		667,993		12/17/14		771			—
Euro		DBAB		Sell		501,617		689,772		12/18/14		2,345			—
Chilean Peso		BZWS		Buy		477,650,000		823,534		1/09/15		24,189			—
Chilean Peso		DBAB		Buy		140,000,000		241,421		1/09/15		7,048			—
Euro		BZWS		Sell		4,116,197		5,626,760		1/09/15		5,983			(20,774	)
Euro		DBAB		Buy		5,250,258		7,234,053		1/09/15		8,068			(46,255	)
Euro		DBAB		Sell		7,328,957		9,971,255		1/09/15		—			(73,621	)
Euro		JPHQ		Sell		7,574,544		10,313,425		1/09/15		3,754			(71,800	)
Indian Rupee		DBAB		Buy		307,316,000		4,589,980		1/09/15		356,372			—
Indian Rupee		HSBC		Buy		144,338,000		2,139,801		1/09/15		183,367			—
Indian Rupee		JPHQ		Buy		23,701,000		356,835		1/09/15		24,640			—
Japanese Yen		BZWS		Sell		136,513,000		1,336,671		1/09/15		—			(13,068	)
Japanese Yen		CITI		Sell		127,820,000		1,250,365		1/09/15		—			(13,425	)
Japanese Yen		DBAB		Sell		987,554,000		9,622,124		1/09/15		—			(142,079	)
Japanese Yen		GSCO		Sell		42,760,000		417,639		1/09/15		—			(5,140	)
Japanese Yen		HSBC		Sell		247,910,000		2,397,324		1/09/15		903			(54,729	)
Japanese Yen		JPHQ		Sell		149,719,000		1,472,570		1/09/15		1,104			(8,845	)
Singapore Dollar		DBAB		Buy		1,663,000		1,319,773		1/09/15		14,452			—
Euro		DBAB		Sell		3,561,422		4,905,641		2/09/15		23,645			—
Euro		JPHQ		Sell		1,889,700		2,614,801		2/09/15		24,401			—
Indian Rupee		CITI		Buy		4,537,000		68,123		2/09/15		4,456			—
Japanese Yen		DBAB		Sell		257,790,000		2,516,252		2/09/15		—			(33,290	)
Japanese Yen		HSBC		Sell		85,800,000		837,049		2/09/15		—			(11,513	)
Japanese Yen		JPHQ		Sell		181,500,000		1,771,692		2/09/15		—			(23,342	)
Singapore Dollar		DBAB		Buy		973,400		768,575		2/09/15		12,426			—
Singapore Dollar		JPHQ		Buy		694,000		548,088		2/09/15		8,738	��		—
Swedish Krona		DBAB		Buy		91,336,000		14,011,490		2/09/15		—			(367,342	)
British Pound		DBAB		Sell		380,363		643,957		3/09/15		—			(4,955	)
Chilean Peso		DBAB		Buy		314,000,000		543,629		3/09/15		10,750			—
Chilean Peso		JPHQ		Buy		234,301,000		408,546		3/09/15		5,121			—
Chilean Peso		MSCO		Buy		220,380,000		389,861		3/09/15		1,081			(1,853	)
Euro		BZWS		Sell		132,570		182,984		3/09/15		1,230			—
Euro		DBAB		Buy		693,250		960,637		3/09/15		—			(10,188	)
Euro		DBAB		Sell		14,178,711		19,458,828		3/09/15		79,734			(59,973	)
Euro		HSBC		Sell		142,717		196,450		3/09/15		784			—
Euro		JPHQ		Sell		2,118,679		2,926,091		3/09/15		21,374			—
Japanese Yen		DBAB		Sell		780,622,000		7,656,519		3/09/15		183			(65,942	)
Japanese Yen		HSBC		Sell		80,270,000		785,267		3/09/15		—			(8,801	)
Japanese Yen		JPHQ		Sell		235,580,000		2,304,140		3/09/15		—			(26,327	)
Singapore Dollar		DBAB		Buy		7,316,140		5,840,520		3/09/15		29,821			—
Singapore Dollar		HSBC		Buy		837,000		669,900		3/09/15		1,694			—
Singapore Dollar		JPHQ		Buy		4,945,200		3,938,045		3/09/15		29,896			—
Unrealized appreciation (depreciation)												1,411,647			(2,221,439	)
Net unrealized appreciation (depreciation)														$	(809,792	)

^aMay be comprised of multiple contracts using the same currency and settlement date.

Semiannual Report FSI-29

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Strategic Income VIP Fund (continued)

At June 30, 2014, the Fund had the following credit default swap contracts outstanding. See Note 1(d).

Credit Default Swap Contracts

Description	Counterparty / Exchange		Notional Amounta		Periodic Payment Rate			Expiration Date		Upfront Premiums Paid (Received)			Unrealized Appreciation		Unrealized Depreciation		Market Value			Ratingb
OTC Swaps
Contracts to Sell Protectionc
Single Name
People’s Republic of China		BZWS		1,500,000		1.00	%		3/20/19	$	2,682		$	19,805		$    —	$	22,487		AA-
People’s Republic of China		JPHQ		7,500,000		1.00	%		3/20/19		19,549			92,886		—		112,435		AA-
Republic of Brazil		FBCO		3,000,000		1.00	%		3/20/19		(137,892	)		96,325		—		(41,567	)	BBB-
Traded Index
CMBX.NA.AJ.2		FBCO		2,730,154		1.09	%		3/15/49		(381,238	)		179,722		—		(201,516	)	Non Investment Grade
MCDX.NA.21		CITI		16,000,000		1.00	%		12/20/18		(268,039	)		232,529		—		(35,510	)	Non Investment Grade
Net unrealized appreciation (depreciation)													$	621,267

^aIn U.S. dollars unless otherwise indicated. For contracts to sell protection, the notional amount is equal to the maximum potential amount of the future payments and no recourse provisions have been entered into in association with the contracts.

^bBased on Standard and Poor’s (S&P) Rating for single name swaps and internal ratings for index swaps. Internal ratings based on mapping into equivalent ratings from external vendors.

^cThe fund enters contracts to sell protection to create a long credit position. Performance triggers include default, bankruptcy or restructuring for single name swaps and failure to pay or bankruptcy of the underlying securities for traded index swaps.

See Note 9 regarding other derivative information.

See Abbreviations on page FSI-47.

FSI-30 Semiannual Report   |    The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Financial Statements

Statement of Assets and Liabilities

June 30, 2014 (unaudited)

	Franklin Strategic Income VIP Fund
Assets:
Investments in securities:
Cost - Unaffiliated issuers	$	843,255,610
Cost - Sweep Money Fund (Note 3e)		96,249,322
Total cost of investments	$	939,504,932
Value - Unaffiliated issuers	$	881,416,629
Value - Sweep Money Fund (Note 3e)		96,249,322
Total value of investments		977,665,951
Cash		847,920
Restricted cash (Note 1e)		56,000
Foreign currency, at value (cost $9,368,585)		9,381,912
Receivables:
Investment securities sold		13,191,188
Capital shares sold		282,729
Dividends and interest		10,283,361
Due from brokers		1,170,000
OTC swaps (premiums paid $24,165)		22,231
Unrealized appreciation on forward exchange contracts		1,411,647
Unrealized appreciation on OTC swap contracts		621,267
Other assets		469
Total assets		1,014,934,675
Liabilities:
Payables:
Investment securities purchased		26,636,164
Capital shares redeemed		1,975,612
Management fees		458,279
Distribution fees		158,966
Due to brokers		56,000
OTC Swaps (premiums received $852,539)		787,169
Unrealized depreciation on forward exchange contracts		2,221,439
Unrealized depreciation on unfunded loan commitments (Note 8)		16,846
Deferred tax		24,637
Accrued expenses and other liabilities		272,745
Total liabilities		32,607,857
Net assets, at value	$	982,326,818
Net assets consist of:
Paid-in capital	$	920,364,886
Undistributed net investment income		13,623,331
Net unrealized appreciation (depreciation)		37,950,556
Accumulated net realized gain (loss)		10,388,045
Net assets, at value	$	982,326,818

The accompanying notes are an integral part of these financial statements.    |   Semiannual Report FSI-31

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL STATEMENTS

Statement of Assets and Liabilities (continued)

June 30, 2014 (unaudited)

	Franklin Strategic Income VIP Fund
Class 1:
Net assets, at value	$	656,691,116
Shares outstanding		54,038,177
Net asset value and maximum offering price per share	$	12.15
Class 2:
Net assets, at value	$	193,514,185
Shares outstanding		16,387,877
Net asset value and maximum offering price per share	$	11.81
Class 4:
Net assets, at value	$	132,121,517
Shares outstanding		10,961,211
Net asset value and maximum offering price per share	$	12.05

FSI-32 Semiannual Report   |    The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL STATEMENTS

Statement of Operations

for the six months ended June 30, 2014 (unaudited)

	Franklin Strategic Income VIP Fund
Investment income:
Dividends	$	28,941
Interest		24,727,901
Total investment income		24,756,842
Expenses:
Management fees (Note 3a)		2,851,686
Distribution fees: (Note 3c)
Class 2		228,359
Class 4		235,691
Custodian fees (Note 4)		66,736
Reports to shareholders		94,326
Registration and filing fees		126
Professional fees		41,524
Trustees’ fees and expenses		2,558
Other		39,011
Total expenses		3,560,017
Expense reductions (Note 4)		(613	)
Expenses waived/paid by affiliates (Note 3e)		(35,336	)
Net expenses		3,524,068
Net investment income		21,232,774
Realized and unrealized gains (losses):
Net realized gain (loss) from:
Investments		10,777,634
Foreign currency transactions		(491,481	)
Swap contracts		356,710
Net realized gain (loss)		10,642,863
Net change in unrealized appreciation (depreciation) on:
Investments		9,765,603
Translation of other assets and liabilities denominated in foreign currencies		(274,353	)
Change in deferred taxes on unrealized appreciation		(13,508	)
Net change in unrealized appreciation (depreciation)		9,477,742
Net realized and unrealized gain (loss)		20,120,605
Net increase (decrease) in net assets resulting from operations	$	41,353,379

The accompanying notes are an integral part of these financial statements.    |   Semiannual Report FSI-33

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL STATEMENTS

Statements of Changes in Net Assets

	Franklin Strategic Income VIP Fund
	Six Months Ended June 30, 2014 (unaudited)			Year Ended December 31, 2013
Increase (decrease) in net assets:
Operations:
Net investment income	$	21,232,774		$	54,238,182
Net realized gain (loss) from investments, foreign currency transactions and swap contracts		10,642,863			22,020,933
Net change in unrealized appreciation (depreciation) on investments, translation of other assets and liabilities denominated in foreign currencies and deferred taxes		9,477,742			(37,991,817	)
Net increase (decrease) in net assets resulting from operations		41,353,379			38,267,298
Distributions to shareholders from:
Net investment income and net foreign currency gains:
Class 1		(39,220,893	)		(54,987,119	)
Class 2		(11,269,863	)		(10,246,664	)
Class 4		(7,512,342	)		(10,775,092	)
Net realized gains:
Class 1		(12,517,628	)		(11,433,439	)
Class 2		(3,732,579	)		(2,203,428	)
Class 4		(2,588,163	)		(2,384,488	)
Total distributions to shareholders		(76,841,468	)		(92,030,230	)
Capital share transactions: (Note 2)
Class 1		(25,486,396	)		(275,817,937	)
Class 2		25,715,487			23,867,593
Class 4		1,815,697			(52,983,286	)
Total capital share transactions		2,044,788			(304,933,630	)
Net increase (decrease) in net assets		(33,443,301	)		(358,696,562	)
Net assets:
Beginning of period		1,015,770,119			1,374,466,681
End of period	$	982,326,818		$	1,015,770,119
Undistributed net investment income included in net assets:
End of period	$	13,623,331		$	50,393,655

FSI-34 Semiannual Report   |    The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Notes to Financial Statements (unaudited)

Franklin Strategic Income VIP Fund

1. Organization and Significant Accounting Policies

Franklin Templeton Variable Insurance Products Trust (Trust) is registered under the Investment Company Act of 1940, as amended, (1940 Act) as an open-end management investment company, consisting of twenty separate funds and applies the specialized accounting and reporting guidance in U.S. Generally Accepted Accounting Principles (U.S. GAAP). The Franklin Strategic Income VIP Fund (Fund) is included in this report. The financial statements of the remaining funds in the Trust are presented separately. Shares of the Fund are generally sold only to insurance company separate accounts to fund the benefits of variable life insurance policies or variable annuity contracts. At June 30, 2014, 81.26% of the Fund’s shares were held through one insurance company. Investment activities of these insurance company separate accounts could have a material impact on the Fund. The Fund offers three classes of shares: Class 1, Class 2, and Class 4. Each class of shares differs by its distribution fees, voting rights on matters affecting a single class and its exchange privilege.

Effective May 1, 2014, the Franklin Strategic Income Securities Fund was renamed the Franklin Strategic Income VIP Fund.

The following summarizes the Fund’s significant accounting policies.

a. Financial Instrument Valuation

The Fund’s investments in financial instruments are carried at fair value daily. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. The Fund calculates the net asset value (NAV) per share at the close of the New York Stock Exchange (NYSE), generally at 4 p.m. Eastern time (NYSE close) on each day the NYSE is open for trading. Under compliance policies and procedures approved by the Trust’s Board of Trustees (the Board), the Fund’s administrator has responsibility for oversight of valuation, including leading the cross-functional Valuation and Liquidity Oversight Committee (VLOC). The VLOC provides administration and oversight of the Fund’s valuation policies and procedures, which are approved annually by the Board. Among other things, these procedures allow the Fund to utilize independent pricing services, quotations from securities and financial instrument dealers, and other market sources to determine fair value.

Equity securities listed on an exchange or on the NASDAQ National Market System are valued at the last quoted sale price or the official closing price of the day, respectively. Foreign equity securities are valued as of the close of trading on the foreign stock exchange on which the security is primarily traded or as of the NYSE close, whichever is earlier. The value is then converted into its U.S. dollar equivalent at the foreign exchange rate in effect at the NYSE close on the day that the value of the security is determined. Over-the-counter (OTC) securities are valued within the range of the most recent quoted bid and ask prices. Securities that trade in multiple markets or on multiple exchanges are valued according to the broadest and most representative market. Certain equity securities are valued based upon fundamental characteristics or relationships to similar securities. Investments in open-end mutual funds are valued at the closing net asset value.

Debt securities generally trade in the OTC market rather than on a securities exchange. The Fund’s pricing services use multiple valuation techniques to determine fair value. In instances where sufficient market activity exists, the pricing services may utilize a market-based approach through which quotes from market makers are used to determine fair value. In instances where sufficient market activity may not exist or is limited, the pricing services also utilize proprietary valuation models which may consider market characteristics such as benchmark yield curves, credit spreads, estimated default rates, anticipated market interest rate volatility, coupon rates, anticipated timing of principal repayments, underlying collateral, and other unique security features in order to estimate the relevant cash flows, which are then discounted to calculate the fair value. Securities denominated in a foreign currency are converted into their U.S. dollar equivalent at the foreign exchange rate in effect at the NYSE close on the date that the values of the foreign debt securities are determined.

Certain derivative financial instruments (derivatives) trade in the OTC market. The Fund’s pricing services use various techniques including industry standard option pricing models and proprietary discounted cash flow models to determine the fair value of those instruments. The Fund’s net benefit or obligation under the derivative contract, as measured by the fair value of the contract, is included in net assets.

The Fund has procedures to determine the fair value of financial instruments for which market prices are not reliable or readily available. Under these procedures, the VLOC convenes on a

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FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Strategic Income VIP Fund (continued)

1. Organization and Significant Accounting Policies (continued)

a. Financial Instrument Valuation (continued)

regular basis to review such financial instruments and considers a number of factors, including significant unobservable valuation inputs, when arriving at fair value. The VLOC primarily employs a market-based approach which may use related or comparable assets or liabilities, recent transactions, market multiples, book values, and other relevant information for the investment to determine the fair value of the investment. An income-based valuation approach may also be used in which the anticipated future cash flows of the investment are discounted to calculate fair value. Discounts may also be applied due to the nature or duration of any restrictions on the disposition of the investments. Due to the inherent uncertainty of valuations of such investments, the fair values may differ significantly from the values that would have been used had an active market existed. The VLOC employs various methods for calibrating these valuation approaches including a regular review of key inputs and assumptions, transactional back-testing or disposition analysis, and reviews of any related market activity.

Trading in securities on foreign securities stock exchanges and OTC markets may be completed before the daily NYSE close. In addition, trading in certain foreign markets may not take place on every NYSE business day. Occasionally, events occur between the time at which trading in a foreign security is completed and the close of the NYSE that might call into question the reliability of the value of a portfolio security held by the Fund. As a result, differences may arise between the value of the Fund’s portfolio securities as determined at the foreign market close and the latest indications of value at the close of the NYSE. In order to minimize the potential for these differences, the VLOC monitors price movements following the close of trading in foreign stock markets through a series of country specific market proxies (such as baskets of American Depositary Receipts, futures contracts and exchange traded funds). These price movements are measured against established trigger thresholds for each specific market proxy to assist in determining if an event has occurred that may call into question the reliability of the values of the foreign securities held by the Fund. If such an event occurs, the securities may be valued using fair value procedures, which may include the use of independent pricing services.

Also, when the last day of the reporting period is a non-business day, certain foreign markets may be open on those days that the NYSE is closed, which could result in differences between the value of the Fund’s portfolio securities on the last business day and the last calendar day of the reporting period. Any significant security valuation changes due to an open foreign market are adjusted and reflected by the Fund for financial reporting purposes.

b. Foreign Currency Translation

Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars based on the exchange rate of such currencies against U.S. dollars on the date of valuation. The Fund may enter into foreign currency exchange contracts to facilitate transactions denominated in a foreign currency. Purchases and sales of securities, income and expense items denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date. Portfolio securities and assets and liabilities denominated in foreign currencies contain risks that those currencies will decline in value relative to the U.S. dollar. Occasionally, events may impact the availability or reliability of foreign exchange rates used to convert the U.S. dollar equivalent value. If such an event occurs, the foreign exchange rate will be valued at fair value using procedures established and approved by the Board.

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

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

c. Securities Purchased on a When-Issued and Delayed Delivery Basis

The Fund purchases securities on a when-issued and delayed delivery basis, with payment and delivery scheduled for a future date. These transactions are subject to market fluctuations and

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NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Strategic Income VIP Fund (continued)

are subject to the risk that the value at delivery may be more or less than the trade date purchase price. Although the Fund will generally purchase these securities with the intention of holding the securities, it may sell the securities before the settlement date. Sufficient assets have been segregated for these securities.

d. Derivative Financial Instruments

The Fund invested in derivatives in order to manage risk or gain exposure to various other investments or markets. Derivatives are financial contracts based on an underlying or notional amount, require no initial investment or an initial net investment that is smaller than would normally be required to have a similar response to changes in market factors, and require or permit net settlement. Derivatives contain various risks including the potential inability of the counterparty to fulfill their obligations under the terms of the contract, the potential for an illiquid secondary market, and/or the potential for market movements which expose the Fund to gains or losses in excess of the amounts shown on the Statement of Assets and Liabilities. Realized gain and loss and unrealized appreciation and depreciation on these contracts for the period are included in the Statement of Operations.

Derivative counterparty credit risk is managed through a formal evaluation of the creditworthiness of all potential counterparties. The Fund attempts to reduce its exposure to counterparty credit risk on OTC derivatives, whenever possible, by entering into International Swaps and Derivatives Association (ISDA) master agreements with certain counterparties. These agreements contain various provisions, including but not limited to collateral requirements, events of default, or early termination. Termination events applicable to the counterparty include certain deteriorations in the credit quality of the counterparty. Termination events applicable to the Fund include failure of the Fund to maintain certain net asset levels and/or limit the decline in net assets over various periods of time. In the event of default or early termination, the ISDA master agreement gives the non-defaulting party the right to net and close-out all transactions traded, whether or not arising under the ISDA agreement, to one net amount payable by one counterparty to the other. However, absent an event of default or early termination, OTC derivative assets and liabilities are presented gross and not offset in the Statement of Assets and Liabilities. Early termination by the counterparty may result in an immediate payment by the Fund of any net liability owed to that counterparty under the ISDA agreement.

Collateral requirements differ by type of derivative. Collateral terms are contract specific for OTC derivatives. For OTC derivatives traded under an ISDA master agreement, posting of collateral is required by either the fund or the applicable counterparty if the total net exposure of all OTC derivatives with the applicable counterparty exceeds the minimum transfer amount, which typically ranges from $100,000 to $250,000, and can vary depending on the counterparty and the type of the agreement. Generally, collateral is determined at the close of fund business each day and any additional collateral required due to changes in derivative values may be delivered by the fund or the counterparty within a few business days. Collateral pledged and/or received by the fund, if any, is held in segregated accounts with the fund’s custodian/counterparty broker and can be in the form of cash and/or securities. Unrestricted cash may be invested according to the Fund’s investment objectives.

The Fund entered into OTC forward exchange contracts primarily to manage and/or gain exposure to certain foreign currencies. A forward exchange contract is an agreement between the Fund and a counterparty to buy or sell a foreign currency at a specific exchange rate on a future date.

The Fund entered into credit default swap contracts primarily to manage exposure to credit risk. A credit default swap is an agreement between the Fund and a counterparty whereby the buyer of the contract receives credit protection and the seller of the contract guarantees the credit worthiness of a referenced debt obligation. These agreements may be privately negotiated in the over-the-counter market (“OTC credit default swaps”) or may be executed in a multilateral trade facility platform, such as a registered exchange (“centrally cleared credit default swaps”). The underlying referenced debt obligation may be a single issuer of corporate or sovereign debt, a credit index, or a tranche of a credit index. In the event of a default of the underlying referenced debt obligation, the buyer is entitled to receive the notional amount of the credit default swap contract from the seller in exchange for the referenced debt obligation, a net settlement amount equal to the notional amount of the credit default swap less the recovery value of the referenced debt obligation, or other agreed upon amount. For centrally cleared credit default swaps, required initial margins are pledged by the Fund, and the daily change in fair value is accounted for as a variation margin payable or receivable on the Statement of Assets and Liabilities. Over the term of the contract, the buyer pays the seller a periodic stream of payments, provided that no event of default has occurred. Such periodic payments are accrued daily

Semiannual Report FSI-37

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Strategic Income VIP Fund (continued)

1. Organization and Significant Accounting Policies (continued)

d. Derivative Financial Instruments (continued)

as an unrealized appreciation or depreciation until the payments are made, at which time they are realized. Payments received or paid to initiate a credit default swap contract are reflected on the Statement of Assets and Liabilities and represent compensating factors between stated terms of the credit default swap agreement and prevailing market conditions (credit spreads and other relevant factors). These upfront payments are amortized over the term of the contract as a realized gain or loss on the Statement of Operations.

See Note 9 regarding other derivative information.

e. Restricted Cash

At June 30, 2014, the Fund received restricted cash in connection with investments in certain derivative securities. Restricted cash is held in a segregated account with the Fund’s custodian and is reflected in the Statement of Assets and Liabilities.

f. Loan Participation Notes

The Fund invests in loan participation notes (“Participations”). Participations are loans originally issued to a borrower by one or more financial institutions (the “Lender”) and subsequently sold to other investors, such as the Fund. Participations typically result in the Fund having a contractual relationship only with the Lender and not with the borrower. The Fund has the right to receive from the Lender any payments of principal, interest and fees which the Lender received from the borrower. The Fund generally has no rights to either enforce compliance by the borrower with the terms of the loan agreement or to any collateral relating to the original loan. As a result, the Fund assumes the credit risk of both the borrower and the Lender that is selling the Participation. The Participations may also involve interest rate risk and liquidity risk, including the potential default or insolvency of the borrower and/or the Lender.

g. FT Holdings Corporation III (FT Subsidiary)

The Fund invests in certain financial instruments through its investment in the FT Subsidiary. The FT Subsidiary is a Delaware Corporation, is a wholly-owned subsidiary of the Fund, and is able to invest in certain financial instruments consistent with the investment objective of the Fund. At June 30, 2014, the FT Subsidiary’s investment, Turtle Bay Resort, as well as any

other assets and liabilities of the FT Subsidiary are reflected in the Fund’s Statement of Investments and Statement of Assets and Liabilities. The financial statements have been consolidated and include the accounts of the Fund and the FT Subsidiary. All intercompany transactions and balances have been eliminated.

h. Mortgage Dollar Rolls

The Fund enters into mortgage dollar rolls, typically on a to-be-announced basis. Mortgage dollar rolls are agreements between the Fund and a financial institution to simultaneously sell and repurchase mortgage-backed securities at a future date. Gains or losses are realized on the initial sale, and the difference between the repurchase price and the sale price is recorded as an unrealized gain or loss to the Fund upon entering into the mortgage dollar roll. In addition, the Fund may invest the cash proceeds that are received from the initial sale. During the period between the sale and repurchase, the Fund is not entitled to principal and interest paid on the mortgage backed securities. The risks of mortgage dollar roll transactions include the potential inability of the counterparty to fulfill its obligations.

i. Senior Floating Rate Interests

The Fund invests in senior secured corporate loans that pay interest at rates which are periodically reset by reference to a base lending rate plus a spread. These base lending rates are generally the prime rate offered by a designated U.S. bank or the London InterBank Offered Rate (LIBOR). Senior secured corporate loans often require prepayment of principal from excess cash flows or at the discretion of the borrower. As a result, actual maturity may be substantially less than the stated maturity. Senior secured corporate loans in which the Fund invests are generally readily marketable, but may be subject to certain restrictions on resale.

j. Income and Deferred Taxes

It is the Fund’s policy to qualify as a regulated investment company under the Internal Revenue Code. The Fund intends to distribute to shareholders substantially all of its taxable income and net realized gains to relieve it from federal income and if applicable, excise taxes. As a result, no provision for U.S. federal income taxes is required.

The Fund may be subject to foreign taxation related to income received, capital gains on the sale of securities and certain foreign currency transactions in the foreign jurisdictions in which it invests. Foreign taxes, if any, are recorded based on the

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NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Strategic Income VIP Fund (continued)

tax regulations and rates that exist in the foreign markets in which the Fund invests. When a capital gain tax is determined to apply the Fund records an estimated deferred tax liability in an amount that would be payable if the securities were disposed of on the valuation date.

The Fund recognizes the tax benefits of uncertain tax positions only when the position is “more likely than not” to be sustained upon examination by the tax authorities based on the technical merits of the tax position. As of June 30, 2014, and for all open tax years, the Fund has determined that no liability for unrecognized tax benefits is required in the Fund’s financial statements related to uncertain tax positions taken on a tax return (or expected to be taken on future tax returns). Open tax years are those that remain subject to examination and are based on each tax jurisdiction statute of limitation.

k. Security Transactions, Investment Income, Expenses and Distributions

Security transactions are accounted for on trade date. Realized gains and losses on security transactions are determined on a specific identification basis. Interest income and estimated expenses are accrued daily. Amortization of premium and accretion of discount on debt securities are included in interest income. Facility fees are recognized as income over the expected term of the loan. Dividend income is recorded on the ex-dividend date. Distributions to shareholders are recorded on the ex-dividend date and are determined according to income tax regulations (tax basis). Distributable earnings determined on a tax basis may differ from earnings recorded in accordance with accounting principles generally accepted in the United States of America. These differences may be permanent or temporary. Permanent differences are reclassified among capital accounts to reflect their tax character. These reclassifications have no impact on net assets or the results of operations. Temporary differences are not reclassified, as they may reverse in subsequent periods.

Common expenses incurred by the Trust are allocated among the funds based on the ratio of net assets of each fund to the

combined net assets of the Trust. Fund specific expenses are charged directly to the fund that incurred the expense.

Realized and unrealized gains and losses and net investment income, not including class specific expenses, are allocated daily to each class of shares based upon the relative proportion of net assets of each class. Differences in per share distributions, by class, are generally due to differences in class specific expenses.

Inflation-indexed bonds are adjusted for inflation through periodic increases or decreases in the security’s interest accruals, face amount, or principal redemption value, by amounts corresponding to the rate of inflation as measured by an index. Any increase or decrease in the face amount or principal redemption value will be included as interest income on the Statement of Operations.

l. Accounting Estimates

The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the amounts of income and expenses during the reporting period. Actual results could differ from those estimates.

m. Guarantees and Indemnifications

Under the Trust’s organizational documents, its officers and trustees are indemnified by the Trust against certain liabilities arising out of the performance of their duties to the Trust. Additionally, in the normal course of business, the Trust, on behalf of the Fund, enters into contracts with service providers that contain general indemnification clauses. The Trust’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Trust that have not yet occurred. Currently, the Trust expects the risk of loss to be remote.

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FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Strategic Income VIP Fund (continued)

2. Shares of Beneficial Interest

At June 30, 2014, there were an unlimited number of shares authorized (without par value). Transactions in the Fund’s shares were as follows:

	Six Months Ended June 30, 2014						Year Ended December 31, 2013
	Shares			Amount			Shares			Amount
Class 1 Shares:
Shares sold		394,638		$	5,020,821			782,903		$	10,091,023
Shares issued in reinvestment of distributions		4,268,855			51,738,520			5,373,832			66,420,558
Shares redeemed		(6,429,009	)		(82,245,737	)		(27,765,536	)		(352,329,518	)
Net increase (decrease)		(1,765,516	)	$	(25,486,396	)		(21,608,801	)	$	(275,817,937	)
Class 2 Shares:
Shares sold		2,516,497		$	31,336,075			4,461,765		$	56,022,684
Shares issued in reinvestment of distributions		1,273,552			15,002,442			1,034,061			12,450,092
Shares redeemed		(1,654,459	)		(20,623,030	)		(3,579,730	)		(44,605,183	)
Net increase (decrease)		2,135,590		$	25,715,487			1,916,096		$	23,867,593
Class 4 Shares:
Shares sold		396,814		$	4,985,004			930,235		$	11,782,444
Shares issued on reinvestment of distributions		839,610			10,100,506			1,074,251			13,159,580
Shares redeemed		(1,061,217	)		(13,269,813	)		(6,283,838	)		(77,925,310	)
Net increase (decrease)		175,207		$	1,815,697			(4,279,352	)	$	(52,983,286	)

3. Transactions With Affiliates

Franklin Resources, Inc. is the holding company for various subsidiaries that together are referred to as Franklin Templeton Investments. Certain officers and trustees of the Fund are also officers and/or directors of the following subsidiaries:

Subsidiary	Affiliation
Franklin Advisers, Inc. (Advisers)	Investment manager
Franklin Templeton Services, LLC (FT Services)	Administrative manager
Franklin Templeton Distributors, Inc. (Distributors)	Principal underwriter
Franklin Templeton Investor Services, LLC (Investor Services)	Transfer agent

a. Management Fees

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

Annualized Fee Rate	Net Assets
0.625%	Up to and including $500 million
0.525%	Over $500 million, up to and including $1 billion
0.480%	Over $1 billion, up to and including $1.5 billion
0.435%	Over $1.5 billion, up to and including $6.5 billion
0.415%	Over $6.5 billion, up to and including $11.5 billion
0.400%	Over $11.5 billion, up to and including $16.5 billion

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NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Strategic Income VIP Fund (continued)

Annualized Fee Rate	Net Assets
0.390%	Over $16.5 billion, up to and including $19 billion
0.380%	Over $19 billion, up to and including $21.5 billion
0.370%	In excess of $21.5 billion

b. Administrative Fees

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

c. Distribution Fees

The Board has adopted distribution plans for Class 2 and Class 4 shares pursuant to Rule 12b-1 under the 1940 Act. Under the Fund’s compensation distribution plans, the Fund pays Distributors for costs incurred in connection with the servicing, sale and distribution of the Fund’s shares up to 0.25%, and 0.35% per year of its average daily net assets of Class 2 and Class 4, respectively. Some distribution fees are not charged on shares held by affiliates. The plan year, for purposes of monitoring compliance with the maximum annual plan rates, is February 1 through January 31.

d. Transfer Agent Fees

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

e. Investment in Institutional Fiduciary Trust Money Market Portfolio

The Fund invests in the Institutional Fiduciary Trust Money Market Portfolio (Sweep Money Fund), an affiliated open-end management investment company. Management fees paid by the Fund are waived on assets invested in the Sweep Money Fund, in an amount not to exceed the management and administrative fees paid directly or indirectly by the Sweep Money Fund, as noted on the Statement of Operations. Prior to January 1, 2014, the waiver was accounted for as a reduction to management fees.

4. Expense Offset Arrangement

The Fund has entered into an arrangement with its custodian whereby credits realized as a result of uninvested cash balances are used to reduce a portion of the Fund’s custodian expenses. During the period ended June 30, 2014, the custodian fees were reduced as noted in the Statement of Operations.

5. Income Taxes

At June 30, 2014, the cost of investments and net unrealized appreciation (depreciation) for income tax purposes were as follows:

Cost of investments	$941,852,209
Unrealized appreciation	$  46,765,434
Unrealized depreciation	(10,951,692)
Net unrealized appreciation (depreciation)	$  35,813,742

Differences between income and/or capital gains as determined on a book basis and a tax basis are primarily due to differing treatments of paydown losses, bond discounts and premiums and tax straddles.

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NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Strategic Income VIP Fund (continued)

6. Investment Transactions

Purchases and sales of investments (excluding short term securities) for the period ended June 30, 2014, aggregated $217,446,022 and $248,015,193, respectively.

7. Credit Risk and Defaulted Securities

At June 30, 2014, the Fund had 53.75% of its portfolio invested in high yield, senior secured floating rate notes, or other securities rated below investment grade. These securities may be more sensitive to economic conditions causing greater price volatility and are potentially subject to a greater risk of loss due to default than higher rated securities.

The Fund held defaulted securities and/or other securities for which the income has been deemed uncollectible. At June 30, 2014, the aggregate value of these securities was $2,768,125, representing 0.28% of the Fund’s net assets. The Fund discontinues accruing income on securities for which income has been deemed uncollectible and provides an estimate for losses on interest receivable. The securities have been identified on the accompanying Statement of Investments.

8. Unfunded Loan Commitments

The Fund enters into certain credit agreements, all or a portion of which may be unfunded. The Fund is obligated to fund these loan commitments at the borrowers’ discretion. Funded portions of credit agreements are presented on the Statement of Investments.

At June 30, 2014, unfunded commitments were as follows:

Borrower	Unfunded Commitment
Patriot Coal Corp., L/C Facility, 6.50%, 12/18/18	$174,859

Unfunded loan commitments and funded portions of credit agreements are marked to market daily and any unrealized appreciation or depreciation is included in the Statement of Assets and Liabilities and the Statement of Operations.

9. Other Derivative Information

At June 30, 2014, the Fund’s investments in derivative contracts are reflected on the Statement of Assets and Liabilities as follows:

	Asset Derivatives			Liability Derivatives
Derivative Contracts Not Accounted for as Hedging Instruments	Statement of Assets and Liabilities Location	Fair Value Amount		Statement of Assets and Liabilities Location	Fair Value Amount
Foreign exchange contracts	Unrealized appreciation on forward exchange contracts	$	1,411,647	Unrealized depreciation on forward exchange contracts	$	2,221,439
Credit contracts	Unrealized appreciation on OTC swap contracts		621,267	Unrealized depreciation on OTC swap contracts		—

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NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Strategic Income VIP Fund (continued)

For the period ended June 30, 2014, the effect of derivative contracts on the Fund’s Statement of Operations was as follows:

Derivative Contracts Not Accounted for as Hedging Instruments	Statement of Operations Locations	Realized Gain (Loss) for the Period	Change in Unrealized Appreciation (Depreciation) for the Period
Foreign exchange contracts	Net realized gain (loss) from foreign currency transactions / Net change in unrealized appreciation (depreciation) on translation of other assets and liabilities denominated in foreign currencies	$(649,796)	$(199,908)
Credit contracts	Net realized gain (loss) from swap contracts / Net change in unrealized appreciation (depreciation) on investments	356,710	373,967

At June 30, 2014, the Fund’s OTC derivative assets and liabilities, are as follows:

	Gross and Net Amounts of Assets and Liabilities Presented in the Statement of Assets and Liabilities
	Assetsa		Liabilitiesa
Derivatives
Forward exchange contracts	$	1,411,647	$	2,221,439
Swap Contracts		643,498		787,169
Total	$	2,055,145	$	3,008,608

^aAbsent an event of default or early termination, OTC derivative assets and liabilities are presented gross and not offset in the Statement of Assets & Liabilities.

At June 30, 2014, the Fund’s OTC derivative assets which may be offset against the Fund’s OTC derivative liabilities and collateral received from the counterparty, is as follows:

			Amounts Not Offset in the Statement of Assets & Liabilities
	Gross and Net Amounts of Assets Presented in the Statement of Assets & Liabilities		Financial Instruments Available for Offset			Financial Instruments Collateral Receiveda,b			Cash Collateral Receivedb		Net Amount (Not less than zero)
Counterparty
BZWS	$	75,460	$	(75,460	)	$	—		$	—	$	—
CITI		259,392		(259,392	)		—			—		—
DBAB		715,873		(715,873	)		—			—		—
FBCO		276,047		(276,047	)		—			—		—
GSCO		3,575		(3,575	)		—			—		—
HSBC		245,566		(75,043	)		(112,303	)		—		58,220

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FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Strategic Income VIP Fund (continued)

9. Other Derivative Information (continued)

			Amounts Not Offset in the Statement of Assets & Liabilities
	Gross and Net Amounts of Assets Presented in the Statement of Assets & Liabilities		Financial Instruments Available for Offset			Financial Instruments Collateral Receiveda,b			Cash Collateral Receivedb			Net Amount (Not less than zero)
JPHQ	$	475,877	$	(465,298	)	$	(10,579	)	$	—		$	—
MSCO		3,355		(1,853	)		—			(1,502	)		—
UBSW		—		—			—			—			—
Total	$	2,055,145	$	(1,872,541	)	$	(122,882	)	$	(1,502	)	$	58,220

^aAt June 30, 2014, the Fund received United Kingdom Treasury Bonds and Notes and U.S. Treasury Bonds and Notes as collateral for derivatives.

^bIn some instances, the collateral amounts disclosed in the table above were adjusted due to the requirement to limit collateral amounts to avoid the effect of overcollateralization. Actual collateral received and/or pledged may be more than the amount disclosed herein.

At June 30, 2014, the Fund’s OTC derivative liabilities which may be offset against the Fund’s OTC derivative assets and collateral pledged to the counterparty, is as follows:

			Amounts Not Offset in the Statement of Assets & Liabilities
	Gross and Net Amounts of Liabilities Presented in the Statement of Assets & Liabilities		Financial Instruments Available for Offset			Financial Instruments Collateral Pledged		Cash Collateral Pledgeda			Net Amount (Not less than zero)
Counterparty
BZWS	$	258,415	$	(75,460	)	$	—	$	—		$	182,955
CITI		376,351		(259,392	)		—		—			116,959
DBAB		1,236,241		(715,873	)		—		(350,000	)		170,368
FBCO		519,130		(276,047	)		—		(243,083	)		—
GSCO		5,140		(3,575	)		—		—			1,565
HSBC		75,043		(75,043	)		—		—			—
JPHQ		465,298		(465,298	)		—		—			—
MSCO		1,853		(1,853	)		—		—			—
UBSW		71,137		—			—		(71,137	)		—
Total	$	3,008,608	$	(1,872,541	)	$	—	$	(664,220	)	$	471,847

^aIn some instances, the collateral amounts disclosed in the table above were adjusted due to the requirement to limit collateral amounts to avoid the effect of overcollateralization. Actual collateral received and/or pledged may be more than the amount disclosed herein.

For the period ended June 30, 2014, the average month end fair value of derivatives represented 0.62% of average month end net assets. The average month end number of open derivative contracts for the period was 206.

See Note 1(d) regarding derivative financial instruments.

FSI-44 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Strategic Income VIP Fund (continued)

10. Credit Facility

The Fund, together with other U.S. registered and foreign investment funds (collectively, Borrowers), managed by Franklin Templeton Investments, are borrowers in a joint syndicated senior unsecured credit facility totaling $1.5 billion (Global Credit Facility) which matures on February 13, 2015. This Global Credit Facility provides a source of funds to the Borrowers for temporary and emergency purposes, including the ability to meet future unanticipated or unusually large redemption requests.

Under the terms of the Global Credit Facility, the Fund shall, in addition to interest charged on any borrowings made by the Fund and other costs incurred by the Fund, pay its share of fees and expenses incurred in connection with the implementation and maintenance of the Global Credit Facility, based upon its relative share of the aggregate net assets of all of the Borrowers, including an annual commitment fee of 0.07% based upon the unused portion of the Global Credit Facility. These fees are reflected in other expenses on the Statement of Operations. During the period ended June 30, 2014, the Fund did not use the Global Credit Facility.

11. Fair Value Measurements

The Fund follows a fair value hierarchy that distinguishes between market data obtained from independent sources (observable inputs) and the Fund’s own market assumptions (unobservable inputs). These inputs are used in determining the value of the Fund’s financial instruments and are summarized in the following fair value hierarchy:

• Level 1 – quoted prices in active markets for identical financial instruments

• Level 2 – other significant observable inputs (including quoted prices for similar financial instruments, interest rates, prepayment speed, credit risk, etc.)

• Level 3 – significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of financial instruments)

The input levels are not necessarily an indication of the risk or liquidity associated with financial instruments at that level.

For movements between the levels within the fair value hierarchy, the Fund has adopted a policy of recognizing the transfers as of the date of the underlying event which caused the movement.

A summary of inputs used as of June 30, 2014, in valuing the Fund’s assets and liabilities carried at fair value, is as follows:

	Level 1		Level 2		Level 3		Total
Assets:
Investments in Securities:
Equity Investments:a
Consumer Services	$	—	$	2,852,173	$		$	2,852,173
Materials		—		415,000		—		415,000
Transportation		—		789,469		—		789,469
Other Equity Investmentsb		682,500		—		—		682,500
Corporate Bonds		—		355,045,336		15,625		355,060,961
Senior Floating Rate Interests		—		160,105,839		170,002		160,275,841
Foreign Government and Agency Securities		—		188,863,292		—		188,863,292
U.S. Government and Agency Securities		—		18,573,764		—		18,573,764
Asset-Backed Securities and Commercial Mortgage-Backed Securities		—		51,222,352		—		51,222,352
Mortgage-Backed Securities		—		34,778,893		—		34,778,893

Semiannual Report FSI-45

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Strategic Income VIP Fund (continued)

11. Fair Value Measurements (continued)

	Level 1		Level 2		Level 3			Total
Assets: (continued)
Investments in Securities: (continued)
Municipal Bonds	$	—	$	59,328,815	$	—		$	59,328,815
Escrows and Litigation Trusts		—		—		—	c		—
Short Term Investments		96,249,322		8,573,569		—			104,822,891
Total Investments in Securities	$	96,931,822	$	880,548,502	$	185,627		$	977,665,951
Other Financial Instruments
Forward Exchange Contracts	$	—	$	1,411,647	$	—		$	1,411,647
Swap Contracts		—		621,267		—			621,267
Total Other Financial Instruments	$	—	$	2,032,914	$	—		$	2,032,914
Liabilities:
Other Financial Instruments
Forward Exchange Contracts	$	—	$	2,221,439	$	—		$	2,221,439
Unfunded Loan Commitments		—		16,846		—			16,846
Total Other Financial Instruments	$	—	$	2,238,285	$	—		$	2,238,285

^aIncludes common, preferred and convertible preferred stocks.

^bFor detailed categories, see the accompanying Statement of Investments.

^cIncludes securities determined to have no value at June 30, 2014.

A reconciliation of assets in which Level 3 inputs are used in determining fair value is presented when there are significant Level 3 financial instruments at the end of the period.

12. New Accounting Pronouncements

In June 2014, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) No. 2014-11, Transfers and Servicing (Topic 860), Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures. The ASU changes the accounting for certain repurchase agreements and expands disclosure requirements related to repurchase agreements, securities lending, repurchase-to-maturity and similar transactions. The ASU is effective for interim and annual reporting periods beginning after December 15, 2014. Management is currently evaluating the impact, if any, of applying this provision.

13. Subsequent Events

The Fund has evaluated subsequent events through the issuance of the financial statements and determined that no events have occurred that require disclosure.

FSI-46 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Strategic Income VIP Fund (continued)

Abbreviations

Counterparty		Currency		Selected Portfolio
BZWS	Barclays Bank PLC	BRL	Brazilian Real	AGMC	Assured Guaranty Municipal Corp.
CITI	Citigroup, Inc.	CAD	Canadian Dollar	CDO	Collateralized Debt Obligation
DBAB	Deutsche Bank AG	EUR	Euro	CLO	Collateralized Loan Obligation
FBCO	Credit Suisse Group AG	GBP	British Pound	EDA	Economic Development Authority
GSCO	The Goldman Sachs Group, Inc.	HUF	Hungarian Forint	FGIC	Financial Guaranty Insurance Co.
HSBC	HSBC Bank USA, N.A.	IDR	Indonesian Rupiah	FICO	Financing Corp.
JPHQ	JP Morgan Chase & Co.	KRW	South Korean Won	FRN	Floating Rate Note
MSCO	Morgan Stanley	LKR	Sri Lankan Rupee	GO	General Obligation
UBSW	UBS AG	MXN	Mexican Peso	HDC	Housing Development Corp.
		MYR	Malaysian Ringgit	ISD	Independent School District
		PHP	Philippine Peso	NATL	National Public Financial Guarantee Corp.
		PLN	Polish Zloty	NATL RE	National Public Financial Guarantee Corp.
		SEK	Swedish Krona		Reinsured
		SGD	Singapore Dollar	PIK	Payment-In-Kind
		UYU	Uruguayan Peso	PSF	Permanent School Fund

Semiannual Report FSI-47

Franklin U.S. Government Securities VIP Fund

(Formerly, Franklin U.S. Government Fund)

This semiannual report for Franklin U.S. Government Securities VIP Fund covers the period ended June 30, 2014.

Class 2 Performance Summary as of June 30, 2014

Franklin U.S. Government Securities VIP Fund – Class 2 delivered a +2.41% total return for the six-month

period ended June 30, 2014.

Performance reflects the Fund’s Class 2 operating expenses, but does not include any contract fees, expenses or sales charges. If they had been included, performance would be lower. These charges and deductions, particularly for variable life policies, can have a significant effect on contract values and insurance benefits. See the contract prospectus for a complete description of these expenses, including sales charges.

Performance data represent past performance, which does not guarantee future results. Investment return and principal value will fluctuate, and you may have a gain or loss when you sell your shares. Current performance may differ from figures shown.

Semiannual Report FUS-1

FRANKLIN U.S. GOVERNMENT SECURITIES VIP FUND

Fund Goal and Main Investments: Franklin U.S. Government Securities VIP Fund seeks income. Under normal market conditions, the Fund invests at least 80% of its net assets in U.S. government securities.

Fund Risks: All investments involve risks, including possible loss of principal. The Fund’s share price and yield will be affected by interest rate movements and mortgage prepayments. Bond prices generally move in the opposite direction of interest rates. Thus, as prices of bonds in the Fund adjust to a rise in interest rates, the Fund’s share price may decline. Changes in the financial strength of a bond issuer or in a bond’s credit rating may affect its value. The Fund is actively managed but there is no guarantee that the manager’s investment decisions will produce the desired results. The Fund’s prospectus also includes a description of the main investment risks.

Performance Overview

You can find the Fund’s six-month total return in the Performance Summary. In comparison, the Fund’s primary benchmark, the Barclays U.S. Government Index: Intermediate Component, delivered a +1.55% total return.¹ The Fund’s secondary benchmark, the Lipper VIP General U.S. Government Funds Classification Average, produced a +3.95% total return.² Funds in the Lipper average may allocate as much as 35% of their investments in asset types other than U.S. government and agency mortgage-backed securities.

Economic and Market Overview

The U.S. economy continued to show signs of recovery during the six-month period ended June 30, 2014. Economic activity increased toward period-end after severe weather conditions and a slowdown in health care spending led to a contraction in the first quarter of 2014. Manufacturing activity expanded during the period under review, despite a slowdown in January. Except for a sharp rebound in March, retail sales rose at a modest pace that missed consensus expectations. The housing market had some weather-related weakness early in 2014, but home sales picked up in the spring and home prices were higher than a year ago. The unemployment rate declined to 6.1% in June 2014 from 6.7% in December 2013.³ Inflation, as measured by the Consumer Price Index, picked up toward the end of the period.

The Federal Reserve Board (Fed) began reducing bond purchases by $10 billion a month in January 2014, based on earlier largely positive economic and employment data. Although economic data in early 2014 were soft, Fed Chair Janet Yellen kept the pace of asset-purchase tapering intact in the March meeting while adopting a more qualitative approach to rate-hike guidance. In June, the Fed lowered projections for near- and long-term economic growth even as it maintained the pace of tapering and remained committed to keeping interest rates low for a considerable amount of time after the asset-purchase program ends.

The 10-year Treasury yield declined from 3.04% at the beginning of the period to 2.53% on June 30, 2014, as investors shifted to less risky assets given subdued economic data, the crises in Ukraine and Iraq, growth concerns about emerging markets and lower Treasury issuance.

Investment Strategy

Using our straightforward investment approach, we seek to produce current income with a high degree of credit safety from a conservatively managed portfolio of U.S. government securities. Analyzing securities using proprietary and nonproprietary research, we seek to identify attractive investment opportunities.

The dollar value, number of shares or principal amount, and names of all portfolio holdings are listed in the Fund’s Statement of Investments.

1. © 2014 Morningstar.

2. Source: Lipper, a Thomson Reuters Company.

One cannot invest directly in an index, and an index is not representative of the Fund’s portfolio. Please see Index Descriptions following the Fund Summaries.

3. Source: Bureau of Labor Statistics.

FUS-2 Semiannual Report

FRANKLIN U.S. GOVERNMENT SECURITIES VIP FUND

Manager’s Discussion

Mortgages outpaced Treasuries during the period as the agency mortgage market has benefited from continued, low interest rates since the beginning of the year. We feel that if the U.S. economy continues to strengthen in line with the Fed’s expectations, the Fed could terminate its purchases of mortgage-backed securities (MBS) later in the year. In our view, agency mortgages were fully valued. Questions still remained, however, about the demand source for agency MBS after the Fed ends its buying program. We felt demand from banks, mortgage real estate investment trusts, overseas investors and domestic money managers would need to rise to compensate for the Fed’s reduced presence in the MBS sector once the Fed ends its stimulus measures. Despite the low interest rate and mortgage rate environment over the period, mortgage credit issuance continued to be constrained and actual prepayment levels remained contained.

Within the agency mortgage pass-through sector, Freddie Mac MBS outperformed their Fannie Mae MBS and Ginnie Mae (GNMA) MBS counterparts. Within GNMAs, lower coupon 3.0% securities were the best performers from an excess return perspective, while higher coupon 5.0% securities underperformed.

The Fund’s investment process and strategy did not change and the team continued to look for strong cash-flow fundamentals and valuations to uncover opportunities across the agency mortgage and agency debenture universe. The Fund emphasized agency pass-throughs, primarily GNMA MBS, which remain the only MBS backed by the full faith and credit of the U.S. government, and invested in other agency securities for diversification.⁴ We remained more heavily allocated to the GNMA sector and added to lower coupon 3.5% and 4.0% GNMA IIs (pools of mortgages from multiple issuers). We decreased our allocation to 5.0% coupons. Our heaviest allocation remained in 3.5% and 4.5% coupons. The Fund’s overweighted allocation to higher coupon 5.5% securities benefited performance, while our underweighted allocation to 3.0% coupons detracted from results.

Thank you for your participation in Franklin U.S. Government Securities VIP Fund. We look forward to serving your future investment needs.

The foregoing information reflects our analysis, opinions and portfolio holdings as of June 30, 2014, the end of the reporting period. The way we implement our main investment strategies and the resulting portfolio holdings may change depending on factors such as market and economic conditions. These opinions may not be relied upon as investment advice or an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but the investment manager makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.

4. Securities owned by the Fund, but not shares of the Fund, are guaranteed by the U.S. government, its agencies or instrumentalities as to timely payment of principal and interest. The Fund’s yield and share price are not guaranteed and will vary with market conditions.

Semiannual Report FUS-3

FRANKLIN U.S. GOVERNMENT SECURITIES VIP FUND

Class 2 Fund Expenses

As an investor in a variable insurance contract (Contract) that indirectly provides for investment in an underlying mutual fund, you can incur transaction and/or ongoing expenses at both the Fund level and the Contract level.

• Transaction expenses can include sales charges (loads) on purchases, surrender fees, transfer fees and premium taxes.

• Ongoing expenses can include management fees, distribution and service (12b-1) fees, contract fees, annual maintenance fees, mortality and expense risk fees and other fees and expenses. All mutual funds and Contracts have some types of ongoing expenses.

The expenses shown in the table are meant to highlight ongoing expenses at the Fund level only and do not include ongoing expenses at the Contract level, or transaction expenses at either the Fund or Contract levels. While the Fund does not have transaction expenses, if the transaction and ongoing expenses at the Contract level were included, the expenses shown below would be higher. You should consult your Contract prospectus or disclosure document for more information.

The table shows Fund-level ongoing expenses and can help you understand these expenses and compare them with those of other mutual funds offered through the Contract. The table assumes a $1,000 investment held for the six months indicated. Please refer to the Fund prospectus for additional information on operating expenses.

Actual Fund Expenses

The first line (Actual) of the table provides actual account values and expenses. The “Ending Account Value” is derived from the Fund’s actual return, which includes the effect of ongoing Fund expenses, but does not include the effect of ongoing Contract expenses.

You can estimate the Fund-level expenses you incurred during the period by following these steps. Of course, your account value and expenses will differ from those in this illustration:

1. Divide your account value by $1,000.

If an account had an $8,600 value,

then $8,600 ÷ $1,000 = 8.6.

2. Multiply the result by the number under the heading “Fund-Level Expenses Incurred During Period.”

If Fund-Level Expenses Incurred During Period were $7.50,

then 8.6 × $7.50 = $64.50.

In this illustration, the estimated expenses incurred this period at the Fund level are $64.50.

Hypothetical Example for Comparison

with Other Mutual Funds

Information in the second line (Hypothetical) of the table can help you compare ongoing expenses of the Fund with those of other mutual funds offered through the Contract. This information may not be used to estimate the actual ending account balance or expenses you incurred during the period. The hypothetical “Ending Account Value” is based on the Fund’s actual expense ratio and an assumed 5% annual rate of return before expenses, which does not represent the Fund’s actual return. The figure under the heading “Fund-Level Expenses Incurred During Period” shows the hypothetical expenses your account would have incurred under this scenario. You can compare this figure with the 5% hypothetical examples that appear in shareholder reports of other funds offered through a Contract.

Class 2	Beginning Account Value 1/1/14		Ending Account Value 6/30/14		Fund-Level Expenses Incurred During Period* 1/1/14–6/30/14
Actual		$1,000		$1,024.10		$3.71
Hypothetical (5% return before expenses)		$1,000		$1,021.12		$3.71

*Expenses are calculated using the most recent six-month annualized expense ratio for the Fund’s Class 2 shares (0.74%), which does not include any ongoing expenses of the Contract for which the Fund is an investment option, multiplied by the average account value over the period, multiplied by 181/365 to reflect the one-half year period.

FUS-4 Semiannual Report

SUPPLEMENT DATED AUGUST 4, 2014

TO THE STATEMENT OF ADDITIONAL INFORMATION DATED MAY 1, 2014

OF

FRANKLIN U.S. GOVERNMENT SECURITIES VIP FUND

(Series of Franklin Templeton Variable Insurance Products Trust)

The Statement of Additional Information is amended as follows:

I.  In the section entitled “Glossary of Investments, Techniques, Strategies and Their Risks – Borrowing-Segregation of Assets,” on page 15, the first paragraph is revised as follows:

Segregation of assets. Consistent with SEC staff guidance, financial instruments that involve the Fund’s obligation to make future payments to third parties will not be viewed as creating any senior security provided that the Fund covers its obligations as described below. Those financial instruments can include, among others, (i) securities purchased or sold on a when-issued, delayed delivery, or to-be-announced basis, (ii) futures contracts, (iii) forward currency contracts, (iv) swaps, (v) written options, (vi) unfunded commitments, (vii) securities sold short, and (viii) reverse repurchase agreements. Consistent with SEC staff guidance, the Fund will consider its obligations involving such a financial instrument as “covered” when the Fund (1) maintains an offsetting financial position, or (2) segregates liquid assets (constituting cash, cash equivalents or other liquid portfolio securities) equal to the Fund’s exposures relating to the financial instrument, as determined on a daily basis. Dedicated Fund compliance policies and procedures, which the Fund’s board has approved, govern the kinds of transactions that can be deemed to be offsetting positions for purposes of (1) above, and the amounts of assets that need to be segregated for purposes of (2) above (Asset Segregation Policies). In the case of forward currency contracts, the Fund may offset the contracts for purposes of (1) above when the counterparties, terms and amounts match; otherwise an appropriate amount of assets will be segregated consistent with (2) above. Segregated assets for purposes of (2) above are not required to be physically segregated from other Fund assets, but are segregated through appropriate notation on the books of the Fund or the Fund’s custodian.

II.  In the section entitled “Glossary of Investments, Techniques, Strategies and Their Risks – Mortgage-backed securities – Overview,” on page 46, the third paragraph is revised as follows:

Mortgage-backed securities are based on different types of mortgages, including those on commercial real estate or residential properties. The primary issuers or guarantors of mortgage-backed securities have historically been the Government National Mortgage Association (GNMA, or “Ginnie Mae”), the Federal National Mortgage Association (FNMA, or “Fannie Mae”) and the Federal Home Loan Mortgage Corporation (FHLMC, or “Freddie Mac”). Other issuers of mortgage-backed securities include commercial banks and other private lenders. Trading in mortgage-backed securities guaranteed by a governmental agency, instrumentality or sponsored enterprise may frequently take place in the to-be-announced (TBA) forward market. See “When-issued, delayed delivery and to-be-announced transactions” below.

III.  In the section entitled “Glossary of Investments, Techniques, Strategies and Their Risks – Mortgage-backed securities – Guarantees,” on page 47 is revised as follows:

Guarantees.    The existence of a guarantee or other form of credit support on a mortgage-backed security usually increases the price that the Fund pays or receives for the security.

FUS-5

There is always the risk that the guarantor will default on its obligations. When the guarantor is the U.S. government, there is minimal risk of guarantor default. However, the risk remains if the credit support or guarantee is provided by a private party or a U.S. government agency or sponsored enterprise. Even if the guarantor meets its obligations, there can be no assurance that the type of guarantee or credit support provided will be effective at reducing losses or delays to investors, given the nature of the default. A guarantee only assures timely payment of interest and principal, not a particular rate of return on the Fund’s investment or protection against prepayment or other risks. The market price and yield of the mortgage-backed security at any given time are not guaranteed and likely to fluctuate.

IV.  In the section entitled “Glossary of Investments, Techniques, Strategies and Their Risks – When-issued, delayed delivery and to-be-announced transactions,” beginning on page 57, the first, second and fourth paragraph is revised as follows:

When-issued, delayed delivery and to-be-announced (TBA) transactions are arrangements under which the parties agree on the sale of securities with payment for and delivery of the security scheduled for a future time. The securities may have been authorized but not yet issued, or, in the TBA market for U.S. Government agency mortgage-backed securities, the parties agree on a price, volume, and basic characteristics of securities to be delivered on the settlement date, rather than particular securities. In addition to buying securities on a when-issued, delayed delivery or TBA basis, the Fund may also sell these securities on a TBA basis to close out an existing TBA position before the settlement date, to take advantage of an expected decline in value of the securities, or for hedging purposes.

Entering into a when-issued, delayed delivery or TBA transaction may be viewed as a form of leverage and will result in associated risks for the Fund. To mitigate these risks, when the Fund enters into this type of transaction, it will segregate liquid assets as set forth in “Segregation of assets” under “Borrowing.” However, the Fund does not consider the purchase and/or sale of securities on a when-issued, delayed delivery or TBA basis to be a borrowing for purposes of the Fund’s fundamental restrictions or other limitations on borrowing.

The Fund also relies on the counterparty to complete the transaction. The counterparty’s failure to do so may cause the Fund to miss a price or yield considered advantageous to the Fund. Although their price typically reflects accrued interest, securities purchased on a when-issued or delayed delivery basis do not generally earn interest until their scheduled delivery date. Purchases or sales of debt securities on a when-issued or delayed delivery basis are also subject to the risk that the market value or the yield at delivery may be more or less than the market price or yield available when the transaction was entered into, or that the Fund is unable to purchase securities for delivery at the settlement date with the characteristics agreed upon at the time of the transaction.

Please keep this supplement with your statement of additional information for future reference.

FUS-6

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Financial Highlights

Franklin U.S. Government Securities VIP Fund

	Six Months Ended June 30, 2014 (unaudited)			Year Ended December 31,
				2013			2012			2011			2010			2009
Class 1
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$12.91			$13.57			$13.67			$13.34			$13.08			$13.19
Income from investment operationsa:
Net investment incomeb		0.13			0.24			0.32			0.42			0.47			0.52
Net realized and unrealized gains (losses)		0.19			(0.51	)		(0.03	)		0.36			0.25			(0.09	)
Total from investment operations		0.32			(0.27	)		0.29			0.78			0.72			0.43
Less distributions from net investment income		(0.37	)		(0.39	)		(0.39	)		(0.45	)		(0.46	)		(0.54	)
Net asset value, end of period		$12.86			$12.91			$13.57			$13.67			$13.34			$13.08
Total returnc		2.52%			(1.99)%			2.12%			5.96%			5.56%			3.34%
Ratios to average net assetsd
Expenses		0.49%			0.49%	e		0.50%			0.51%			0.52%			0.53%
Net investment income		1.96%			1.84%			2.36%			3.11%			3.51%			3.96%
Supplemental data
Net assets, end of period (000’s)		$96,918			$99,947			$126,536			$136,628			$157,551			$162,524
Portfolio turnover rate		15.58%			69.47%			45.89%			37.89%			51.04%			27.51%
Portfolio turnover rate excluding mortgage dollar rollsf		15.58%			67.80%			45.89%			37.89%			51.04%			27.51%

^aThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.

^bBased on average daily shares outstanding.

^cTotal return does not include fees, charges or expenses imposed by the variable annuity and life insurance contracts for which the Franklin Templeton Variable Insurance Products Trust serves as an underlying investment vehicle. Total return is not annualized for periods less than one year.

^dRatios are annualized for periods less than one year.

^eBenefit of expense reduction rounds to less than 0.01%.

^fSee Note 1(c) regarding mortgage dollar rolls.

The accompanying notes are an integral part of these financial statements.    |   Semiannual Report FUS-7

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL HIGHLIGHTS

Franklin U.S. Government Securities VIP Fund (continued)

	Six Months Ended June 30, 2014 (unaudited)			Year Ended December 31,
				2013			2012			2011			2010			2009
Class 2
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$12.65			$13.31			$13.42			$13.11			$12.87			$12.99
Income from investment operationsa:
Net investment incomeb		0.11			0.21			0.28			0.38			0.43			0.48
Net realized and unrealized gains (losses)		0.19			(0.50	)		(0.03	)		0.35			0.24			(0.09	)
Total from investment operations		0.30			(0.29	)		0.25			0.73			0.67			0.39
Less distributions from net investment income		(0.34	)		(0.37	)		(0.36	)		(0.42	)		(0.43	)		(0.51	)
Net asset value, end of period		$12.61			$12.65			$13.31			$13.42			$13.11			$12.87
Total returnc		2.41%			(2.24)%			1.89%			5.68%			5.28%			3.09%
Ratios to average net assetsd
Expenses		0.74%			0.74%	e		0.75%			0.76%			0.77%			0.78%
Net investment income		1.71%			1.59%			2.11%			2.86%			3.26%			3.71%
Supplemental data
Net assets, end of period (000’s)		$1,324,486			$1,267,994			$1,206,089			$894,699			$703,997			$557,809
Portfolio turnover rate		15.58%			69.47%			45.89%			37.89%			51.04%			27.51%
Portfolio turnover rate excluding mortgage dollar rollsf		15.58%			67.80%			45.89%			37.89%			51.04%			27.51%

^aThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.

^bBased on average daily shares outstanding.

^cTotal return does not include fees, charges or expenses imposed by the variable annuity and life insurance contracts for which the Franklin Templeton Variable Insurance Products Trust serves as an underlying investment vehicle. Total return is not annualized for periods less than one year.

^dRatios are annualized for periods less than one year.

^eBenefit of expense reduction rounds to less than 0.01%.

^fSee Note 1(c) regarding mortgage dollar rolls.

FUS-8 Semiannual Report   |    The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Statement of Investments, June 30, 2014 (unaudited)

Franklin U.S. Government Securities VIP Fund
		Principal Amount		Value
	Corporate Bonds 1.3%
	New Valley Generation IV, secured bond, 4.687%, 1/15/22	$	2,962,730	$	3,244,240
	Private Export Funding Corp.,
	secured bond, 2.80%, 5/15/22		9,000,000		9,185,436
	senior secured note, 3.05%, 10/15/14		6,500,000		6,554,366
	Total Corporate Bonds (Cost $19,251,980)				18,984,042
	Foreign Government and Agency Securities 0.7%
	Government of Tunisia, 1.686%, 7/16/19		7,000,000		6,952,456
	International Bank for Reconstruction and Development,
	2, zero cpn., 2/15/16		1,868,000		1,850,155
	Principal Strip, 7/15/17		1,761,000		1,688,491
	Total Foreign Government and Agency Securities (Cost $10,624,594)				10,491,102
	Mortgage-Backed Securities 77.8%
a	Federal Home Loan Mortgage Corp. (FHLMC) Adjustable Rate 7.5%
	FHLMC, 1.607% - 2.261%, 10/01/16 - 5/01/43		5,771,095		5,994,223
	FHLMC, 2.264%, 6/01/37		13,531,362		14,345,654
	FHLMC, 2.305%, 6/01/36		13,932,204		14,886,411
	FHLMC, 2.265% - 2.365%, 2/01/19 - 7/01/41		13,113,223		13,924,429
	FHLMC, 2.366% - 2.40%, 10/01/22 - 9/01/38		12,284,818		13,078,124
	FHLMC, 2.40% - 2.445%, 3/01/24 - 10/01/38		12,069,574		12,851,908
	FHLMC, 2.75%, 4/01/40		15,417,935		16,390,769
	FHLMC, 2.445% - 5.307%, 12/01/18 - 8/01/41		13,129,431		13,959,214
	FHLMC, 5.318% - 6.137%, 8/01/24 - 11/01/39		1,220,307		1,291,997
					106,722,729
	Federal Home Loan Mortgage Corp. (FHLMC) Fixed Rate 3.9%
	FHLMC Gold 15 Year, 4.50%, 3/01/25 - 4/01/25		3,651,812		3,934,230
	FHLMC Gold 30 Year, 3.00%, 5/01/43		688,642		680,333
	FHLMC Gold 30 Year, 3.50%, 3/01/32 - 5/01/43		8,489,476		8,873,276
	FHLMC Gold 30 Year, 4.00%, 9/01/40 - 12/01/41		13,922,744		14,773,925
	FHLMC Gold 30 Year, 4.50%, 5/01/40 - 7/01/41		7,341,123		7,953,087
	FHLMC Gold 30 Year, 5.00%, 9/01/33 - 4/01/40		9,571,623		10,603,196
	FHLMC Gold 30 Year, 5.50%, 7/01/33 - 5/01/38		3,466,187		3,883,871
	FHLMC Gold 30 Year, 6.00%, 1/01/24 - 8/01/35		2,299,381		2,607,470
	FHLMC Gold 30 Year, 6.50%, 12/01/23 - 5/01/35		871,120		982,843
	FHLMC Gold 30 Year, 7.00%, 4/01/24 - 10/01/32		408,964		454,559
	FHLMC Gold 30 Year, 7.50%, 12/01/22 - 5/01/24		5,998		6,404
	FHLMC Gold 30 Year, 8.00%, 7/01/21 - 5/01/22		9,837		11,040
	FHLMC Gold 30 Year, 8.50%, 10/01/21 - 7/01/31		659,758		767,987
	FHLMC PC 30 Year, 8.00%, 1/01/17 - 5/01/17		3,058		3,068
	FHLMC PC 30 Year, 8.50%, 9/01/20		562		613
					55,535,902
a	Federal National Mortgage Association (FNMA) Adjustable Rate 13.9%
	FNMA, 1.08% - 1.996%, 4/01/16 - 10/01/44		13,225,193		13,808,881
	FNMA, 1.998% - 2.07%, 8/01/29 - 10/01/37		10,041,784		10,582,822
	FNMA, 2.073% - 2.156%, 11/01/17 - 1/01/40		12,698,000		13,292,033
	FNMA, 2.225%, 8/01/36		14,281,448		15,177,743
	FNMA, 2.256%, 10/01/35		13,909,063		14,778,054
	FNMA, 2.158% - 2.257%, 1/01/17 - 8/01/37		11,662,030		12,375,332
	FNMA, 2.258% - 2.304%, 8/01/26 - 8/01/39		13,196,355		14,013,023
	FNMA, 2.260% - 2.311%, 9/01/23 - 4/01/40		13,248,209		14,102,340

Semiannual Report FUS-9

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin U.S. Government Securities VIP Fund (continued)

		Principal Amount		Value
	Mortgage-Backed Securities (continued)
a	Federal National Mortgage Association (FNMA) Adjustable Rate (continued)
	FNMA, 2.301% - 2.322%, 11/01/33 - 7/01/38	$	13,029,593	$	13,794,368
	FNMA, 2.323% - 2.375%, 6/01/21 - 12/01/40		13,199,575		14,005,879
	FNMA, 2.484%, 9/01/37		37,848,356		40,456,814
	FNMA, 2.375% - 2.621%, 9/01/18 - 3/01/47		13,322,170		14,002,908
	FNMA, 2.625% - 7.210%, 8/01/18 - 11/01/47		6,043,297		6,341,794
					196,731,991
	Federal National Mortgage Association (FNMA) Fixed Rate 6.6%
	FNMA 15 Year, 5.50%, 6/01/16 - 1/01/25		3,648,144		4,000,302
	FNMA 15 Year, 6.00%, 8/01/17 - 9/01/17		184,039		191,331
	FNMA 30 Year, 3.00%, 12/01/42		348,080		344,377
	FNMA 30 Year, 4.00%, 1/01/41 - 8/01/41		16,980,886		18,052,020
	FNMA 30 Year, 4.50%, 8/01/40 - 6/01/41		17,234,228		18,680,282
	FNMA 30 Year, 4.50%, 12/01/43		20,658,749		22,414,153
	FNMA 30 Year, 5.00%, 3/01/34 - 7/01/41		13,348,893		14,848,163
	FNMA 30 Year, 5.50%, 12/01/32 - 8/01/35		3,847,220		4,316,164
	FNMA 30 Year, 6.00%, 1/01/24 - 8/01/38		6,626,039		7,471,637
	FNMA 30 Year, 6.50%, 1/01/24 - 9/01/36		1,108,152		1,251,378
	FNMA 30 Year, 7.50%, 4/01/23 - 8/01/25		37,584		40,428
	FNMA 30 Year, 8.00%, 3/01/22 - 2/01/25		134,208		141,596
	FNMA 30 Year, 8.50%, 3/01/20 - 6/01/21		1,335		1,464
	FNMA 30 Year, 9.00%, 10/01/26		186,502		215,523
	FNMA GL 30 Year, 8.00%, 8/01/19		17,657		17,726
	FNMA PL 30 Year, 5.50%, 4/01/34		1,946,835		2,191,306
					94,177,850
	Government National Mortgage Association (GNMA) Fixed Rate 45.9%
	GNMA I SF 30 Year, 3.00%, 7/15/42		773,106		780,697
	GNMA I SF 30 Year, 4.50%, 1/15/39 - 6/15/41		41,386,468		45,219,437
	GNMA I SF 30 Year, 5.00%, 6/15/30 - 9/15/40		56,167,771		62,117,608
	GNMA I SF 30 Year, 5.50%, 11/15/28 - 10/15/39		13,632,962		15,317,333
	GNMA I SF 30 Year, 6.00%, 11/15/23 - 11/15/38		7,248,853		8,224,900
	GNMA I SF 30 Year, 6.50%, 5/15/23 - 9/15/38		3,398,070		3,880,314
	GNMA I SF 30 Year, 7.00%, 3/15/22 - 1/15/32		950,382		1,015,183
	GNMA I SF 30 Year, 7.50%, 2/15/17 - 8/15/33		938,450		1,085,741
	GNMA I SF 30 Year, 8.00%, 3/15/17 - 5/15/24		277,184		292,095
	GNMA I SF 30 Year, 8.50%, 6/15/22 - 12/15/24		104,272		111,032
	GNMA I SF 30 Year, 9.00%, 6/15/16 - 5/15/20		20,542		20,681
	GNMA I SF 30 Year, 9.50%, 7/15/16 - 12/15/20		83,349		86,665
	GNMA I SF 30 Year, 10.00%, 11/15/17 - 8/15/21		45,507		47,970
	GNMA II SF 30 Year, 3.00%, 12/20/42		376,691		381,461
	GNMA II SF 30 Year, 3.50%, 8/20/42		16,240,906		16,954,113
	GNMA II SF 30 Year, 3.50%, 9/20/42		45,491,098		47,489,431
	GNMA II SF 30 Year, 3.50%, 10/20/42		14,030,542		14,646,713
	GNMA II SF 30 Year, 3.50%, 11/20/42		27,869,532		29,093,617
	GNMA II SF 30 Year, 3.50%, 12/20/42		20,345,880		21,240,761
	GNMA II SF 30 Year, 3.50%, 1/20/43		34,427,680		35,942,284
	GNMA II SF 30 Year, 3.50%, 4/20/43		16,735,077		17,469,128
	GNMA II SF 30 Year, 3.50%, 5/20/43		28,643,932		29,893,259
	GNMA II SF 30 Year, 3.50%, 12/20/40 - 6/20/43		31,676,727		33,063,894
	GNMA II SF 30 Year, 3.50%, 5/20/44		24,942,673		26,031,715
	GNMA II SF 30 Year, 4.00%, 11/20/41		17,713,288		18,993,860

FUS-10 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin U.S. Government Securities VIP Fund (continued)

		Principal Amount		Value
	Mortgage-Backed Securities (continued)
	Government National Mortgage Association (GNMA) Fixed Rate (continued)
	GNMA II SF 30 Year, 4.00%, 11/20/39 - 2/20/44	$	37,964,456	$	40,736,890
	GNMA II SF 30 Year, 4.00%, 2/20/44		19,675,698		21,098,141
	GNMA II SF 30 Year, 4.00%, 6/20/44		25,649,000		27,503,280
	GNMA II SF 30 Year, 4.50%, 9/20/41		14,869,682		16,271,775
	GNMA II SF 30 Year, 4.50%, 10/20/39 - 2/20/44		61,280,765		67,090,798
	GNMA II SF 30 Year, 5.00%, 9/20/33 - 10/20/42		25,740,364		28,575,748
	GNMA II SF 30 Year, 5.50%, 5/20/34 - 6/20/38		11,470,278		12,872,865
	GNMA II SF 30 Year, 6.00%, 11/20/23 - 7/20/39		7,052,850		8,020,566
	GNMA II SF 30 Year, 6.50%, 12/20/27 - 4/20/34		904,548		1,040,168
	GNMA II SF 30 Year, 7.00%, 5/20/32		15,125		17,805
	GNMA II SF 30 Year, 7.50%, 11/20/17 - 5/20/33		185,165		211,840
	GNMA II SF 30 Year, 8.00%, 7/20/16 - 8/20/26		17,880		20,030
	GNMA II SF 30 Year, 9.50%, 4/20/25		2,689		2,704
					652,862,502
	Total Mortgage-Backed Securities (Cost $1,092,369,029)				1,106,030,974
	U.S. Government and Agency Securities 18.8%
	AID-Israel,
	7-Z, U.S. Government Guaranteed, Strip, 8/15/22		5,619,000		4,482,967
	U.S. Government Guaranteed, Strip, 5/01/17		5,000,000		4,845,650
	Federal Agricultural Mortgage Corp.,
	1.41%, 3/06/20		10,000,000		9,653,060
	2.66%, 4/12/22		7,000,000		7,126,420
	4.30%, 5/13/19		1,010,000		1,125,635
b	Federal Agricultural Mortgage Corp. Guaranteed Trust 07-1, 144A, 5.125%, 4/19/17		13,000,000		14,476,098
	FFCB, 1.50%, 11/16/15		10,000,000		10,162,220
	FHLB,
	4.75%, 12/16/16		17,000,000		18,689,086
	5.25%, 6/05/17		9,000,000		10,141,929
	FICO,
	1P, Strip, 5/11/18		10,000,000		9,456,810
	12, Strip, 6/06/18		4,627,000		4,359,013
	13P, Strip, 12/27/18		2,500,000		2,318,343
	15, Strip, 3/07/16		15,000,000		14,853,345
	15P, Strip, 3/07/19		1,798,000		1,656,264
	16, Strip, 4/05/17		12,367,000		12,022,765
	A-P, Strip, 2/08/18		1,000,000		951,700
	B-P, Strip, 4/06/18		1,405,000		1,331,873
	E-P, Strip, 11/02/18		1,296,000		1,207,983
	Strip, 9/26/19		7,605,000		6,873,178
	FNMA, senior note, 5.375%, 6/12/17		17,800,000		20,112,950
	Overseas Private Investment Corp.,
	A, Strip, 2/19/18		800,000		801,217
	Strip, 11/18/16		2,650,000		2,658,416
	SBA,
	a FRN, 3.125%, 3/25/18		282,846		284,539
	PC, 1995-20L, 1, 6.45%, 12/01/15		63,518		65,809
	PC, 1996-20L, 1, 6.70%, 12/01/16		117,271		122,001
	PC, 1997-20G, 1, 6.85%, 7/01/17		135,856		141,775
	PC, 1998-20I, 1, 6.00%, 9/01/18		455,175		479,702

Semiannual Report FUS-11

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin U.S. Government Securities VIP Fund (continued)

		Principal Amount		Value
	U.S. Government and Agency Securities (continued)
	TVA,
	1.875%, 8/15/22	$	6,000,000	$	5,692,710
	5.88%, 4/01/36		5,000,000		6,479,750
	Strip, 11/01/18		2,644,000		2,437,559
	Strip, 6/15/19		5,973,000		5,416,000
	Strip, 6/15/20		6,138,000		5,364,311
	U.S. Treasury Note,
	0.875%, 11/30/16		2,500,000		2,515,332
	1.25%, 1/31/19		10,000,000		9,886,720
	1.75%, 10/31/18		3,000,000		3,042,657
	2.375%, 8/31/14		8,000,000		8,030,936
	2.375%, 9/30/14		17,000,000		17,098,277
	2.375%, 10/31/14		7,000,000		7,053,592
	2.50%, 4/30/15		6,950,000		7,089,139
	4.25%, 8/15/15		20,000,000		20,917,180
	Ukraine Government Aid Bonds, 1.844%, 5/16/19		5,000,000		5,006,860
	Total U.S. Government and Agency Securities (Cost $262,919,065)				266,431,771
	Total Investments before Short Term Investments (Cost $1,385,164,668)				1,401,937,889
	Short Term Investments (Cost $14,100,650) 1.0%
	Repurchase Agreements 1.0%
c	Joint Repurchase Agreement, 0.064%, 7/01/14 (Maturity Value $14,100,675)     BNP Paribas Securities Corp. (Maturity Value $2,848,054) Credit Suisse Securities (USA) LLC (Maturity Value $1,424,027) Deutsche Bank Securities Inc. (Maturity Value $1,070,664) HSBC Securities (USA) Inc. (Maturity Value $5,981,084) Merrill Lynch, Pierce, Fenner & Smith Inc. (Maturity Value $2,776,846)		14,100,650		14,100,650
	Collateralized by U.S. Government Agency Securities, 0.00% - 6.21%, 1/16/15 - 5/04/37; d U.S. Government Agency Discount Notes, 12/24/14 - 1/30/15; U.S. Government Agency Securities, Strips, 5/15/30; U.S. Treasury Bonds, 7.50% - 8.875%, 11/15/16 - 2/15/19; U.S. Treasury Notes, 0.25% - 4.50%, 7/15/15 - 4/30/18; and U.S. Treasury Notes, Index Linked, 1.375%, 7/15/18 (valued at $14,385,065)
	Total Investments (Cost $1,399,265,318) 99.6%				1,416,038,539
	Other Assets, less Liabilities 0.4%				5,365,359
	Net Assets 100.0%			$	1,421,403,898

See Abbreviations on page FUS-21.

^aThe coupon rate shown represents the rate at period end.

^bSecurity was purchased pursuant to Rule 144A under the Securities Act of 1933 and may be sold in transactions exempt from registration only to qualified institutional buyers or in a public offering registered under the Securities Act of 1933. This security has been deemed liquid under guidelines approved by the Trust’s Board of Trustees. At June 30, 2014, the value of this security was $14,476,098, representing 1.02% of net assets.

^cSee Note 1(b) regarding joint repurchase agreement.

^dThe security is traded on a discount basis with no stated coupon rate.

FUS-12 Semiannual Report   |    The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Financial Statements

Statement of Assets and Liabilities

June 30, 2014 (unaudited)

	Franklin U.S. Government Securities VIP Fund
Assets:
Investments in securities:
Cost - Unaffiliated issuers	$	1,385,164,668
Cost - Repurchase agreements		14,100,650
Total cost of investments	$	1,399,265,318
Value - Unaffiliated issuers	$	1,401,937,889
Value - Repurchase agreements		14,100,650
Total value of investments		1,416,038,539
Receivables:
Investment securities sold		1,211,462
Capital shares sold		1,112,509
Interest		4,536,322
Other assets		644
Total assets		1,422,899,476
Liabilities:
Payables:
Capital shares redeemed		215,859
Management fees		542,424
Distribution fees		549,374
Reports to shareholders		175,511
Accrued expenses and other liabilities		12,410
Total liabilities		1,495,578
Net assets, at value	$	1,421,403,898
Net assets consist of:
Paid-in capital	$	1,427,809,715
Undistributed net investment income		7,497,244
Net unrealized appreciation (depreciation)		16,773,221
Accumulated net realized gain (loss)		(30,676,282	)
Net assets, at value	$	1,421,403,898
Class 1:
Net assets, at value	$	96,918,075
Shares outstanding		7,537,115
Net asset value and maximum offering price per share	$	12.86
Class 2:
Net assets, at value	$	1,324,485,823
Shares outstanding		105,059,530
Net asset value and maximum offering price per share	$	12.61

The accompanying notes are an integral part of these financial statements.    |   Semiannual Report FUS-13

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL STATEMENTS

Statement of Operations

for the six months ended June 30, 2014 (unaudited)

	Franklin U.S. Government Securities VIP Fund
Investment income:
Interest	$	21,540,074
Paydown gain (loss)		(4,596,922	)
Total investment income		16,943,152
Expenses:
Management fees (Note 3a)		3,237,144
Distribution fees - Class 2 (Note 3c)		1,608,936
Custodian fees (Note 4)		5,716
Reports to shareholders		99,666
Professional fees		24,596
Trustees’ fees and expenses		2,838
Other		26,077
Total expenses		5,004,973
Net investment income		11,938,179
Realized and unrealized gains (losses):
Net realized gain (loss) from investments		(446,340	)
Net change in unrealized appreciation (depreciation) on investments		21,807,179
Net realized and unrealized gain (loss)		21,360,839
Net increase (decrease) in net assets resulting from operations	$	33,299,018

FUS-14 Semiannual Report   |    The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL STATEMENTS

Statements of Changes in Net Assets

	Franklin U.S. Government Securities VIP Fund
	Six Months     Ended June 30, 2014 (unaudited)			Year     Ended December 31, 2013
Increase (decrease) in net assets:
Operations:
Net investment income	$	11,938,179		$	22,010,219
Net realized gain (loss) from investments		(446,340	)		(4,159,151	)
Net change in unrealized appreciation (depreciation) on investments		21,807,179			(49,606,935	)
Net increase (decrease) in net assets resulting from operations		33,299,018			(31,755,867	)
Distributions to shareholders from:
Net investment income:
Class 1		(2,743,382	)		(3,416,984	)
Class 2		(35,038,168	)		(35,241,458	)
Total distributions to shareholders		(37,781,550	)		(38,658,442	)
Capital share transactions: (Note 2)
Class 1		(2,750,753	)		(20,692,170	)
Class 2		60,695,568			126,422,957
Total capital share transactions		57,944,815			105,730,787
Net increase (decrease) in net assets		53,462,283			35,316,478
Net assets:
Beginning of period		1,367,941,615			1,332,625,137
End of period	$	1,421,403,898		$	1,367,941,615
Undistributed net investment income included in net assets:
End of period	$	7,497,244		$	33,340,615

The accompanying notes are an integral part of these financial statements.    |   Semiannual Report FUS-15

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Notes to Financial Statements (unaudited)

Franklin U.S. Government Securities VIP Fund

1. Organization and Significant Accounting Policies

Franklin Templeton Variable Insurance Products Trust (Trust) is registered under the Investment Company Act of 1940, as amended, (1940 Act) as an open-end management investment company, consisting of twenty separate funds and applies the specialized accounting and reporting guidance in U.S. Generally Accepted Accounting Principles (U.S. GAAP). The Franklin U.S. Government Securities VIP Fund (Fund) is included in this report. The financial statements of the remaining funds in the Trust are presented separately. Shares of the Fund are generally sold only to insurance company separate accounts to fund the benefits of variable life insurance policies or variable annuity contracts. At June 30, 2014, 43.65% of the Fund’s shares were held through one insurance company. Investment activities of these insurance company separate accounts could have a material impact on the Fund. The Fund offers two classes of shares: Class 1 and Class 2. Each class of shares differs by its distribution fees, voting rights on matters affecting a single class and its exchange privilege.

Effective May 1, 2014, the Franklin U.S. Government Fund was renamed the Franklin U.S. Government Securities VIP Fund.

The following summarizes the Fund’s significant accounting policies.

a. Financial Instrument Valuation

The Fund’s investments in financial instruments are carried at fair value daily. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. The Fund calculates the net asset value (NAV) per share at the close of the New York Stock Exchange (NYSE), generally at 4 p.m. Eastern time (NYSE close) on each day the NYSE is open for trading. Under compliance policies and procedures approved by the Trust’s Board of Trustees (the Board), the Fund’s administrator has responsibility for oversight of valuation, including leading the cross-functional Valuation and Liquidity Oversight Committee (VLOC). The VLOC provides administration and oversight of the Fund’s valuation policies and procedures, which are approved annually by the Board. Among other things, these procedures allow the Fund to utilize independent pricing services, quotations from securities and financial instrument dealers, and other market sources to determine fair value.

Debt securities generally trade in the over-the-counter market rather than on a securities exchange. The Fund’s pricing

services use multiple valuation techniques to determine fair value. In instances where sufficient market activity exists, the pricing services may utilize a market-based approach through which quotes from market makers are used to determine fair value. In instances where sufficient market activity may not exist or is limited, the pricing services also utilize proprietary valuation models which may consider market characteristics such as benchmark yield curves, credit spreads, estimated default rates, anticipated market interest rate volatility, coupon rates, anticipated timing of principal repayments, underlying collateral, and other unique security features in order to estimate the relevant cash flows, which are then discounted to calculate the fair value. Repurchase agreements are valued at cost, which approximates fair value.

The Fund has procedures to determine the fair value of financial instruments for which market prices are not reliable or readily available. Under these procedures, the VLOC convenes on a regular basis to review such financial instruments and considers a number of factors, including significant unobservable valuation inputs, when arriving at fair value. The VLOC primarily employs a market-based approach which may use related or comparable assets or liabilities, recent transactions, market multiples, book values, and other relevant information for the investment to determine the fair value of the investment. An income-based valuation approach may also be used in which the anticipated future cash flows of the investment are discounted to calculate fair value. Discounts may also be applied due to the nature or duration of any restrictions on the disposition of the investments. Due to the inherent uncertainty of valuations of such investments, the fair values may differ significantly from the values that would have been used had an active market existed. The VLOC employs various methods for calibrating these valuation approaches including a regular review of key inputs and assumptions, transactional back-testing or disposition analysis, and reviews of any related market activity.

b. Joint Repurchase Agreement

The Fund enters into a joint repurchase agreement whereby its uninvested cash balance is deposited into a joint cash account with other funds managed by the investment manager or an affiliate of the investment manager and is used to invest in one or more repurchase agreements. The value and face amount of the joint repurchase agreement are allocated to the funds based on their pro-rata interest. A repurchase agreement is accounted for as a loan by the Fund to the seller, collateralized by

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FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin U.S. Government Securities VIP Fund (continued)

securities which are delivered to the Fund’s custodian. The fair value, including accrued interest, of the initial collateralization

is required to be at least 102% of the dollar amount invested by the funds, with the value of the underlying securities marked to market daily to maintain coverage of at least 100%. Repurchase agreements are subject to the terms of Master Repurchase Agreements (MRAs) with approved counterparties (sellers). The MRAs contain various provisions, including but not limited to events of default and maintenance of collateral for repurchase agreements. In the event of default by either the seller or the Fund, certain MRAs may permit the non-defaulting party to net and close-out all transactions, if any, traded under such agreements. The Fund may sell securities it holds as collateral and apply the proceeds towards the repurchase price and any other amounts owed by the seller to the Fund in the event of default by the seller. This could involve costs or delays in addition to a loss on the securities if their value falls below the repurchase price owed by the seller. The joint repurchase agreement held by the Fund at period end, as indicated in the Statement of Investments, had been entered into on June 30, 2014.

c. Mortgage Dollar Rolls

The Fund enters into mortgage dollar rolls, typically on a TBA basis. Mortgage dollar rolls are agreements between the Fund and a financial institution to simultaneously sell and repurchase mortgage-backed securities at a future date. Gains or losses are realized on the initial sale, and the difference between the repurchase price and the sale price is recorded as an unrealized gain or loss to the Fund upon entering into the mortgage dollar roll. In addition, the Fund may invest the cash proceeds that are received from the initial sale. During the period between the sale and repurchase, the Fund is not entitled to principal and interest paid on the mortgage backed securities. The risks of mortgage dollar roll transactions include the potential inability of the counterparty to fulfill its obligations.

d. Income Taxes

It is the Fund’s policy to qualify as a regulated investment company under the Internal Revenue Code. The Fund intends to distribute to shareholders substantially all of its taxable income and net realized gains to relieve it from federal income and if applicable, excise taxes. As a result, no provision for U.S. federal income taxes is required.

The Fund recognizes the tax benefits of uncertain tax positions only when the position is “more likely than not” to be sustained

upon examination by the tax authorities based on the technical merits of the tax position. As of June 30, 2014, and for all open tax years, the Fund has determined that no liability for unrecognized tax benefits is required in the Fund’s financial statements related to uncertain tax positions taken on a tax return (or expected to be taken on future tax returns). Open tax years are those that remain subject to examination and are based on each tax jurisdiction statute of limitation.

e. Security Transactions, Investment Income, Expenses and Distributions

Security transactions are accounted for on trade date. Realized gains and losses on security transactions are determined on a specific identification basis. Interest income and estimated expenses are accrued daily. Amortization of premium and accretion of discount on debt securities are included in interest income. Paydown gains and losses are recorded separately on the Statement of Operations. Distributions to shareholders are recorded on the ex-dividend date and are determined according to income tax regulations (tax basis). Distributable earnings determined on a tax basis may differ from earnings recorded in accordance with accounting principles generally accepted in the United States of America. These differences may be permanent or temporary. Permanent differences are reclassified among capital accounts to reflect their tax character. These reclassifications have no impact on net assets or the results of operations. Temporary differences are not reclassified, as they may reverse in subsequent periods.

Common expenses incurred by the Trust are allocated among the funds based on the ratio of net assets of each fund to the combined net assets of the Trust. Fund specific expenses are charged directly to the fund that incurred the expense.

Realized and unrealized gains and losses and net investment income, not including class specific expenses, are allocated daily to each class of shares based upon the relative proportion of net assets of each class. Differences in per share distributions, by class, are generally due to differences in class specific expenses.

f. Accounting Estimates

The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the amounts of income and expenses during the reporting period. Actual results could differ from those estimates.

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FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin U.S. Government Securities VIP Fund (continued)

1. Organization and Significant Accounting Policies (continued)

g. Guarantees and Indemnifications

Under the Trust’s organizational documents, its officers and trustees are indemnified by the Trust against certain liabilities arising out of the performance of their duties to the Trust.

Additionally, in the normal course of business, the Trust, on behalf of the Fund, enters into contracts with service providers that contain general indemnification clauses. The Trust’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Trust that have not yet occurred. Currently, the Trust expects the risk of loss to be remote.

2. Shares of Beneficial Interest

At June 30, 2014, there were an unlimited number of shares authorized (without par value). Transactions in the Fund’s shares were as follows:

	Six Months Ended June 30, 2014						Year Ended December 31, 2013
	Shares			Amount			Shares			Amount
Class 1 Shares:
Shares sold		118,088		$	1,547,128			543,938		$	7,320,837
Shares issued in reinvestment of distributions		214,159			2,743,382			262,643			3,416,984
Shares redeemed		(539,252	)		(7,041,263	)		(2,385,700	)		(31,429,991	)
Net increase (decrease)		(207,005	)	$	(2,750,753	)		(1,579,119	)	$	(20,692,170	)
Class 2 Shares:
Shares sold		5,954,911		$	76,194,386			21,495,475		$	278,880,113
Shares issued in reinvestment of distributions		2,789,663			35,038,168			2,759,707			35,241,458
Shares redeemed		(3,949,875	)		(50,536,986	)		(14,590,310	)		(187,698,614	)
Net increase (decrease)		4,794,699		$	60,695,568			9,664,872		$	126,422,957

3. Transactions With Affiliates

Franklin Resources, Inc. is the holding company for various subsidiaries that together are referred to as Franklin Templeton Investments. Certain officers and trustees of the Fund are also officers and/or directors of the following subsidiaries:

Subsidiary	Affiliation
Franklin Advisers, Inc. (Advisers)	Investment manager
Franklin Templeton Services, LLC (FT Services)	Administrative manager
Franklin Templeton Distributors, Inc. (Distributors)	Principal underwriter
Franklin Templeton Investor Services, LLC (Investor Services)	Transfer agent

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NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin U.S. Government Securities VIP Fund (continued)

a. Management Fees

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

Annualized Fee Rate	Net Assets
0.625%	Up to and including $100 million
0.500%	Over $100 million, up to and including $250 million
0.450%	Over $250 million, up to and including $7.5 billion
0.440%	Over $7.5 billion, up to and including $10 billion
0.430%	Over $10 billion, up to and including $12.5 billion
0.420%	Over $12.5 billion, up to and including $15 billion
0.400%	In excess of $15 billion

b. Administrative Fees

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

c. Distribution Fees

The Board has adopted a distribution plan for Class 2 shares pursuant to Rule 12b-1 under the 1940 Act. Under the Fund’s compensation distribution plan, the Fund pays Distributors for costs incurred in connection with the servicing, sale and distribution of the Fund’s shares up to 0.35% per year of its average daily net assets. Some distribution fees are not charged on shares held by affiliates. The Board has agreed to limit the current rate to 0.25% per year for Class 2. The plan year, for purposes of monitoring compliance with the maximum annual plan rate, is February 1 through January 31.

d. Transfer Agent Fees

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

4. Expense Offset Arrangement

The Fund has entered into an arrangement with its custodian whereby credits realized as a result of uninvested cash balances are used to reduce a portion of the Fund’s custodian expenses. During the period ended June 30, 2014, there were no credits earned.

5. Income Taxes

For tax purposes, capital losses may be carried over to offset future capital gains. Capital loss carryforwards with no expiration, if any, must be fully utilized before those losses with expiration dates.

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FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin U.S. Government Securities VIP Fund (continued)

5. Income Taxes (continued)

At December 31, 2013, capital loss carryforwards were as follows:

Capital loss carryforwards expiring in:
2014	$  1,618,397
2015	2,329,071
2016	841,479
2017	401,851
2018	426,637
Capital loss carryforwards not subject to expiration:
Short term	15,192,272
Long term	9,310,380
Total capital loss carryforwards	$30,120,087

At June 30, 2014, the cost of investments and net unrealized appreciation (depreciation) for income tax purposes were as follows:

Cost of investments	$	1,404,952,567
Unrealized appreciation	$	25,560,269
Unrealized depreciation		(14,474,297	)
Net unrealized appreciation (depreciation)	$	11,085,972

Differences between income and/or capital gains as determined on a book basis and a tax basis are primarily due to differing treatments of paydown losses and bond discounts and premiums.

6. Investment Transactions

Purchases and sales of investments (excluding short term securities) for the period ended June 30, 2014, aggregated $284,903,753 and $212,515,683, respectively.

7. Credit Facility

The Fund, together with other U.S. registered and foreign investment funds (collectively, Borrowers), managed by Franklin Templeton Investments, are borrowers in a joint syndicated senior unsecured credit facility totaling $1.5 billion (Global Credit Facility) which matures on February 13, 2015. This Global Credit Facility provides a source of funds to the Borrowers for temporary and emergency purposes, including the ability to meet future unanticipated or unusually large redemption requests.

Under the terms of the Global Credit Facility, the Fund shall, in addition to interest charged on any borrowings made by the Fund and other costs incurred by the Fund, pay its share of fees and expenses incurred in connection with the implementation and maintenance of the Global Credit Facility, based upon its relative share of the aggregate net assets of all of the Borrowers, including an annual commitment fee of 0.07% based upon the unused portion of the Global Credit Facility. These fees are reflected in other expenses on the Statement of Operations. During the period ended June 30, 2014, the Fund did not use the Global Credit Facility.

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NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin U.S. Government Securities VIP Fund (continued)

8. Fair Value Measurements

The Fund follows a fair value hierarchy that distinguishes between market data obtained from independent sources (observable inputs) and the Fund’s own market assumptions (unobservable inputs). These inputs are used in determining the value of the Fund’s financial instruments and are summarized in the following fair value hierarchy:

• Level 1 – quoted prices in active markets for identical financial instruments

• Level 2 – other significant observable inputs (including quoted prices for similar financial instruments, interest rates, prepayment speed, credit risk, etc.)

• Level 3 – significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of financial instruments)

The input levels are not necessarily an indication of the risk or liquidity associated with financial instruments at that level.

For movements between the levels within the fair value hierarchy, the Fund has adopted a policy of recognizing the transfers as of the date of the underlying event which caused the movement.

At June 30, 2014, all of the Fund’s investments in financial instruments carried at fair value were valued using Level 2 inputs. For detailed categories, see the accompanying Statement of Investments.

9. New Accounting Pronouncements

In June 2014, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) No. 2014-11, Transfers and Servicing (Topic 860), Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures. The ASU changes the accounting for certain repurchase agreements and expands disclosure requirements related to repurchase agreements, securities lending, repurchase-to-maturity and similar transactions. The ASU is effective for interim and annual reporting periods beginning after December 15, 2014. Management is currently evaluating the impact, if any, of applying this provision.

10. Subsequent Events

The Fund has evaluated subsequent events through the issuance of the financial statements and determined that no events have occurred that require disclosure.

Abbreviations

Selected Portfolio
FFCB	Federal Farm Credit Bank
FHLB	Federal Home Loan Bank
FICO	Financing Corp.
FRN	Floating Rate Note
GL	Government Loan
PC	Participation Certificate
PL	Project Loan
SBA	Small Business Administration
SF	Single Family
TVA	Tennessee Valley Authority

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Templeton Developing Markets VIP Fund

(Formerly, Templeton Developing Markets Securities Fund)

This semiannual report for Templeton Developing Markets VIP Fund covers the period ended June 30, 2014.

Class 2 Performance Summary as of June 30, 2014

Templeton Developing Markets VIP Fund – Class 2 delivered a +0.77% total return* for the six-month period ended June 30, 2014.

*The Fund has a fee waiver associated with its investments in a Franklin Templeton money fund, contractually guaranteed through at least its current fiscal year-end. Fund investment results reflect the fee waiver, to the extent applicable; without this reduction, the results would have been lower.

Performance reflects the Fund’s Class 2 operating expenses, but does not include any contract fees, expenses or sales charges. If they had been included, performance would be lower. These charges and deductions, particularly for variable life policies, can have a significant effect on contract values and insurance benefits. See the contract prospectus for a complete description of these expenses, including sales charges.

Performance data represent past performance, which does not guarantee future results. Investment return and principal value will fluctuate, and you may have a gain or loss when you sell your shares. Current performance may differ from figures shown.

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Fund Goal and Main Investments: Templeton Developing Markets VIP Fund seeks long-term capital appreciation. Under normal market conditions, the Fund invests at least 80% of its net assets in emerging market investments.

Fund Risks: All investments involve risks, including possible loss of principal. Special risks are associated with foreign investing, including currency fluctuations, economic instability and political developments. Investments in developing markets, of which frontier markets are a subset, involve heightened risks related to the same factors, in addition to those associated with these markets’ smaller size, lesser liquidity and lack of established legal, political, business and social frameworks to support securities markets. Because these frameworks are typically even less developed in frontier markets, as well as various factors including the increased potential for extreme price volatility, illiquidity, trade barriers and exchange controls, the risks associated with developing markets are magnified in frontier markets. The Fund is designed for the aggressive portion of a well-diversified portfolio. The Fund is actively managed but there is no guarantee that the manager’s investment decisions will produce the desired results. The Fund’s prospectus also includes a description of the main investment risks.

Performance Overview

You can find the Fund’s six-month total return in the Performance Summary. In comparison, the MSCI Emerging Markets (EM) Index generated a +6.32% total return, and the Standard & Poor’s^®/International Finance Corporation Investable Composite Index produced a +6.82% total return for the same period.¹ Please note index performance numbers are for reference and we do not attempt to track an index but rather undertake investments on the basis of fundamental research.

Economic and Market Overview

The six months under review were characterized by growth in emerging markets and a continued recovery in developed markets. Although several emerging market countries faced headwinds such as soft domestic demand, weak exports and political crises, emerging market economies overall continued to grow faster than developed market economies. After moderating in the first quarter, China’s economic growth stabilized in the second quarter as the government’s stimulus measures gained

traction. Retail sales continued to grow as household income increased. Domestic demand accounted for a greater portion of gross domestic product, indicating stable progress in policymakers’ efforts to make China’s economy more consumer driven. Other economies that showed signs of moderation included those of Russia, Brazil and Turkey, while several economies, including those of Qatar, Taiwan and Poland, showed signs of improvement.

After a weak start to the year, emerging market stocks advanced in the second half of the period, supported by better U.S. economic data, the European Central Bank’s further monetary easing, an apparent cooling of tensions between Russia and Ukraine, and China’s improving manufacturing sector. Certain emerging markets such as India and Indonesia were buoyed by investors’ expectations for economic reforms after elections. Several emerging market central banks, including those of Brazil, India, South Africa and Russia, raised interest rates in response to rising inflation and weakening currencies, while several central banks, including those of Chile, Mexico, Romania and Thailand, lowered interest rates to promote economic growth. After raising interest rates early in the year to support the Turkish lira, Turkey’s central bank began easing monetary policy toward period-end to boost economic growth. The

1. Source: © 2014 Morningstar. One cannot invest directly in an index, and an index is not representative of the Fund’s portfolio. Please see Index Descriptions following the Fund Summaries.

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People’s Bank of China (PBOC) tightened liquidity by curbing lending by banks and non-bank institutions. However, near period-end the PBOC reduced the cash reserve requirement ratio for banks serving rural borrowers and smaller companies to stimulate lending in targeted sectors and support economic expansion.

Emerging market stocks rose during the six months under review, as many investors were encouraged by generally positive global economic data and seemed to focus on the relatively attractive valuations of many emerging market stocks. For the six months ended June 30, 2014, emerging market stocks, as measured by the MSCI EM Index, generated a +6.32% total return in U.S. dollar terms, aided by strength in several emerging market currencies.¹ Latin America outperformed as Colombia, Peru and Brazil generated strong returns. Asia performed well, with Indonesia, India, the Philippines and Thailand producing robust returns. European emerging markets underperformed their peers, as losses in Russia and Hungary partly offset gains in Turkey, the Czech Republic and Greece.

Investment Strategy

We employ a fundamental research, value-oriented, long-term investment approach. We focus on the market price of a company’s securities relative to our evaluation of its long-term earnings, asset value and cash flow potential. We also consider a company’s profit and loss outlook, balance sheet strength, cash flow trends and asset value in relation to the current price. Our analysis considers the company’s corporate governance behavior as well as its position in its sector, the economic framework and political environment. We invest in securities without regard to benchmark comparisons.

Manager’s Discussion

During the six months under review, key contributors to the Fund’s absolute performance included Emaar Properties, a leading property developer and manager with operations throughout the Middle East, notably in Dubai, United Arab Emirates (UAE); Brilliance China Automotive Holdings, one of China’s major automobile manufacturers; and Tata Consultancy Services, one of India’s largest information technology (IT) consulting and services companies.

Emaar Properties’ first-quarter 2014 earnings benefited from strong growth in the company’s leasing and rental income. Rising tourism in Dubai boosted Emaar’s hotel and retail operations, and, in our assessment, an ongoing property sector

Top 10 Countries
6/30/14
	% of Total Net Assets
China		13.9%
Brazil		13.0%
Thailand		9.0%
South Africa		8.9%
Russia		8.1%
India		6.6%
U.K.		4.5%
Taiwan		3.6%
South Korea		3.5%
Switzerland		3.4%

recovery could potentially support future earnings growth. Investor positioning prior to the UAE’s inclusion in the MSCI EM Index in June led to strong buying of Emaar’s shares, contributing to further price increases.

Brilliance China Automotive has a joint venture with BMW for the production and sale of BMW 3-series and 5-series sedans and X1 compact sport utility vehicles in China. The company appears to us to be well positioned to fulfill China’s expanding middle class’s fast-growing demand for affordable luxury vehicles. The resilient sales growth of luxury cars in China contributed to Brilliance’s strong first-quarter sales volume, with BMW cars taking an increasing market share. Continued positive car-sales data and news of an extension to 2028 of the joint venture agreement between Brilliance and BMW also boosted Brilliance’s share price.

Tata Consultancy Services, in our view, is a well-managed and attractively valued service provider in the growing IT outsourcing industry. In addition to benefiting from the Indian equity market’s strong performance, its shares were supported by the IT outsourcing industry’s growth during the period. We believe that India has a major competitive advantage in providing outsourcing services because of the country’s available technological expertise and relatively low labor costs. Tata Consultancy’s shares made solid gains in June as the company reaffirmed its revenue and margin outlook and as earnings results from a U.S. peer suggested ongoing strength in key markets.

In contrast, key detractors from the Fund’s absolute performance included SJM Holdings, MGM China Holdings and Luk Fook Holdings (International). We closed the Fund’s positions

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TEMPLETON DEVELOPING MARKETS VIP FUND

in these companies as we sought to invest in companies we considered to be more attractively valued within our investment universe.

Many Hong Kong-listed, Macau-based casino and entertainment companies declined in value as uncertainty about the sustainability of their robust revenue growth rates led to lower revenue estimates. Furthermore, concerns about the long-term impact of rapidly increasing hotel and casino capacity on Macau’s Cotai Strip led many investors to lock in some profits. The Fund’s positions in SJM Holdings and MGM China Holdings were among those that lost ground after strong performances in the latter part of 2013.

Luk Fook Holdings is a Hong Kong-based jewelry retailer that we considered to be an attractive route to gain exposure to Chinese consumers’ rising discretionary spending. Pressuring Luk Fook’s share price were uncertainty about China’s jewelry sales trends and some unease that instances of Hong Kong residents’ hostility toward mainland tourists might discourage them from visiting.

It is important to recognize the effect of currency movements on the Fund’s performance. In general, if the value of the U.S. dollar goes up compared with a foreign currency, an investment traded in that foreign currency will go down in value because it will be worth fewer U.S. dollars. This can have a negative effect on Fund performance. Conversely, when the U.S. dollar weakens in relation to a foreign currency, an investment traded in that foreign currency will increase in value, which can contribute to Fund performance. For the six months ended June 30, 2014, the U.S. dollar declined in value relative to many currencies in which the Fund’s investments were traded. As a result, the Fund’s performance was positively affected by the portfolio’s investment predominantly in securities with non-U.S. currency exposure. However, one cannot expect the same result in future periods.

In the past six months, our continued search for investments we considered to be attractively valued led us to increase the Fund’s holdings largely in Thailand, Russia, South Africa and China via China H and Red Chip shares.² We initiated investments in several markets, including Greece and Peru, and made

Top 10 Holdings
6/30/14
Company Sector/Industry, Country	% of Total Net Assets
Remgro Ltd. Diversified Financial Services, South Africa		5.0%
Unilever PLC Food Products, U.K.		4.5%
Brilliance China Automotive Holdings Ltd. Automobiles, China		4.1%
Tata Consultancy Services Ltd. IT Services, India		3.9%
Itau Unibanco Holding SA, ADR Banks, Brazil		3.5%
Compagnie Financiere Richemont SA Textiles, Apparel & Luxury Goods, Switzerland		3.3%
Siam Commercial Bank PCL, fgn. Banks, Thailand		3.3%
TSMC (Taiwan Semiconductor Manufacturing Co. Ltd.) Semiconductors & Semiconductor Equipment, Taiwan		3.3%
Industries Qatar QSC Industrial Conglomerates, Qatar		3.2%
Naspers Ltd., N Media, South Africa		3.1%

The dollar value, number of shares or principal amount, and names of all portfolio holdings are listed in the Fund’s Statement of Investments (SOI).

some purchases in other emerging market countries, including Turkey, Indonesia and Taiwan. Additionally, we made some purchases in certain developed market countries, such as Austria and Belgium, where we identified companies that have significant emerging market operations, giving them the potential to benefit from emerging market countries’ stronger personal income and consumer demand growth. In sector terms, we increased investments largely in materials, energy, IT and financials.³ Key purchases included new positions in Brilliance China Automotive Holdings; Siam Commercial Bank, one of

Thailand’s biggest banks; and Naspers, a South Africa-based multinational media group that engages in Internet, pay television and print media businesses.

Conversely, we reduced the Fund’s investments largely in Hong Kong, the UAE and Brazil as we focused on opportunities we considered to be more attractively valued within our investment

2. “China H” denotes shares of China-incorporated, Hong Kong Stock Exchange-listed companies with most businesses in China. “Red Chip” denotes shares of Hong Kong Stock Exchange-listed companies substantially owned by Chinese mainland state entities, with significant exposure to China.

3. The materials sector comprises chemicals, construction materials, and metals and mining in the SOI. The energy sector comprises oil, gas and consumable fuels in the SOI. The IT sector comprises Internet software and services, IT services, and semiconductors and semiconductor equipment in the SOI. The financials sector comprises banks, diversified financial services, and real estate management and development in the SOI.

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TEMPLETON DEVELOPING MARKETS VIP FUND

universe. Additionally, we eliminated the Fund’s exposure to certain markets, including Macau and Singapore. In sector terms, some of the largest sales were in financials, consumer staples and consumer discretionary.⁴ Key sales included reductions of the Fund’s holdings in Emaar Properties and in Ambev, a Brazil-based company that is one of world’s largest beer and soft drink producers. We closed the Fund’s position in British American Tobacco, a major global tobacco company. We also closed the Fund’s positions in Macau casino operators, namely the aforementioned SJM Holdings and MGM China Holdings, as well as Sands China and Melco Crown Entertainment.

Thank you for your participation in Templeton Developing Markets VIP Fund. We look forward to serving your future investment needs.

The foregoing information reflects our analysis, opinions and portfolio holdings as of June 30, 2014, the end of the reporting period. The way we implement our main investment strategies and the resulting portfolio holdings may change depending on factors such as market and economic conditions. These opinions may not be relied upon as investment advice or an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but the investment manager makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.

4. The consumer staples sector comprises beverages, food products, food staples and retailing, personal products and tobacco in the SOI. The consumer discretionary sector comprises automobiles; media; hotels, restaurants and leisure; specialty retail; and textiles, apparel and luxury goods in the SOI.

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TEMPLETON DEVELOPING MARKETS VIP FUND

Class 2 Fund Expenses

As an investor in a variable insurance contract (Contract) that indirectly provides for investment in an underlying mutual fund, you can incur transaction and/or ongoing expenses at both the Fund level and the Contract level.

• Transaction expenses can include sales charges (loads) on purchases, surrender fees, transfer fees and premium taxes.

• Ongoing expenses can include management fees, distribution and service (12b-1) fees, contract fees, annual maintenance fees, mortality and expense risk fees and other fees and expenses. All mutual funds and Contracts have some types of ongoing expenses.

The expenses shown in the table are meant to highlight ongoing expenses at the Fund level only and do not include ongoing expenses at the Contract level, or transaction expenses at either the Fund or Contract levels. While the Fund does not have transaction expenses, if the transaction and ongoing expenses at the Contract level were included, the expenses shown below would be higher. You should consult your Contract prospectus or disclosure document for more information.

The table shows Fund-level ongoing expenses and can help you understand these expenses and compare them with those of other mutual funds offered through the Contract. The table assumes a $1,000 investment held for the six months indicated. Please refer to the Fund prospectus for additional information on operating expenses.

Actual Fund Expenses

The first line (Actual) of the table provides actual account values and expenses. The “Ending Account Value” is derived from the Fund’s actual return, which includes the effect of ongoing Fund expenses, but does not include the effect of ongoing Contract expenses.

You can estimate the Fund-level expenses you incurred during the period by following these steps. Of course, your account value and expenses will differ from those in this illustration:

1. Divide your account value by $1,000.

If an account had an $8,600 value, then $8,600 ÷ $1,000 = 8.6.

2. Multiply the result by the number under the heading “Fund-Level Expenses Incurred During Period.”

If Fund-Level Expenses Incurred During Period were $7.50, then 8.6 × $7.50 = $64.50.

In this illustration, the estimated expenses incurred this period at the Fund level are $64.50.

Hypothetical Example for Comparison with Other Mutual Funds

Information in the second line (Hypothetical) of the table can help you compare ongoing expenses of the Fund with those of other mutual funds offered through the Contract. This information may not be used to estimate the actual ending account balance or expenses you incurred during the period. The hypothetical “Ending Account Value” is based on the Fund’s actual expense ratio and an assumed 5% annual rate of return before expenses, which does not represent the Fund’s actual return. The figure under the heading “Fund-Level Expenses Incurred During Period” shows the hypothetical expenses your account would have incurred under this scenario. You can compare this figure with the 5% hypothetical examples that appear in shareholder reports of other funds offered through a Contract.

Class 2	Beginning Account Value 1/1/14		Ending Account Value 6/30/14		Fund-Level Expenses Incurred During Period* 1/1/14–6/30/14
Actual		$1,000		$1,007.70		$8.06
Hypothetical (5% return before expenses)		$1,000		$1,016.76		$8.10

*Expenses are calculated using the most recent six-month annualized expense ratio, net of expense waivers, for the Fund’s Class 2 shares (1.62%), which does not include any ongoing expenses of the Contract for which the Fund is an investment option, multiplied by the average account value over the period, multiplied by 181/365 to reflect the one-half year period.

TD-6 Semiannual Report

SUPPLEMENT DATED AUGUST 1, 2014

TOTHE PROSPECTUS DATED MAY 1, 2014

OF

TEMPLETON DEVELOPING MARKETS VIP FUND

(a series of Franklin Templeton Variable Insurance Products Trust)

The prospectus is amended as follows:

I.  The “Fund Summary – Annual Fund Operating Expenses” table beginning on page TD-S1 in the Fund’s Class 1 prospectus is replaced with the following:

Annual Fund Operating Expenses

(expenses that you pay each year as a percentage of the value of your investment)

	Class 1
Management fees1		1.24%
Distribution and service (12b-1) fees		None
Other expenses1		0.11%
Total annual Fund operating expenses		1.35%

1. Management fees and other expenses have been restated to reflect current fiscal year fees and expenses as a result of the bundling of the Fund’s investment management agreement with its fund administration agreement effective May 1, 2014. Such combined investment management fees are described further under “Management” in the Fund’s prospectus. Total annual fund operating expenses are not affected by such bundling.

II.  The “Fund Summary – Annual Fund Operating Expenses” table beginning on page TD-S1 in the Fund’s Class 2 prospectus is replaced with the following:

Annual Fund Operating Expenses

(expenses that you pay each year as a percentage of the value of your investment)

	Class 2
Management fees1		1.24%
Distribution and service (12b-1) fees		0.25%
Other expenses1		0.11%
Total annual Fund operating expenses		1.60%

1. Management fees and other expenses have been restated to reflect current fiscal year fees and expenses as a result of the bundling of the Fund’s investment management agreement with its fund administration agreement effective May 1, 2014. Such combined investment management fees are described further under “Management” in the Fund’s prospectus. Total annual fund operating expenses are not affected by such bundling.

III.  The “Fund Summary – Annual Fund Operating Expenses” table beginning on page TD-S1 in the Fund’s Class 4 prospectus is replaced with the following:

Annual Fund Operating Expenses

(expenses that you pay each year as a percentage of the value of your investment)

	Class 4
Management fees1		1.24%
Distribution and service (12b-1) fees		0.35%
Other expenses1		0.11%
Total annual Fund operating expenses		1.70%

TD-7

1. Management fees and other expenses have been restated to reflect current fiscal year fees and expenses as a result of the bundling of the Fund’s investment management agreement with its fund administration agreement effective May 1, 2014. Such combined investment management fees are described further under “Management” in the Fund’s prospectus. Total annual fund operating expenses are not affected by such bundling.

IV.  The following is added as the second to last paragraph in the “Fund Details – Management” section of each Class’ prospectus beginning on page TD-D7:

Effective May 1, 2014, the Fund’s investment management agreement was bundled with its fund administration agreement, including the fees payable to the Fund’s administrator thereunder, as approved by the board of trustees. The fee payable to the administrator under the Fund’s administration agreement, prior to May 1, 2014, was a monthly fee under the following fee schedule of the Fund’s average daily net assets:

• 0.150% up to and including $200 million;

• 0.135% over $200 million, up to and including $700 million;

• 0.100% over $700 million, up to and including $1.2 billion;

• 0.075% in excess of $1.2 billion.

As of such date, the Fund’s investment management fees became a monthly fee at the annual rate of the value of the Fund’s average daily net assets as set forth below:

• 1.250% up to and including $200 million;

• 1.235% over $200 million, up to and including $700 million;

• 1.200% over $700 million, up to and including $1 billion;

• 1.150% over $1 billion, up to and including $1.2 billion;

• 1.125% over $1.2 billion, up to and including $5 billion;

• 1.075% over $5 billion, up to and including $10 billion;

• 1.025% over $10 billion, up to and including $15 billion;

• 0.975% over $15 billion, up to and including $20 billion;

• 0.925% in excess of $20 billion.

Please keep this supplement with your prospectus for future reference.

TD-8

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Financial Highlights

Templeton Developing Markets VIP Fund

	Six Months Ended June 30, 2014 (unaudited)			Year Ended December 31,
				2013			2012			2011			2010			2009
Class 1
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$10.26			$10.58			$  9.50			$11.40			$  9.86			$6.11
Income from investment operationsa:
Net investment incomeb		0.11			0.13			0.19			0.17			0.09			0.12
Net realized and unrealized gains (losses)		(0.02	)		(0.22	)		1.06			(1.94	)		1.63			4.02
Total from investment operations		0.09			(0.09	)		1.25			(1.77	)		1.72			4.14
Less distributions from:
Net investment income		(0.17	)		(0.23	)		(0.17	)		(0.13	)		(0.18	)		(0.36	)
Net realized gains		—			—			—			—			—			(0.03	)
Total distributions		(0.17	)		(0.23	)		(0.17	)		(0.13	)		(0.18	)		(0.39	)
Redemption feesc		—			—			—			—			—			—
Net asset value, end of period		$10.18			$10.26			$10.58			$  9.50			$11.40			$9.86
Total returnd		0.93%			(0.73)%			13.40%			(15.67)%			17.83%			73.32%
Ratios to average net assetse
Expenses before waiver and payments by affiliates		1.38%			1.35%			1.35%			1.40%			1.49%			1.45%
Expenses net of waiver and payments by affiliates		1.37%			1.35%			1.35%			1.40%			1.49%	f		1.45%	f
Net investment income		2.17%			1.25%			1.93%			1.57%			0.87%			1.64%
Supplemental data
Net assets, end of period (000’s)		$135,486			$145,707			$203,568			$232,544			$347,242			$325,927
Portfolio turnover rate		61.52%			44.59%			24.45%			14.90%			24.41%			56.58%	g

^aThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.

^bBased on average daily shares outstanding.

^cAmount rounds to less than $0.01 per share.

^dTotal return does not include fees, charges or expenses imposed by the variable annuity and life insurance contracts for which the Franklin Templeton Variable Insurance Products Trust serves as an underlying investment vehicle. Total return is not annualized for periods less than one year.

^eRatios are annualized for periods less than one year.

^fBenefit of expense reduction rounds to less than 0.01%.

^gExcludes the value of portfolio securities delivered as a result of a redemption in-kind.

The accompanying notes are an integral part of these financial statements.    |   Semiannual Report TD-9

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL HIGHLIGHTS

Templeton Developing Markets VIP Fund (continued)

	Six Months Ended June 30, 2014 (unaudited)			Year Ended December 31,
				2013			2012			2011			2010			2009
Class 2
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$10.19			$10.50			$  9.42			$11.30			$  9.78			$6.04
Income from investment operationsa:
Net investment incomeb		0.09			0.10			0.17			0.14			0.06			0.11
Net realized and unrealized gains (losses)		(0.02	)		(0.21	)		1.05			(1.92	)		1.62			3.98
Total from investment operations		0.07			(0.11	)		1.22			(1.78	)		1.68			4.09
Less distributions from:
Net investment income		(0.15	)		(0.20	)		(0.14	)		(0.10	)		(0.16	)		(0.32	)
Net realized gains		—			—			—			—			—			(0.03	)
Total distributions		(0.15	)		(0.20	)		(0.14	)		(0.10	)		(0.16	)		(0.35	)
Redemption feesc		—			—			—			—			—			—
Net asset value, end of period		$10.11			$10.19			$10.50			$  9.42			$11.30			$9.78
Total returnd		0.77%			(0.92)%			13.16%			(15.86)%			17.58%			72.59%
Ratios to average net assetse
Expenses before waiver and payments by affiliates		1.63%			1.60%			1.60%			1.65%			1.74%			1.70%
Expenses net of waiver and payments by affiliates		1.62%			1.60%			1.60%			1.65%			1.74%	f		1.70%	f
Net investment income		1.92%			1.00%			1.68%			1.32%			0.62%			1.39%
Supplemental data
Net assets, end of period (000’s)		$301,279			$274,683			$291,638			$295,223			$392,546			$435,947
Portfolio turnover rate		61.52%			44.59%			24.45%			14.90%			24.41%			56.58%	g

^aThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.

^bBased on average daily shares outstanding.

^cAmount rounds to less than $0.01 per share.

^dTotal return does not include fees, charges or expenses imposed by the variable annuity and life insurance contracts for which the Franklin Templeton Variable Insurance Products Trust serves as an underlying investment vehicle. Total return is not annualized for periods less than one year.

^eRatios are annualized for periods less than one year.

^fBenefit of expense reduction rounds to less than 0.01%.

^gExcludes the value of portfolio securities delivered as a result of a redemption in-kind.

TD-10 Semiannual Report   |    The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL HIGHLIGHTS

Templeton Developing Markets VIP Fund (continued)

	Six Months Ended June 30, 2014 (unaudited)			Year Ended December 31,
				2013			2012			2011			2010			2009
Class 4
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$10.20			$10.50			$  9.42			$11.30			$  9.80			$6.09
Income from investment operationsa:
Net investment incomeb		0.09			0.10			0.16			0.13			0.05			0.09
Net realized and unrealized gains (losses)		(0.02	)		(0.21	)		1.04			(1.91	)		1.61			4.00
Total from investment operations		0.07			(0.11	)		1.20			(1.78	)		1.66			4.09
Less distributions from:
Net investment income		(0.13	)		(0.19	)		(0.12	)		(0.10	)		(0.16	)		(0.35	)
Net realized gains		—			—			—			—			—			(0.03	)
Total distributions		(0.13	)		(0.19	)		(0.12	)		(0.10	)		(0.16	)		(0.38	)
Redemption feesc		—			—			—			—			—			—
Net asset value, end of period		$10.14			$10.20			$10.50			$  9.42			$11.30			$9.80
Total returnd		0.65%			(1.07)%			13.06%			(15.88)%			17.41%			72.45%
Ratios to average net assetse
Expenses before waiver and payments by affiliates		1.73%			1.70%			1.70%			1.75%			1.84%			1.80%
Expenses net of waiver and payments by affiliates		1.72%			1.70%			1.70%			1.75%			1.84%	f		1.80%	f
Net investment income		1.82%			0.90%			1.58%			1.22%			0.52%			1.29%
Supplemental data
Net assets, end of period (000’s)		$13,980			$15,225			$23,341			$24,380			$37,198			$26,362
Portfolio turnover rate		61.52%			44.59%			24.45%			14.90%			24.41%			56.58%	g

^aThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.

^bBased on average daily shares outstanding.

^cAmount rounds to less than $0.01 per share.

^dTotal return does not include fees, charges or expenses imposed by the variable annuity and life insurance contracts for which the Franklin Templeton Variable Insurance Products Trust serves as an underlying investment vehicle. Total return is not annualized for periods less than one year.

^eRatios are annualized for periods less than one year.

^fBenefit of expense reduction rounds to less than 0.01%.

^gExcludes the value of portfolio securities delivered as a result of a redemption in-kind.

The accompanying notes are an integral part of these financial statements.    |   Semiannual Report TD-11

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Statement of Investments, June 30, 2014 (unaudited)

Templeton Developing Markets VIP Fund
		Industry		Shares		Value
	Common Stocks 90.9%
	Argentina 0.1%
a	Grupo Clarin SA, B, GDR, Reg S		Media		70,355	$	513,592
	Australia 0.4%
	BHP Billiton Ltd.		Metals & Mining		56,757		1,922,148
	Austria 0.1%
	OMV AG		Oil, Gas & Consumable Fuels		13,000		587,494
	Belgium 3.1%
	Anheuser-Busch InBev NV		Beverages		120,577		13,853,917
	Brazil 10.4%
	Ambev SA		Beverages		1,856,450		13,237,259
	Itau Unibanco Holding SA, ADR		Banks		1,090,710		15,684,410
	M Dias Branco SA		Food Products		149,700		6,618,565
	Souza Cruz SA		Tobacco		1,098,228		11,313,947
							46,854,181
	Chile 0.6%
	Sociedad Quimica Y Minera de Chile SA Soquimich, ADR		Chemicals		94,287		2,763,552
	China 13.9%
b	Aluminum Corp. of China Ltd., H		Metals & Mining		1,324,000		474,904
	Angang Steel Co. Ltd., H		Metals & Mining		3,772,000		2,428,540
	Brilliance China Automotive Holdings Ltd.		Automobiles		9,805,700		18,345,083
	China Construction Bank Corp., H		Banks		6,283,300		4,750,710
	China Mobile Ltd.		Wireless Telecommunication Services		542,000		5,258,843
b	China Shipping Development Co. Ltd., H		Marine		6,101,100		3,565,984
	Industrial and Commercial Bank of China Ltd., H		Banks		7,018,300		4,437,119
	NetEase Inc., ADR		Internet Software & Services		36,003		2,821,195
	PetroChina Co. Ltd., H		Oil, Gas & Consumable Fuels		6,136,600		7,743,544
	Tencent Holdings Ltd.		Internet Software & Services		827,000		12,644,363
							62,470,285
	Greece 0.3%
b	National Bank of Greece SA		Banks		312,080		1,141,099
	Hong Kong 0.6%
	Dairy Farm International Holdings Ltd.		Food & Staples Retailing		187,433		1,998,036
	Giordano International Ltd.		Specialty Retail		1,358,200		800,853
b	Summit Ascent Holdings Ltd.		Trading Companies & Distributors		50,400		38,757
							2,837,646
	India 6.6%
	Dr. Reddy’s Laboratories Ltd.		Pharmaceuticals		68,010		2,961,312
	Tata Consultancy Services Ltd.		IT Services		438,340		17,658,037
	Tata Motors Ltd.		Automobiles		1,285,800		9,230,314
							29,849,663
	Indonesia 2.5%
	Astra International Tbk PT		Automobiles		11,424,700		7,010,940
	Bank Danamon Indonesia Tbk PT		Banks		3,377,400		1,180,879
	Semen Indonesia (Persero) Tbk PT		Construction Materials		2,531,000		3,218,459
							11,410,278

TD-12 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENTS OF INVESTMENTS (UNAUDITED)

Templeton Developing Markets VIP Fund (continued)

		Industry		Shares		Value
	Common Stocks (continued)
	Kenya 0.7%
	Equity Bank Ltd.		Banks		2,662,201	$	1,428,350
	Kenya Commercial Bank Ltd.		Banks		3,217,000		1,872,911
							3,301,261
	Luxembourg 0.0%†
a	O’Key Group SA, GDR, Reg S		Food & Staples Retailing		600		5,511
	Nigeria 0.4%
	Nigerian Breweries PLC		Beverages		1,467,239		1,548,727
	Pakistan 0.6%
	United Bank Ltd.		Banks		1,465,400		2,506,605
	Peru 0.4%
	Compania de Minas Buenaventura SA, ADR		Metals & Mining		153,850		1,816,968
	Philippines 0.9%
	Ayala Corp.		Diversified Financial Services		193,800		2,876,458
b	Bloomberry Resorts Corp.		Hotels, Restaurants & Leisure		1,112,200		274,321
b	Melco Crown Philippines Resorts Corp.		Hotels, Restaurants & Leisure		2,837,100		745,288
							3,896,067
	Qatar 3.2%
	Industries Qatar QSC		Industrial Conglomerates		312,223		14,493,679
	Romania 0.2%
c	Societatea Nationala de Gaze Naturale ROMGAZ SA, 144A		Oil, Gas & Consumable Fuels		85,800		929,871
	Russia 7.4%
	Gazprom OAO, ADR		Oil, Gas & Consumable Fuels		509,300		4,438,549
d	LUKOIL Holdings, ADR		Oil, Gas & Consumable Fuels		29,958		1,788,792
d	LUKOIL Holdings, ADR (London Stock Exchange)		Oil, Gas & Consumable Fuels		38,918		2,323,794
a,b	Mail.ru Group Ltd., GDR, Reg S		Internet Software & Services		68,025		2,397,881
	Mining and Metallurgical Co. Norilsk Nickel OJSC, ADR		Metals & Mining		540,000		10,697,400
b	Yandex NV, A		Internet Software & Services		331,568		11,817,084
							33,463,500
	South Africa 8.9%
	MTN Group Ltd.		Wireless Telecommunication Services		176,100		3,708,248
	Naspers Ltd., N		Media		118,190		13,911,242
	Remgro Ltd.		Diversified Financial Services		1,032,124		22,317,244
							39,936,734
	South Korea 3.5%
	Grand Korea Leisure Co. Ltd.		Hotels, Restaurants & Leisure		170,220		6,997,186
	Hyundai Development Co.		Construction & Engineering		57,780		1,835,600
	Samsung Electronics Co. Ltd.		Semiconductors & Semiconductor Equipment		3,858		5,039,798
	SK Innovation Co. Ltd.		Oil, Gas & Consumable Fuels		17,532		1,957,624
							15,830,208
	Sweden 0.5%
e	Oriflame Cosmetics SA, SDR		Personal Products		92,706		2,160,471
	Switzerland 3.4%
	Compagnie Financiere Richemont SA		Textiles, Apparel & Luxury Goods		143,641		15,071,089

Semiannual Report TD-13

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENTS OF INVESTMENTS (UNAUDITED)

Templeton Developing Markets VIP Fund (continued)

		Industry		Shares		Value
	Common Stocks (continued)
	Taiwan 3.6%
	Novatek Microelectronics Corp. Ltd.		Semiconductors & Semiconductor Equipment		252,000	$	1,240,071
	Taiwan Semiconductor Manufacturing Co. Ltd.		Semiconductors & Semiconductor Equipment		3,505,000		14,842,497
							16,082,568
	Thailand 9.0%
	Kasikornbank PCL, fgn.		Banks		705,800		4,460,203
	Land and Houses PCL, fgn.		Real Estate Management & Development		9,006,200		2,734,620
	PTT Exploration and Production PCL, fgn.		Oil, Gas & Consumable Fuels		609,700		3,148,112
	PTT PCL, fgn.		Oil, Gas & Consumable Fuels		593,300		5,815,949
	Quality Houses PCL, fgn.		Real Estate Management & Development		20,757,100		2,265,109
	Siam Commercial Bank PCL, fgn.		Banks		2,869,800		14,906,329
	Thai Beverage PCL, fgn.		Beverages		14,863,200		7,391,958
							40,722,280
	Turkey 2.9%
	Akbank TAS		Banks		1,260,000		4,631,654
	Tupras-Turkiye Petrol Rafinerileri AS		Oil, Gas & Consumable Fuels		91,900		2,142,252
	Turkiye Garanti Bankasi AS		Banks		1,636,500		6,401,748
							13,175,654
	United Arab Emirates 0.4%
	Emaar Properties PJSC		Real Estate Management & Development		793,238		1,816,361
	United Kingdom 4.5%
	Unilever PLC		Food Products		450,037		20,415,440
	United States 1.7%
	Avon Products Inc.		Personal Products		537,046		7,846,242
	Vietnam 0.1%
	DHG Pharmaceutical JSC		Pharmaceuticals		54,400		249,939
	Total Common Stocks (Cost $334,685,369)						409,473,030
f	Participatory Notes (Cost $2,030,659) 0.6%
	Saudi Arabia 0.6%
c	HSBC Bank PLC, Etihad Etisalat Co., 144A, 12/05/14		Wireless Telecommunication Services		129,805		2,838,024
	Preferred Stocks 4.2%
	Brazil 2.6%
	Petroleo Brasileiro SA, ADR, pfd.		Oil, Gas & Consumable Fuels		454,600		7,109,944
	Vale SA, ADR, pfd., A		Metals & Mining		391,400		4,657,660
							11,767,604
	Chile 0.9%
	Embotelladora Andina SA, pfd., A		Beverages		1,374,417		4,218,458

TD-14 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENTS OF INVESTMENTS (UNAUDITED)

Templeton Developing Markets VIP Fund (continued)

		Industry	Shares		Value
	Preferred Stocks (continued)
	Russia 0.7%
	Sberbank of Russia, pfd.	Banks		1,538,200	$	3,123,212
	Total Preferred Stocks (Cost $18,100,263)					19,109,274
	Total Investments before Short Term Investments (Cost $354,816,291)					431,420,328
	Short Term Investments 5.2%
	Money Market Funds (Cost $22,475,010) 5.0%
	United States 5.0%
b,g	Institutional Fiduciary Trust Money Market Portfolio			22,475,010		22,475,010
h	Investments from Cash Collateral Received for Loaned Securities (Cost $1,128,696) 0.2%
	Money Market Funds 0.2%
	United States 0.2%
i	BNY Mellon Overnight Government Fund, 0.082%			1,128,696		1,128,696
	Total Investments (Cost $378,419,997) 100.9%					455,024,034
	Other Assets, less Liabilities (0.9)%					(4,279,758	)
	Net Assets 100.0%				$	450,744,276

See Abbreviations on page TD-27.

^†Rounds to less than 0.1% of net assets.

^aSecurity was purchased pursuant to Regulation S under the Securities Act of 1933, which exempts from registration securities offered and sold outside of the United States. Such a security cannot be sold in the United States without either an effective registration statement filed pursuant to the Securities Act of 1933, or pursuant to an exemption from registration. These securities have been deemed liquid under guidelines approved by the Trust’s Board of Trustees. At June 30, 2014, the aggregate value of these securities was $2,916,984, representing 0.65% of net assets.

^bNon-income producing.

^cSecurity was purchased pursuant to Rule 144A under the Securities Act of 1933 and may be sold in transactions exempt from registration only to qualified institutional buyers or in a public offering registered under the Securities Act of 1933. These securities have been deemed liquid under guidelines approved by the Trust’s Board of Trustees. At June 30, 2014, the aggregate value of these securities was $3,767,895, representing 0.84% of net assets.

^dAt June 30, 2014, pursuant to the Fund’s policies and the requirements of applicable securities law, the Fund may be restricted from trading these securities for a limited or extended period of time due to ownership limits and/or potential possession of material non-public information.

^eA portion or all of the security is on loan at June 30, 2014. See Note 1(d).

^fSee Note 1(c) regarding Participatory Notes.

^gSee Note 3(e) regarding investments in the Institutional Fiduciary Trust Money Market Portfolio.

^hSee Note 1(d) regarding securities on loan.

ⁱThe rate shown is the annualized seven-day yield at period end.

The accompanying notes are an integral part of these financial statements.    |   Semiannual Report TD-15

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Financial Statements

Statement of Assets and Liabilities

June 30, 2014 (unaudited)

	Templeton Developing Markets VIP Fund
Assets:
Investments in securities:
Cost - Unaffiliated issuers	$	355,944,987
Cost - Sweep Money Fund (Note 3e)		22,475,010
Total cost of investments	$	378,419,997
Value - Unaffiliated issuers	$	432,549,024
Value - Sweep Money Fund (Note 3e)		22,475,010
Total value of investments (Includes securities loaned in the amount of $1,080,236)		455,024,034
Cash		107,481
Foreign currency, at value (cost $17,472)		17,472
Receivables:
Investment securities sold		1,384,670
Capital shares sold		63,398
Dividends		1,134,916
Foreign tax		25,537
Other assets		201
Total assets		457,757,709
Liabilities:
Payables:
Investment securities purchased		4,473,528
Capital shares redeemed		451,991
Management fees		456,460
Distribution fees		133,506
Trustees’ fees and expenses		102
Payable upon return of securities loaned		1,128,696
Deferred tax		15,134
Accrued expenses and other liabilities		354,016
Total liabilities		7,013,433
Net assets, at value	$	450,744,276
Net assets consist of:
Paid-in capital	$	348,211,368
Distributions in excess of net investment income		(2,913,174	)
Net unrealized appreciation (depreciation)		76,541,780
Accumulated net realized gain (loss)		28,904,302
Net assets, at value	$	450,744,276

TD-16 Semiannual Report   |    The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL STATEMENTS

Statement of Assets and Liabilities (continued)

June 30, 2014 (unaudited)

	Templeton Developing Markets VIP Fund
Class 1:
Net assets, at value	$	135,485,746
Shares outstanding		13,309,893
Net asset value and maximum offering price per share	$	10.18
Class 2:
Net assets, at value	$	301,278,598
Shares outstanding		29,786,460
Net asset value and maximum offering price per share	$	10.11
Class 4:
Net assets, at value	$	13,979,932
Shares outstanding		1,378,402
Net asset value and maximum offering price per share	$	10.14

The accompanying notes are an integral part of these financial statements.    |   Semiannual Report TD-17

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL STATEMENTS

Statement of Operations

for the six months ended June 30, 2014 (unaudited)

	Templeton Developing Markets VIP Fund
Investment income:
Dividends (net of foreign taxes of $477,114)	$	7,819,279
Income from securities loaned		29,839
Total investment income		7,849,118
Expenses:
Management fees (Note 3a)		2,544,970
Administrative fees (Note 3b)		207,590
Distribution fees: (Note 3c)
Class 2		339,802
Class 3		27,045
Class 4		24,750
Custodian fees (Note 4)		149,935
Reports to shareholders		97,631
Professional fees		34,679
Trustees’ fees and expenses		1,074
Other		11,251
Total expenses		3,438,727
Expenses waived/paid by affiliates (Note 3e)		(9,804	)
Net expenses		3,428,923
Net investment income		4,420,195
Realized and unrealized gains (losses):
Net realized gain (loss) from:
Investments		55,794,187
Foreign currency transactions		64,531
Net realized gain (loss)		55,858,718
Net change in unrealized appreciation (depreciation) on:
Investments		(57,238,411	)
Translation of other assets and liabilities denominated in foreign currencies		(24,412	)
Change in deferred taxes on unrealized appreciation		(15,134	)
Net change in unrealized appreciation (depreciation)		(57,277,957	)
Net realized and unrealized gain (loss)		(1,419,239	)
Net increase (decrease) in net assets resulting from operations	$	3,000,956

TD-18 Semiannual Report   |    The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL STATEMENTS

Statements of Changes in Net Assets

	Templeton Developing Markets VIP Fund
	Six Months Ended June 30, 2014 (unaudited)			Year Ended December 31, 2013
Increase (decrease) in net assets:
Operations:
Net investment income	$	4,420,195		$	5,556,147
Net realized gain (loss) from investments and foreign currency transactions		55,858,718			67,962,625
Net change in unrealized appreciation (depreciation) on investments, translation of other assets and liabilities denominated in foreign currencies and deferred taxes		(57,277,957	)		(79,189,158	)
Net increase (decrease) in net assets resulting from operations		3,000,956			(5,670,386	)
Distributions to shareholders from:
Net investment income:
Class 1		(2,319,775	)		(3,816,779	)
Class 2		(4,358,800	)		(5,449,449	)
Class 3		—			(777,644	)
Class 4		(173,399	)		(373,848	)
Total distributions to shareholders		(6,851,974	)		(10,417,720	)
Capital share transactions: (Note 2)
Class 1		(8,793,874	)		(52,075,044	)
Class 2		27,936,429			(8,867,643	)
Class 3		(33,674,042	)		(12,240,084	)
Class 4		(1,138,997	)		(7,287,727	)
Total capital share transactions		(15,670,484	)		(80,470,498	)
Redemption fees		68			1,204
Net increase (decrease) in net assets		(19,521,434	)		(96,557,400	)
Net assets:
Beginning of period		470,265,710			566,823,110
End of period	$	450,744,276		$	470,265,710
Distributions in excess of net investment income included in net assets:
End of period	$	(2,913,174	)	$	(481,395	)

The accompanying notes are an integral part of these financial statements.    |   Semiannual Report TD-19

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Notes to Financial Statements (unaudited)

Templeton Developing Markets VIP Fund

1. Organization and Significant Accounting Policies

Franklin Templeton Variable Insurance Products Trust (Trust) is registered under the Investment Company Act of 1940, as amended, (1940 Act) as an open-end management investment company, consisting of twenty separate funds and applies the specialized accounting and reporting guidance in U.S. Generally Accepted Accounting Principles (U.S. GAAP). The Templeton Developing Markets VIP Fund (Fund) is included in this report. The financial statements of the remaining funds in the Trust are presented separately. Shares of the Fund are generally sold only to insurance company separate accounts to fund the benefits of variable life insurance policies or variable annuity contracts. The Fund offers three classes of shares: Class 1, Class 2, and Class 4. Effective May 1, 2014, all Class 3 shares were converted to Class 2. Each class of shares differs by its distribution fees, voting rights on matters affecting a single class and its exchange privilege.

Effective May 1, 2014, the Templeton Developing Markets Securities Fund was renamed the Templeton Developing Markets VIP Fund.

The following summarizes the Fund’s significant accounting policies.

a. Financial Instrument Valuation

The Fund’s investments in financial instruments are carried at fair value daily. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. The Fund calculates the net asset value (NAV) per share at the close of the New York Stock Exchange (NYSE), generally at 4 p.m. Eastern time (NYSE close) on each day the NYSE is open for trading. Under compliance policies and procedures approved by the Trust’s Board of Trustees (the Board), the Fund’s administrator has responsibility for oversight of valuation, including leading the cross-functional Valuation and Liquidity Oversight Committee (VLOC). The VLOC provides administration and oversight of the Fund’s valuation policies and procedures, which are approved annually by the Board. Among other things, these procedures allow the Fund to utilize independent pricing services, quotations from securities and financial instrument dealers, and other market sources to determine fair value.

Equity securities listed on an exchange or on the NASDAQ National Market System are valued at the last quoted sale price or the official closing price of the day, respectively. Foreign equity securities are valued as of the close of trading on the foreign stock exchange on which the security is primarily traded or as of the NYSE close, whichever is earlier. The value is then converted into its U.S. dollar equivalent at the foreign exchange rate in effect at the NYSE close on the day that the value of the security is determined. Over-the-counter (OTC) securities are valued within the range of the most recent quoted bid and ask prices. Securities that trade in multiple markets or on multiple exchanges are valued according to the broadest and most representative market. Certain equity securities are valued based upon fundamental characteristics or relationships to similar securities. Investments in open-end mutual funds and non-registered money market funds are valued at the closing net asset value.

The Fund has procedures to determine the fair value of financial instruments for which market prices are not reliable or readily available. Under these procedures, the VLOC convenes on a regular basis to review such financial instruments and considers a number of factors, including significant unobservable valuation inputs, when arriving at fair value. The VLOC primarily employs a market-based approach which may use related or comparable assets or liabilities, recent transactions, market multiples, book values, and other relevant information for the investment to determine the fair value of the investment. An income-based valuation approach may also be used in which the anticipated future cash flows of the investment are discounted to calculate fair value. Discounts may also be applied due to the nature or duration of any restrictions on the disposition of the investments. Due to the inherent uncertainty of valuations of such investments, the fair values may differ significantly from the values that would have been used had an active market existed. The VLOC employs various methods for calibrating these valuation approaches including a regular review of key inputs and assumptions, transactional back-testing or disposition analysis, and reviews of any related market activity.

Trading in securities on foreign securities stock exchanges and OTC markets may be completed before the daily NYSE close. In addition, trading in certain foreign markets may not take place on every NYSE business day. Occasionally, events occur between the time at which trading in a foreign security is completed and the close of the NYSE that might call into question

TD-20 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Templeton Developing Markets VIP Fund (continued)

the reliability of the value of a portfolio security held by the Fund. As a result, differences may arise between the value of the Fund’s portfolio securities as determined at the foreign market close and the latest indications of value at the close of the NYSE. In order to minimize the potential for these differences, the VLOC monitors price movements following the close of trading in foreign stock markets through a series of country specific market proxies (such as baskets of American Depositary Receipts, futures contracts and exchange traded funds). These price movements are measured against established trigger thresholds for each specific market proxy to assist in determining if an event has occurred that may call into question the reliability of the values of the foreign securities held by the Fund. If such an event occurs, the securities may be valued using fair value procedures, which may include the use of independent pricing services.

Also, when the last day of the reporting period is a non-business day, certain foreign markets may be open on those days that the NYSE is closed, which could result in differences between the value of the Fund’s portfolio securities on the last business day and the last calendar day of the reporting period. Any significant security valuation changes due to an open foreign market are adjusted and reflected by the Fund for financial reporting purposes.

b. Foreign Currency Translation

Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars based on the exchange rate of such currencies against U.S. dollars on the date of valuation. The Fund may enter into foreign currency exchange contracts to facilitate transactions denominated in a foreign currency. Purchases and sales of securities, income and expense items denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date. Portfolio securities and assets and liabilities denominated in foreign currencies contain risks that those currencies will decline in value relative to the U.S. dollar. Occasionally, events may impact the availability or reliability of foreign exchange rates used to convert the U.S. dollar equivalent value. If such an event occurs, the foreign exchange rate will be valued at fair value using procedures established and approved by the Board.

The Fund does not separately report the effect of changes in foreign exchange rates from changes in market prices on

securities held. Such changes are included in net realized and unrealized gain or loss from investments on the Statement of Operations.

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

c. Participatory Notes

The Fund invests in Participatory Notes (P-Notes). P-notes are promissory notes that are designed to offer a return linked to the performance of a particular underlying equity security or market. P-Notes are issued by banks or broker-dealers and allow the fund to gain exposure to common stocks in markets where direct investment is not allowed. Income received from P-Notes is recorded as dividend income in the Statement of Operations. P-Notes may contain various risks including the potential inability of the counterparty to fulfill their obligations under the terms of the contract. These securities may be more volatile and less liquid than other investments held by the Fund.

d. Securities Lending

The Fund participates in an agency based securities lending program. The Fund receives cash collateral against the loaned securities in an amount equal to at least 102% of the fair value of the loaned securities. Collateral is maintained over the life of the loan in an amount not less than 100% of the fair value of loaned securities, as determined at the close of fund business each day; any additional collateral required due to changes in security values is delivered to the Fund on the next business day. The collateral is invested in a non-registered money fund as indicated on the Statement of Investments. The Fund receives income from the investment of cash collateral, in addition to lending fees and rebates paid by the borrower. The Fund bears the market risk with respect to the collateral investment, securities loaned, and the risk that the agent may default on its obligations to the Fund. The securities lending agent has agreed to indemnify the Fund in the event of default by a third party borrower.

Semiannual Report TD-21

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Templeton Developing Markets VIP Fund (continued)

1. Organization and Significant Accounting Policies (continued)

e. Income and Deferred Taxes

It is the Fund’s policy to qualify as a regulated investment company under the Internal Revenue Code. The Fund intends to distribute to shareholders substantially all of its taxable income and net realized gains to relieve it from federal income and if applicable, excise taxes. As a result, no provision for U.S. federal income taxes is required.

The Fund may be subject to foreign taxation related to income received, capital gains on the sale of securities and certain foreign currency transactions in the foreign jurisdictions in which it invests. Foreign taxes, if any, are recorded based on the tax regulations and rates that exist in the foreign markets in which the Fund invests. When a capital gain tax is determined to apply the Fund records an estimated deferred tax liability in an amount that would be payable if the securities were disposed of on the valuation date.

The Fund recognizes the tax benefits of uncertain tax positions only when the position is “more likely than not” to be sustained upon examination by the tax authorities based on the technical merits of the tax position. As of June 30, 2014, and for all open tax years, the Fund has determined that no liability for unrecognized tax benefits is required in the Fund’s financial statements related to uncertain tax positions taken on a tax return (or expected to be taken on future tax returns). Open tax years are those that remain subject to examination and are based on each tax jurisdiction statute of limitation.

f. Security Transactions, Investment Income, Expenses and Distributions

Security transactions are accounted for on trade date. Realized gains and losses on security transactions are determined on a specific identification basis. Estimated expenses are accrued daily. Dividend income is recorded on the ex-dividend date except that certain dividends from foreign securities are recognized as soon as the Fund is notified of the ex-dividend date. Distributions to shareholders are recorded on the ex-dividend date and are determined according to income tax regulations (tax basis). Distributable earnings determined on a tax basis may differ from earnings recorded in accordance with accounting principles generally accepted in the United States of America. These differences may be permanent or temporary. Permanent

differences are reclassified among capital accounts to reflect their tax character. These reclassifications have no impact on net assets or the results of operations. Temporary differences are not reclassified, as they may reverse in subsequent periods.

Common expenses incurred by the Trust are allocated among the funds based on the ratio of net assets of each fund to the combined net assets of the Trust. Fund specific expenses are charged directly to the fund that incurred the expense.

Realized and unrealized gains and losses and net investment income, not including class specific expenses, are allocated daily to each class of shares based upon the relative proportion of net assets of each class. Differences in per share distributions, by class, are generally due to differences in class specific expenses.

g. Accounting Estimates

The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the amounts of income and expenses during the reporting period. Actual results could differ from those estimates.

h. Redemption Fees

Redemptions and exchanges of interests in an insurance company subaccount that invested in Class 3 shares of the Fund were subject to a 1.0% short term trading fee if the interest in the subaccount had been held for less than 60 days. Such fees were retained by the Fund and accounted for as an addition to paid-in capital, allocated to each class of shares based upon the relative proportion of net assets of each class.

i. Guarantees and Indemnifications

Under the Trust’s organizational documents, its officers and trustees are indemnified by the Trust against certain liabilities arising out of the performance of their duties to the Trust. Additionally, in the normal course of business, the Trust, on behalf of the Fund, enters into contracts with service providers that contain general indemnification clauses. The Trust’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Trust that have not yet occurred. Currently, the Trust expects the risk of loss to be remote.

TD-22 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Templeton Developing Markets VIP Fund (continued)

2. Shares of Beneficial Interest

At June 30, 2014, there were an unlimited number of shares authorized (without par value). Transactions in the Fund’s shares were as follows:

	Six Months Ended June 30, 2014						Year Ended December 31, 2013
	Shares			Amount			Shares			Amount
Class 1 Shares:
Shares sold		745,405		$	7,471,902			1,118,729		$	11,636,774
Shares issued in reinvestment of distributions		229,681			2,319,775			392,673			3,816,779
Shares redeemed		(1,861,045	)		(18,585,551	)		(6,552,381	)		(67,528,597	)
Net increase (decrease)		(885,959	)	$	(8,793,874	)		(5,040,979	)	$	(52,075,044	)
Class 2 Shares:
Shares sold		5,902,160		$	58,483,619			5,110,513		$	51,867,557
Shares issued in reinvestment of distributions		434,143			4,358,800			564,125			5,449,449
Shares redeemed		(3,516,666	)		(34,905,990	)		(6,483,017	)		(66,184,649	)
Net increase (decrease)		2,819,637		$	27,936,429			(808,379	)	$	(8,867,643	)
Class 3 Sharesa:
Shares sold		171,371		$	1,697,483			410,783		$	4,328,836
Shares issued in reinvestment of distributions		—			—			81,005			777,644
Shares redeemed		(3,593,907	)		(35,371,525	)		(1,696,602	)		(17,346,564	)
Net increase (decrease)		(3,422,536	)	$	(33,674,042	)		(1,204,814	)	$	(12,240,084	)
Class 4 Shares:
Shares sold		37,229		$	367,546			206,201		$	2,099,934
Shares issued on reinvestment of distributions		17,219			173,399			38,661			373,848
Shares redeemed		(169,287	)		(1,679,942	)		(973,500	)		(9,761,509	)
Net increase (decrease)		(114,839	)	$	(1,138,997	)		(728,638	)	$	(7,287,727	)

^aEffective May 1, 2014, all Class 3 shares were converted to Class 2.

3. Transactions With Affiliates

Franklin Resources, Inc. is the holding company for various subsidiaries that together are referred to as Franklin Templeton Investments. Certain officers and trustees of the Fund are also officers and/or directors of the following subsidiaries:

Subsidiary	Affiliation
Templeton Asset Management Ltd. (TAML)	Investment manager
Franklin Templeton Services, LLC (FT Services)	Administrative manager
Franklin Templeton Distributors, Inc. (Distributors)	Principal underwriter
Franklin Templeton Investor Services, LLC (Investor Services)	Transfer agent

Semiannual Report TD-23

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Templeton Developing Markets VIP Fund (continued)

3. Transactions With Affiliates (continued)

a. Management Fees

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

Annualized Fee Rate	Net Assets
1.250%	Up to and including $200 million
1.235%	Over $200 million, up to and including $700 million
1.200%	Over $700 million, up to and including $1 billion
1.150%	Over $1 billion, up to and including $1.2 billion
1.125%	Over $1.2 billion, up to and including $5 billion
1.075%	Over $5 billion, up to and including $10 billion
1.025%	Over $10 billion, up to and including $15 billion
0.975%	Over $15 billion, up to and including $20 billion
0.925%	In excess of $20 billion

Effective May 1, 2014, the Fund combined its investment management and administration agreements as approved by the Board. The fees paid under the combined agreement do not exceed the aggregate fees that were paid under the separate agreements.

Prior to May 1, 2014, the Fund paid fees to TAML based on the average daily net assets of the Fund as follows:

Annualized Fee Rate	Net Assets
1.100%	Up to and including $1 billion
1.050%	Over $1 billion, up to and including $5 billion
1.000%	Over $5 billion, up to and including $10 billion
0.950%	Over $10 billion, up to and including $15 billion
0.900%	Over $15 billion, up to and including $20 billion
0.850%	In excess of $20 billion

b. Administrative Fees

Effective, May 1, 2014, under an agreement with TAML, FT Services provides administrative services to the Fund. The fee is paid by TAML based on the Fund’s average daily net assets, and is not an additional expense of the Fund.

Prior to May 1, 2014, the Fund paid administrative fees to FT Services based on the average daily net assets of the Fund as follows:

Annualized Fee Rate	Net Assets
0.150%	Up to and including $200 million
0.135%	Over $200 million, up to and including $700 million
0.100%	Over $700 million, up to and including $1.2 billion
0.075%	In excess of $1.2 billion

c. Distribution Fees

The Board has adopted distribution plans for Class 2, Class 3, and Class 4 shares pursuant to Rule 12b-1 under the 1940 Act. Under the Fund’s compensation distribution plans, the Fund pays Distributors for costs incurred in connection with the servicing, sale and distribution of the Fund’s shares up to 0.25%, 0.35%, and 0.35% per year of its average daily net assets of Class 2, Class 3, and

TD-24 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Templeton Developing Markets VIP Fund (continued)

Class 4, respectively. Some distribution fees are not charged on shares held by affiliates. The Board has agreed to limit the current rate to 0.25% per year for Class 3. The plan year, for purposes of monitoring compliance with the maximum annual plan rates, is February 1 through January 31.

d. Transfer Agent Fees

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

e. Investment in Institutional Fiduciary Trust Money Market Portfolio

The Fund invests in the Institutional Fiduciary Trust Money Market Portfolio (Sweep Money Fund), an affiliated open-end management investment company. Management fees paid by the Fund are waived on assets invested in the Sweep Money Fund, in an amount not to exceed the management and administrative fees paid directly or indirectly by the Sweep Money Fund, as noted on the Statement of Operations. Prior to January 1, 2014, the waiver was accounted for as a reduction to management fees.

4. Expense Offset Arrangement

The Fund has entered into an arrangement with its custodian whereby credits realized as a result of uninvested cash balances are used to reduce a portion of the Fund’s custodian expenses. During the period ended June 30, 2014, there were no credits earned.

5. Income Taxes

For tax purposes, capital losses may be carried over to offset future capital gains. Capital loss carryforwards with no expiration, if any, must be fully utilized before those losses with expiration dates.

At December 31, 2013, the Fund had capital loss carryforwards of $21,512,788 expiring in 2017.

At June 30, 2014, the cost of investments and net unrealized appreciation (depreciation) for income tax purposes were as follows:

Cost of investments	$391,637,946
Unrealized appreciation	$  70,234,167
Unrealized depreciation	(6,848,079)
Net unrealized appreciation (depreciation)	$  63,386,088

Differences between income and/or capital gains as determined on a book basis and a tax basis are primarily due to differing treatments of foreign currency transactions, passive foreign investment company shares, corporate actions and wash sales.

6. Investment Transactions

Purchases and sales of investments (excluding short term securities) for the period ended June 30, 2014, aggregated $261,157,894 and $285,458,370, respectively.

7. Concentration of Risk

Investing in foreign securities may include certain risks and considerations not typically associated with investing in U.S. securities, such as fluctuating currency values and changing local and regional economic, political and social conditions, which may result in greater market volatility. In addition, certain foreign securities may not be as liquid as U.S. securities.

Semiannual Report TD-25

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Templeton Developing Markets VIP Fund (continued)

8. Credit Facility.

The Fund, together with other U.S. registered and foreign investment funds (collectively, Borrowers), managed by Franklin Templeton Investments, are borrowers in a joint syndicated senior unsecured credit facility totaling $1.5 billion (Global Credit Facility) which matures on February 13, 2015. This Global Credit Facility provides a source of funds to the Borrowers for temporary and emergency purposes, including the ability to meet future unanticipated or unusually large redemption requests.

Under the terms of the Global Credit Facility, the Fund shall, in addition to interest charged on any borrowings made by the Fund and other costs incurred by the Fund, pay its share of fees and expenses incurred in connection with the implementation and maintenance of the Global Credit Facility, based upon its relative share of the aggregate net assets of all of the Borrowers, including an annual commitment fee of 0.07% based upon the unused portion of the Global Credit Facility. These fees are reflected in other expenses on the Statement of Operations. During the period ended June 30, 2014, the Fund did not use the Global Credit Facility.

9. Fair Value Measurements

The Fund follows a fair value hierarchy that distinguishes between market data obtained from independent sources (observable inputs) and the Fund’s own market assumptions (unobservable inputs). These inputs are used in determining the value of the Fund’s financial instruments and are summarized in the following fair value hierarchy:

• Level 1 – quoted prices in active markets for identical financial instruments

• Level 2 – other significant observable inputs (including quoted prices for similar financial instruments, interest rates, prepayment speed, credit risk, etc.)

• Level 3 – significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of financial instruments)

The input levels are not necessarily an indication of the risk or liquidity associated with financial instruments at that level.

For movements between the levels within the fair value hierarchy, the Fund has adopted a policy of recognizing the transfers as of the date of the underlying event which caused the movement.

A summary of inputs used as of June 30, 2014, in valuing the Fund’s assets carried at fair value, is as follows:

	Level 1		Level 2		Level 3		Total
Assets:
Investments in Securities:
Equity Investments:a
Russia	$	19,661,971	$	16,924,741	$	—	$	36,586,712
All Other Equity Investmentsb		391,995,592		—		—		391,995,592
Participatory Notes		—		2,838,024		—		2,838,024
Short Term Investments		22,475,010		1,128,696		—		23,603,706
Total Investments in Securities	$	434,132,573	$	20,891,461	$	—	$	455,024,034

^aIncludes common and preferred stocks.

^bFor detailed categories, see the accompanying Statement of Investments.

TD-26 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Templeton Developing Markets VIP Fund (continued)

10. New Accounting Pronouncements

In June 2014, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) No. 2014-11, Transfers and Servicing (Topic 860), Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures. The ASU changes the accounting for certain repurchase agreements and expands disclosure requirements related to repurchase agreements, securities lending, repurchase-to-maturity and similar transactions. The ASU is effective for interim and annual reporting periods beginning after December 15, 2014. Management is currently evaluating the impact, if any, of applying this provision.

11. Subsequent Events

The Fund has evaluated subsequent events through the issuance of the financial statements and determined that no events have occurred that require disclosure.

Abbreviations

Selected Portfolio
ADR	American Depositary Receipt
GDR	Global Depositary Receipt
SDR	Swedish Depositary Receipt

Semiannual Report TD-27

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

TAX INFORMATION (UNAUDITED)

Templeton Developing Markets VIP Fund

At December 31, 2013, more than 50% of the Fund’s total assets were invested in securities of foreign issuers. In most instances, foreign taxes were withheld from income paid to the Fund on these investments. As shown in the table below, the Fund hereby reports to shareholders the foreign source income and foreign taxes paid, pursuant to Section 853 of the Internal Revenue Code. This written statement will allow shareholders of record on June 12, 2014, to treat their proportionate share of foreign taxes paid by the Fund as having been paid directly by them. The shareholder shall consider these amounts as foreign taxes paid in the tax year in which they receive the Fund distribution.

The following table provides a detailed analysis of foreign tax paid, and foreign source income as reported by the Fund, to Class 1, Class 2, and Class 4 shareholders of record.

Class	Foreign Tax Paid Per Share		Foreign Source Income Per Share
Class 1		$0.0221		$0.2041
Class 2		$0.0221		$0.1809
Class 4		$0.0221		$0.1564

Foreign Tax Paid Per Share (Column 1) is the amount per share available to you, as a tax credit (assuming you held your shares in the Fund for a minimum of 16 days during the 31-day period beginning 15 days before the ex-dividend date of the Fund’s dis-tribution to which the foreign taxes relate), or, as a tax deduction.

Foreign Source Income Per Share (Column 2) is the amount per share of income dividends attributable to foreign securities held by the Fund, plus any foreign taxes withheld on these dividends.

TD-28 Semiannual Report

Templeton Foreign VIP Fund

(Formerly, Templeton Foreign Securities Fund)

This semiannual report for Templeton Foreign VIP Fund covers the period ended June 30, 2014.

Class 2 Performance Summary as of June 30, 2014

Templeton Foreign VIP Fund – Class 2 delivered a +3.22% total return* for the six-month period ended June 30, 2014.

*The Fund has a fee waiver associated with its investments in a Franklin Templeton money fund, contractually guaranteed through at least its current fiscal year-end. Fund investment results reflect the fee waiver, to the extent applicable; without this reduction, the results would have been lower.

Performance reflects the Fund’s Class 2 operating expenses, but does not include any contract fees, expenses or sales charges. If they had been included, performance would be lower. These charges and deductions, particularly for variable life policies, can have a significant effect on contract values and insurance benefits. See the contract prospectus for a complete description of these expenses, including sales charges.

Performance data represent past performance, which does not guarantee future results. Investment return and principal value will fluctuate, and you may have a gain or loss when you sell your shares. Current performance may differ from figures shown.

Semiannual Report TF-1

TEMPLETON FOREIGN VIP FUND

Fund Goal and Main Investments: Templeton Foreign VIP Fund seeks long-term capital growth. Under normal market conditions, the Fund invests at least 80% of its net assets in investments of issuers located outside the U.S., including those in emerging markets.

Fund Risks: All investments involve risks, including possible loss of principal. Special risks are associated with foreign investing, including currency fluctuations, economic instability and political developments; investments in emerging markets involve heightened risks related to the same factors. In addition, smaller company stocks have historically experienced more price volatility than larger company stocks, especially over the short term. To the extent the Fund focuses on particular countries, regions, industries, sectors or types of investment from time to time, it may be subject to greater risks of adverse developments in such areas of focus than a fund that invests in a wider variety of countries, regions, industries, sectors or investments. The Fund is actively managed but there is no guarantee that the manager’s investment decisions will produce the desired results. The Fund’s prospectus also includes a description of the main investment risks.

Performance Overview

You can find the Fund’s six-month total return in the Performance Summary. In comparison, the Fund’s benchmark, the MSCI Europe, Australasia, Far East (EAFE) Index, produced a +5.14% total return for the same period.¹ Please note, index performance information is provided for reference and we do not attempt to track the index but rather undertake investments on the basis of fundamental research.

Economic and Market Overview

The global economy grew moderately during the six months under review as many developed markets continued to recover and many emerging markets recorded continued growth. Major developed market central banks reaffirmed their accommodative monetary policies in an effort to support ongoing recovery. Several emerging market central banks cut interest rates to boost economic growth, while others raised rates to control inflation and currency depreciation.

U.S. economic growth and employment trends were generally encouraging during the period, despite severe weather across many states that limited economic activity in the first quarter of

2014. The U.S. Federal Reserve Board (Fed) began reducing bond purchases by $10 billion a month in January 2014, based on earlier largely positive economic and employment data. The Fed continued reducing asset purchases during the period.

Outside the U.S., the U.K. economy grew relatively well in the first half of 2014, supported by the services and manufacturing sectors. In the second quarter, a preliminary estimate registered expansion at precrisis levels. The Japanese economy grew strongly during the first quarter of 2014 as consumption rose ahead of a sales tax increase in April. The Bank of Japan kept its monetary policy unchanged as it maintained an upbeat inflation forecast and reiterated that the economy continued to recover moderately, despite challenges resulting from the sales tax increase. Japan’s growth weakened, however, in the second quarter. The Japanese government proposed a reduction in corporate taxes as part of its economic reforms in an effort to avoid deflation and facilitate growth. Although out of recession, the eurozone experienced deflationary risks and weak employment trends. The region’s first-quarter economic growth was softer than what many observers had expected. In the second quarter, concerns arose about the potential negative impacts to growth from the crisis in Ukraine and tension in the Middle East. Toward period-end, the European Central Bank reduced its main interest rate and, for the first time, set a negative deposit rate.

1. Source: © 2014 Morningstar. One cannot invest directly in an index, and an index is not representative of the Fund’s portfolio. Please see Index Descriptions following the Fund Summaries.

TF-2 Semiannual Report

TEMPLETON FOREIGN VIP FUND

In several emerging markets, including China, growth remained solid though moderating, as domestic demand and exports were relatively soft. Emerging market equities generally rose for the six-month period, despite volatility resulting from concerns about moderating economic growth, rising geopolitical tensions in certain regions and the potential impact of the Fed’s tapering its asset purchases. Many emerging market currencies depreciated against the U.S. dollar, leading central banks in several countries, including Brazil, India, Turkey and South Africa, to raise interest rates in an effort to curb inflation and support their currencies.

Stocks in developed markets advanced overall during the period amid a generally accommodative monetary policy environment, continued strength in corporate earnings and signs of an economic recovery. Global government and corporate bonds delivered solid performance as interest rates in many developed market countries remained low. Gold prices rose during the period and oil prices increased amid supply concerns related to the crises in Ukraine and Iraq. The U.S. dollar was relatively flat compared to most currencies.

Investment Strategy

Our investment philosophy is bottom up, value oriented and long term. In choosing investments, we generally focus on the market price of a company’s securities relative to our evaluation of the company’s potential long-term earnings, asset value and cash flow. Among factors we consider are a company’s historical value measures, including price/earnings ratio, profit margins and liquidation value. We do in-depth research to construct a bargain list from which we buy.

Manager’s Discussion

Although the Fund’s performance lagged that of its benchmark, the MSCI EAFE Index, the Fund had several notable contributors. An overweighting in the energy sector, especially in the oil, gas and consumable fuels industry, was a major contributor to the Fund’s relative performance.² Oil and gas producers Statoil (Norway), Suncor Energy³ (Canada) and Total (France) as well as energy equipment and services company Trican Well Service³ (Canada) each outperformed the index. Shares of

Top 10 Holdings
6/30/14
Company Sector/Industry, Country	% of Total Net Assets
GlaxoSmithKline PLC Pharmaceuticals, U.K.		2.7%
BNP Paribas SA Banks, France		2.6%
Total SA, B Oil, Gas & Consumable Fuels, France		2.6%
Samsung Electronics Co. Ltd. Semiconductors & Semiconductor Equipment, South Korea		2.5%
Tesco PLC Food & Staples Retailing, U.K.		2.2%
UniCredit SpA Banks, Italy		2.1%
Hana Financial Group Inc. Banks, South Korea		2.1%
Sanofi Pharmaceuticals, France		2.0%
Credit Suisse Group AG Capital Markets, Switzerland		1.9%
Roche Holding AG Pharmaceuticals, Switzerland		1.9%

The dollar value, number of shares or principal amount, and names of all portfolio holdings are listed in the Fund’s Statement of Investments (SOI).

Statoil rallied after it reported better-than-expected first-quarter earnings because of higher gas prices resulting from a severe winter in the U.S. Investor sentiment toward oil exploration and production companies improved as crude oil prices rose following geopolitical tension in Ukraine and Iraq. Stock selection and an underweighting in the consumer discretionary sector, especially in automobiles, also aided relative results.⁴ Stock selection and an underweighting in industrials, particularly in aerospace and defense, added to relative returns.⁵ Select positions in the financials sector, including U.K. insurer Aviva and Italian bank UniCredit, aided returns.⁶ Aviva reported strong earnings in 2013, reflecting its efforts in reducing costs and selling underperforming businesses. Aviva also reported strong new business growth during the first quarter of 2014. Other individual contributors included Flextronics International³ (Singapore) and Teva Pharmaceuticals³ (Israel).

2. The energy sector comprises energy equipment and services; and oil, gas and consumable fuels in the SOI.

3. Not part of the index.

4. The consumer discretionary sector comprises auto components, automobiles, household durables, leisure products, multiline retail and specialty retail in the SOI.

5. The industrials sector comprises aerospace and defense, airlines, building products, construction and engineering, electrical equipment, industrial conglomerates, and trading companies and distributors in the SOI.

6. The financials sector comprises banks, capital markets, diversified financial services, insurance, and real estate management and development in the SOI.

Semiannual Report TF-3

TEMPLETON FOREIGN VIP FUND

In contrast, our stock selection in the financials sector, especially in banks, detracted from Fund performance. Among the sector’s top detractors were BNP Paribas (France), South Korean banks KB Financial Group³ and Hana Financial Group,³ insurance providers AXA (France) and Aegon (the Netherlands), and capital markets company Credit Suisse Group (Switzerland). Shares of BNP declined as it was fined by U.S. regulators for evading sanctions on doing business with Cuba, Iran and Sudan. Stock selection in health care, particularly in pharmaceuticals, also weighed on results.⁷ Our stock selection in consumer staples, notably in the food and staples retailing industry, also hurt performance.⁸ In this industry, shares of food and staples retailer Tesco (U.K.) fell amid a declining market share and concerns over price wars. A lack of Fund exposure to the outperforming utilities sector also hindered performance. Elsewhere, other individual detractors included Kingboard Chemical³ (Hong Kong), and Alstom⁹ (France). Alstom lowered its earnings guidance for fiscal year 2014 because of lower demand for turnkey electricity plants and gas turbines. Toward period-end, conglomerate General Electric agreed to acquire Alstom’s energy assets.

From a geographic perspective, The Fund’s off-benchmark allocation in North America, especially in Canadian energy companies, benefited the Fund’s relative performance.

Positioning in select Asian countries such as Japan and Singapore as well as select European countries such as Norway, Germany and Italy contributed to relative returns. In contrast, stock selection in Europe detracted from Fund performance as investments in France, Spain, the Netherlands, Switzerland and the U.K. underperformed. Stock selection in Asia, particularly off-benchmark holdings in South Korean and Chinese stocks, further hampered the Fund’s performance.

Thank you for your participation in Templeton Foreign VIP Fund. We look forward to serving your future investment needs.

The foregoing information reflects our analysis, opinions and portfolio holdings as of June 30, 2014, the end of the reporting period. The way we implement our main investment strategies and the resulting portfolio holdings may change depending on factors such as market and economic conditions. These opinions may not be relied upon as investment advice or an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but the investment manager makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.

7. The health care sector comprises health care equipment and supplies, health care providers and services, life sciences tools and services, and pharmaceuticals in the SOI.

8. The consumer staples sector comprises beverages and food and staples retailing in the SOI.

9. Sold by period-end.

TF-4 Semiannual Report

TEMPLETON FOREIGN VIP FUND

Class 2 Fund Expenses

As an investor in a variable insurance contract (Contract) that indirectly provides for investment in an underlying mutual fund, you can incur transaction and/or ongoing expenses at both the Fund level and the Contract level.

• Transaction expenses can include sales charges (loads) on purchases, surrender fees, transfer fees and premium taxes.

• Ongoing expenses can include management fees, distribution and service (12b-1) fees, contract fees, annual maintenance fees, mortality and expense risk fees and other fees and expenses. All mutual funds and Contracts have some types of ongoing expenses.

The expenses shown in the table are meant to highlight ongoing expenses at the Fund level only and do not include ongoing expenses at the Contract level, or transaction expenses at either the Fund or Contract levels. While the Fund does not have transaction expenses, if the transaction and ongoing expenses at the Contract level were included, the expenses shown below would be higher. You should consult your Contract prospectus or disclosure document for more information.

The table shows Fund-level ongoing expenses and can help you understand these expenses and compare them with those of other mutual funds offered through the Contract. The table assumes a $1,000 investment held for the six months indicated. Please refer to the Fund prospectus for additional information on operating expenses.

Actual Fund Expenses

The first line (Actual) of the table provides actual account values and expenses. The “Ending Account Value” is derived from the Fund’s actual return, which includes the effect of ongoing Fund expenses, but does not include the effect of ongoing Contract expenses.

You can estimate the Fund-level expenses you incurred during the period by following these steps. Of course, your account value and expenses will differ from those in this illustration:

1. Divide your account value by $1,000.

If an account had an $8,600 value,

then $8,600 ÷ $1,000 = 8.6.

2. Multiply the result by the number under the heading “Fund-Level Expenses Incurred During Period.”

If Fund-Level Expenses Incurred During Period were $7.50,

then 8.6 × $7.50 = $64.50.

In this illustration, the estimated expenses incurred this period at the Fund level are $64.50.

Hypothetical Example for Comparison

with Other Mutual Funds

Information in the second line (Hypothetical) of the table can help you compare ongoing expenses of the Fund with those of other mutual funds offered through the Contract. This information may not be used to estimate the actual ending account balance or expenses you incurred during the period. The hypothetical “Ending Account Value” is based on the Fund’s actual expense ratio and an assumed 5% annual rate of return before expenses, which does not represent the Fund’s actual return. The figure under the heading “Fund-Level Expenses Incurred During Period” shows the hypothetical expenses your account would have incurred under this scenario. You can compare this figure with the 5% hypothetical examples that appear in shareholder reports of other funds offered through a Contract.

Class 2	Beginning Account Value 1/1/14		Ending Account Value 6/30/14		Fund-Level Expenses Incurred During Period* 1/1/14–6/30/14
Actual		$1,000		$1,032.20		$5.14
Hypothetical (5% return before expenses)		$1,000		$1,019.74		$5.11

*Expenses are calculated using the most recent six-month annualized expense ratio, net of expense waivers, for the Fund’s Class 2 shares (1.02%), which does not include any ongoing expenses of the Contract for which the Fund is an investment option, multiplied by the average account value over the period, multiplied by 181/365 to reflect the one-half year period.

Semiannual Report TF-5

SUPPLEMENT DATED AUGUST 1, 2014

TOTHE PROSPECTUS DATED MAY 1, 2014

OF

TEMPLETON FOREIGN VIP FUND

(a series of Franklin Templeton Variable Insurance Products Trust)

The prospectus is amended as follows:

I.  The “Fund Summary – Annual Fund Operating Expenses” table beginning on page TF-S1 in the Fund’s Class 1 prospectus is replaced with the following:

Annual Fund Operating Expenses

(expenses that you pay each year as a percentage of the value of your investment)

	Class 1
Management fees1		0.74%
Distribution and service (12b-1) fees		None
Other expenses1		0.04%
Total annual Fund operating expenses		0.78%

1. Management fees and other expenses have been restated to reflect current fiscal year fees and expenses as a result of the bundling of the Fund’s investment management agreement with its fund administration agreement effective May 1, 2014. Such combined investment management fees are described further under “Management” in the Fund’s prospectus. Total annual fund operating expenses are not affected by such bundling.

II.  The “Fund Summary – Annual Fund Operating Expenses” table beginning on page TF-S1 in the Fund’s Class 2 prospectus is replaced with the following:

Annual Fund Operating Expenses

(expenses that you pay each year as a percentage of the value of your investment)

	Class 2
Management fees1		0.74%
Distribution and service (12b-1) fees		0.25%
Other expenses1		0.04%
Total annual Fund operating expenses		1.03%

1. Management fees and other expenses have been restated to reflect current fiscal year fees and expenses as a result of the bundling of the Fund’s investment management agreement with its fund administration agreement effective May 1, 2014. Such combined investment management fees are described further under “Management” in the Fund’s prospectus. Total annual fund operating expenses are not affected by such bundling.

III.  The “Fund Summary – Annual Fund Operating Expenses” table beginning on page TF-S1 in the Fund’s Class 4 prospectus is replaced with the following:

Annual Fund Operating Expenses

(expenses that you pay each year as a percentage of the value of your investment)

	Class 4
Management fees1		0.74%
Distribution and service (12b-1) fees		0.35%
Other expenses1		0.04%
Total annual Fund operating expenses		1.13%

TF-6

1. Management fees and other expenses have been restated to reflect current fiscal year fees and expenses as a result of the bundling of the Fund’s investment management agreement with its fund administration agreement effective May 1, 2014. Such combined investment management fees are described further under “Management” in the Fund’s prospectus. Total annual fund operating expenses are not affected by such bundling.

IV.  The following is added as the second to last paragraph in the “Fund Details – Management” section of each Class’ prospectus beginning on page TF-D8:

Effective May 1, 2014, the Fund’s investment management agreement was bundled with its fund administration agreement, including the fees payable to the Fund’s administrator thereunder, as approved by the board of trustees. The fee payable to the administrator under the Fund’s administration agreement, prior to May 1, 2014, was a monthly fee under the following fee schedule of the Fund’s average daily net assets:

• 0.150% up to and including $200 million;

• 0.135% over $200 million, up to and including $700 million;

• 0.100% over $700 million, up to and including $1.2 billion;

• 0.075% in excess of $1.2 billion.

As of such date, the Fund’s investment management fees became a monthly fee at the annual rate of the value of the Fund’s average daily net assets as set forth below:

• 0.900% up to and including $200 million;

• 0.810% over $200 million, up to and including $700 million;

• 0.775% over $700 million, up to and including $1.2 billion;

• 0.750% over $1.2 billion, up to and including $1.3 billion;

• 0.675% over $1.3 billion, up to and including $10 billion;

• 0.655% over $10 billion, up to and including $15 billion;

• 0.635% over $15 billion, up to and including $20 billion;

• 0.615% in excess of $20 billion.

Please keep this supplement with your prospectus for future reference.

TF-7

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Financial Highlights

Templeton Foreign VIP Fund

	Six Months Ended June 30, 2014 (unaudited)			Year Ended December 31,
				2013			2012			2011			2010			2009
Class 1
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$17.56			$14.63			$12.78			$14.54			$13.68			$10.95
Income from investment operationsa:
Net investment incomeb		0.45	c		0.34			0.38			0.42			0.28			0.25
Net realized and unrealized gains (losses)		0.14			3.00			1.91			(1.90	)		0.86			3.39
Total from investment operations		0.59			3.34			2.29			(1.48	)		1.14			3.64
Less distributions from:
Net investment income		(0.36	)		(0.41	)		(0.44	)		(0.28	)		(0.28	)		(0.43	)
Net realized gains		—			—			—			—			—			(0.48	)
Total distributions		(0.36	)		(0.41	)		(0.44	)		(0.28	)		(0.28	)		(0.91	)
Redemption feesd		—			—			—			—			—			—
Net asset value, end of period		$17.79			$17.56			$14.63			$12.78			$14.54			$13.68
Total returne		3.35%			23.27%			18.60%			(10.44)%			8.67%			37.34%
Ratios to average net assetsf
Expenses before waiver and payments by affiliates		0.78%			0.78%			0.79%			0.79%			0.78%			0.78%
Expenses net of waiver and payments by affiliates		0.77%			0.78%			0.79%			0.79%	g		0.78%	g		0.78%	g
Net investment income		5.18%	c		2.16%			2.84%			2.92%			2.10%			2.28%
Supplemental data
Net assets, end of period (000’s)		$296,523			$298,468			$265,924			$254,292			$321,282			$318,173
Portfolio turnover rate		9.16%			23.61%			12.53%			21.09%			19.16%			22.50%

^aThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.

^bBased on average daily shares outstanding.

^cNet investment income per share includes approximately $0.17 per share received in the form of a special dividend paid in connection with certain Fund holdings. Excluding this amount, the ratio of net investment income to average net assets would have been 3.24%.

^dAmount rounds to less than $0.01 per share.

^eTotal return does not include fees, charges or expenses imposed by the variable annuity and life insurance contracts for which the Franklin Templeton Variable Insurance Products Trust serves as an underlying investment vehicle. Total return is not annualized for periods less than one year.

^fRatios are annualized for periods less than one year.

^gBenefit of expense reduction rounds to less than 0.01%.

TF-8 Semiannual Report   |    The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL HIGHLIGHTS

Templeton Foreign VIP Fund (continued)

	Six Months Ended June 30, 2014 (unaudited)			Year Ended December 31,
				2013			2012			2011			2010			2009
Class 2
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$17.24			$14.37			$12.56			$14.29			$13.45			$10.76
Income from investment operationsa:
Net investment incomeb		0.42	c		0.30			0.34			0.37			0.25			0.22
Net realized and unrealized gains (losses)		0.14			2.94			1.87			(1.86	)		0.84			3.34
Total from investment operations		0.56			3.24			2.21			(1.49	)		1.09			3.56
Less distributions from:
Net investment income		(0.32	)		(0.37	)		(0.40	)		(0.24	)		(0.25	)		(0.39	)
Net realized gains		—			—			—			—			—			(0.48	)
Total distributions		(0.32	)		(0.37	)		(0.40	)		(0.24	)		(0.25	)		(0.87	)
Redemption feesd		—			—			—			—			—			—
Net asset value, end of period		$17.48			$17.24			$14.37			$12.56			$14.29			$13.45
Total returne		3.22%			22.97%			18.23%			(10.63)%			8.41%			37.04%
Ratios to average net assetsf
Expenses before waiver and payments by affiliates		1.03%			1.03%			1.04%			1.04%			1.03%			1.03%
Expenses net of waiver and payments by affiliates		1.02%			1.03%			1.04%			1.04%	g		1.03%	g		1.03%	g
Net investment income		4.93%	c		1.91%			2.59%			2.67%			1.85%			2.03%
Supplemental data
Net assets, end of period (000’s)		$1,928,297			$1,873,586			$1,744,231			$1,679,412			$2,090,757			$2,010,268
Portfolio turnover rate		9.16%			23.61%			12.53%			21.09%			19.16%			22.50%

^aThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.

^bBased on average daily shares outstanding.

^cNet investment income per share includes approximately $0.17 per share received in the form of a special dividend paid in connection with certain Fund holdings. Excluding this amount, the ratio of net investment income to average net assets would have been 2.99%.

^dAmount rounds to less than $0.01 per share.

^eTotal return does not include fees, charges or expenses imposed by the variable annuity and life insurance contracts for which the Franklin Templeton Variable Insurance Products Trust serves as an underlying investment vehicle. Total return is not annualized for periods less than one year.

^fRatios are annualized for periods less than one year.

^gBenefit of expense reduction rounds to less than 0.01%.

The accompanying notes are an integral part of these financial statements.    |   Semiannual Report TF-9

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL HIGHLIGHTS

Templeton Foreign VIP Fund (continued)

	Six Months Ended June 30, 2014 (unaudited)			Year Ended December 31,
				2013			2012			2011			2010			2009
Class 4
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$17.37			$14.48			$12.66			$14.43			$13.59			$10.91
Income from investment operationsa:
Net investment incomeb		0.42	c		0.28			0.33			0.36			0.17			0.21
Net realized and unrealized gains (losses)		0.13			2.97			1.89			(1.88	)		0.92			3.37
Total from investment operations		0.55			3.25			2.22			(1.52	)		1.09			3.58
Less distributions from:
Net investment income		(0.31	)		(0.36	)		(0.40	)		(0.25	)		(0.25	)		(0.42	)
Net realized gains		—			—			—			—			—			(0.48	)
Total distributions		(0.31	)		(0.36	)		(0.40	)		(0.25	)		(0.25	)		(0.90	)
Redemption feesd		—			—			—			—			—			—
Net asset value, end of period		$17.61			$17.37			$14.48			$12.66			$14.43			$13.59
Total returne		3.13%			22.86%			18.14%			(10.74)%			8.38%			36.84%
Ratios to average net assetsf
Expenses before waiver and payments by affiliates		1.13%			1.13%			1.14%			1.14%			1.13%			1.13%
Expenses net of waiver and payments by affiliates		1.12%			1.13%			1.14%			1.14%	g		1.13%	g		1.13%	g
Net investment income		4.83%	c		1.81%			2.49%			2.57%			1.75%			1.93%
Supplemental data
Net assets, end of period (000’s)		$535,078			$513,098			$416,277			$353,346			$305,505			$48,501
Portfolio turnover rate		9.16%			23.61%			12.53%			21.09%			19.16%			22.50%

^aThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.

^bBased on average daily shares outstanding.

^cNet investment income per share includes approximately $0.17 per share received in the form of a special dividend paid in connection with certain Fund holdings. Excluding this amount, the ratio of net investment income to average net assets would have been 2.89%.

^dAmount rounds to less than $0.01 per share.

^eTotal return does not include fees, charges or expenses imposed by the variable annuity and life insurance contracts for which the Franklin Templeton Variable Insurance Products Trust serves as an underlying investment vehicle. Total return is not annualized for periods less than one year.

^fRatios are annualized for periods less than one year.

^gBenefit of expense reduction rounds to less than 0.01%.

TF-10 Semiannual Report   |    The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Statement of Investments, June 30, 2014 (unaudited)

Templeton Foreign VIP Fund
		Country		Shares		Value
	Common Stocks 94.0%
	Aerospace & Defense 0.9%
	BAE Systems PLC		United Kingdom		3,443,320	$	25,507,375
	Airlines 0.7%
	Deutsche Lufthansa AG		Germany		859,340		18,452,586
	Auto Components 2.0%
	Cie Generale des Etablissements Michelin, B		France		222,570		26,596,715
	Hyundai Mobis		South Korea		100,634		28,241,162
							54,837,877
	Automobiles 2.4%
	Hyundai Motor Co.		South Korea		38,742		8,785,859
	Nissan Motor Co. Ltd.		Japan		2,952,600		28,008,969
	Toyota Motor Corp., ADR		Japan		240,755		28,808,743
							65,603,571
	Banks 12.9%
	Bangkok Bank PCL, fgn.		Thailand		1,247,500		7,441,161
	Barclays PLC		United Kingdom		2,778,290		10,116,959
	BNP Paribas SA		France		1,058,470		71,816,551
	DBS Group Holdings Ltd.		Singapore		2,174,520		29,216,869
	Hana Financial Group Inc.		South Korea		1,562,861		57,912,339
	HSBC Holdings PLC		United Kingdom		4,015,600		40,723,592
	KB Financial Group Inc., ADR		South Korea		1,189,645		41,352,060
	Societe Generale SA		France		391,870		20,529,406
	UniCredit SpA		Italy		6,991,743		58,550,159
	United Overseas Bank Ltd.		Singapore		985,000		17,793,446
							355,452,542
	Beverages 0.5%
	Suntory Beverage & Food Ltd.		Japan		377,600		14,816,248
	Building Products 0.6%
	Compagnie de Saint-Gobain		France		296,890		16,752,964
	Capital Markets 2.3%
	Credit Suisse Group AG		Switzerland		1,874,638		53,606,382
	GAM Holding Ltd.		Switzerland		505,110		9,625,482
							63,231,864
	Chemicals 1.1%
	Akzo Nobel NV		Netherlands		407,380		30,544,286
	Communications Equipment 0.4%
	Ericsson, B, ADR		Sweden		997,972		12,055,502
	Construction & Engineering 0.8%
	Carillion PLC		United Kingdom		3,750,730		21,250,824
	Construction Materials 0.6%
	CRH PLC		Ireland		659,820		16,933,285
	Containers & Packaging 0.8%
	Rexam PLC		United Kingdom		2,417,032		22,127,736
	Diversified Financial Services 3.9%
	BM&F BOVESPA SA		Brazil		2,189,700		11,482,241
	Deutsche Boerse AG		Germany		279,400		21,687,146

Semiannual Report TF-11

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Templeton Foreign VIP Fund (continued)

		Country		Shares		Value
	Common Stocks (continued)
	Diversified Financial Services (continued)
a	ING Groep NV, IDR		Netherlands		2,462,644	$	34,601,518
	Voya Financial Inc.		United States		1,076,240		39,110,561
							106,881,466
	Diversified Telecommunication Services 4.5%
	China Telecom Corp. Ltd., H		China		47,482,357		23,280,320
	Orange SA		France		25,570		403,569
	Singapore Telecommunications Ltd.		Singapore		9,394,000		29,011,270
b	Telefonica SA, ADR		Spain		2,270,951		38,969,519
	Telenor ASA		Norway		1,103,354		25,134,701
	Vivendi SA		France		245,395		6,005,324
							122,804,703
	Electrical Equipment 0.3%
	Shanghai Electric Group Co. Ltd., H		China		23,792,000		9,577,643
	Electronic Equipment, Instruments & Components 1.8%
a	Flextronics International Ltd.		Singapore		2,385,970		26,412,688
	Kingboard Chemical Holdings Ltd.		Hong Kong		11,646,000		24,011,906
							50,424,594
	Energy Equipment & Services 4.6%
	Aker Solutions ASA		Norway		1,617,940		28,124,322
	Ensign Energy Services Inc.		Canada		1,965,300		30,535,910
	Fugro NV, IDR		Netherlands		225,252		12,898,729
a	Saipem SpA		Italy		297,027		8,013,243
	Technip SA		France		76,090		8,324,653
	Trican Well Service Ltd.		Canada		2,373,000		38,339,153
							126,236,010
	Food & Staples Retailing 2.9%
a	Metro AG		Germany		489,650		21,343,643
	Tesco PLC		United Kingdom		12,226,930		59,462,381
							80,806,024
	Health Care Equipment & Supplies 0.9%
	Getinge AB, B		Sweden		417,870		10,982,918
	Nobel Biocare Holding AG		Switzerland		974,135		14,499,162
							25,482,080
	Health Care Providers & Services 0.8%
	Shanghai Pharmaceuticals Holding Co. Ltd., H		China		6,434,800		13,383,607
	Sinopharm Group Co.		China		3,102,800		8,607,268
							21,990,875
	Household Durables 0.4%
	Nikon Corp.		Japan		647,800		10,199,309
	Industrial Conglomerates 2.2%
	Hutchison Whampoa Ltd.		Hong Kong		2,096,239		28,642,429
	Siemens AG		Germany		233,124		30,791,821
							59,434,250
	Insurance 7.5%
	ACE Ltd.		United States		307,649		31,903,201
	Aegon NV		Netherlands		4,446,700		38,814,683

TF-12 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Templeton Foreign VIP Fund (continued)

		Country		Shares		Value
	Common Stocks (continued)
	Insurance (continued)
	AIA Group Ltd.		Hong Kong		4,133,000	$	20,797,115
	Aviva PLC		United Kingdom		3,200,110		27,955,126
	AXA SA		France		2,056,508		49,158,250
	China Life Insurance Co. Ltd., H		China		4,286,000		11,225,903
	Muenchener Rueckversicherungs-Gesellschaft AG		Germany		68,060		15,089,851
	Swiss Re AG		Switzerland		130,190		11,582,557
							206,526,686
	Leisure Products 0.8%
	Bandai Namco Holdings Inc.		Japan		977,800		22,894,641
	Life Sciences Tools & Services 0.7%
	Lonza Group AG		Switzerland		121,930		13,267,458
a	QIAGEN NV		Netherlands		197,121		4,778,068
							18,045,526
	Metals & Mining 3.1%
	HudBay Minerals Inc.		Canada		2,891,000		26,756,219
	Mining and Metallurgical Co. Norilsk Nickel OJSC, ADR		Russia		926,924		18,362,364
	POSCO		South Korea		136,907		41,126,214
							86,244,797
	Multiline Retail 1.1%
	Marks & Spencer Group PLC		United Kingdom		4,066,900		29,590,857
	Oil, Gas & Consumable Fuels 13.3%
	BP PLC		United Kingdom		5,946,135		52,391,212
	China Shenhua Energy Co. Ltd., H		China		8,462,000		24,456,490
	Dragon Oil PLC		Turkmenistan		731,930		7,683,957
	Eni SpA		Italy		1,319,747		36,110,402
	Kunlun Energy Co. Ltd.		China		7,280,000		12,004,258
	LUKOIL Holdings, ADR		Russia		160,535		9,585,545
	Royal Dutch Shell PLC, A		United Kingdom		16,803		695,398
	Royal Dutch Shell PLC, B		United Kingdom		1,094,263		47,608,387
	Statoil ASA		Norway		1,314,870		40,394,865
	Suncor Energy Inc.		Canada		901,700		38,470,955
	Talisman Energy Inc.		Canada		2,554,600		27,020,383
	Total SA, B		France		979,926		70,828,627
							367,250,479
	Pharmaceuticals 9.7%
	Bayer AG		Germany		194,750		27,510,143
	GlaxoSmithKline PLC		United Kingdom		2,772,585		74,203,162
	Novartis AG		Switzerland		328,730		29,764,920
	Roche Holding AG		Switzerland		179,480		53,529,300
	Sanofi		France		513,135		54,516,450
	Teva Pharmaceutical Industries Ltd., ADR		Israel		520,107		27,264,009
							266,787,984
	Real Estate Management & Development 0.0%†
	Cheung Kong (Holdings) Ltd.		Hong Kong		922		16,345
	Semiconductors & Semiconductor Equipment 3.6%
	Infineon Technologies AG		Germany		1,103,225		13,792,197
	Samsung Electronics Co. Ltd.		South Korea		53,022		69,263,917
	Taiwan Semiconductor Manufacturing Co. Ltd.		Taiwan		4,151,526		17,580,318
							100,636,432

Semiannual Report TF-13

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Templeton Foreign VIP Fund (continued)

		Country		Shares		Value
	Common Stocks (continued)
	Software 0.7%
	Capcom Co. Ltd.		Japan		1,211,400	$	20,531,798
	Specialty Retail 1.1%
	Kingfisher PLC		United Kingdom		5,160,616		31,702,739
	Technology Hardware, Storage & Peripherals 0.4%
	CANON Inc.		Japan		349,700		11,377,634
	Trading Companies & Distributors 2.1%
	ITOCHU Corp.		Japan		3,753,600		48,205,257
	Noble Group Ltd.		Hong Kong		8,267,000		9,084,980
							57,290,237
	Wireless Telecommunication Services 1.6%
	China Mobile Ltd.		China		2,340,000		22,704,230
	Vodafone Group PLC, ADR		United Kingdom		671,535		22,422,554
							45,126,784
	Total Common Stocks (Cost $1,965,280,829)						2,595,426,553
	Preferred Stocks (Cost $11,136,802) 0.3%
	Oil, Gas & Consumable Fuels 0.3%
	Petroleo Brasileiro SA, ADR, pfd.		Brazil		517,880		8,099,643
	Total Investments before Short Term Investments (Cost $1,976,417,631)						2,603,526,196
	Short Term Investments 3.3%
	Money Market Funds (Cost $88,693,589) 3.3%
a,c	Institutional Fiduciary Trust Money Market Portfolio		United States		88,693,589		88,693,589
d	Investments from Cash Collateral Received for Loaned Securities (Cost $175,000) 0.0%†
	Money Market Funds 0.0%†
e	BNY Mellon Overnight Government Fund, 0.082%		United States		175,000		175,000
	Total Investments (Cost $2,065,286,220) 97.6%						2,692,394,785
	Other Assets, less Liabilities 2.4%						67,503,762
	Net Assets 100.0%					$	2,759,898,547

See Abbreviations on page TF-25.

^†Rounds to less than 0.1% of net assets.

^aNon-income producing.

^bA portion or all of the security is on loan at June 30, 2014. See Note 1(c).

^cSee Note 3(e) regarding investments in the Institutional Fiduciary Trust Money Market Portfolio.

^dSee Note 1(c) regarding securities on loan.

^eThe rate shown is the annualized seven-day yield at period end.

TF-14 Semiannual Report   |    The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Financial Statements

Statement of Assets and Liabilities

June 30, 2014 (unaudited)

	Templeton Foreign VIP Fund
Assets:
Investments in securities:
Cost - Unaffiliated issuers	$	1,976,592,631
Cost - Sweep Money Fund (Note 3e)		88,693,589
Total cost of investments	$	2,065,286,220
Value - Unaffiliated issuers	$	2,603,701,196
Value - Sweep Money Fund (Note 3e)		88,693,589
Total value of investments (includes securities loaned in the amount $188,760)		2,692,394,785
Cash		1,033,838
Receivables:
Investment securities sold		59,340,898
Capital shares sold		4,368,268
Dividends		9,420,950
Other assets		1,227
Total assets		2,766,559,966
Liabilities:
Payables:
Investment securities purchased		854,232
Capital shares redeemed		2,087,479
Management fees		1,673,742
Distribution fees		1,123,503
Reports to shareholders		521,744
Payable upon return of securities loaned		175,000
Accrued expenses and other liabilities		225,719
Total liabilities		6,661,419
Net assets, at value	$	2,759,898,547
Net assets consist of:
Paid-in capital	$	2,090,303,838
Undistributed net investment income		66,405,969
Net unrealized appreciation (depreciation)		627,330,445
Accumulated net realized gain (loss)		(24,141,705	)
Net assets, at value	$	2,759,898,547

The accompanying notes are an integral part of these financial statements.    |   Semiannual Report TF-15

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL STATEMENTS

Statement of Assets and Liabilities (continued)

June 30, 2014 (unaudited)

	Templeton Foreign VIP Fund
Class 1:
Net assets, at value	$	296,523,166
Shares outstanding		16,670,268
Net asset value and maximum offering price per share	$	17.79
Class 2:
Net assets, at value	$	1,928,297,158
Shares outstanding		110,319,871
Net asset value and maximum offering price per share	$	17.48
Class 4:
Net assets, at value	$	535,078,223
Shares outstanding		30,385,375
Net asset value and maximum offering price per share	$	17.61

TF-16 Semiannual Report   |    The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL STATEMENTS

Statement of Operations

for the six months ended June 30, 2014 (unaudited)

	Templeton Foreign VIP Fund
Investment income:
Dividends (net of foreign taxes of $5,540,795)	$	79,172,850
Income from securities loaned		1,581,816
Total investment income		80,754,666
Expenses:
Management fees (Note 3a)		9,145,575
Administrative fees (Note 3b)		859,943
Distribution fees: (Note 3c)
Class 2		2,312,099
Class 3		75,571
Class 4		897,703
Custodian fees (Note 4)		201,159
Reports to shareholders		233,252
Registration and filing fees		298
Professional fees		47,828
Trustees’ fees and expenses		5,365
Other		30,063
Total expenses		13,808,856
Expenses waived/paid by affiliates (Note 3e)		(35,078	)
Net expenses		13,773,778
Net investment income		66,980,888
Realized and unrealized gains (losses):
Net realized gain (loss) from:
Investments		44,052,202
Foreign currency transactions		(258,117	)
Net realized gain (loss)		43,794,085
Net change in unrealized appreciation (depreciation) on:
Investments		(24,744,270	)
Translation of other assets and liabilities denominated in foreign currencies		137,909
Net change in unrealized appreciation (depreciation)		(24,606,361	)
Net realized and unrealized gain (loss)		19,187,724
Net increase (decrease) in net assets resulting from operations	$	86,168,612

The accompanying notes are an integral part of these financial statements.    |   Semiannual Report TF-17

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL STATEMENTS

Statements of Changes in Net Assets

	Templeton Foreign VIP Fund
	Six Months Ended June 30, 2014 (unaudited)			Year Ended December 31, 2013
Increase (decrease) in net assets:
Operations:
Net investment income	$	66,980,888		$	50,200,298
Net realized gain (loss) from investments and foreign currency transactions		43,794,085			40,523,982
Net change in unrealized appreciation (depreciation) on investments and translation of other assets and liabilities denominated in foreign currencies		(24,606,361	)		454,985,363
Net increase (decrease) in net assets resulting from operations		86,168,612			545,709,643
Distributions to shareholders from:
Net investment income:
Class 1		(5,893,509	)		(7,042,374	)
Class 2		(34,594,703	)		(42,339,120	)
Class 3		—			(2,189,476	)
Class 4		(9,091,879	)		(10,745,373	)
Total distributions to shareholders		(49,580,091	)		(62,316,343	)
Capital share transactions: (Note 2)
Class 1		(5,604,179	)		(18,682,478	)
Class 2		30,610,794			(199,579,456	)
Class 3		(96,991,462	)		(13,135,502	)
Class 4		14,733,712			10,467,967
Total capital share transactions		(57,251,135	)		(220,929,469	)
Redemption fees		3,115			19,703
Net increase (decrease) in net assets		(20,659,499	)		262,483,534
Net assets:
Beginning of period		2,780,558,046			2,518,074,512
End of period	$	2,759,898,547		$	2,780,558,046
Undistributed net investment income included in net assets:
End of period	$	66,405,969		$	49,005,172

TF-18  �� Semiannual Report   |    The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Notes to Financial Statements (unaudited)

Templeton Foreign VIP Fund

1. Organization and Significant Accounting Policies

Franklin Templeton Variable Insurance Products Trust (Trust) is registered under the Investment Company Act of 1940, as amended, (1940 Act) as an open-end management investment company, consisting of twenty separate funds and applies the specialized accounting and reporting guidance in U.S. Generally Accepted Accounting Principles (U.S. GAAP). The Templeton Foreign VIP Fund (Fund) is included in this report. The financial statements of the remaining funds in the Trust are presented separately. Shares of the Fund are generally sold only to insurance company separate accounts to fund the benefits of variable life insurance policies or variable annuity contracts. The Fund offers three classes of shares: Class 1, Class 2, and Class 4. Effective May 1, 2014, all Class 3 shares were converted to Class 2. Each class of shares differs by its distribution fees, voting rights on matters affecting a single class and its exchange privilege.

Effective May 1, 2014, the Templeton Foreign Securities Fund was renamed the Templeton Foreign VIP Fund.

The following summarizes the Fund’s significant accounting policies.

a. Financial Instrument Valuation

The Fund’s investments in financial instruments are carried at fair value daily. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. The Fund calculates the net asset value (NAV) per share at the close of the New York Stock Exchange (NYSE), generally at 4 p.m. Eastern time (NYSE close) on each day the NYSE is open for trading. Under compliance policies and procedures approved by the Trust’s Board of Trustees (the Board), the Fund’s administrator has responsibility for oversight of valuation, including leading the cross-functional Valuation and Liquidity Oversight Committee (VLOC). The VLOC provides administration and oversight of the Fund’s valuation policies and procedures, which are approved annually by the Board. Among other things, these procedures allow the Fund to utilize independent pricing services, quotations from securities and financial instrument dealers, and other market sources to determine fair value.

Equity securities listed on an exchange or on the NASDAQ National Market System are valued at the last quoted sale price or the official closing price of the day, respectively. Foreign

equity securities are valued as of the close of trading on the foreign stock exchange on which the security is primarily traded or as of the NYSE close, whichever is earlier. The value is then converted into its U.S. dollar equivalent at the foreign exchange rate in effect at the NYSE close on the day that the value of the security is determined. Over-the-counter securities are valued within the range of the most recent quoted bid and ask prices. Securities that trade in multiple markets or on multiple exchanges are valued according to the broadest and most representative market. Certain equity securities are valued based upon fundamental characteristics or relationships to similar securities. Investments in open-end mutual funds and non-registered money market funds are valued at the closing net asset value.

The Fund has procedures to determine the fair value of financial instruments for which market prices are not reliable or readily available. Under these procedures, the VLOC convenes on a regular basis to review such financial instruments and considers a number of factors, including significant unobservable valuation inputs, when arriving at fair value. The VLOC primarily employs a market-based approach which may use related or comparable assets or liabilities, recent transactions, market multiples, book values, and other relevant information for the investment to determine the fair value of the investment. An income-based valuation approach may also be used in which the anticipated future cash flows of the investment are discounted to calculate fair value. Discounts may also be applied due to the nature or duration of any restrictions on the disposition of the investments. Due to the inherent uncertainty of valuations of such investments, the fair values may differ significantly from the values that would have been used had an active market existed. The VLOC employs various methods for calibrating these valuation approaches including a regular review of key inputs and assumptions, transactional back-testing or disposition analysis, and reviews of any related market activity.

Trading in securities on foreign securities stock exchanges may be completed before the daily NYSE close. In addition, trading in certain foreign markets may not take place on every NYSE business day. Occasionally, events occur between the time at which trading in a foreign security is completed and the close of the NYSE that might call into question the reliability of the value of a portfolio security held by the Fund. As a result, differences may arise between the value of the Fund’s portfolio securities as determined at the foreign market close and the latest indications of value at the close of the NYSE. In order to

Semiannual Report TF-19

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Templeton Foreign VIP Fund (continued)

1. Organization and Significant Accounting Policies (continued)

a. Financial Instrument Valuation (continued)

minimize the potential for these differences, the VLOC monitors price movements following the close of trading in foreign stock markets through a series of country specific market proxies (such as baskets of American Depositary Receipts, futures contracts and exchange traded funds). These price movements are measured against established trigger thresholds for each specific market proxy to assist in determining if an event has occurred that may call into question the reliability of the values of the foreign securities held by the Fund. If such an event occurs, the securities may be valued using fair value procedures, which may include the use of independent pricing services.

Also, when the last day of the reporting period is a non-business day, certain foreign markets may be open on those days that the NYSE is closed, which could result in differences between the value of the Fund’s portfolio securities on the last business day and the last calendar day of the reporting period. Any significant security valuation changes due to an open foreign market are adjusted and reflected by the Fund for financial reporting purposes.

b. Foreign Currency Translation

Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars based on the exchange rate of such currencies against U.S. dollars on the date of valuation. The Fund may enter into foreign currency exchange contracts to facilitate transactions denominated in a foreign currency. Purchases and sales of securities, income and expense items denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date. Portfolio securities and assets and liabilities denominated in foreign currencies contain risks that those currencies will decline in value relative to the U.S. dollar. Occasionally, events may impact the availability or reliability of foreign exchange rates used to convert the U.S. dollar equivalent value. If such an event occurs, the foreign exchange rate will be valued at fair value using procedures established and approved by the Board.

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

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

c. Securities Lending

The Fund participates in an agency based securities lending program. The Fund receives cash collateral against the loaned securities in an amount equal to at least 102% of the fair value of the loaned securities. Collateral is maintained over the life of the loan in an amount not less than 100% of the fair value of loaned securities, as determined at the close of fund business each day; any additional collateral required due to changes in security values is delivered to the Fund on the next business day. The collateral is invested in a non-registered money fund as indicated on the Statement of Investments. The Fund receives income from the investment of cash collateral, in addition to lending fees and rebates paid by the borrower. The Fund bears the market risk with respect to the collateral investment, securities loaned, and the risk that the agent may default on its obligations to the Fund. The securities lending agent has agreed to indemnify the Fund in the event of default by a third party borrower.

d. Income and Deferred Taxes

It is the Fund’s policy to qualify as a regulated investment company under the Internal Revenue Code. The Fund intends to distribute to shareholders substantially all of its taxable income and net realized gains to relieve it from federal income and if applicable, excise taxes. As a result, no provision for U.S. federal income taxes is required.

The Fund may be subject to foreign taxation related to income received, capital gains on the sale of securities and certain foreign currency transactions in the foreign jurisdictions in which it invests. Foreign taxes, if any, are recorded based on the tax regulations and rates that exist in the foreign markets in which the Fund invests. When a capital gain tax is determined to apply the Fund records an estimated deferred tax liability in an amount that would be payable if the securities were disposed of on the valuation date.

TF-20 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Templeton Foreign VIP Fund (continued)

The Fund recognizes the tax benefits of uncertain tax positions only when the position is “more likely than not” to be sustained upon examination by the tax authorities based on the technical merits of the tax position. As of June 30, 2014, and for all open tax years, the Fund has determined that no liability for unrecognized tax benefits is required in the Fund’s financial statements related to uncertain tax positions taken on a tax return (or expected to be taken on future tax returns). Open tax years are those that remain subject to examination and are based on each tax jurisdiction statute of limitation.

e. Security Transactions, Investment Income, Expenses and Distributions

Security transactions are accounted for on trade date. Realized gains and losses on security transactions are determined on a specific identification basis. Estimated expenses are accrued daily. Dividend income is recorded on the ex-dividend date except that certain dividends from foreign securities are recognized as soon as the Fund is notified of the ex-dividend date. Distributions to shareholders are recorded on the ex-dividend date and are determined according to income tax regulations (tax basis). Distributable earnings determined on a tax basis may differ from earnings recorded in accordance with accounting principles generally accepted in the United States of America. These differences may be permanent or temporary. Permanent differences are reclassified among capital accounts to reflect their tax character. These reclassifications have no impact on net assets or the results of operations. Temporary differences are not reclassified, as they may reverse in subsequent periods.

Common expenses incurred by the Trust are allocated among the funds based on the ratio of net assets of each fund to the combined net assets of the Trust. Fund specific expenses are charged directly to the fund that incurred the expense.

Realized and unrealized gains and losses and net investment income, not including class specific expenses, are allocated daily to each class of shares based upon the relative proportion of net assets of each class. Differences in per share distributions, by class, are generally due to differences in class specific expenses.

f. Accounting Estimates

The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the amounts of income and expenses during the reporting period. Actual results could differ from those estimates.

g. Redemption Fees

Redemptions and exchanges of interests in an insurance company subaccount that invested in Class 3 shares of the Fund were subject to a 1.0% short term trading fee if the interest in the subaccount had been held for less than 60 days. Such fees were retained by the Fund and accounted for as an addition to paid-in capital, allocated to each class of shares based upon the relative proportion of net assets of each class.

h. Guarantees and Indemnifications

Under the Trust’s organizational documents, its officers and trustees are indemnified by the Trust against certain liabilities arising out of the performance of their duties to the Trust. Additionally, in the normal course of business, the Trust, on behalf of the Fund, enters into contracts with service providers that contain general indemnification clauses. The Trust’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Trust that have not yet occurred. Currently, the Trust expects the risk of loss to be remote.

2. Shares of Beneficial Interest

At June 30, 2014, there were an unlimited number of shares authorized (without par value). Transactions in the Fund’s shares were as follows:

	Six Months Ended June 30, 2014						Year Ended December 31, 2013
	Shares			Amount			Shares			Amount
Class 1 Shares:
Shares sold		270,390		$	4,708,316			496,052		$	7,884,222
Shares issued in reinvestment of distributions		329,615			5,893,509			468,554			7,042,374
Shares redeemed		(925,352	)		(16,206,004	)		(2,142,399	)		(33,609,074	)
Net increase (decrease)		(325,347	)	$	(5,604,179	)		(1,177,793	)	$	(18,682,478	)

Semiannual Report TF-21

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Templeton Foreign VIP Fund (continued)

2. Shares of Beneficial Interest (continued)

	Six Months Ended June 30, 2014						Year Ended December 31, 2013
	Shares			Amount			Shares			Amount
Class 2 Shares:
Shares sold		9,956,026		$	173,281,368			9,932,214		$	152,564,880
Shares issued in reinvestment of distributions		1,967,844			34,594,703			2,864,622			42,339,120
Shares redeemed		(10,260,663	)		(177,265,277	)		(25,480,434	)		(394,483,456	)
Net increase (decrease)		1,663,207		$	30,610,794			(12,683,598	)	$	(199,579,456	)
Class 3 Sharesa:
Shares sold		149,791		$	2,553,688			558,566		$	8,455,794
Shares issued in reinvestment of distributions		—			—			148,742			2,189,476
Shares redeemed		(5,703,761	)		(99,545,150	)		(1,552,340	)		(23,780,772	)
Net increase (decrease)		(5,553,970	)	$	(96,991,462	)		(845,032	)	$	(13,135,502	)
Class 4 Shares:
Shares sold		2,127,882		$	36,966,762			5,690,758		$	88,119,947
Shares issued on reinvestment of distributions		513,375			9,091,879			721,650			10,745,373
Shares redeemed		(1,800,270	)		(31,324,929	)		(5,613,738	)		(88,397,353	)
Net increase (decrease)		840,987		$	14,733,712			798,670		$	10,467,967

^aEffective May 1, 2014, all Class 3 Shares were converted to Class 2.

3. Transactions With Affiliates

Franklin Resources, Inc. is the holding company for various subsidiaries that together are referred to as Franklin Templeton Investments. Certain officers and trustees of the Fund are also officers and/or directors of the following subsidiaries:

Subsidiary	Affiliation
Templeton Investment Counsel, LLC (TIC)	Investment manager
Franklin Templeton Services, LLC (FT Services)	Administrative manager
Franklin Templeton Distributors, Inc. (Distributors)	Principal underwriter
Franklin Templeton Investor Services, LLC (Investor Services)	Transfer agent

a. Management Fees

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

Annualized Fee Rate	Net Assets
0.900%	Up to and including $200 million
0.810%	Over $200 million, up to and including $700 million
0.775%	Over $700 million, up to and including $1.2 billion
0.750%	Over $1.2 billion, up to and including $1.3 billion
0.675%	Over $1.3 billion, up to and including $10 billion
0.655%	Over $10 billion, up to and including $15 billion
0.635%	Over $15 billion, up to and including $20 billion
0.615%	In excess of $20 billion

TF-22 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Templeton Foreign VIP Fund (continued)

Effective May 1, 2014, the Fund combined its investment management and administration agreements as approved by the Board. The fees paid under the combined agreement do not exceed the aggregate fees that were paid under the separate agreements.

Prior to May 1, 2014, the Fund paid fees to TIC based on the average daily net assets of the Fund as follows:

Annualized Fee Rate	Net Assets
0.750%	Up to and including $200 million
0.675%	Over $200 million, up to and including $1.3 billion
0.600%	Over $1.3 billion, up to and including $10 billion
0.580%	Over $10 billion, up to and including $15 billion
0.560%	Over $15 billion, up to and including $20 billion
0.540%	In excess of $20 billion

b. Administrative Fees

Effective May 1, 2014, under an agreement with TIC, FT Services provides administrative services to the Fund. The fee is paid by TIC based on the Fund’s average daily net assets, and is not an additional expense of the Fund.

Prior to May 1, 2014, the Fund paid fees to FT Services based on the average daily net assets of the Fund as follows:

Annualized Fee Rate	Net Assets
0.150%	Up to and including $200 million
0.135%	Over $200 million, up to and including $700 million
0.100%	Over $700 million, up to and including $1.2 billion
0.075%	In excess of $1.2 billion

c. Distribution Fees

The Board has adopted distribution plans for Class 2, Class 3, and Class 4 shares pursuant to Rule 12b-1 under the 1940 Act. Under the Fund’s compensation distribution plans, the Fund pays Distributors for costs incurred in connection with the servicing, sale and distribution of the Fund’s shares up to 0.25%, 0.35%, and 0.35% per year of its average daily net assets of Class 2, Class 3, and Class 4, respectively. Some distribution fees are not charged on shares held by affiliates. The Board has agreed to limit the current rate to 0.25% per year for Class 3. The plan year, for purposes of monitoring compliance with the maximum annual plan rates, is February 1 through January 31.

d. Transfer Agent Fees

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

e. Investment in Institutional Fiduciary Trust Money Market Portfolio

The Fund invests in the Institutional Fiduciary Trust Money Market Portfolio (Sweep Money Fund), an affiliated open-end management investment company. Management fees paid by the Fund are waived on assets invested in the Sweep Money Fund, in an amount not to exceed the management and administrative fees paid directly or indirectly by the Sweep Money Fund, as noted on the Statement of Operations. Prior to January 1, 2014, the waiver was accounted for as a reduction to management fees.

Semiannual Report TF-23

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Templeton Foreign VIP Fund (continued)

4. Expense Offset Arrangement

The Fund has entered into an arrangement with its custodian whereby credits realized as a result of uninvested cash balances are used to reduce a portion of the Fund’s custodian expenses. During the period ended June 30, 2014, there were no credits earned.

5. Income Taxes

For tax purposes, capital losses may be carried over to offset future capital gains. Capital loss carryforwards with no expiration, if any, must be fully utilized before those losses with expiration dates. At December 31, 2013, the Fund had capital loss carryforwards of $59,815,020 expiring in 2017.

At June 30, 2014, the cost of investments and net unrealized appreciation (depreciation) for income tax purposes were as follows:

Cost of investments	$2,074,098,065
Unrealized appreciation	$   682,164,336
Unrealized depreciation	(63,867,616)
Net unrealized appreciation (depreciation)	$   618,296,720

Differences between income and/or capital gains as determined on a book basis and a tax basis are primarily due to differing treatments of foreign currency transactions and wash sales.

6. Investment Transactions

Purchases and sales of investments (excluding short term securities) for the period ended June 30, 2014, aggregated $242,207,618 and $392,812,257, respectively.

7. Concentration of Risk

Investing in foreign securities may include certain risks and considerations not typically associated with investing in U.S. securities, such as fluctuating currency values and changing local and regional economic, political and social conditions, which may result in greater market volatility. In addition, certain foreign securities may not be as liquid as U.S. securities.

8. Credit Facility

The Fund, together with other U.S. registered and foreign investment funds (collectively, Borrowers), managed by Franklin Templeton Investments, are borrowers in a joint syndicated senior unsecured credit facility totaling $1.5 billion (Global Credit Facility) which matures on February 13, 2015. This Global Credit Facility provides a source of funds to the Borrowers for temporary and emergency purposes, including the ability to meet future unanticipated or unusually large redemption requests.

Under the terms of the Global Credit Facility, the Fund shall, in addition to interest charged on any borrowings made by the Fund and other costs incurred by the Fund, pay its share of fees and expenses incurred in connection with the implementation and maintenance of the Global Credit Facility, based upon its relative share of the aggregate net assets of all of the Borrowers, including an annual commitment fee of 0.07% based upon the unused portion of the Global Credit Facility. These fees are reflected in other expenses on the Statement of Operations. During the period ended June 30, 2014, the Fund did not use the Global Credit Facility.

TF-24 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Templeton Foreign VIP Fund (continued)

9. Fair Value Measurements

The Fund follows a fair value hierarchy that distinguishes between market data obtained from independent sources (observable inputs) and the Fund’s own market assumptions (unobservable inputs). These inputs are used in determining the value of the Fund’s financial instruments and are summarized in the following fair value hierarchy:

• Level 1 – quoted prices in active markets for identical financial instruments

• Level 2 – other significant observable inputs (including quoted prices for similar financial instruments, interest rates, prepayment speed, credit risk, etc.)

• Level 3 – significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of financial instruments)

The input levels are not necessarily an indication of the risk or liquidity associated with financial instruments at that level.

For movements between the levels within the fair value hierarchy, the Fund has adopted a policy of recognizing the transfers as of the date of the underlying event which caused the movement.

A summary of inputs used as of June 30, 2014, in valuing the Fund’s assets carried at fair value, is as follows:

	Level 1		Level 2		Level 3		Total
Assets:
Investments in Securities:
Equity Investmentsa,b	$	2,603,526,196	$	—	$	—	$	2,603,526,196
Short Term Investments		88,693,589		175,000		—		88,868,589
Total Investments in Securities	$	2,692,219,785	$	175,000	$	—	$	2,692,394,785

^aIncludes common and preferred stocks.

^bFor detailed categories, see the accompanying Statement of Investments.

10. New Accounting Pronouncements

In June 2014, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) No. 2014-11, Transfers and Servicing (Topic 860), Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures. The ASU changes the accounting for certain repurchase agreements and expands disclosure requirements related to repurchase agreements, securities lending, repurchase-to-maturity and similar transactions. The ASU is effective for interim and annual reporting periods beginning after December 15, 2014. Management is currently evaluating the impact, if any, of applying this provision.

11. Subsequent Events

The Fund has evaluated subsequent events through the issuance of the financial statements and determined that no events have occurred that require disclosure.

Abbreviations

Selected Portfolio
ADR	American Depositary Receipt
IDR	International Depositary Receipt

Semiannual Report TF-25

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

TAX INFORMATION (UNAUDITED)

Templeton Foreign VIP Fund

At December 31, 2013, more than 50% of the Fund’s total assets were invested in securities of foreign issuers. In most instances, foreign taxes were withheld from income paid to the Fund on these investments. As shown in the table below, the Fund hereby reports to shareholders the foreign source income and foreign taxes paid, pursuant to Section 853 of the Internal Revenue Code. This written statement will allow shareholders of record on June 12, 2014, to treat their proportionate share of foreign taxes paid by the Fund as having been paid directly by them. The shareholder shall consider these amounts as foreign taxes paid in the tax year in which they receive the Fund distribution.

The following table provides a detailed analysis of foreign tax paid and foreign source income as reported by the Fund, to Class 1, Class 2, and Class 4 shareholders of record.

Class	Foreign Tax Paid Per Share	Foreign Source Income Per Share
Class 1	$0.0298	$0.3847
Class 2	$0.0298	$0.3447
Class 4	$0.0298	$0.3313

Foreign Tax Paid Per Share (Column 1) is the amount per share available to you, as a tax credit (assuming you held your shares in the Fund for a minimum of 16 days during the 31-day period beginning 15 days before the ex-dividend date of the Fund’s distribution to which the foreign taxes relate), or, as a tax deduction.

Foreign Source Income Per Share (Column 2) is the amount per share of income dividends attributable to foreign securities held by the Fund, plus any foreign taxes withheld on these dividends.

TF-26 Semiannual Report

Templeton Global Bond VIP Fund

(Formerly, Templeton Global Bond Securities Fund)

This semiannual report for Templeton Global Bond VIP Fund covers the period ended June 30, 2014.

Class 2 Performance Summary as of June 30, 2014

Templeton Global Bond VIP Fund – Class 2 delivered a +3.19% total return for the six-month period ended June 30, 2014.

Performance reflects the Fund’s Class 2 operating expenses, but does not include any contract fees, expenses or sales charges. If they had been included, performance would be lower. These charges and deductions, particularly for variable life policies, can have a significant effect on contract values and insurance benefits. See the contract prospectus for a complete description of these expenses, including sales charges.

Performance data represent past performance, which does not guarantee future results. Investment return and principal value will fluctuate, and you may have a gain or loss when you sell your shares. Current performance may differ from figures shown.

Semiannual Report TGB-1

TEMPLETON GLOBAL BOND VIP FUND

Fund Goal and Main Investments: Templeton Global Bond VIP Fund seeks high current income, consistent with preservation of capital, with capital appreciation as a secondary consideration. Under normal market conditions, the Fund invests at least 80% of its net assets in bonds, which include debt securities of any maturity, such as bonds, notes, bills and debentures.

Fund Risks: All investments involve risks, including possible loss of principal. Currency rates may fluctuate significantly over short periods of time, and can reduce returns. Derivatives, including currency management strategies, involve costs and can create economic leverage in the portfolio that may result in significant volatility and cause the Fund to participate in losses (as well as enable gains) on an amount that exceeds the Fund’s initial investment. The Fund may not achieve the anticipated benefits and may realize losses when a counterparty fails to perform as promised. Foreign securities involve special risks, including currency fluctuations and economic and political uncertainties. Investments in emerging markets involve heightened risks related to the same factors, in addition to those associated with these markets’ smaller size and lesser liquidity. Investments in lower rated bonds include higher risk of default and loss of principal. Changes in interest rates will affect the value of the Fund’s portfolio and its share price and yield. Bond prices generally move in the opposite direction of interest rates. As prices of bonds in the Fund adjust to a rise in interest rates, the Fund’s share price may decline. The Fund is also nondiversified, which involves the risk of greater price fluctuation than a more diversified portfolio. Changes in the financial strength of a bond issuer or in a bond’s credit rating may affect its value. The Fund is actively managed but there is no guarantee that the manager’s investment decisions will produce the desired results. The Fund’s prospectus also includes a description of the main investment risks.

Performance Overview

You can find the Fund’s six-month total return in the Performance Summary. For comparison, the Fund’s benchmarks, the J.P. Morgan (JPM) Global Government Bond Index (GGBI) and the Citigroup World Government Bond Index, generated +5.05% and +5.00% total returns for the same period.¹

*Weightings may be negative or may not total 100% due to rounding, use of any derivatives, unsettled trades or other factors

**The Fund’s euro area investments were in Ireland and Slovenia.

***The Fund’s supranational investment was denominated in the Mexican peso.

Economic and Market Overview

The global economic recovery was mixed during the period under review. The recovery in emerging markets moderated from fairly strong levels. Although some developed economies, such as those of Australia and some Scandinavian countries, also enjoyed relatively strong recoveries, the G-3 (U.S., eurozone and Japan) continued to experience growth that was slow by the standards of previous recoveries. As fears eased surrounding the issues of European sovereign debt, the possibility of another U.S. recession and a potential Chinese “hard landing,” financial market performance was positive. Improving sentiment, relatively strong fundamentals and continued provision of global liquidity supported risk assets as equity markets performed well. Policymakers in the largest developed economies adjusted their unprecedented efforts to supply liquidity. The European Central Bank (ECB) took the unusual step of

1. Source: © 2014 Morningstar. One cannot invest directly in an index, and an index is not representative of the Fund’s portfolio. Please see Index Descriptions following the Fund Summaries.

TGB-2 Semiannual Report

TEMPLETON GLOBAL BOND VIP FUND

charging banks to hold their deposits. Actions elsewhere in the world were mixed, with some policymakers less willing to reverse previous tightening efforts in response to the external environment. During the period, investors became concerned with geopolitical issues surrounding rising tensions between Russia and Ukraine.

Reductions in stimulative government policies contributed to periods of risk aversion, when credit spreads widened and assets perceived as risky sold off, alternating with periods of heightened risk appetite, when spreads narrowed and investors again favored risk assets. Against this backdrop, extensive liquidity creation continued, in particular from the Bank of Japan’s commitment to increase inflation and the ECB’s interest rate cut. Economic data among the largest economies remained inconsistent with predictions of a severe global economic slowdown.

During the period, the Federal Reserve Board (Fed) initiated the reduction of its quantitative easing program. The Fed announced further gradual reductions to its bond buying program from $85 billion per month last year to $35 billion per month in total purchases.

Investment Strategy

We allocate the Fund’s assets among issuers, geographic regions, and currencies based upon our assessment of relative interest rates among currencies, our outlook for changes in interest rates and currencies, and credit risks. In considering these factors, we may evaluate a country’s changing market, economic and political conditions, such as inflation rate, growth prospects, global trade patterns and government policies. We seek to manage the Fund’s exposure to various currencies and may utilize currency forward contracts.

What is a currency forward contract?

A currency forward contract is an agreement between the Fund and a counterparty to buy or sell a foreign currency at a specific exchange rate on a future date.

Manager’s Discussion

The Fund’s total return was influenced by various factors, including interest rate developments, currency movements and exposure to sovereign debt markets. During the period under review, each of these sources of return contributed to absolute performance.

Interest Rate Strategy

As part of the Fund’s interest rate strategy, we used interest rate swaps to manage duration. At period-end, the Fund had a shorter duration position than the JPM GGBI given our assessment that there is limited scope for further global interest rate reductions from historically low levels and improving economic conditions. Although the Fund maintained a defensive approach regarding interest rates in developed and emerging markets, select duration exposures in Europe contributed to absolute performance.

What is an interest rate swap?

An interest rate swap is an agreement between two parties to exchange interest rate obligations, generally one based on an interest rate fixed to maturity while the other is based on an interest rate that changes in accordance with changes in a

designated benchmark (for example, LIBOR, prime, commercial paper or other benchmarks).

What is duration?

Duration is a measure of a bond’s price sensitivity to interest rate changes. In general, a portfolio of securities with a lower duration can be expected to be less sensitive to interest rate changes than a portfolio with a higher duration.

Semiannual Report TGB-3

TEMPLETON GLOBAL BOND VIP FUND

Currency Breakdown*
6/30/14
	% of Total Net Assets
Americas		86.3%
U.S. Dollar		61.0%
Mexican Peso		13.3%
Brazilian Real		4.7%
Canadian Dollar		3.9%
Chilean Peso		3.3%
Peruvian Nuevo Sol		0.1%
Asia Pacific		19.9%
South Korean Won		16.3%
Malaysian Ringgit		12.5%
Singapore Dollar		8.2%
Indonesian Rupiah		2.4%
Indian Rupee		2.2%
Sri Lankan Rupee		1.3%
Philippine Peso		1.2%
Japanese Yen		-24.2%
Europe		-6.2%
Polish Zloty		10.0%
Swedish Krona		7.5%
Hungarian Forint		4.9%
Euro		-28.6%

*Weightings may be negative or may not total 100% due to rounding, use of any derivatives, unsettled trades or other factors.

The dollar value, number of shares or principal amount, and names of all portfolio holdings are listed in the Fund’s Statement of Investments.

Currency Strategy

As part of the Fund’s investment strategy, we used currency forward contracts to hedge or gain exposure to various currencies, which sometimes resulted in net-negative positions. Overall, our diversified currency exposure contributed to absolute performance. Among currencies, the Fund’s underweighted and net-negative exposure to the euro benefited relative results, but this effect was more than offset by its overweighted exposure to peripheral European currencies. The Japanese yen appreciated against the U.S. dollar during the period and the Fund’s net-negative and underweighted position in the yen detracted from absolute performance. Conversely, the Fund’s exposures to Asian currencies other than the yen contributed to absolute results.

Global Sovereign Debt Strategy

The Fund purchased investment-grade and subinvestment-grade hard currency-denominated sovereign debt that typically compensates for greater credit risk by offering higher yields relative to U.S. Treasury and European benchmark bonds. Overall, the Fund’s sovereign credit exposures contributed to absolute performance.

Thank you for your participation in Templeton Global Bond VIP Fund. We look forward to serving your future investment needs.

The foregoing information reflects our analysis, opinions and portfolio holdings as of June 30, 2014, the end of the reporting period. The way we implement our main investment strategies and the resulting portfolio holdings may change depending on factors such as market and economic conditions. These opinions may not be relied upon as investment advice or an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but the investment manager makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.

TGB-4 Semiannual Report

TEMPLETON GLOBAL BOND VIP FUND

Class 2 Fund Expenses

As an investor in a variable insurance contract (Contract) that indirectly provides for investment in an underlying mutual fund, you can incur transaction and/or ongoing expenses at both the Fund level and the Contract level.

• Transaction expenses can include sales charges (loads) on purchases, surrender fees, transfer fees and premium taxes.

• Ongoing expenses can include management fees, distribution and service (12b-1) fees, contract fees, annual maintenance fees, mortality and expense risk fees and other fees and expenses. All mutual funds and Contracts have some types of ongoing expenses.

The expenses shown in the table are meant to highlight ongoing expenses at the Fund level only and do not include ongoing expenses at the Contract level, or transaction expenses at either the Fund or Contract levels. While the Fund does not have transaction expenses, if the transaction and ongoing expenses at the Contract level were included, the expenses shown below would be higher. You should consult your Contract prospectus or disclosure document for more information.

The table shows Fund-level ongoing expenses and can help you understand these expenses and compare them with those of other mutual funds offered through the Contract. The table assumes a $1,000 investment held for the six months indicated. Please refer to the Fund prospectus for additional information on operating expenses.

Actual Fund Expenses

The first line (Actual) of the table provides actual account values and expenses. The “Ending Account Value” is derived from the Fund’s actual return, which includes the effect of ongoing Fund expenses, but does not include the effect of ongoing Contract expenses.

You can estimate the Fund-level expenses you incurred during the period by following these steps. Of course, your account value and expenses will differ from those in this illustration:

1. Divide your account value by $1,000.

If an account had an $8,600 value, then $8,600 ÷ $1,000 = 8.6.

2. Multiply the result by the number under the heading “Fund-Level Expenses Incurred During Period.”

If Fund-Level Expenses Incurred During Period were $7.50, then 8.6 × $7.50 = $64.50.

In this illustration, the estimated expenses incurred this period at the Fund level are $64.50.

Hypothetical Example for Comparison with Other Mutual Funds

Information in the second line (Hypothetical) of the table can help you compare ongoing expenses of the Fund with those of other mutual funds offered through the Contract. This information may not be used to estimate the actual ending account balance or expenses you incurred during the period. The hypothetical “Ending Account Value” is based on the Fund’s actual expense ratio and an assumed 5% annual rate of return before expenses, which does not represent the Fund’s actual return. The figure under the heading “Fund-Level Expenses Incurred During Period” shows the hypothetical expenses your account would have incurred under this scenario. You can compare this figure with the 5% hypothetical examples that appear in shareholder reports of other funds offered through a Contract.

Class 2	Beginning Account Value 1/1/14		Ending Account Value 6/30/14		Fund-Level Expenses Incurred During Period* 1/1/14–6/30/14
Actual		$1,000		$1,031.90		$3.83
Hypothetical (5% return before expenses)		$1,000		$1,021.03		$3.81

*Expenses are calculated using the most recent six-month annualized expense ratio for the Fund’s Class 2 shares (0.76%), which does not include any ongoing expenses of the Contract for which the Fund is an investment option, multiplied by the average account value over the period, multiplied by 181/365 to reflect the one-half year period.

Semiannual Report TGB-5

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Financial Highlights

Templeton Global Bond VIP Fund

	Six Months Ended June 30, 2014 (unaudited)			Year Ended December 31,
				2013			2012			2011			2010			2009
Class 1
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$19.15			$20.01			$18.61			$19.94			$17.72			$17.42
Income from investment operationsa:
Net investment incomeb		0.30			0.64			0.72			0.87			1.00			0.99
Net realized and unrealized gains (losses)		0.34			(0.30	)		1.99			(0.92	)		1.58			2.01
Total from investment operations		0.64			0.34			2.71			(0.05	)		2.58			3.00
Less distributions from:
Net investment income and net foreign currency gains		(1.01	)		(0.96	)		(1.28	)		(1.15	)		(0.31	)		(2.70	)
Net realized gains		—			(0.24	)		(0.03	)		(0.13	)		(0.05	)		—
Total distributions		(1.01	)		(1.20	)		(1.31	)		(1.28	)		(0.36	)		(2.70	)
Redemption feesc		—			—			—			—			—			—
Net asset value, end of period		$18.78			$19.15			$20.01			$18.61			$19.94			$17.72
Total returnd		3.33%			1.89%			15.31%			(0.61)%			14.71%			18.98%
Ratios to average net assetse
Expensesf		0.51%			0.51%			0.55%			0.56%			0.55%			0.54%
Net investment income		3.17%			3.26%			3.71%			4.40%			5.27%			5.73%
Supplemental data
Net assets, end of period (000’s)		$314,705			$280,963			$307,142			$269,819			$272,232			$195,662
Portfolio turnover rate		18.58%			34.39%			43.26%			34.18%			8.77%			20.84%

^aThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.

^bBased on average daily shares outstanding.

^cAmount rounds to less than $0.01 per share.

^dTotal return does not include fees, charges or expenses imposed by the variable annuity and life insurance contracts for which the Franklin Templeton Variable Insurance Products Trust serves as an underlying investment vehicle. Total return is not annualized for periods less than one year.

^eRatios are annualized for periods less than one year.

^fBenefit of expense reduction rounds to less than 0.01%.

TGB-6 Semiannual Report   |    The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL HIGHLIGHTS

Templeton Global Bond VIP Fund (continued)

	Six Months Ended June 30, 2014 (unaudited)			Year Ended December 31,
				2013			2012			2011			2010			2009
Class 2
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$18.60			$19.47			$18.15			$19.49			$17.34			$17.10
Income from investment operationsa:
Net investment incomeb		0.27			0.57			0.65			0.79			0.93			0.93
Net realized and unrealized gains (losses)		0.32			(0.27	)		1.94			(0.89	)		1.54			1.98
Total from investment operations		0.59			0.30			2.59			(0.10	)		2.47			2.91
Less distributions from:
Net investment income and net foreign currency gains		(0.96	)		(0.93	)		(1.24	)		(1.11	)		(0.27	)		(2.67	)
Net realized gains		—			(0.24	)		(0.03	)		(0.13	)		(0.05	)		—
Total distributions		(0.96	)		(1.17	)		(1.27	)		(1.24	)		(0.32	)		(2.67	)
Redemption feesc		—			—			—			—			—			—
Net asset value, end of period		$18.23			$18.60			$19.47			$18.15			$19.49			$17.34
Total returnd		3.19%			1.63%			15.07%			(0.87)%			14.45%			18.68%
Ratios to average net assetse
Expensesf		0.76%			0.76%			0.80%			0.81%			0.80%			0.79%
Net investment income		2.92%			3.01%			3.46%			4.15%			5.02%			5.48%
Supplemental data
Net assets, end of period (000’s)		$3,137,403			$2,826,039			$2,418,229			$1,812,814			$1,490,794			$1,262,783
Portfolio turnover rate		18.58%			34.39%			43.26%			34.18%			8.77%			20.84%

^aThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.

^bBased on average daily shares outstanding.

^cAmount rounds to less than $0.01 per share.

^dTotal return does not include fees, charges or expenses imposed by the variable annuity and life insurance contracts for which the Franklin Templeton Variable Insurance Products Trust serves as an underlying investment vehicle. Total return is not annualized for periods less than one year.

^eRatios are annualized for periods less than one year.

^fBenefit of expense reduction rounds to less than 0.01%.

The accompanying notes are an integral part of these financial statements.    |   Semiannual Report TGB-7

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL HIGHLIGHTS

Templeton Global Bond VIP Fund (continued)

	Six Months Ended June 30, 2014 (unaudited)			Year Ended December 31,
				2013			2012			2011			2010			2009
Class 4
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$18.97			$19.82			$18.44			$19.78			$17.61			$17.37
Income from investment operationsa:
Net investment incomeb		0.27			0.56			0.64			0.79			0.93			0.93
Net realized and unrealized gains (losses)		0.31			(0.28	)		1.98			(0.91	)		1.56			2.00
Total from investment operations		0.58			0.28			2.62			(0.12	)		2.49			2.93
Less distributions from:
Net investment income and net foreign currency gains		(0.92	)		(0.89	)		(1.21	)		(1.09	)		(0.27	)		(2.69	)
Net realized gains		—			(0.24	)		(0.03	)		(0.13	)		(0.05	)		—
Total distributions		(0.92	)		(1.13	)		(1.24	)		(1.22	)		(0.32	)		(2.69	)
Redemption feesc		—			—			—			—			—			—
Net asset value, end of period		$18.63			$18.97			$19.82			$18.44			$19.78			$17.61
Total returnd		3.08%			1.54%			14.97%			(0.96)%			14.28%			18.58%
Ratios to average net assetse
Expensesf		0.86%			0.86%			0.90%			0.91%			0.90%			0.89%
Net investment income		2.82%			2.91%			3.36%			4.05%			4.92%			5.38%
Supplemental data
Net assets, end of period (000’s)		$116,993			$118,145			$163,241			$151,695			$150,891			$108,910
Portfolio turnover rate		18.58%			34.39%			43.26%			34.18%			8.77%			20.84%

^aThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.

^bBased on average daily shares outstanding.

^cAmount rounds to less than $0.01 per share.

^dTotal return does not include fees, charges or expenses imposed by the variable annuity and life insurance contracts for which the Franklin Templeton Variable Insurance Products Trust serves as an underlying investment vehicle. Total return is not annualized for periods less than one year.

^eRatios are annualized for periods less than one year.

^fBenefit of expense reduction rounds to less than 0.01%.

TGB-8 Semiannual Report   |    The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Statement of Investments, June 30, 2014 (unaudited)

Templeton Global Bond VIP Fund
		Principal Amount*			Value
	Foreign Government and Agency Securities 64.5%
	Brazil 4.7%
	Letra Tesouro Nacional, Strip,
	1/01/15		3,971	a BRL	$	1,702,766
	1/01/16		26,160	a BRL		10,071,585
	1/01/17		46,660	a BRL		16,016,735
	1/01/18		28,770	a BRL		8,780,326
	Nota Do Tesouro Nacional,
	10.00%, 1/01/17		22,490	a BRL		9,854,568
	10.00%, 1/01/21		9,240	a BRL		3,836,307
	10.00%, 1/01/23		26,700	a BRL		10,870,763
	b Index Linked, 6.00%, 5/15/15		30,226	a BRL		33,877,643
	b Index Linked, 6.00%, 8/15/16		14,388	a BRL		16,180,512
	b Index Linked, 6.00%, 5/15/17		202	a BRL		227,913
	b Index Linked, 6.00%, 8/15/18		15,665	a BRL		17,590,648
	b Index Linked, 6.00%, 8/15/22		14,400	a BRL		16,046,254
	b Index Linked, 6.00%, 5/15/45		10,825	a BRL		11,740,325
	senior note, 10.00%, 1/01/19		21,390	a BRL		9,112,338
						165,908,683
	Canada 3.2%
	Government of Canada,
	2.25%, 8/01/14		35,099,000	CAD		32,948,859
	1.00%, 11/01/14		20,887,000	CAD		19,585,149
	2.00%, 12/01/14		17,861,000	CAD		16,820,106
	1.00%, 2/01/15		48,972,000	CAD		45,929,303
						115,283,417
	Hungary 4.7%
	Government of Hungary,
	7.75%, 8/24/15		672,690,000	HUF		3,159,979
	5.50%, 2/12/16		436,800,000	HUF		2,032,286
	5.50%, 12/22/16		258,730,000	HUF		1,222,761
	4.125%, 2/19/18		14,310,000			14,927,119
	4.00%, 4/25/18		609,130,000	HUF		2,781,366
	6.50%, 6/24/19		1,037,370,000	HUF		5,241,835
	7.50%, 11/12/20		317,540,000	HUF		1,697,859
	5.375%, 2/21/23		26,430,000			28,453,216
	A, 8.00%, 2/12/15		280,000,000	HUF		1,281,842
	A, 6.75%, 11/24/17		2,394,300,000	HUF		11,903,159
	A, 5.50%, 12/20/18		446,060,000	HUF		2,159,323
	A, 7.00%, 6/24/22		1,272,650,000	HUF		6,730,864
	A, 6.00%, 11/24/23		613,400,000	HUF		3,076,100
	B, 6.75%, 2/24/17		597,480,000	HUF		2,916,107
	B, 5.50%, 6/24/25		2,583,860,000	HUF		12,542,547
	D, 6.75%, 8/22/14		923,770,000	HUF		4,109,561
	senior note, 6.25%, 1/29/20		6,420,000			7,274,662
	senior note, 6.375%, 3/29/21		14,820,000			16,950,375
	c senior note, Reg S, 3.50%, 7/18/16		1,055,000	EUR		1,498,046
	c senior note, Reg S, 4.375%, 7/04/17		7,480,000	EUR		10,995,869
	c senior note, Reg S, 5.75%, 6/11/18		14,475,000	EUR		22,498,864
	c senior note, Reg S, 3.875%, 2/24/20		3,120,000	EUR		4,560,983
						168,014,723

Semiannual Report TGB-9

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Templeton Global Bond VIP Fund (continued)
		Principal Amount*			Value
	Foreign Government and Agency Securities (continued)
	Iceland 0.2%
d	Government of Iceland, 144A, 5.875%, 5/11/22		7,660,000		$	8,461,696
	Indonesia 2.4%
	Government of Indonesia,
	FR31, 11.00%, 11/15/20		170,808,000,000	IDR		16,578,898
	FR34, 12.80%, 6/15/21		208,649,000,000	IDR		22,066,113
	FR35, 12.90%, 6/15/22		67,421,000,000	IDR		7,216,548
	FR36, 11.50%, 9/15/19		31,754,000,000	IDR		3,087,959
	FR39, 11.75%, 8/15/23		5,491,000,000	IDR		567,396
	FR40, 11.00%, 9/15/25		46,856,000,000	IDR		4,672,101
	FR43, 10.25%, 7/15/22		69,179,000,000	IDR		6,512,103
	FR44, 10.00%, 9/15/24		4,454,000,000	IDR		419,382
	FR46, 9.50%, 7/15/23		226,780,000,000	IDR		20,553,003
	FR48, 9.00%, 9/15/18		16,920,000,000	IDR		1,493,520
	senior bond, FR53, 8.25%, 7/15/21		11,270,000,000	IDR		958,658
	Indonesia Retail Bond, senior note, 8.50%, 10/15/16		3,358,000,000	IDR		289,006
						84,414,687
	Ireland 8.8%
	Government of Ireland,
	5.50%, 10/18/17		20,708,700	EUR		33,013,043
	5.90%, 10/18/19		20,597,000	EUR		35,373,847
	4.50%, 4/18/20		19,512,000	EUR		31,640,657
	5.00%, 10/18/20		58,588,000	EUR		97,948,852
	senior bond, 4.50%, 10/18/18		8,090,000	EUR		12,869,635
	senior bond, 4.40%, 6/18/19		20,943,000	EUR		33,547,165
	senior bond, 5.40%, 3/13/25		40,422,910	EUR		70,205,047
						314,598,246
	Lithuania 1.1%
d	Government of Lithuania, 144A,
	6.75%, 1/15/15		19,480,000			20,111,249
	7.375%, 2/11/20		12,690,000			15,566,442
	6.125%, 3/09/21		3,240,000			3,797,086
						39,474,777
	Malaysia 3.1%
	Government of Malaysia,
	3.434%, 8/15/14		59,260,000	MYR		18,466,383
	3.741%, 2/27/15		80,530,000	MYR		25,187,256
	3.835%, 8/12/15		54,190,000	MYR		16,992,810
	4.72%, 9/30/15		42,200,000	MYR		13,378,885
	3.197%, 10/15/15		51,120,000	MYR		15,910,722
	senior bond, 3.814%, 2/15/17		18,885,000	MYR		5,928,984
	senior bond, 4.24%, 2/07/18		44,360,000	MYR		14,116,178
						109,981,218
	Mexico 4.4%
	Government of Mexico,
	9.50%, 12/18/14		5,221,200	e MXN		41,437,453
	6.00%, 6/18/15		775,800	e MXN		6,145,120
	8.00%, 12/17/15		5,566,550	e MXN		45,850,201
	6.25%, 6/16/16		733,810	e MXN		5,967,660
	7.25%, 12/15/16		250,000	e MXN		2,091,463
	7.75%, 12/14/17		4,473,000	e MXN		38,594,167

TGB-10 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Templeton Global Bond VIP Fund (continued)
		Principal Amount*			Value
	Foreign Government and Agency Securities (continued)
	Mexico (continued)
f	Mexican Udibonos, Index Linked,
	4.50%, 12/18/14		225,369	g MXN	$	1,783,575
	5.00%, 6/16/16		577,352	g MXN		4,886,129
	3.50%, 12/14/17		578,841	g MXN		4,896,269
	4.00%, 6/13/19		397,302	g MXN		3,460,719
	2.50%, 12/10/20		312,895	g MXN		2,523,729
						157,636,485
	Peru 0.1%
	Government of Peru, senior bond, 7.84%, 8/12/20		11,090,000	PEN		4,560,613
	Philippines 0.3%
	Government of the Philippines,
	senior bond, 7.00%, 1/27/16		53,190,000	PHP		1,292,515
	senior bond, 9.125%, 9/04/16		31,840,000	PHP		812,990
	senior note, 1.625%, 4/25/16		349,310,000	PHP		7,930,112
						10,035,617
	Poland 7.4%
	Government of Poland,
	6.25%, 10/24/15		34,630,000	PLN		11,965,289
	5.00%, 4/25/16		61,000,000	PLN		20,988,813
	4.75%, 10/25/16		340,685,000	PLN		117,804,802
	5.75%, 9/23/22		48,750,000	PLN		18,775,878
	h FRN, 2.72%, 1/25/17		59,279,000	PLN		19,514,184
	h FRN, 2.72%, 1/25/21		60,135,000	PLN		19,526,151
	Strip, 1/25/16		177,077,000	PLN		56,175,267
						264,750,384
	Russia 1.6%
d	Government of Russia, senior bond, 144A, 7.50%, 3/31/30		48,523,345			56,341,669
	Serbia 0.7%
d	Government of Serbia, senior note, 144A,
	5.25%, 11/21/17		4,590,000			4,802,287
	4.875%, 2/25/20		8,800,000			8,954,000
	7.25%, 9/28/21		9,670,000			11,077,082
						24,833,369
	Singapore 0.7%
	Government of Singapore, senior note,
	3.625%, 7/01/14		21,650,000	SGD		17,366,542
	1.125%, 4/01/16		11,000,000	SGD		8,941,240
						26,307,782
	Slovenia 0.4%
d	Government of Slovenia, senior note, 144A,
	5.50%, 10/26/22		8,140,000			8,969,629
	5.85%, 5/10/23		5,030,000			5,678,115
						14,647,744
	South Korea 13.5%
	The Export-Import Bank of Korea, senior note, 4.625%, 2/20/17		230,000	EUR		345,868
	Korea Monetary Stabilization Bond,
	senior bond, 2.47%, 4/02/15		22,461,930,000	KRW		22,177,050
	senior bond, 2.80%, 8/02/15		68,737,030,000	KRW		68,063,242

Semiannual Report TGB-11

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Templeton Global Bond VIP Fund (continued)
		Principal Amount*			Value
	Foreign Government and Agency Securities (continued)
	South Korea (continued)
	senior bond, 2.81%, 10/02/15		2,932,000,000	KRW	$	2,904,218
	senior note, 2.82%, 8/02/14		31,785,420,000	KRW		31,415,428
	senior note, 2.78%, 10/02/14		13,357,000,000	KRW		13,205,519
	senior note, 2.84%, 12/02/14		22,065,270,000	KRW		21,827,153
	senior note, 2.74%, 2/02/15		47,745,950,000	KRW		47,220,463
	senior note, 2.76%, 6/02/15		51,516,200,000	KRW		50,979,860
	senior note, 2.90%, 12/02/15		54,164,800,000	KRW		53,728,432
	senior note, 2.78%, 2/02/16		20,416,550,000	KRW		20,220,737
	senior note, 2.80%, 4/02/16		34,476,970,000	KRW		34,160,988
	senior note, 2.79%, 6/02/16		10,523,000,000	KRW		10,427,430
	Korea Treasury Bond,
	senior bond, 4.00%, 3/10/16		1,283,100,000	KRW		1,296,409
	senior bond, 5.00%, 9/10/16		2,806,000,000	KRW		2,909,467
	senior note, 3.25%, 12/10/14		13,830,700,000	KRW		13,706,156
	senior note, 4.50%, 3/10/15		641,500,000	KRW		642,106
	senior note, 3.25%, 6/10/15		4,668,800,000	KRW		4,641,498
	senior note, 4.00%, 9/10/15		3,390,100,000	KRW		3,404,307
	senior note, 2.75%, 12/10/15		32,942,000,000	KRW		32,618,081
	senior note, 2.75%, 6/10/16		18,308,100,000	KRW		18,128,148
	senior note, 3.00%, 12/10/16		26,530,400,000	KRW		26,421,814
						480,444,374
	Sri Lanka 1.2%
	Government of Sri Lanka,
	8.25%, 3/01/17		41,710,000	LKR		325,132
	10.60%, 7/01/19		20,000,000	LKR		165,096
	11.20%, 7/01/22		69,990,000	LKR		579,020
	A, 11.25%, 7/15/14		773,000,000	LKR		5,941,587
	A, 11.75%, 3/15/15		8,520,000	LKR		67,520
	A, 6.50%, 7/15/15		239,920,000	LKR		1,831,593
	A, 11.00%, 8/01/15		1,349,700,000	LKR		10,773,936
	A, 8.50%, 11/01/15		144,870,000	LKR		1,130,848
	A, 6.40%, 8/01/16		109,200,000	LKR		823,414
	A, 5.80%, 1/15/17		112,300,000	LKR		827,642
	A, 7.50%, 8/15/18		25,990,000	LKR		193,922
	A, 8.00%, 11/15/18		512,300,000	LKR		3,864,332
	A, 9.00%, 5/01/21		861,720,000	LKR		6,503,316
	B, 6.40%, 10/01/16		119,100,000	LKR		895,578
	B, 8.50%, 7/15/18		146,350,000	LKR		1,130,087
	C, 8.50%, 4/01/18		444,930,000	LKR		3,444,303
	D, 8.50%, 6/01/18		633,000,000	LKR		4,893,468
						43,390,794
i	Supranational 0.5%
	Inter-American Development Bank, senior note, 7.50%, 12/05/24		200,000,000	MXN		17,992,679
	Sweden 1.5%
	Government of Sweden, 4.50%, 8/12/15		342,110,000	SEK		53,542,409
	Ukraine 3.6%
d	Financing of Infrastructure Projects State Enterprise, 144A,
	8.375%, 11/03/17		1,100,000			1,050,500
	7.40%, 4/20/18		840,000			803,775

TGB-12 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Templeton Global Bond VIP Fund (continued)
		Principal Amount*			Value
	Foreign Government and Agency Securities (continued)
	Ukraine (continued)
d	Government of Ukraine,
	144A, 9.25%, 7/24/17		46,270,000		$	46,964,050
	144A, 7.75%, 9/23/20		17,227,000			16,514,922
	senior bond, 144A, 6.58%, 11/21/16		12,541,000			12,073,221
	senior bond, 144A, 7.80%, 11/28/22		10,110,000			9,604,500
	senior note, 144A, 4.95%, 10/13/15		290,000	EUR		377,383
	senior note, 144A, 6.25%, 6/17/16		8,760,000			8,442,450
	senior note, 144A, 7.95%, 2/23/21		24,098,000			23,103,957
	senior note, 144A, 7.50%, 4/17/23		8,160,000			7,715,606
						126,650,364
	Vietnam 0.4%
d	Government of Vietnam, 144A, 6.75%, 1/29/20		13,110,000			14,901,613
	Total Foreign Government and Agency Securities (Cost $2,137,153,839)					2,302,173,343
	Short Term Investments 25.2%
	Foreign Government and Agency Securities 16.3%
	Canada 0.6%
j	Canada Treasury Bills, 7/31/14 - 9/11/14		23,550,000	CAD		22,053,785
	Malaysia 5.0%
j	Bank of Negara Monetary Notes, 7/03/14 - 6/16/15		583,025,000	MYR		178,759,314
	Mexico 4.7%
j	Mexico Treasury Bills,
	7/10/14		3,744,700	k MXN		2,883,591
	10/16/14		48,848,680	k MXN		37,318,336
	12/11/14		61,630,770	k MXN		46,852,968
	4/01/15		108,012,900	k MXN		81,327,017
						168,381,912
	Philippines 0.6%
j	Philippine Treasury Bills, 7/02/14 - 4/08/15		967,255,000	PHP		22,115,981
	Singapore 3.7%
j	Monetary Authority of Singapore Treasury Bills,
	8/01/14		56,381,000	SGD		45,217,368
	7/11/14 - 11/25/14		108,930,000	SGD		87,339,460
						132,556,828
	South Korea 1.1%
	Korea Monetary Stabilization Bond,
	senior bond, 2.72%, 9/09/14		14,437,000,000	KRW		14,269,705
	senior note, 2.66%, 6/09/15		24,216,850,000	KRW		23,943,333
						38,213,038
	Sweden 0.6%
j	Sweden Treasury Bills, 8/20/14 - 9/17/14		144,410,000	SEK		21,596,461
	Total Foreign Government and Agency Securities (Cost $580,309,606)					583,677,319
	Total Investments before Repurchase Agreements (Cost $2,717,463,445)					2,885,850,662

Semiannual Report TGB-13

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Templeton Global Bond VIP Fund (continued)
		Principal Amount*		Value
	Repurchase Agreements (Cost $316,336,298) 8.9%
	United States 8.9%
l	Joint Repurchase Agreement, 0.064%, 7/01/14 (Maturity Value $316,336,864)     BNP Paribas Securities Corp. (Maturity Value $63,893,720) Credit Suisse Securities (USA) LLC (Maturity Value $31,946,860) Deutsche Bank Securities Inc. (Maturity Value $24,019,458) HSBC Securities (USA) Inc. (Maturity Value $134,180,607) Merrill Lynch, Pierce, Fenner & Smith Inc. (Maturity Value $62,296,219)		316,336,298	$	316,336,298
	Collateralized by U.S. Government Agency Securities, 0.00% - 6.21%, 1/16/15 - 5/04/37; jU.S. Government Agency Discount Notes, 12/24/14 - 1/30/15; U.S. Government Agency Securities, Strips, 5/15/30; U.S. Treasury Bonds, 7.50% - 8.875%, 11/15/16 - 2/15/19; U.S. Treasury Notes, 0.25% - 4.50%, 7/15/15 - 4/30/18; and U.S. Treasury Notes, Index Linked, 1.375%, 7/15/18 (valued at $322,716,913)
	Total Investments (Cost $3,033,799,743) 89.7%				3,202,186,960
	Other Assets, less Liabilities 10.3%				366,914,800
	Net Assets 100.0%			$	3,569,101,760

*The principal amount is stated in U.S. dollars unless otherwise indicated.

^aPrincipal amount is stated in 1,000 Brazilian Real Units.

^bRedemption price at maturity is adjusted for inflation. See Note 1(g).

^cSecurity was purchased pursuant to Regulation S under the Securities Act of 1933, which exempts from registration securities offered and sold outside of the United States. Such a security cannot be sold in the United States without either an effective registration statement filed pursuant to the Securities Act of 1933, or pursuant to an exemption from registration. These securities have been deemed liquid under guidelines approved by the Trust’s Board of Trustees. At June 30, 2014, the aggregate value of these securities was $39,553,762, representing 1.11% of net assets.

^dSecurity was purchased pursuant to Rule 144A under the Securities Act of 1933 and may be sold in transactions exempt from registration only to qualified institutional buyers or in a public offering registered under the Securities Act of 1933. These securities have been deemed liquid under guidelines approved by the Trust’s Board of Trustees. At June 30, 2014, the aggregate value of these securities was $285,311,232, representing 7.99% of net assets.

^ePrincipal amount is stated in 100 Mexican Peso Units.

^fPrincipal amount of security is adjusted for inflation. See Note 1(g).

^gPrincipal amount is stated in Unidad de Inversion Units.

^hThe coupon rate shown represents the rate at period end.

ⁱA supranational organization is an entity formed by two or more central governments through international treaties.

^jThe security is traded on a discount basis with no stated coupon rate.

^kPrincipal amount is stated in 10 Mexican Peso Units.

^l See Note 1(c) regarding joint repurchase agreement.

TGB-14 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Templeton Global Bond VIP Fund (continued)

At June 30, 2014, the Fund had the following forward exchange contracts outstanding. See Note 1(d).

Forward Exchange Contracts

Currency	Counterpartya			Type		Quantity		Contract Amount*			Settlement Date		Unrealized Appreciation		Unrealized Depreciation
Indian Rupee		HSBC			Buy		120,016,750		2,026,163			7/03/14	$	—	$	(28,913	)
Indian Rupee		HSBC			Buy		251,448,000		4,110,004			7/07/14		71,573		—
Swedish Krona		DBAB			Buy		136,332,733		15,345,873	EUR		7/09/14		—		(612,867	)
Mexican Peso		CITI			Buy		105,786,172		7,970,207			7/10/14		175,650		—
Malaysian Ringgit		DBAB			Buy		18,006,622		5,550,404			7/14/14		53,316		—
Indian Rupee		DBAB			Buy		239,338,000		3,897,918			7/15/14		76,806		—
Malaysian Ringgit		DBAB			Buy		13,610,000		4,232,360			7/15/14		2,898		—
Euro		BZWS			Sell		2,243,000		2,932,498			7/16/14		—		(139,378	)
Euro		MSCO			Sell		9,679,000		12,627,320			7/16/14		—		(628,450	)
Euro		UBSW			Sell		17,930,000		23,415,056			7/16/14		—		(1,140,783	)
Indian Rupee		DBAB			Buy		383,041,000		6,231,653			7/17/14		127,387		—
Euro		BZWS			Sell		3,518,000		4,627,050			7/18/14		—		(191,029	)
Malaysian Ringgit		DBAB			Buy		2,637,000		815,651			7/18/14		4,822		—
Malaysian Ringgit		DBAB	��		Buy		11,455,000		2,704,841	EUR		7/18/14		—		(140,321	)
Indian Rupee		JPHQ			Buy		226,092,000		3,683,102			7/21/14		67,781		—
Euro		DBAB			Sell		1,935,000		2,538,372			7/22/14		—		(111,752	)
Euro		MSCO			Sell		12,182,000		15,957,689			7/22/14		—		(726,446	)
Indian Rupee		DBAB			Buy		79,271,000		1,285,302			7/22/14		29,585		—
Indian Rupee		JPHQ			Buy		152,363,000		2,476,018			7/22/14		51,263		—
Malaysian Ringgit		DBAB			Buy		4,160,000		1,280,867			7/22/14		13,202		—
Malaysian Ringgit		DBAB			Buy		12,933,000		3,029,870	EUR		7/22/14		—		(126,504	)
Euro		DBAB			Sell		1,759,000		2,311,361			7/23/14		—		(97,727	)
Japanese Yen		CITI			Sell		913,412,000		9,181,286			7/24/14		163,057		—
Japanese Yen		JPHQ			Sell		1,407,000,000		14,122,252			7/24/14		230,769		—
Singapore Dollar		JPHQ			Buy		5,740,000		4,493,010			7/24/14		111,352		—
Euro		DBAB			Sell		4,715,000		6,236,219			7/25/14		—		(221,395	)
Euro		GSCO			Sell		4,711,000		6,236,704			7/25/14		—		(215,432	)
Japanese Yen		JPHQ			Sell		490,100,000		4,944,262			7/25/14		105,405		—
Malaysian Ringgit		DBAB			Buy		5,058,000		1,570,466			7/25/14		2,703		—
Malaysian Ringgit		DBAB			Buy		16,628,000		3,903,470	EUR		7/25/14		—		(174,413	)
Chilean Peso		DBAB			Buy		1,967,720,000		3,551,200			7/28/14		—		(3,730	)
Euro		CITI			Sell		1,935,410		2,563,112			7/28/14		—		(87,638	)
Japanese Yen		BZWS			Sell		1,079,470,000		10,875,395			7/29/14		217,219		—
Chilean Peso		DBAB			Buy		635,690,000		1,131,725			7/30/14		14,055		—
Chilean Peso		JPHQ			Buy		675,370,000		1,209,907			7/30/14		7,393		—
Indian Rupee		HSBC			Buy		531,272,000		8,522,675			7/30/14		277,590		—
Malaysian Ringgit		JPHQ			Buy		5,318,000		1,632,139			7/30/14		21,468		—
Malaysian Ringgit		JPHQ			Buy		16,628,000		3,857,826	EUR		7/30/14		—		(113,347	)
Chilean Peso		MSCO			Buy		1,963,430,000		3,690,311			7/31/14		—		(151,747	)
Euro		JPHQ			Sell		11,263,000		14,973,201			7/31/14		—		(452,845	)
Indian Rupee		DBAB			Buy		233,568,494		3,783,766			7/31/14		84,564		—
Indian Rupee		JPHQ			Buy		60,607,000		1,018,656			7/31/14		—		(14,891	)
Malaysian Ringgit		HSBC			Buy		3,005,000		916,354			7/31/14		17,988		—
Malaysian Ringgit		JPHQ			Buy		11,703,000		3,466,939			7/31/14		171,865		—
Chilean Peso		DBAB			Buy		1,271,380,000		2,278,949			8/01/14		12,145		—
Euro		GSCO			Sell		11,263,000		14,951,745			8/01/14		—		(474,347	)
Euro		BZWS			Sell		282,898		375,646			8/04/14		—		(11,822	)
Euro		HSBC			Sell		11,263,000		14,928,318			8/04/14		—		(497,911	)
Euro		BZWS			Sell		7,003,000		9,287,659			8/05/14		—		(303,942	)
Euro		JPHQ			Sell		5,724,900		7,572,342			8/06/14		—		(268,743	)
Indian Rupee		JPHQ			Buy		21,500,000		350,877			8/06/14		4,861		—
Malaysian Ringgit		HSBC			Buy		21,208,085		6,274,923			8/06/14		317,240		—
Malaysian Ringgit		JPHQ			Buy		1,100,000		331,655			8/06/14		10,261		—
Indian Rupee		CITI			Buy		34,491,000		565,171			8/07/14		5,424		—
Indian Rupee		DBAB			Buy		217,594,000		3,562,297			8/07/14		37,432		—

Semiannual Report TGB-15

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Templeton Global Bond VIP Fund (continued)

Forward Exchange Contracts (continued)

Currency	Counterpartya		Type		Quantity		Contract Amount*			Settlement Date		Unrealized Appreciation		Unrealized Depreciation
Malaysian Ringgit		HSBC		Buy		1,320,000		393,619			8/07/14	$	16,659	$	—
Singapore Dollar		DBAB		Buy		6,207,000		4,893,490			8/07/14		85,500		—
Singapore Dollar		HSBC		Buy		6,206,000		4,894,322			8/07/14		83,866		—
Euro		CITI		Sell		1,210,637		1,611,721			8/08/14		—		(46,433	)
Euro		CITI		Sell		351,512		468,384			8/11/14		—		(13,070	)
Euro		DBAB		Sell		4,845,000		6,460,081			8/11/14		—		(175,951	)
Euro		JPHQ		Sell		6,343,900		8,447,664			8/11/14		—		(241,360	)
Malaysian Ringgit		HSBC		Buy		2,230,000		666,250			8/11/14		26,727		—
Chilean Peso		DBAB		Buy		1,145,000,000		2,028,523			8/12/14		32,526		—
Euro		GSCO		Sell		30,376,000		40,668,604			8/12/14		—		(936,495	)
Indian Rupee		DBAB		Buy		39,609,000		649,740			8/12/14		5,001		—
Indian Rupee		HSBC		Buy		42,784,000		701,822			8/12/14		5,402		—
Malaysian Ringgit		HSBC		Buy		6,100,000		1,853,146			8/12/14		42,343		—
Singapore Dollar		BZWS		Buy		1,717,028		1,351,778			8/12/14		25,551		—
Singapore Dollar		DBAB		Buy		12,363,000		9,768,489			8/12/14		148,600		—
South Korean Won		HSBC		Buy		11,980,000,000		1,018,568,902	JPY		8/12/14		1,760,301		—
Indian Rupee		HSBC		Buy		108,000,000		1,770,666			8/13/14		14,301		—
Euro		MSCO		Sell		1,962,500		2,604,218			8/15/14		—		(83,784	)
Chilean Peso		DBAB		Buy		2,188,820,000		3,887,089			8/18/14		50,485		—
Singapore Dollar		BZWS		Buy		4,886,000		3,847,244			8/18/14		72,113		—
Euro		BZWS		Sell		7,066,000		9,363,510			8/19/14		—		(314,779	)
Indian Rupee		DBAB		Buy		108,614,000		1,799,601			8/19/14		—		(6,205	)
Indian Rupee		JPHQ		Buy		358,075,000		5,936,798			8/19/14		—		(24,392	)
Japanese Yen		DBAB		Sell		838,612,000		8,543,578			8/19/14		262,362		—
Polish Zloty		DBAB		Buy		59,155,000		13,693,287	EUR		8/19/14		660,415		—
Singapore Dollar		DBAB		Buy		3,667,000		2,892,412			8/19/14		49,112		—
Singapore Dollar		HSBC		Buy		3,667,000		2,892,868			8/19/14		48,656		—
Chilean Peso		JPHQ		Buy		1,055,800,000		1,893,302			8/20/14		5,643		—
Chilean Peso		MSCO		Buy		981,300,000		1,843,960			8/20/14		—		(79,009	)
Euro		DBAB		Sell		3,964,000		5,294,081			8/20/14		—		(135,420	)
Euro		JPHQ		Sell		7,851,000		10,489,250			8/20/14		—		(264,284	)
Japanese Yen		HSBC		Sell		1,621,372,000		16,715,175			8/20/14		704,171		—
Japanese Yen		JPHQ		Sell		1,135,828,000		11,683,964			8/20/14		467,693		—
Indian Rupee		DBAB		Buy		98,937,000		1,668,527			8/21/14		—		(35,437	)
Japanese Yen		BZWS		Sell		376,247,000		3,880,435			8/22/14		164,957		—
Euro		BZWS		Sell		2,680,925		3,594,021			8/25/14		—		(78,103	)
Japanese Yen		CITI		Sell		751,731,000		7,738,515			8/25/14		314,948		—
Japanese Yen		DBAB		Sell		371,821,000		3,825,870			8/25/14		154,027		—
Japanese Yen		HSBC		Sell		746,218,000		7,662,084			8/25/14		292,959		—
Japanese Yen		BZWS		Sell		1,085,075,000		11,038,403			8/26/14		322,893		—
Japanese Yen		JPHQ		Sell		750,133,000		7,630,942			8/26/14		223,106		—
Malaysian Ringgit		HSBC		Buy		1,223,000		363,124			8/26/14		16,631		—
Swedish Krona		UBSW		Buy		30,000,000		3,417,246	EUR		8/26/14		—		(193,249	)
Chilean Peso		DBAB		Buy		1,435,490,000		2,547,001			8/27/14		33,018		—
Euro		CITI		Sell		6,136,805		8,203,374			8/27/14		—		(202,397	)
Euro		HSBC		Sell		18,537,726		24,780,677			8/27/14		—		(611,020	)
Euro		JPHQ		Sell		14,996,625		20,054,025			8/27/14		—		(487,315	)
Indian Rupee		DBAB		Buy		130,201,000		2,196,169			8/27/14		—		(49,079	)
Japanese Yen		DBAB		Sell		685,950,000		6,949,848			8/27/14		175,798		—
Japanese Yen		HSBC		Sell		1,247,125,000		12,637,176			8/27/14		321,283		—
Japanese Yen		JPHQ		Sell		751,903,000		7,628,692			8/27/14		203,328		—
Malaysian Ringgit		JPHQ		Buy		8,340,000		2,483,399			8/27/14		106,127		—
Singapore Dollar		DBAB		Buy		15,499,000		12,204,702			8/27/14		228,032		—
Chilean Peso		JPHQ		Buy		593,800,000		1,052,650			8/28/14		14,484		—
Indian Rupee		DBAB		Buy		233,568,494		3,904,848			8/28/14		—		(53,781	)
Indian Rupee		HSBC		Buy		148,257,000		2,478,095			8/28/14		—		(33,640	)

TGB-16 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Templeton Global Bond VIP Fund (continued)

Forward Exchange Contracts (continued)

Currency	Counterpartya		Type		Quantity		Contract Amount*			Settlement Date		Unrealized Appreciation		Unrealized Depreciation
Indian Rupee		JPHQ		Buy		60,607,000		1,013,715			8/28/14	$	—	$	(14,430	)
Euro		DBAB		Sell		1,058,312		1,413,270			8/29/14		—		(36,341	)
Japanese Yen		JPHQ		Sell		372,662,000		3,835,372			8/29/14		155,127		—
Euro		DBAB		Sell		1,732,000		2,293,688			9/03/14		—		(78,752	)
Indian Rupee		CITI		Buy		34,827,000		582,260			9/03/14		—		(8,630	)
Indian Rupee		DBAB		Buy		211,714,000		3,541,937			9/03/14		—		(54,829	)
Indian Rupee		HSBC		Buy		120,016,750		2,007,019			9/03/14		—		(30,242	)
Chilean Peso		DBAB		Buy		2,582,200,000		4,533,263			9/05/14		103,504		—
Euro		DBAB		Sell		8,105,300		10,696,483			9/05/14		—		(406,003	)
Chilean Peso		DBAB		Buy		1,320,220,000		2,316,988			9/08/14		52,961		—
Indian Rupee		DBAB		Buy		40,529,000		674,053			9/09/14		—		(7,209	)
Mexican Peso		HSBC		Buy		135,500,950		10,157,493			9/10/14		232,227		—
Swedish Krona		DBAB		Buy		41,300,000		4,559,405	EUR		9/10/14		—		(68,591	)
Swedish Krona		MSCO		Buy		13,064,000		1,437,037	EUR		9/11/14		—		(14,610	)
Swedish Krona		MSCO		Buy		42,305,800		4,657,203	EUR		9/12/14		—		(52,289	)
Singapore Dollar		HSBC		Buy		10,521,600		8,293,867			9/15/14		146,290		—
Swedish Krona		BZWS		Buy		24,372,000		2,689,354	EUR		9/15/14		—		(39,003	)
Swedish Krona		MSCO		Buy		28,654,000		3,162,945	EUR		9/15/14		—		(47,347	)
Swedish Krona		MSCO		Buy		21,328,100		2,350,385	EUR		9/16/14		—		(29,945	)
Chilean Peso		DBAB		Buy		2,600,220,000		4,463,897			9/17/14		199,533		—
Japanese Yen		BZWS		Sell		285,057,504		2,895,749			9/18/14		80,245		—
Euro		BZWS		Sell		678,250		906,142			9/19/14		—		(22,969	)
Singapore Dollar		HSBC		Buy		9,120,000		7,203,791			9/19/14		112,059		—
Euro		DBAB		Sell		8,070,000		10,949,537			9/23/14		—		(105,470	)
Hungarian Forint		JPHQ		Buy		1,156,013,000		3,813,337	EUR		9/23/14		—		(128,354	)
Indian Rupee		JPHQ		Buy		139,661,000		2,293,762			9/23/14		—		(1,482	)
Euro		BZWS		Sell		1,647,381		2,230,159			9/24/14		—		(26,581	)
Hungarian Forint		JPHQ		Buy		925,405,000		3,021,829	EUR		9/25/14		—		(60,863	)
Philippine Peso		JPHQ		Buy		123,740,000		2,819,064			9/25/14		15,564		—
Euro		CITI		Sell		1,532,964		2,110,324			9/26/14		10,305		—
Euro		DBAB		Sell		3,753,000		5,064,392			9/26/14		—		(76,871	)
Indian Rupee		DBAB		Buy		130,201,000		2,136,194			9/26/14		—		(304	)
Malaysian Ringgit		DBAB		Buy		11,080,500		3,390,087			9/26/14		44,520		—
Malaysian Ringgit		HSBC		Buy		11,490,000		3,513,224			9/26/14		48,315		—
South Korean Won		HSBC		Buy		9,530,000,000		8,719,122			9/26/14		665,264		—
Euro		BZWS		Sell		6,085,000		8,220,531			9/29/14		—		(115,467	)
Japanese Yen		JPHQ		Sell		285,510,329		2,905,810			9/29/14		85,606		—
Chilean Peso		DBAB		Buy		1,252,750,000		2,393,028			9/30/14		—		(149,171	)
Euro		DBAB		Sell		14,880,000		20,093,506			9/30/14		—		(291,081	)
Euro		GSCO		Sell		4,020,000		5,424,226			9/30/14		—		(82,900	)
Euro		HSBC		Sell		5,430,000		7,340,763			9/30/14		—		(97,968	)
Indian Rupee		DBAB		Buy		258,518,494		4,237,536			9/30/14		333		—
Japanese Yen		JPHQ		Sell		172,207,000		1,746,477			9/30/14		45,441		—
Swedish Krona		UBSW		Buy		302,991,000		32,894,831	EUR		10/01/14		244,321		—
Swedish Krona		DBAB		Buy		445,104,500		69,296,379			10/03/14		—		(2,738,064	)
Chilean Peso		DBAB		Buy		1,330,940,000		2,372,442			10/06/14		10,155		—
Euro		JPHQ		Sell		6,370,000		8,687,183			10/07/14		—		(39,560	)
Mexican Peso		HSBC		Buy		377,048,070		27,679,754			10/07/14		1,178,554		—
Euro		DBAB		Sell		12,680,000		17,224,258			10/09/14		—		(147,188	)
Chilean Peso		MSCO		Buy		2,645,530,000		4,751,738			10/10/14		—		(17,545	)
Mexican Peso		DBAB		Buy		259,112,000		19,136,780			10/14/14		685,623		—
Japanese Yen		JPHQ		Sell		652,895,000		6,282,004			10/17/14		—		(168,240	)
Chilean Peso		CITI		Buy		921,291,798		1,770,693			10/20/14		—		(123,542	)
Euro		HSBC		Sell		12,569,000		17,069,079			10/20/14		—		(151,158	)
Japanese Yen		JPHQ		Sell		1,233,160,000		12,562,755			10/20/14		379,464		—
Malaysian Ringgit		JPHQ		Buy		8,104,000		2,505,023			10/20/14		3,351		—

Semiannual Report TGB-17

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Templeton Global Bond VIP Fund (continued)

Forward Exchange Contracts (continued)

Currency	Counterpartya		Type		Quantity		Contract Amount*			Settlement Date		Unrealized Appreciation		Unrealized Depreciation
Japanese Yen		BZWS		Sell		735,200,000		7,538,966			10/22/14	$	275,249	$	—
Malaysian Ringgit		HSBC		Buy		14,613,000		4,556,311			10/22/14		—		(33,796	)
Chilean Peso		CITI		Buy		2,420,966,000		4,646,768			10/24/14		—		(319,974	)
Euro		DBAB		Sell		4,545,000		6,276,600			10/24/14		49,581		—
Malaysian Ringgit		DBAB		Buy		10,811,000		3,356,932			10/24/14		—		(11,484	)
Malaysian Ringgit		HSBC		Buy		7,209,825		2,226,629			10/24/14		4,440		—
Chilean Peso		BZWS		Buy		199,342,000		381,370			10/27/14		—		(25,200	)
Euro		BZWS		Sell		5,604,306		7,749,142			10/27/14		70,684		—
Chilean Peso		DBAB		Buy		398,486,000		758,732			10/29/14		—		(46,876	)
Euro		DBAB		Sell		3,319,244		4,583,909			10/31/14		36,131		—
Malaysian Ringgit		JPHQ		Buy		7,468,000		2,335,210			10/31/14		—		(25,221	)
Swedish Krona		BZWS		Buy		122,773,200		13,531,560	EUR		10/31/14		—		(185,159	)
Euro		DBAB		Sell		224,556		309,000			11/03/14		1,326		—
Euro		BZWS		Sell		1,581,109		2,138,292			11/05/14		—		(28,074	)
Japanese Yen		CITI		Sell		341,992,119		3,478,711			11/10/14		99,247		—
Euro		JPHQ		Sell		8,969,211		11,959,905			11/12/14		—		(329,701	)
Japanese Yen		HSBC		Sell		413,563,000		4,194,351			11/12/14		107,567		—
Japanese Yen		JPHQ		Sell		335,950,000		3,397,209			11/13/14		77,357		—
Japanese Yen		MSCO		Sell		300,000,000		3,019,202			11/14/14		54,579		—
Euro		DBAB		Sell		10,778,730		14,488,984			11/17/14		—		(280,358	)
Euro		MSCO		Sell		1,962,500		2,641,103			11/17/14		—		(47,974	)
Japanese Yen		CITI		Sell		429,663,000		4,339,154			11/17/14		93,070		—
Japanese Yen		SCNY		Sell		340,600,700		3,436,315			11/17/14		70,377		—
Euro		DBAB		Sell		3,953,398		5,324,831			11/19/14		—		(92,283	)
Japanese Yen		CITI		Sell		986,239,000		9,872,460			11/19/14		125,908		—
Japanese Yen		DBAB		Sell		796,770,000		7,970,888			11/19/14		96,772		—
Malaysian Ringgit		DBAB		Buy		7,197,960		2,208,844			11/19/14		15,075		—
Euro		DBAB		Sell		3,887,000		5,260,471			11/20/14		—		(65,686	)
Euro		JPHQ		Sell		15,309,581		20,722,858			11/20/14		—		(255,079	)
Japanese Yen		CITI		Sell		1,107,834,000		11,116,135			11/20/14		167,811		—
Japanese Yen		HSBC		Sell		207,909,000		2,085,116			11/20/14		30,426		—
Japanese Yen		JPHQ		Sell		715,709,000		7,176,440			11/20/14		103,346		—
Malaysian Ringgit		HSBC		Buy		4,326,000		1,328,624			11/20/14		7,879		—
Chilean Peso		DBAB		Buy		2,094,920,000		3,681,111			11/28/14		51,036		—
Euro		DBAB		Sell		837,570		1,134,907			11/28/14		—		(12,814	)
Singapore Dollar		DBAB		Buy		2,980,000		2,373,027			11/28/14		17,677		—
Chilean Peso		DBAB		Buy		790,050,000		1,385,810			12/01/14		21,298		—
Euro		DBAB		Sell		5,440,000		7,369,350			12/04/14		—		(85,277	)
Euro		HSBC		Sell		2,155,292		2,941,973			12/09/14		—		(11,568	)
Euro		SCNY		Sell		2,400,751		3,279,738			12/09/14		—		(10,172	)
Euro		JPHQ		Sell		5,095,000		7,027,712			12/15/14		45,502		—
Mexican Peso		CITI		Buy		95,083,400		7,164,750			12/16/14		78,436		—
Malaysian Ringgit		JPHQ		Buy		13,361,013		4,058,384			12/17/14		62,771		—
Mexican Peso		CITI		Buy		45,585,080		3,424,103			12/18/14		47,973		—
Malaysian Ringgit		JPHQ		Buy		14,772,000		4,472,704			12/19/14		83,118		—
Singapore Dollar		JPHQ		Buy		5,686,000		4,540,808			12/19/14		20,915		—
Japanese Yen		DBAB		Sell		1,453,310,000		14,169,165			12/22/14		—		(197,738	)
Japanese Yen		HSBC		Sell		1,455,540,000		14,169,149			12/22/14		—		(219,799	)
Singapore Dollar		HSBC		Buy		6,864,000		5,478,053			12/22/14		28,771		—
Singapore Dollar		DBAB		Buy		8,589,700		6,876,106			12/23/14		15,215		—
Japanese Yen		BZWS		Sell		696,650,000		6,718,260			12/26/14		—		(168,834	)
Japanese Yen		CITI		Sell		1,086,780,000		10,480,503			12/26/14		—		(263,423	)
Philippine Peso		JPHQ		Buy		17,950,000		408,381			12/29/14		2,551		—
Euro		DBAB		Sell		2,285,618		3,117,423			1/07/15		—		(15,152	)
Japanese Yen		DBAB		Sell		770,370,000		7,397,446			1/07/15		—		(219,266	)
Japanese Yen		GSCO		Sell		329,010,000		3,172,373			1/08/15		—		(80,605	)

TGB-18 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Templeton Global Bond VIP Fund (continued)

Forward Exchange Contracts (continued)

Currency	Counterpartya		Type		Quantity		Contract Amount*			Settlement Date		Unrealized Appreciation		Unrealized Depreciation
Malaysian Ringgit		DBAB		Buy		8,862,500		2,641,344			1/08/15	$	88,615	$	—
Malaysian Ringgit		JPHQ		Buy		5,661,200		1,689,507			1/08/15		54,340		—
Malaysian Ringgit		JPHQ		Buy		3,044,000		909,091			1/09/15		28,510		—
Chilean Peso		MSCO		Buy		2,254,600,000		4,087,753			1/12/15		—		(87,398	)
Euro		CITI		Sell		5,040,000		6,851,628			1/12/15		—		(56,174	)
Malaysian Ringgit		JPHQ		Buy		912,000		272,646			1/12/15		8,213		—
Mexican Peso		CITI		Buy		109,357,558		8,148,849			1/12/15		166,401		—
Euro		SCNY		Sell		15,572,000		21,162,504			1/13/15		—		(180,524	)
Japanese Yen		CITI		Sell		138,680,000		1,325,939			1/13/15		—		(45,275	)
Euro		DBAB		Sell		9,460,000		12,915,265			1/14/15		—		(50,707	)
Euro		JPHQ		Sell		937,000		1,280,879			1/14/15		—		(3,383	)
Japanese Yen		SCNY		Sell		415,980,000		3,981,432			1/14/15		—		(131,654	)
Japanese Yen		BZWS		Sell		1,089,820,000		10,508,959			1/15/15		—		(266,951	)
Japanese Yen		HSBC		Sell		536,380,000		5,157,500			1/15/15		—		(146,112	)
Japanese Yen		JPHQ		Sell		708,450,000		6,830,771			1/15/15		—		(174,233	)
Malaysian Ringgit		JPHQ		Buy		1,700,000		509,975			1/15/15		13,460		—
Euro		DBAB		Sell		4,856,000		6,643,979			1/16/15		—		(11,774	)
Japanese Yen		DBAB		Sell		858,140,000		8,301,876			1/16/15		—		(183,307	)
Japanese Yen		SCNY		Sell		707,660,000		6,849,041			1/16/15		—		(148,214	)
Malaysian Ringgit		JPHQ		Buy		1,856,000		559,221			1/16/15		12,211		—
Japanese Yen		JPHQ		Sell		652,895,000		6,288,781			1/20/15		—		(167,195	)
Euro		BZWS		Sell		2,638,000		3,595,594			1/21/15		—		(20,210	)
Euro		JPHQ		Sell		300,000		407,663			1/22/15		—		(3,538	)
Chilean Peso		DBAB		Buy		2,227,910,000		4,025,131			1/23/15		—		(75,986	)
Chilean Peso		DBAB		Buy		3,160,140,000		5,597,626			1/26/15		2,480		—
Japanese Yen		GSCO		Sell		944,420,000		9,135,865			1/27/15		—		(203,361	)
Japanese Yen		DBAB		Sell		897,860,782		8,793,935			1/28/15		—		(84,953	)
Japanese Yen		HSBC		Sell		1,162,462,488		11,359,272			1/28/15		—		(136,245	)
Euro		CITI		Sell		4,998,400		6,833,688			1/29/15		—		(17,717	)
Euro		DBAB		Sell		71,313,000		97,501,346			1/30/15		—		(249,289	)
Chilean Peso		DBAB		Buy		1,186,400,000		2,093,155			2/04/15		7,598		—
Malaysian Ringgit		JPHQ		Buy		9,715,000		2,870,948			2/04/15		116,668		—
Japanese Yen		JPHQ		Sell		1,719,500,000		17,030,047			2/06/15		24,655		—
Japanese Yen		SCNY		Sell		1,720,000,000		17,030,125			2/06/15		19,787		—
Euro		DBAB		Sell		1,738,000		2,350,993			2/09/15		—		(31,457	)
Euro		GSCO		Sell		2,045,000		2,850,198			2/09/15		46,913		—
Japanese Yen		BZWS		Sell		1,720,220,000		17,030,111			2/09/15		17,142		—
Japanese Yen		JPHQ		Sell		1,723,960,000		17,030,113			2/09/15		—		(19,845	)
Chilean Peso		BZWS		Buy		1,142,900,000		1,966,110			2/10/15		56,542		—
Euro		BZWS		Sell		4,929,000		6,705,658			2/10/15		—		(51,049	)
Euro		CITI		Sell		6,572,000		8,937,066			2/10/15		—		(71,877	)
Euro		HSBC		Sell		1,800,000		2,448,198			2/10/15		—		(19,254	)
Japanese Yen		CITI		Sell		366,860,000		3,613,387			2/10/15		—		(14,889	)
Polish Zloty		DBAB		Buy		17,528,000		4,100,597	EUR		2/10/15		76,845		—
South Korean Won		HSBC		Buy		21,363,430,000		19,556,417			2/10/15		1,362,640		—
Euro		BZWS		Sell		1,412,000		1,919,896			2/11/15		—		(15,693	)
Polish Zloty		BZWS		Buy		17,528,000		4,098,200	EUR		2/11/15		79,828		—
Chilean Peso		MSCO		Buy		2,590,220,000		4,500,035			2/12/15		83,209		—
Japanese Yen		GSCO		Sell		394,373,000		3,862,539			2/12/15		—		(37,912	)
Japanese Yen		HSBC		Sell		1,035,240,000		10,157,129			2/12/15		—		(81,664	)
Japanese Yen		JPHQ		Sell		1,034,700,000		10,163,748			2/12/15		—		(69,705	)
Euro		SCNY		Sell		657,000		898,921			2/13/15		—		(1,714	)
Japanese Yen		CITI		Sell		1,371,360,000		13,455,259			2/13/15		—		(107,970	)
Japanese Yen		JPHQ		Sell		686,710,000		6,722,960			2/13/15		—		(68,842	)
Malaysian Ringgit		DBAB		Buy		97,443,480		28,620,284			2/13/15		1,329,642		—
Chilean Peso		CITI		Buy		2,285,090,000		3,997,009			2/17/15		44,537		—

Semiannual Report TGB-19

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Templeton Global Bond VIP Fund (continued)

Forward Exchange Contracts (continued)

Currency	Counterpartya		Type		Quantity			Contract Amount*			Settlement Date		Unrealized Appreciation		Unrealized Depreciation
Chilean Peso		DBAB		Buy		964,250,000			1,678,124			2/17/15	$	27,306	$	—
Japanese Yen		CITI		Sell		684,870,000			6,711,780			2/17/15		—		(62,066	)
Polish Zloty		DBAB		Buy		17,528,000			4,116,487	EUR		2/17/15		52,943		—
Japanese Yen		GSCO		Sell		810,877,280			7,987,562			2/18/15		—		(32,655	)
Japanese Yen		JPHQ		Sell		831,970,000			8,193,278			2/18/15		—		(35,563	)
Singapore Dollar		HSBC		Buy		3,667,000			2,901,108			2/18/15		41,130		—
Euro		JPHQ		Sell		3,942,000			5,406,118			2/19/15		2,139		—
Malaysian Ringgit		HSBC		Buy		4,899,000			1,458,904			2/19/15		46,285		—
Euro		BZWS		Sell		6,280,000			8,629,160			2/20/15		20,035		—
Chilean Peso		MSCO		Buy		1,273,240,000			2,229,062			2/23/15		21,672		—
Euro		DBAB		Sell		11,070,000			15,216,822			2/23/15		40,941		—
Euro		GSCO		Sell		2,038,000			2,804,594			2/23/15		10,696		—
Hungarian Forint		DBAB		Buy		18,260,690,000			57,055,741	EUR		2/23/15		1,866,300		—
Chilean Peso		JPHQ		Buy		1,792,000,000			3,139,453			2/24/15		28,023		—
Japanese Yen		HSBC		Sell		385,460,000			3,778,205			2/24/15		—		(34,504	)
Chilean Peso		MSCO		Buy		1,559,200,000			2,719,456			2/25/15		36,288		—
Euro		DBAB		Sell		1,530,900			2,104,222			2/25/15		5,486		—
Japanese Yen		BZWS		Sell		343,460,000			3,353,283			2/25/15		—		(44,020	)
Japanese Yen		JPHQ		Sell		385,700,000	��		3,764,359			2/25/15		—		(50,757	)
Chilean Peso		DBAB		Buy		1,455,470,000			2,533,896			2/26/15		38,287		—
Euro		BZWS		Sell		13,673,773			18,783,180			2/26/15		37,483		—
Euro		SCNY		Sell		13,581,483			18,651,450			2/26/15		32,276		—
Japanese Yen		BZWS		Sell		1,576,550,000			15,416,019			2/26/15		—		(178,421	)
Japanese Yen		SCNY		Sell		937,086,000			9,171,113			2/26/15		—		(98,070	)
Euro		BOFA		Sell		2,694,506			3,684,198			2/27/15		—		(9,783	)
Euro		DBAB		Sell		2,579,651			3,535,928			2/27/15		—		(595	)
Japanese Yen		DBAB		Sell		229,660,000			2,253,115			2/27/15		—		(18,587	)
Malaysian Ringgit		HSBC		Buy		2,087,700			625,397			2/27/15		15,723		—
Chilean Peso		DBAB		Buy		1,253,970,000			2,164,256			3/03/15		50,847		—
Japanese Yen		JPHQ		Sell		848,300,000			8,330,768			3/03/15		—		(60,564	)
Japanese Yen		HSBC		Sell		400,800,000			3,927,487			3/04/15		—		(37,238	)
Euro		DBAB		Sell		1,536,000			2,117,606			3/05/15		11,789		—
Euro		BZWS		Sell		7,226,276			9,927,286			3/09/15		20,035		—
Euro		GSCO		Sell		21,480,000			29,508,580			3/09/15		59,420		—
Euro		HSBC		Sell		1,844,000			2,535,057			3/09/15		6,927		—
Japanese Yen		BZWS		Sell		1,712,605,900			16,747,810			3/09/15		—		(194,091	)
Euro		CITI		Sell		31,404,613			43,464,770			3/10/15		408,699		—
Euro		MSCO		Sell		5,225,000			7,236,494			3/10/15		72,962		—
Singapore Dollar		CITI		Buy		21,075,381			16,688,084			3/11/15		222,484		—
Chilean Peso		DBAB		Buy		1,284,460,000			2,183,008			3/13/15		83,953		—
Mexican Peso		CITI		Buy		30,688,400			2,312,964			3/13/15		10,927		—
Euro		JPHQ		Sell		541,000			749,734			3/16/15		7,993		—
Euro		BZWS		Sell		1,161,439			1,619,627			3/17/15		27,222		—
Euro		CITI		Sell		861,168			1,201,588			3/17/15		20,873		—
Japanese Yen		CITI		Sell		286,112,008			2,796,192			3/17/15		—		(34,364	)
Mexican Peso		CITI		Buy		25,894,900			1,896,854			3/17/15		63,511		—
Hungarian Forint		DBAB		Buy		2,348,675,000			7,360,310	EUR		3/19/15		200,979		—
Hungarian Forint		JPHQ		Buy		703,907,450			2,206,261	EUR		3/19/15		59,760		—
Japanese Yen		CITI		Sell		1,866,452,000			18,386,154			3/19/15		—		(79,314	)
Japanese Yen		MSCO		Sell		575,230,000			5,697,039			3/19/15		6,086		—
Chilean Peso		JPHQ		Buy		1,065,000,000			1,806,616			3/20/15		71,857		—
Hungarian Forint		JPHQ		Buy		2,348,992,000			7,387,464	EUR		3/20/15		164,759		—
Euro		BZWS		Sell		744,197			1,036,294			3/23/15		15,921		—
Japanese Yen		DBAB		Sell		725,287,000			7,102,579			3/24/15		—		(73,261	)
Mexican Peso		CITI		Buy		75,637,200			5,533,080			3/24/15		190,273		—
Japanese Yen		BZWS		Sell		983,714,840			9,632,663			3/25/15		—		(100,096	)

TGB-20 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Templeton Global Bond VIP Fund (continued)

Forward Exchange Contracts (continued)

Currency	Counterpartya		Type		Quantity		Contract Amount*		Settlement Date		Unrealized Appreciation		Unrealized Depreciation
Euro		DBAB		Sell		2,736,000	$	3,767,882		3/26/15	$	16,477	$	—
Malaysian Ringgit		DBAB		Buy		8,012,500		2,379,008		3/26/15		77,532		—
Malaysian Ringgit		HSBC		Buy		7,634,000		2,265,685		3/26/15		74,811		—
Euro		BZWS		Sell		6,085,000		8,403,385		3/27/15		60,029		—
Malaysian Ringgit		HSBC		Buy		7,790,000		2,319,971		3/31/15		67,667		—
Euro		DBAB		Sell		6,200,000		8,552,466		4/07/15		50,732		—
Euro		HSBC		Sell		8,692,000		11,983,443		4/10/15		64,294		—
Malaysian Ringgit		HSBC		Buy		4,010,000		1,204,023		4/10/15		24,349		—
Euro		DBAB		Sell		7,243,000		9,997,296		4/13/15		64,906		—
Euro		SCNY		Sell		4,346,000		6,007,172		4/13/15		47,464		—
Euro		JPHQ		Sell		3,907,000		5,415,297		4/14/15		57,554		—
Japanese Yen		CITI		Sell		261,800,000		2,586,279		4/15/15		—		(4,646	)
Chilean Peso		MSCO		Buy		2,370,410,000		4,180,617		4/16/15		—		(10,134	)
Euro		HSBC		Sell		6,919,000		9,607,793		4/16/15		119,495		—
Malaysian Ringgit		DBAB		Buy		16,369,588		4,942,508		4/16/15		70,244		—
Japanese Yen		BZWS		Sell		700,840,000		6,897,488		4/17/15		—		(38,618	)
Japanese Yen		JPHQ		Sell		421,090,000		4,129,831		4/21/15		—		(37,855	)
Malaysian Ringgit		JPHQ		Buy		15,728,213		4,756,756		4/21/15		58,233		—
Japanese Yen		JPHQ		Sell		496,560,000		4,870,981		4/22/15		—		(43,727	)
Chilean Peso		JPHQ		Buy		1,501,938,000		2,597,385		4/28/15		42,111		—
Euro		BZWS		Sell		6,575,679		9,116,916		4/30/15		98,487		—
Euro		SCNY		Sell		11,263,000		15,586,415		4/30/15		139,407		—
Euro		BZWS		Sell		7,026,829		9,738,201		5/05/15		100,668		—
Euro		BZWS		Sell		1,259,000		1,747,228		5/07/15		20,441		—
Euro		GSCO		Sell		2,990,000		4,150,539		5/07/15		49,592		—
Chilean Peso		MSCO		Buy		1,150,200,000		1,963,134		5/11/15		55,735		—
Japanese Yen		CITI		Sell		366,861,000		3,622,531		5/12/15		—		(9,454	)
Euro		CITI		Sell		5,658,426		7,795,614		5/13/15		34,429		—
Euro		GSCO		Sell		2,279,000		3,140,210		5/13/15		14,298		—
Euro		SCNY		Sell		629,000		865,237		5/13/15		2,491		—
Japanese Yen		GSCO		Sell		490,555,000		4,832,578		5/13/15		—		(24,064	)
Japanese Yen		SCNY		Sell		366,681,000		3,615,470		5/13/15		—		(14,782	)
Euro		GSCO		Sell		3,095,000		4,263,177		5/14/15		17,995		—
Japanese Yen		CITI		Sell		366,680,000		3,607,315		5/14/15		—		(22,975	)
Euro		BZWS		Sell		8,551,980		11,739,474		5/18/15		9,008		—
Japanese Yen		BOFA		Sell		1,105,661,700		10,890,000		5/18/15		—		(57,117	)
Japanese Yen		BOFA		Sell		1,102,846,375		10,895,000		5/19/15		—		(24,389	)
Japanese Yen		BZWS		Sell		1,105,842,500		10,895,000		5/19/15		—		(54,054	)
Japanese Yen		CITI		Sell		1,104,534,000		10,895,000		5/19/15		—		(41,099	)
Japanese Yen		HSBC		Sell		1,106,730,400		10,895,000		5/19/15		—		(62,846	)
Singapore Dollar		DBAB		Buy		11,645,100		9,320,927		5/19/15		24,731		—
Euro		GSCO		Sell		4,454,000		6,114,496		5/21/15		4,956		—
Chilean Peso		MSCO		Buy		420,740,000		740,218		5/22/15		—		(2,489	)
Euro		BZWS		Sell		11,375,532		15,597,276		5/22/15		—		(6,627	)
Malaysian Ringgit		HSBC		Buy		298,500		90,870		5/22/15		352		—
Euro		JPHQ		Sell		4,730,771		6,467,059		5/26/15		—		(22,370	)
Malaysian Ringgit		HSBC		Buy		1,229,300		374,615		5/28/15		934		—
Euro		BZWS		Sell		2,836,669		3,862,153		5/29/15		—		(29,130	)
Singapore Dollar		BZWS		Buy		21,427,761		17,077,995		5/29/15		119,175		—
Singapore Dollar		DBAB		Buy		2,980,000		2,374,029		5/29/15		17,615		—
Euro		GSCO		Sell		463,000		629,997		6/01/15		—		(5,151	)
Chilean Peso		BZWS		Buy		3,010,700,000		5,297,730		6/04/15		—		(25,220	)
Chilean Peso		MSCO		Buy		662,100,000		1,160,053		6/05/15		—		(655	)
Euro		BZWS		Sell		7,895,591		10,753,400		6/05/15		—		(78,173	)
Mexican Peso		CITI		Buy		78,317,430		5,880,658		6/08/15		15,795		—
Euro		GSCO		Sell		2,033,100		2,772,843		6/09/15		—		(16,350	)

Semiannual Report TGB-21

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Templeton Global Bond VIP Fund (continued)

Forward Exchange Contracts (continued)

Currency	Counterpartya		Type		Quantity		Contract Amount*			Settlement Date		Unrealized Appreciation		Unrealized Depreciation
Japanese Yen		CITI		Sell		1,370,500,000		13,418,909			6/09/15	$	—	$	(154,371	)
Japanese Yen		HSBC		Sell		2,052,400,000		20,093,398			6/09/15		—		(233,343	)
Mexican Peso		CITI		Buy		78,230,000		5,898,586			6/09/15		—		(9,103	)
Japanese Yen		BZWS		Sell		1,689,110,000		16,542,468			6/10/15		—		(186,515	)
Japanese Yen		CITI		Sell		2,595,800,000		25,383,818			6/10/15		—		(325,042	)
Japanese Yen		HSBC		Sell		1,798,900,000		17,624,266			6/10/15		—		(192,079	)
Japanese Yen		DBAB		Sell		595,700,000		5,832,191			6/11/15		—		(67,714	)
Japanese Yen		JPHQ		Sell		1,666,680,000		16,314,089			6/11/15		—		(192,967	)
Polish Zloty		CITI		Buy		5,990,000		1,431,781	EUR		6/11/15		—		(28,151	)
Euro		GSCO		Sell		8,105,300		10,996,461			6/12/15		—		(123,382	)
Mexican Peso		CITI		Buy		159,085,880		11,896,940			6/12/15		77,347		—
Polish Zloty		DBAB		Buy		30,704,000		7,330,373	EUR		6/12/15		—		(132,820	)
Euro		DBAB		Sell		8,383,000		11,362,067			6/15/15		—		(139,016	)
Mexican Peso		CITI		Buy		68,370,400		5,118,694			6/15/15		26,483		—
Japanese Yen		CITI		Sell		310,702,000		3,054,123			6/17/15		—		(23,366	)
Japanese Yen		JPHQ		Sell		702,800,000		6,909,128			6/17/15		—		(52,072	)
Euro		BZWS		Sell		1,124,367		1,529,617			6/22/15		—		(13,043	)
Japanese Yen		DBAB		Sell		1,455,820,000		14,296,573			6/22/15		—		(124,226	)
Malaysian Ringgit		HSBC		Buy		36,880,000		11,168,312			6/22/15		82,633		—
Mexican Peso		CITI		Buy		61,535,000		4,596,280			6/22/15		32,368		—
Philippine Peso		JPHQ		Buy		251,010,000		5,697,263			6/25/15		35,522		—
South Korean Won		DBAB		Buy		21,440,000,000		20,706,973			6/29/15		181,758		—
Polish Zloty		CITI		Buy		135,806,000		43,573,652			6/30/15		283,500		—
Unrealized appreciation (depreciation)													26,169,086		(26,275,243	)
Net unrealized appreciation (depreciation)														$	(106,157	)

^aMay be comprised of multiple contracts using the same currency and settlement date.

*In U.S. dollars unless otherwise indicated.

At June 30, 2014, the Fund had the following interest rate swap contracts outstanding. See Note 1(d).

Interest Rate Swap Contracts

Description	Counterparty/ Exchange		Expiration Date		Notional Amount		Unrealized Appreciation		Unrealized Depreciation
Centrally Cleared Swaps
Receive Floating rate 3-month USD BBA LIBOR Pay Fixed rate 2.775%		DBAB		10/4/23	$	13,090,000	$	—	$	(346,044	)
Receive Floating rate 3-month USD BBA LIBOR Pay Fixed rate 2.795%		DBAB		10/4/23		13,090,000		—		(368,968	)
Receive Floating rate 3-month USD BBA LIBOR Pay Fixed rate 2.765%		HSBC		10/7/23		13,090,000		—		(329,894	)
Receive Floating rate 3-month USD BBA LIBOR Pay Fixed rate 3.668%		DBAB		10/4/43		6,370,000		—		(480,809	)
Receive Floating rate 3-month USD BBA LIBOR Pay Fixed rate 3.687%		DBAB		10/4/43		6,370,000		—		(504,390	)
Receive Floating rate 3-month USD BBA LIBOR Pay Fixed rate 3.675%		HSBC		10/7/43		6,370,000		—		(487,920	)
Centrally Cleared Swaps unrealized appreciation (depreciation)								—		(2,518,025	)
OTC Swaps
Receive Floating rate 3-month USD BBA LIBOR Pay Fixed rate 3.558%		JPHQ		3/4/21	$	3,240,000	$	—	$	(334,109	)
Receive Floating rate 3-month USD BBA LIBOR Pay Fixed rate 3.523%		DBAB		3/28/21		14,630,000		—		(1,442,766	)

TGB-22 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Templeton Global Bond VIP Fund (continued)

Interest Rate Swap Contracts (continued)

Description	Counterparty/ Exchange		Expiration Date		Notional Amount		Unrealized Appreciation		Unrealized Depreciation
Receive Floating rate 3-month USD BBA LIBOR Pay Fixed rate 4.347%		CITI		2/25/41	$	7,460,000	$	—	$	(1,556,877	)
Receive Floating rate 3-month USD BBA LIBOR Pay Fixed rate 4.349%		JPHQ		2/25/41		7,460,000		—		(1,560,637	)
Receive Floating rate 3-month USD BBA LIBOR Pay Fixed rate 4.320%		JPHQ		2/28/41		5,600,000		—		(1,146,436	)
Receive Floating rate 3-month USD BBA LIBOR Pay Fixed rate 4.299%		JPHQ		3/1/41		1,870,000		—		(371,892	)
OTC Swaps unrealized appreciation (depreciation)								—		(6,412,717	)
Total Interest Rate Swaps unrealized appreciation (depreciation)								—		(8,930,742	)
Net unrealized appreciation (depreciation)									$	(8,930,742	)

See Abbreviations on page TGB-37.

The accompanying notes are an integral part of these financial statements.    |   Semiannual Report TGB-23

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Financial Statements

Statement of Assets and Liabilities

June 30, 2014 (unaudited)

	Templeton Global Bond VIP Fund
Assets:
Investments in securities:
Cost - Unaffiliated issuers	$	2,717,463,445
Cost - Repurchase agreements		316,336,298
Total cost of investments	$	3,033,799,743
Value - Unaffiliated issuers	$	2,885,850,662
Value - Repurchase agreements		316,336,298
Total value of investments		3,202,186,960
Cash		295,748,898
Restricted cash (Note 1e)		4,160,000
Foreign currency, at value (cost $20,661,415)		20,782,477
Receivables:
Investment securities sold		11,479,755
Capital shares sold		7,307,574
Interest		36,068,916
Due from brokers		9,689,309
Unrealized appreciation on forward exchange contracts		26,169,086
Other assets		1,549
Total assets		3,613,594,524
Liabilities:
Payables:
Capital shares redeemed		1,727,492
Management fees		1,324,328
Distribution fees		1,359,836
Variation margin		191,903
Due to Brokers		4,160,000
Unrealized depreciation on forward exchange contracts		26,275,243
Unrealized depreciation on OTC swap contracts		6,412,717
Deferred tax		1,782,818
Accrued expenses and other liabilities		1,258,427
Total liabilities		44,492,764
Net assets, at value	$	3,569,101,760
Net assets consist of:
Paid-in capital	$	3,428,853,008
Distributions in excess of net investment income		(22,970,846	)
Net unrealized appreciation (depreciation)		157,801,357
Accumulated net realized gain (loss)		5,418,241
Net assets, at value	$	3,569,101,760

TGB-24 Semiannual Report   |    The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL STATEMENTS

Statement of Assets and Liabilities (continued)

June 30, 2014 (unaudited)

	Templeton Global Bond VIP Fund
Class 1:
Net assets, at value	$	314,705,377
Shares outstanding		16,758,260
Net asset value and maximum offering price per share	$	18.78
Class 2:
Net assets, at value	$	3,137,403,256
Shares outstanding		172,133,980
Net asset value and maximum offering price per share	$	18.23
Class 4:
Net assets, at value	$	116,993,127
Shares outstanding		6,278,192
Net asset value and maximum offering price per share	$	18.63

The accompanying notes are an integral part of these financial statements.    |   Semiannual Report TGB-25

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL STATEMENTS

Statement of Operations

for the six months ended June 30, 2014 (unaudited)

	Templeton Global Bond VIP Fund
Investment income:
Interest (net of foreign taxes $1,449,591)	$	62,608,345
Expenses:
Management fees (Note 3a)		7,778,963
Distribution fees: (Note 3c)
Class 2		3,599,193
Class 3		156,081
Class 4		205,066
Custodian fees (Note 4)		593,634
Reports to shareholders		248,636
Professional fees		48,632
Trustees’ fees and expenses		6,846
Other		31,085
Total expenses		12,668,136
Expense reductions (Note 4)		(2,593	)
Net expenses		12,665,543
Net investment income		49,942,802
Realized and unrealized gains (losses):
Net realized gain (loss) from:
Investments		3,326,708
Foreign currency transactions		8,488,773
Swap contracts		(2,061,842	)
Net realized gain (loss)		9,753,639
Net change in unrealized appreciation (depreciation) on:
Investments		71,024,415
Translation of other assets and liabilities denominated in foreign currencies		(22,152,346	)
Change in deferred taxes on unrealized appreciation		(122,498	)
Net change in unrealized appreciation (depreciation)		48,749,571
Net realized and unrealized gain (loss)		58,503,210
Net increase (decrease) in net assets resulting from operations	$	108,446,012

TGB-26 Semiannual Report   |    The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL STATEMENTS

Statements of Changes in Net Assets

	Templeton Global Bond VIP Fund
	Six Months Ended June 30, 2014 (unaudited)			Year Ended December 31, 2013
Increase (decrease) in net assets:
Operations:
Net investment income	$	49,942,802		$	100,648,197
Net realized gain (loss) from investments, foreign currency transactions and swap contracts		9,753,639			47,113,794
Net change in unrealized appreciation (depreciation) on investments, translation of other assets and liabilities denominated in foreign currencies and deferred taxes		48,749,571			(98,508,111	)
Net increase (decrease) in net assets resulting from operations		108,446,012			49,253,880
Distributions to shareholders from:
Net investment income and net foreign currency gains:
Class 1		(15,858,865	)		(14,463,879	)
Class 2		(156,385,457	)		(128,696,606	)
Class 3		—			(9,351,774	)
Class 4		(5,645,270	)		(7,129,387	)
Net realized gains:
Class 1		—			(3,587,066	)
Class 2		—			(33,227,731	)
Class 3		—			(2,438,218	)
Class 4		—			(1,906,223	)
Total distributions to shareholders		(177,889,592	)		(200,800,884	)
Capital share transactions: (Note 2)
Class 1		40,004,185			(13,273,114	)
Class 2		374,327,544			529,969,403
Class 3		(195,888,546	)		4,794,164
Class 4		831,948			(37,369,362	)
Total capital share transactions		219,275,131			484,121,091
Redemption fees		1,163			7,288
Net increase (decrease) in net assets		149,832,714			332,581,375
Net assets:
Beginning of period		3,419,269,046			3,086,687,671
End of period	$	3,569,101,760		$	3,419,269,046
Undistributed net investment income (distributions in excess of net investment income) included in net assets:
End of period	$	(22,970,846	)	$	104,975,944

The accompanying notes are an integral part of these financial statements.    |   Semiannual Report TGB-27

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Notes to Financial Statements (unaudited)

Templeton Global Bond VIP Fund

1. Organization and Significant Accounting Policies

Franklin Templeton Variable Insurance Products Trust (Trust) is registered under the Investment Company Act of 1940, as amended, (1940 Act) as an open-end management investment company, consisting of twenty separate funds and applies the specialized accounting and reporting guidance in U.S. Generally Accepted Accounting Principles (U.S. GAAP). The Templeton Global Bond VIP Fund (Fund) is included in this report. The financial statements of the remaining funds in the Trust are presented separately. Shares of the Fund are generally sold only to insurance company separate accounts to fund the benefits of variable life insurance policies or variable annuity contracts. The Fund offers three classes of shares: Class 1, Class 2, and Class 4. Effective May 1, 2014, all Class 3 shares were converted to Class 2. Each class of shares differs by its distribution fees, voting rights on matters affecting a single class and its exchange privilege.

Effective May 1, 2014, the Templeton Global Bond Securities Fund was renamed the Templeton Global Bond VIP Fund.

The following summarizes the Fund’s significant accounting policies.

a. Financial Instrument Valuation

The Fund’s investments in financial instruments are carried at fair value daily. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. The Fund calculates the net asset value per share at the close of the New York Stock Exchange (NYSE), generally at 4 p.m. Eastern time (NYSE close) on each day the NYSE is open for trading. Under compliance policies and procedures approved by the Trust’s Board of Trustees (the Board), the Fund’s administrator has responsibility for oversight of valuation, including leading the cross-functional Valuation and Liquidity Oversight Committee (VLOC). The VLOC provides administration and oversight of the Fund’s valuation policies and procedures, which are approved annually by the Board. Among other things, these procedures allow the Fund to utilize independent pricing services, quotations from securities and financial instrument dealers, and other market sources to determine fair value.

Debt securities generally trade in the over-the-counter (OTC) market rather than on a securities exchange. The Fund’s pricing services use multiple valuation techniques to determine fair value. In instances where sufficient market activity exists, the

pricing services may utilize a market-based approach through which quotes from market makers are used to determine fair value. In instances where sufficient market activity may not exist or is limited, the pricing services also utilize proprietary valuation models which may consider market characteristics such as benchmark yield curves, credit spreads, estimated default rates, anticipated market interest rate volatility, coupon rates, anticipated timing of principal repayments, underlying collateral, and other unique security features in order to estimate the relevant cash flows, which are then discounted to calculate the fair value. Securities denominated in a foreign currency are converted into their U.S. dollar equivalent at the foreign exchange rate in effect at the NYSE close on the date that the values of the foreign debt securities are determined. Repurchase agreements are valued at cost, which approximates fair value.

Derivative financial instruments (derivatives) listed on an exchange are valued at the official closing price of the day. Certain derivatives trade in the OTC market. The Fund’s pricing services use various techniques including industry standard option pricing models and proprietary discounted cash flow models to determine the fair value of those instruments. The Fund’s net benefit or obligation under the derivative contract, as measured by the fair value of the contract, is included in net assets.

The Fund has procedures to determine the fair value of financial instruments for which market prices are not reliable or readily available. Under these procedures, the VLOC convenes on a regular basis to review such financial instruments and considers a number of factors, including significant unobservable valuation inputs, when arriving at fair value. The VLOC primarily employs a market-based approach which may use related or comparable assets or liabilities, recent transactions, market multiples, book values, and other relevant information for the investment to determine the fair value of the investment. An income-based valuation approach may also be used in which the anticipated future cash flows of the investment are discounted to calculate fair value. Discounts may also be applied due to the nature or duration of any restrictions on the disposition of the investments. Due to the inherent uncertainty of valuations of such investments, the fair values may differ significantly from the values that would have been used had an active market existed. The VLOC employs various methods for calibrating these valuation approaches including a regular review of key inputs and assumptions, transactional back-testing or disposition analysis, and reviews of any related market activity.

TGB-28 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Templeton Global Bond VIP Fund (continued)

b. Foreign Currency Translation

Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars based on the exchange rate of such currencies against U.S. dollars on the date of valuation. The Fund may enter into foreign currency exchange contracts to facilitate transactions denominated in a foreign currency. Purchases and sales of securities, income and expense items denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date. Portfolio securities and assets and liabilities denominated in foreign currencies contain risks that those currencies will decline in value relative to the U.S. dollar. Occasionally, events may impact the availability or reliability of foreign exchange rates used to convert the U.S. dollar equivalent value. If such an event occurs, the foreign exchange rate will be valued at fair value using procedures established and approved by the Board.

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

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

c. Joint Repurchase Agreement

The Fund enters into a joint repurchase agreement whereby its uninvested cash balance is deposited into a joint cash account with other funds managed by the investment manager or an affiliate of the investment manager and is used to invest in one or more repurchase agreements. The value and face amount of the joint repurchase agreement are allocated to the funds based on their pro-rata interest. A repurchase agreement is accounted for as a loan by the Fund to the seller, collateralized by securities which are delivered to the Fund’s custodian. The fair value, including accrued interest, of the initial collateralization is required to be at least 102% of the dollar amount invested by

the funds, with the value of the underlying securities marked to market daily to maintain coverage of at least 100%. Repurchase agreements are subject to the terms of Master Repurchase Agreements (MRAs) with approved counterparties (sellers). The MRAs contain various provisions, including but not limited to events of default and maintenance of collateral for repurchase agreements. In the event of default by either the seller or the Fund, certain MRAs may permit the non-defaulting party to net and close-out all transactions, if any, traded under such agreements. The Fund may sell securities it holds as collateral and apply the proceeds towards the repurchase price and any other amounts owed by the seller to the Fund in the event of default by the seller. This could involve costs or delays in addition to a loss on the securities if their value falls below the repurchase price owed by the seller. The joint repurchase agreement held by the Fund at period end, as indicated in the Statement of Investments, had been entered into on June 30, 2014.

d. Derivative Financial Instruments

The Fund invested in derivatives in order to manage risk or gain exposure to various other investments or markets. Derivatives are financial contracts based on an underlying or notional amount, require no initial investment or an initial net investment that is smaller than would normally be required to have a similar response to changes in market factors, and require or permit net settlement. Derivatives contain various risks including the potential inability of the counterparty to fulfill their obligations under the terms of the contract, the potential for an illiquid secondary market, and/or the potential for market movements which expose the Fund to gains or losses in excess of the amounts shown on the Statement of Assets and Liabilities. Realized gain and loss and unrealized appreciation and depreciation on these contracts for the period are included in the Statement of Operations.

Derivative counterparty credit risk is managed through a formal evaluation of the creditworthiness of all potential counterparties. The Fund attempts to reduce its exposure to counterparty credit risk on OTC derivatives, whenever possible, by entering into International Swaps and Derivatives Association (ISDA) master agreements with certain counterparties. These agreements contain various provisions, including but not limited to collateral requirements, events of default, or early termination. Termination events applicable to the counterparty include certain deteriorations in the credit quality of the counterparty. Termination events applicable to the Fund include failure of the Fund to maintain certain net asset levels and/or limit the decline in net

Semiannual Report TGB-29

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Templeton Global Bond VIP Fund (continued)

1. Organization and Significant Accounting Policies (continued)

d. Derivative Financial Instruments (continued)

assets over various periods of time. In the event of default or early termination, the ISDA master agreement gives the non-defaulting party the right to net and close-out all transactions traded, whether or not arising under the ISDA agreement, to one net amount payable by one counterparty to the other. However, absent an event of default or early termination, OTC derivative assets and liabilities are presented gross and not offset in the Statement of Assets and Liabilities. Early termination by the counterparty may result in an immediate payment by the Fund of any net liability owed to that counterparty under the ISDA agreement.

Collateral requirements differ by type of derivative. Collateral or initial margin requirements are set by the broker or exchange clearing house for exchange traded and centrally cleared derivatives. Initial margin deposited is held at the exchange and can be in the form of cash and/or securities. For OTC derivatives traded under an ISDA master agreement, posting of collateral is required by either the fund or the applicable counterparty if the total net exposure of all OTC derivatives with the applicable counterparty exceeds the minimum transfer amount, which typically ranges from $100,000 to $250,000, and can vary depending on the counterparty and the type of the agreement. Generally, collateral is determined at the close of fund business each day and any additional collateral required due to changes in derivative values may be delivered by the fund or the counterparty within a few business days. Collateral pledged and/or received by the fund for OTC derivatives, if any, is held in segregated accounts with the fund’s custodian/counterparty broker and can be in the form of cash and/or securities. Unrestricted cash may be invested according to the Fund’s investment objectives.

The Fund entered into OTC forward exchange contracts primarily to manage and/or gain exposure to certain foreign currencies. A forward exchange contract is an agreement between the Fund and a counterparty to buy or sell a foreign currency at a specific exchange rate on a future date.

The Fund entered into interest rate swap contracts primarily to manage interest rate risk. An interest rate swap is an agreement between the Fund and a counterparty to exchange cash flows

based on the difference between two interest rates, applied to a notional amount. These agreements may be privately negotiated in the over-the-counter market (“OTC interest rate swaps”) or may be executed on a registered exchange (“centrally cleared interest rate swaps”). For centrally cleared interest rate swaps, required initial margins are pledged by the Fund, and the daily change in fair value is accounted for as a variation margin payable or receivable on the Statement of Assets and Liabilities. Over the term of the contract, contractually required payments to be paid and to be received are accrued daily and recorded as unrealized depreciation and appreciation until the payments are made, at which time they are realized.

See Note 9 regarding other derivative information.

e. Restricted Cash

At June 30, 2014, the Fund received restricted cash in connection with investments in certain derivative securities. Restricted cash is held in a segregated account with the Fund’s counterparty broker and is reflected in the Statement of Assets and Liabilities.

f. Income and Deferred Taxes

It is the Fund’s policy to qualify as a regulated investment company under the Internal Revenue Code. The Fund intends to distribute to shareholders substantially all of its taxable income and net realized gains to relieve it from federal income and if applicable, excise taxes. As a result, no provision for U.S. federal income taxes is required.

The Fund may be subject to foreign taxation related to income received, capital gains on the sale of securities and certain foreign currency transactions in the foreign jurisdictions in which it invests. Foreign taxes, if any, are recorded based on the tax regulations and rates that exist in the foreign markets in which the Fund invests. When a capital gain tax is determined to apply the Fund records an estimated deferred tax liability in an amount that would be payable if the securities were disposed of on the valuation date.

The Fund recognizes the tax benefits of uncertain tax positions only when the position is “more likely than not” to be sustained upon examination by the tax authorities based on the technical merits of the tax position. As of June 30, 2014, and for all open tax years, the Fund has determined that no liability for unrecognized tax benefits is required in the Fund’s financial statements

TGB-30 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Templeton Global Bond VIP Fund (continued)

related to uncertain tax positions taken on a tax return (or expected to be taken on future tax returns). Open tax years are those that remain subject to examination and are based on each tax jurisdiction statute of limitation.

g. Security Transactions, Investment Income, Expenses and Distributions

Security transactions are accounted for on trade date. Realized gains and losses on security transactions are determined on a specific identification basis. Interest income and estimated expenses are accrued daily. Amortization of premium and accretion of discount on debt securities are included in interest income. Distributions to shareholders are recorded on the ex-dividend date and are determined according to income tax regulations (tax basis). Distributable earnings determined on a tax basis may differ from earnings recorded in accordance with accounting principles generally accepted in the United States of America. These differences may be permanent or temporary. Permanent differences are reclassified among capital accounts to reflect their tax character. These reclassifications have no impact on net assets or the results of operations. Temporary differences are not reclassified, as they may reverse in subsequent periods.

Common expenses incurred by the Trust are allocated among the funds based on the ratio of net assets of each fund to the combined net assets of the Trust. Fund specific expenses are charged directly to the fund that incurred the expense.

Realized and unrealized gains and losses and net investment income, not including class specific expenses, are allocated daily to each class of shares based upon the relative proportion of net assets of each class. Differences in per share distributions, by class, are generally due to differences in class specific expenses.

Inflation-indexed bonds are adjusted for inflation through periodic increases or decreases in the security’s interest accruals,

face amount, or principal redemption value, by amounts corresponding to the rate of inflation as measured by an index. Any increase or decrease in the face amount or principal redemption value will be included as interest income on the Statement of Operations.

f. Accounting Estimates

The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the amounts of income and expenses during the reporting period. Actual results could differ from those estimates.

g. Redemption Fees

Redemptions and exchanges of interests in an insurance company subaccount that invested in Class 3 shares of the Fund were subject to a 1.0% short term trading fee if the interest in the subaccount had been held for less than 60 days. Such fees were retained by the Fund and accounted for as an addition to paid-in capital, allocated to each class of shares based upon the relative proportion of net assets of each class.

h. Guarantees and Indemnifications

Under the Trust’s organizational documents, its officers and trustees are indemnified by the Trust against certain liabilities arising out of the performance of their duties to the Trust. Additionally, in the normal course of business, the Trust, on behalf of the Fund, enters into contracts with service providers that contain general indemnification clauses. The Trust’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Trust that have not yet occurred. Currently, the Trust expects the risk of loss to be remote.

Semiannual Report TGB-31

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Templeton Global Bond VIP Fund (continued)

2. Shares of Beneficial Interest

At June 30, 2014, there were an unlimited number of shares authorized (without par value). Transactions in the Fund’s shares were as follows:

	Six Months Ended June 30, 2014						Year Ended December 31, 2013
	Shares			Amount			Shares			Amount
Class 1 Shares:
Shares sold		2,388,211		$	45,987,259			1,918,229		$	37,822,305
Shares issued in reinvestment of distributions		844,006			15,858,865			962,717			18,050,945
Shares redeemed		(1,142,034	)		(21,841,939	)		(3,563,965	)		(69,146,364	)
Net increase (decrease)		2,090,183		$	40,004,185			(683,019	)	$	(13,273,114	)
Class 2 Shares:
Shares sold		21,979,032		$	410,865,499			34,876,621		$	667,964,958
Shares issued in reinvestment of distributions		8,573,764			156,385,457			8,877,431			161,924,337
Shares redeemed		(10,359,769	)		(192,923,412	)		(16,008,448	)		(299,919,892	)
Net increase (decrease)		20,193,027		$	374,327,544			27,745,604		$	529,969,403
Class 3 Sharesa:
Shares sold		167,296		$	3,090,707			1,022,231		$	19,570,327
Shares issued in reinvestment of distributions		—			—			646,027			11,789,991
Shares redeemed		(10,595,103	)		(198,979,253	)		(1,409,425	)		(26,566,154	)
Net increase (decrease)		(10,427,807	)	$	(195,888,546	)		258,833		$	4,794,164
Class 4 Shares:
Shares sold		307,102		$	5,804,634			892,452		$	17,199,730
Shares issued on reinvestment of distributions		302,695			5,645,270			485,524			9,035,611
Shares redeemed		(560,738	)		(10,617,956	)		(3,385,215	)		(63,604,703	)
Net increase (decrease)		49,059		$	831,948			(2,007,239	)	$	(37,369,362	)

^aEffective May 1, 2014, all Class 3 shares were converted to Class 2.

3. Transactions With Affiliates

Franklin Resources, Inc. is the holding company for various subsidiaries that together are referred to as Franklin Templeton Investments. Certain officers and trustees of the Fund are also officers and/or directors of the following subsidiaries:

Subsidiary	Affiliation
Franklin Advisers, Inc. (Advisers)	Investment manager
Franklin Templeton Services, LLC (FT Services)	Administrative manager
Franklin Templeton Distributors, Inc. (Distributors)	Principal underwriter
Franklin Templeton Investor Services, LLC (Investor Services)	Transfer agent

TGB-32 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Templeton Global Bond VIP Fund (continued)

a. Management Fees

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

Annualized Fee Rate	Net Assets
0.625%	Up to and including $100 million
0.500%	Over $100 million, up to and including $250 million
0.450%	Over $250 million, up to and including $7.5 billion
0.440%	Over $7.5 billion, up to and including $10 billion
0.430%	Over $10 billion, up to and including $12.5 billion
0.420%	Over $12.5 billion, up to and including $15 billion
0.400%	In excess of $15 billion

b. Administrative Fees

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

c. Distribution Fees.

The Board has adopted distribution plans for Class 2, Class 3, and Class 4 shares pursuant to Rule 12b-1 under the 1940 Act. Under the Fund’s compensation distribution plans, the Fund pays Distributors for costs incurred in connection with the servicing, sale and distribution of the Fund’s shares up to 0.25%, 0.35%, and 0.35% per year of its average daily net assets of Class 2, Class 3, and Class 4, respectively. Some distribution fees are not charged on shares held by affiliates. The Board has agreed to limit the current rate to 0.25% per year for Class 3. The plan year, for purposes of monitoring compliance with the maximum annual plan rates, is February 1 through January 31.

d. Transfer Agent Fees

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

4. Expense Offset Arrangement

The Fund has entered into an arrangement with its custodian whereby credits realized as a result of uninvested cash balances are used to reduce a portion of the Fund’s custodian expenses. During the period ended June 30, 2014, the custodian fees were reduced as noted in the Statement of Operations.

5. Income Taxes

For tax purposes, capital losses may be carried over to offset future capital gains. At December 31, 2013, the Fund had long-term capital loss carryforwards of $4,268,308.

At June 30, 2014, the cost of investments and net unrealized appreciation (depreciation) for income tax purposes were as follows:

Cost of investments	$	3,050,563,904
Unrealized appreciation	$	188,957,445
Unrealized depreciation		(37,334,389	)
Net unrealized appreciation (depreciation)	$	151,623,056

Semiannual Report TGB-33

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Templeton Global Bond VIP Fund (continued)

5. Income Taxes (continued)

Differences between income and/or capital gains as determined on a book basis and a tax basis are primarily due to differing treatments of foreign currency transactions, bond discounts and premiums, and tax straddles.

6. Investment Transactions

Purchases and sales of investments (excluding short term securities) for the period ended June 30, 2014, aggregated $434,725,701 and $513,101,247, respectively.

7. Credit Risk

At June 30, 2014, the Fund had 12.87% of its portfolio invested in high yield or other securities rated below investment grade. These securities may be more sensitive to economic conditions causing greater price volatility and are potentially subject to a greater risk of loss due to default than higher rated securities.

8. Concentration of Risk.

Investing in foreign securities may include certain risks and considerations not typically associated with investing in U.S. securities, such as fluctuating currency values and changing local and regional economic, political and social conditions, which may result in greater market volatility. In addition, certain foreign securities may not be as liquid as U.S. securities.

9. Other Derivative Information

At June 30, 2014, the Fund’s investments in derivative contracts are reflected on the Statement of Assets and Liabilities as follows:

	Asset Derivatives			Liability Derivatives
Derivative Contracts Not Accounted for as Hedging Instruments	Statement of Assets and Liabilities Location	Fair Value Amount		Statement of Assets and Liabilities Location	Fair Value Amount
Interest rate contracts	Net assets consist of—net unrealized appreciation (depreciation)	$	—	Variation margin /Unrealized depreciation on swap contracts / Net assets consist of—net unrealized appreciation (depreciation)a	$	8,930,742
Foreign exchange contracts	Unrealized appreciation on forward exchange contracts		26,169,086	Unrealized depreciation on forward exchange contracts		26,275,243

^a Includes cumulative appreciation (depreciation) of centrally cleared swaps as reported in the Statement of Investments. Only current day’s variation margin is separately reported within the Statement of Assets and Liabilities.

For the period ended June 30, 2014, the effect of derivative contracts on the Fund’s Statement of Operations was as follows:

Derivative Contracts Not Accounted for as Hedging Instruments	Statement of Operations Locations	Realized Gain (Loss) for the Period			Change in Unrealized Appreciation (Depreciation) for the Period
Interest rate contracts	Net realized gain (loss) from swap contracts / Net change in unrealized appreciation (depreciation) on investments	$	(2,061,842	)	$	(6,803,271	)
Foreign exchange contracts	Net realized gain (loss) from foreign currency transactions / Net change in unrealized appreciation (depreciation) on translation of other assets and liabilities denominated in foreign currencies		7,481,025			(21,876,711	)

TGB-34 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Templeton Global Bond VIP Fund (continued)

At June 30, 2014, the Fund’s OTC derivative assets and liabilities, are as follows:

	Gross and Net Amounts of Assets and Liabilities Presented in the Statement of Assets  and Liabilities
	Assetsa		Liabilitiesa
Derivatives
Forward Exchange Contracts	$	26,169,086	$	26,275,243
Swap Contracts		—		6,412,717
Total	$	26,169,086	$	32,687,960

^aAbsent an event of default or early termination, OTC derivative assets and liabilities are presented gross and not offset in the Statement of Assets and Liabilities.

At June 30, 2014, the Fund’s OTC derivative assets which may be offset against the Fund’s OTC derivative liabilities and collateral received from the counterparty, is as follows:

			Amounts Not Offset in the Statement of Assets & Liabilities
	Gross and Net Amounts of Assets Presented in the Statement of Assets & Liabilities		Financial Instruments Available for Offset			Financial Instruments Collateral Receiveda,b			Cash Collateral Receivedb		Net Amount (Not less than zero)
Counterparty
BOFA	$	—	$	—		$	—		$	—	$	—
BZWS		1,910,927		(1,910,927	)		—			—		—
CITI		2,879,456		(2,879,456	)		—			—		—
DBAB		8,132,537		(8,132,537	)		—			—		—
GSCO		203,870		(203,870	)		—			—		—
HSBC		8,486,722		(2,659,300	)		(5,827,422	)		—		—
JPHQ		3,668,920		(3,668,920	)		—			—		—
MSCO		330,531		(330,531	)		—			—		—
SCNY		311,802		(311,802	)		—			—		—
UBSW		244,321		(244,321	)		—			—		—
Total	$	26,169,086	$	(20,341,664	)	$	(5,827,422	)	$	—	$	—

^aAt June 30, 2014, the Fund received United Kingdom Treasury Bonds and U.S. Treasury Bonds as collateral for derivatives.

^bIn some instances, the collateral amounts disclosed in the table above were adjusted due to the requirement to limit the collateral amounts to avoid the effect of overcollateralization. Actual collateral received and/or pledged may be more than the amounts disclosed herein.

Semiannual Report TGB-35

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Templeton Global Bond VIP Fund (continued)

9. Other Derivative Information (continued)

At June 30, 2014, the Fund’s OTC derivative liabilities which may be offset against the Fund’s OTC derivative assets and collateral pledged to the counterparty, is as follows:

			Amounts Not Offset in the Statement of Assets & Liabilities
	Gross and Net Amounts of Liabilities Presented in the Statement of Assets & Liabilities		Financial Instruments Available for Offset			Financial Instruments Collateral Pledged		Cash Collateral Pledgeda			Net Amount (Not less than zero)
Counterparty
BOFA	$	91,289	$	—		$	—	$	—		$	91,289
BZWS		2,952,251		(1,910,927	)		—		—			1,041,324
CITI		3,729,837		(2,879,456	)		—		—			850,381
DBAB		9,817,848		(8,132,537	)		—		—			1,685,311
GSCO		2,232,654		(203,870	)		—		(1,190,000	)		838,784
HSBC		2,659,300		(2,659,300	)		—		—			—
JPHQ		7,305,797		(3,668,920	)		—		(740,000	)		2,896,877
MSCO		1,979,822		(330,531	)		—		(1,649,291	)		—
SCNY		585,130		(311,802	)		—		—			273,328
UBSW		1,334,032		(244,321	)		—		(1,089,711	)		—
Total	$	32,687,960	$	(20,341,664	)	$	—	$	(4,669,002	)	$	7,677,294

^aIn some instances, the collateral amounts disclosed in the table above were adjusted due to the requirement to limit the collateral amounts to avoid the effect of overcollateralization. Actual collateral received and/or pledged may be more than the amounts disclosed herein.

For the period ended June 30, 2014, the average month end fair value of derivatives represented 2.43% of average month end net assets. The average month end number of open derivative contracts for the period was 475.

See Note 1(d) regarding derivative financial instruments.

10. Credit Facility

The Fund, together with other U.S. registered and foreign investment funds (collectively, Borrowers), managed by Franklin Templeton Investments, are borrowers in a joint syndicated senior unsecured credit facility totaling $1.5 billion (Global Credit Facility) which matures on February 13, 2015. This Global Credit Facility provides a source of funds to the Borrowers for temporary and emergency purposes, including the ability to meet future unanticipated or unusually large redemption requests.

Under the terms of the Global Credit Facility, the Fund shall, in addition to interest charged on any borrowings made by the Fund and other costs incurred by the Fund, pay its share of fees and expenses incurred in connection with the implementation and maintenance of the Global Credit Facility, based upon its relative share of the aggregate net assets of all of the Borrowers, including an annual commitment fee of 0.07% based upon the unused portion of the Global Credit Facility. These fees are reflected in other expenses on the Statement of Operations. During the period ended June 30, 2014, the Fund did not use the Global Credit Facility.

11. Fair Value Measurements

The Fund follows a fair value hierarchy that distinguishes between market data obtained from independent sources (observable inputs) and the Fund’s own market assumptions (unobservable inputs). These inputs are used in determining the value of the Fund’s financial instruments and are summarized in the following fair value hierarchy:

• Level 1 – quoted prices in active markets for identical financial instruments

• Level 2 – other significant observable inputs (including quoted prices for similar financial instruments, interest rates, prepayment speed, credit risk, etc.)

• Level 3 – significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of financial instruments)

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FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Templeton Global Bond VIP Fund (continued)

The input levels are not necessarily an indication of the risk or liquidity associated with financial instruments at that level.

For movements between the levels within the fair value hierarchy, the Fund has adopted a policy of recognizing the transfers as of the date of the underlying event which caused the movement.

At June 30, 2014, all of the Fund’s investments in financial instruments carried at fair value were valued using Level 2 inputs.

12. New Accounting Pronouncements

In June 2014, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) No. 2014-11, Transfers and Servicing (Topic 860), Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures. The ASU changes the accounting for certain repurchase agreements and expands disclosure requirements related to repurchase agreements, securities lending, repurchase-to-maturity and similar transactions. The ASU is effective for interim and annual reporting periods beginning after December 15, 2014. Management is currently evaluating the impact, if any, of applying this provision.

13. Subsequent Events

The Fund has evaluated subsequent events through the issuance of the financial statements and determined that no events have occurred that require disclosure.

Abbreviations

Counterparty		Currency		Selected Portfolio
BOFA	Bank of America N.A.	BRL	Brazilian Real	FRN	Floating Rate Note
BZWS	Barclays Bank PLC	CAD	Canadian Dollar
CITI	Citigroup, Inc.	EUR	Euro
DBAB	Deutsche Bank AG	HUF	Hungarian Forint
GSCO	Goldman Sachs Bank	IDR	Indonesian Rupiah
HSBC	HSBC Bank USA N.A.	JPY	Japanese Yen
JPHQ	JP Morgan Chase & Co.	KRW	South Korean Won
MSCO	Morgan Stanley	LKR	Sri Lankan Rupee
SCNY	Standard Chartered Bank	MXN	Mexican Peso
UBSW	UBS AG	MYR	Malaysian Ringgit
		PEN	Peruvian Nuevo Sol
		PHP	Philippine Peso
		PLN	Polish Zloty
		SEK	Swedish Krona
		SGD	Singapore Dollar

Semiannual Report TGB-37

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

TAX INFORMATION (UNAUDITED)

Templeton Global Bond VIP Fund

At December 31, 2013, more than 50% of the Fund’s total assets were invested in securities of foreign issuers. In most instances, foreign taxes were withheld from income paid to the Fund on these investments. As shown in the table below, the Fund hereby reports to shareholders the foreign source income and foreign taxes paid, pursuant to Section 853 of the Internal Revenue Code (Code). This written statement will allow shareholders of record on June 12, 2014, to treat their proportionate share of foreign taxes paid by the Fund as having been paid directly by them. The shareholder shall consider these amounts as foreign taxes paid in the tax year in which they receive the Fund distribution.

The following table provides a detailed analysis of foreign tax paid and foreign source income as reported by the Fund, to Class 1, Class 2, and Class 4 shareholders of record.

Class	Foreign Tax Paid Per Share	Foreign Source Income Per Share
Class 1	$0.0152	$0.7142
Class 2	$0.0152	$0.6850
Class 4	$0.0152	$0.6557

Foreign Tax Paid Per Share (Column 1) is the amount per share available to you, as a tax credit (assuming you held your shares in the Fund for a minimum of 16 days during the 31-day period beginning 15 days before the ex-dividend date of the Fund’s distribution to which the foreign taxes relate), or, as a tax deduction.

Foreign Source Income Per Share (Column 2) is the amount per share of income dividends attributable to foreign securities held by the Fund, plus any foreign taxes withheld on these dividends.

TGB-38 Semiannual Report

Templeton Growth VIP Fund

(Formerly, Templeton Growth Securities Fund)

This semiannual report for Templeton Growth VIP Fund covers the period ended June 30, 2014.

Class 2 Performance Summary as of June 30, 2014

Templeton Growth VIP Fund – Class 2 delivered a +5.03% total return for the six-month period ended June 30, 2014.

Performance reflects the Fund’s Class 2 operating expenses, but does not include any contract fees, expenses or sales charges. If they had been included, performance would be lower. These charges and deductions, particularly for variable life policies, can have a significant effect on contract values and insurance benefits. See the contract prospectus for a complete description of these expenses, including sales charges.

Performance data represent past performance, which does not guarantee future results. Investment return and principal value will fluctuate, and you may have a gain or loss when you sell your shares. Current performance may differ from figures shown.

Semiannual Report TG-1

TEMPLETON GROWTH VIP FUND

Fund Goal and Main Investments: Templeton Growth VIP Fund seeks long-term capital growth. Under normal market conditions, the Fund invests predominantly in equity securities of companies located anywhere in the world, including emerging markets.

Fund Risks: All investments involve risks, including possible loss of principal. Special risks are associated with foreign investing, including currency fluctuations, economic instability and political developments; investments in emerging markets involve heightened risks related to the same factors. To the extent the Fund focuses on particular countries, regions, industries, sectors or types of investments from time to time, it may be subject to greater risks of adverse developments in such areas of focus than a fund that invests in a wider variety of countries, regions, industries, sectors or investments. The Fund is actively managed but there is no guarantee that the manager’s investment decisions will produce the desired results. The Fund’s prospectus also includes a description of the main investment risks.

Performance Overview

You can find the Fund’s six-month total return in the Performance Summary. For comparison, the Fund’s benchmarks, the MSCI All Country World Index (ACWI) and the MSCI World Index, produced total returns of +6.50% and +6.52% for the period under review.¹

Economic and Market Overview

The global economy grew moderately during the six months under review as many developed markets continued to recover and many emerging markets recorded continued growth. Major developed market central banks reaffirmed their accommodative monetary policies in an effort to support ongoing recovery. Several emerging market central banks cut interest rates to boost economic growth, while others raised rates to control inflation and currency depreciation.

U.S. economic growth and employment trends were generally encouraging during the period, despite severe weather across many states that limited economic activity in the first quarter of 2014. The U.S. Federal Reserve Board (Fed) began reducing bond purchases by $10 billion a month in January 2014, based on earlier largely positive economic and employment data. The Fed continued reducing asset purchases during the period. In this

environment, defensive sectors, such as health care and utilities, and sectors benefiting from rising oil prices, including energy, led market returns, while more cyclical sectors, such as financials and consumer discretionary, lagged the broader market.

Outside the U.S., the U.K. economy grew relatively well in the first half of 2014, supported by the services and manufacturing sectors. In the second quarter, a preliminary estimate registered expansion at percrisis levels. The Japanese economy grew strongly during the first quarter of 2014 as consumption rose ahead of a sales tax increase in April. The Bank of Japan kept its monetary policy unchanged as it maintained an upbeat inflation forecast and reiterated that the economy continued to recover moderately, despite challenges resulting from the sales tax increase. Japan’s growth weakened, however, in the second quarter. The Japanese government proposed a reduction in corporate taxes as part of its economic reforms in an effort to avoid deflation and facilitate growth. Although out of recession, the eurozone experienced deflationary risks and weak employment trends. The region’s first-quarter economic growth was softer than what many observers had expected. In the second quarter, concerns arose about the potential negative impacts to growth from the crisis in Ukraine and tension in the Middle East. Toward period-end, the European Central Bank (ECB) reduced its main interest rate and, for the first time, set a negative deposit rate.

1. Source: © 2014 Morningstar. One cannot invest directly in an index, and an index is not representative of the Fund’s portfolio. Please see Index Descriptions following the Fund Summaries.

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TEMPLETON GROWTH VIP FUND

In several emerging markets, including China, growth remained solid though moderating, as domestic demand and exports were relatively soft. Emerging market equities generally rose for the six-month period, despite volatility resulting from concerns about moderating economic growth, rising geopolitical tensions in certain regions and the potential impact of the Fed’s tapering its asset purchases. Many emerging market currencies depreciated against the U.S. dollar, leading central banks in several countries, including Brazil, India, Turkey and South Africa, to raise interest rates in an effort to curb inflation and support their currencies.

Stocks in developed markets advanced overall during the period amid a generally accommodative monetary policy environment, continued strength in corporate earnings and signs of an economic recovery. Global government and corporate bonds delivered solid performance as interest rates in many developed market countries remained low. Gold prices rose during the period and oil prices increased amid supply concerns related to the crises in Ukraine and Iraq. The U.S. dollar was relatively flat compared to most currencies.

Investment Strategy

Our investment philosophy is bottom up, value oriented and long term. In choosing investments, we will focus on the market price of a company’s securities relative to our evaluation of the company’s potential long-term earnings, asset value and cash flow. Among factors we may consider are a company’s historical value measures, including price/earnings ratio, profit margins and liquidation value. We do in-depth research to construct a bargain list from which we buy.

Manager’s Discussion

The Fund trailed the benchmark MSCI ACWI during the review period but delivered solid absolute returns and remained ahead of the benchmark on major medium- and long-term time horizons. Among the Fund’s biggest detractors during the period were holdings in the sectors and regions that most contributed to relative performance in recent years. However, we remained favorable on these core holdings as the process of value recognition continued to unfold. More broadly, we saw considerable performance potential across our portfolio as our analysis

suggested the market continued to underappreciate the long-term earnings, asset growth and cash-flow potential of our holdings.

The Fund’s European holdings delivered absolute gains during the first half of 2014 but weighed on performance relative to the benchmark. Since the European financial crisis, financial markets have stabilized, an early-stage economic recovery was under way, austerity was largely over, and, despite occasionally alarming headlines, political support for pro-European reform policies endured. In a development hardly conceivable to many just two years ago, the governments of Spain and Ireland were borrowing at lower rates than the U.S. government during the reporting period. Loan growth remained anemic in this early recovery, but we were encouraged by the ECB’s recent efforts to cut interest rates and ease credit access for small and medium enterprises. Overall, corporate fundamentals improved, but earnings and equity valuations remained depressed. In fact, corporate free cash-flow yields in Europe were higher than junk bond yields, a highly unusual occurrence. Deflationary pressures and geopolitical risks remain, and we expect the region to navigate additional uncertainty and volatility as the process of stabilization and repair proceeds unevenly. However, we believe valuations still fail to reflect the long-term recovery potential of our diverse European holdings.

From a sector perspective, industrials stocks were among the Fund’s largest detractors during the review period.² U.K. services firm Serco Group’s management issued a profit warning stemming from the U.K. government’s exclusion of the company as a contracting partner while the government investigated allegations of wrongdoing. This was the company’s third profit warning in a year, and shares posted their biggest price decline in two decades. Serco was the market’s most shorted support services stock, leading us to believe we were near the point of maximum pessimism. In our view, Serco took numerous successful steps to restore its reputation and business integrity, including replacing its chief executive officer, and U.K. government outsourcing remained an attractive growth segment. A stake in Dutch lighting giant Koninklijke Philips also pressured industrials performance. The company’s share price declined from a recent multi-year high after a stronger euro pressured first-quarter earnings. Currency fluctuations aside,

Semiannual Report TG-3

2. The industrials sector comprises aerospace and defense, air freight and logistics, airlines, commercial services and supplies, construction and engineering, electrical equipment, industrial conglomerates, machinery and professional services in the SOI.

TEMPLETON GROWTH VIP FUND

Philips’s restructuring efforts have improved fundamentals and profitability across core business lines, and its share price has recovered considerably over the past two years from depressed levels.

Financials is another long-term sector contributor that experienced adversity during the six months in review.³ The sector was responsible for many of the Fund’s largest detractors during a period when investors rotated out of cyclical stocks and increasing regulatory scrutiny impacted industry sentiment. French lender BNP Paribas and U.S. bank Citigroup were subject to U.S. regulatory censure, with the former fined a record amount for violating international business sanctions and the latter fined for alleged offenses relating to its precrisis mortgage operations. Despite these headwinds, capital ratios at the banks still appeared adequate to us, they maintained leadership positions in key markets and share prices traded below tangible book value, keeping us optimistic on their long-term prospects. In our view, rebuilt capital ratios and an improving economic outlook could allow European banks including BNP Paribas to lower loan-loss provisions, eventually boosting earnings and returns on tangible equity. Expectations also rose for enhanced shareholder returns through share buybacks and dividends, and our analysis suggested that investors underestimated the total return potential of certain European banks. Elsewhere, we added to our financials holdings in Asian and emerging markets, as well as a diverse range of financials in developed markets.

Conversely, consumer discretionary stocks contributed to performance during the six months under review.⁴ During a relatively weak period for consumer stocks, our sector holdings notably outperformed those of the broader benchmark. Diverse holdings such as U.S. entertainment firm Walt Disney, French tire manufacturer Michelin (Cie Generale des Etablissements Michelin) and Japanese automaker Nissan delivered double-digit absolute gains and benefited relative performance. Although we selectively reduced exposure to the consumer discretionary sector in recent periods to realize gains, in our view, continued value remained among firms where cyclical pressures and short-term skepticism were depressing share prices well below our assessment of their long-term intrinsic business values.

Top 10 Holdings
6/30/14
Company Sector/Industry, Country	% of Total Net Assets
Samsung Electronics Co. Ltd. Semiconductors & Semiconductor Equipment, South Korea		2.5%
Microsoft Corp. Software, U.S.		2.3%
Total SA, B Oil, Gas & Consumable Fuels, France		2.1%
Roche Holding AG Pharmaceuticals, Switzerland		1.8%
Citigroup Inc. Banks, U.S.		1.7%
Teva Pharmaceutical Industries Ltd., ADR Pharmaceuticals, Israel		1.7%
Hewlett-Packard Co. Technology Hardware, Storage & Peripherals, U.S.		1.7%
Comcast Corp., Special A Media, U.S.		1.7%
Deutsche Lufthansa AG Airlines, Germany		1.7%
Talisman Energy Inc. Oil, Gas & Consumable Fuels, Canada		1.6%

The dollar value, number of shares or principal amount, and names of all portfolio holdings are listed in the Fund’s Statement of Investments (SOI).

Encouragingly, an underweighted position in energy, where we found new bargains, also contributed to relative and absolute performance during the period.⁵ U.S. oilfield services firms Halliburton and Baker Hughes were among the key overweighted energy stocks, with share prices rallying as pessimism surrounding margins and supply faded amid improvements in the U.S. pressure pumping market. With oil prices rising above the estimated marginal cost of supply and U.S. pumping activity near all-time highs, our thesis on these highly cyclical stocks appeared to be maturing. We remained favorable toward oil services stocks given the strong demand for their expertise and technology as major and state-owned oil companies attempted to extract hydrocarbons from increasingly challenging locations. Among oil services and integrated oil firms, we found opportunities attractive to us in Europe, where energy stocks traded at their lowest cyclically adjusted earnings multiples in 30 years. We were encouraged to see many major oil companies

3. The financials sector comprises banks, capital markets, diversified financial services and insurance in the SOI.

4. The consumer discretionary sector comprises auto components, automobiles, media, multiline retail and specialty retail in the SOI.

5. The energy sector comprises energy equipment and services; and oil, gas and consumable fuels in the SOI.

TG-4 Semiannual Report

TEMPLETON GROWTH VIP FUND

committed to scaling back what many viewed as excessive capital expenditures (capex) and prioritizing shareholder returns. We believed French oil company Total exemplified this trend. Total’s shares significantly outperformed the broader energy sector since management signaled that capex had peaked in September 2013. We believe this combination of improving shareholder return prospects and potential productivity gains from legacy capex could help integrated oil stocks appreciate in value over our long-term investment horizon as sentiment continues to improve.

Information technology holdings also performed well, led by U.S. personal computer manufacturer Hewlett-Packard.⁶ The company’s share price rose after the firm announced additional cost-cutting measures. Telecommunication services stocks also performed fairly well, buoyed by Turkish mobile operator Turkcell Iletisim Hizmetleri as the company’s share price rose to a record level after it reported solid mobile and broadband growth and improved overall profit margins.^{7, 8}

The Fund’s health care stocks weighed on results, despite delivering respectable absolute gains.⁹ U.S. biotechnology firm Forest Laboratories was one of the Fund’s leading performers as its share price rose to a record level after the firm agreed to be acquired by Actavis, one of the world’s largest generic drugmakers. We analyzed Forest in mid-2012, a time when the firm was nearing the end of key product cycles and a depressed share price reflected investor skepticism about its long-term strategy. Our analysis suggested that the market was overly negative about Forest’s prospects following major patent expirations. Although our long-term investment rationale was not dependent on a buyout, overtures from the activist investor who facilitated the sale were known, and we believed that a divestiture scenario could also unlock shareholder value. We increasingly found opportunities in biotechnology as investors appeared to us to overly discount the headwinds caused by generic competition and the long and capital-intensive innovation cycles inherent to the industry. We also remained favorable on our holdings in traditional pharmaceuticals companies, as many were cutting costs and diversifying away from patent-dependent products, which in our view can help value recognition unfold.

As we look back on the review period, we note that investor sentiment was cautious, although markets continued to move higher. Were investors buying stocks from a position of healthy skepticism or dangerous complacency? From our perspective, circumstances seemed more consistent with caution and skepticism than the complacency or euphoria often associated with bull markets. Equities at period-end were historically underowned, trend earnings multiples remained depressed and long-term equity returns were still below average, circumstances that we would typically not associate with market peaks. However, as the market cycle progresses, we believe investors will have to become increasingly selective in their stock picking. At Templeton, we believe our bottom-up approach and creative, forward-looking value process are well-suited to such an environment. By looking ahead of the consensus and thinking about value differently than the crowd, we believe we have kept the Fund replenished with compelling values and well positioned to potentially protect and grow client capital over time.

Thank you for your participation in Templeton Growth VIP Fund. We look forward to serving your future investment needs.

The foregoing information reflects our analysis, opinions and portfolio holdings as of June 30, 2014, the end of the reporting period. The way we implement our main investment strategies and the resulting portfolio holdings may change depending on factors such as market and economic conditions. These opinions may not be relied upon as investment advice or an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but the investment manager makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.

6. The information technology sector comprises communications equipment; electronic equipment, instruments and components; semiconductors and semiconductor equipment; and software in the SOI.

7. The telecommunication services sector comprises diversified telecommunication services and wireless telecommunication services in the SOI.

8. Not part of the index.

9. The health care sector comprises biotechnology, life sciences tools and services, and pharmaceuticals in the SOI.

Semiannual Report TG-5

TEMPLETON GROWTH VIP FUND

Class 2 Fund Expenses

As an investor in a variable insurance contract (Contract) that indirectly provides for investment in an underlying mutual fund, you can incur transaction and/or ongoing expenses at both the Fund level and the Contract level.

• Transaction expenses can include sales charges (loads) on purchases, surrender fees, transfer fees and premium taxes.

• Ongoing expenses can include management fees, distribution and service (12b-1) fees, contract fees, annual maintenance fees, mortality and expense risk fees and other fees and expenses. All mutual funds and Contracts have some types of ongoing expenses.

The expenses shown in the table are meant to highlight ongoing expenses at the Fund level only and do not include ongoing expenses at the Contract level, or transaction expenses at either the Fund or Contract levels. While the Fund does not have transaction expenses, if the transaction and ongoing expenses at the Contract level were included, the expenses shown below would be higher. You should consult your Contract prospectus or disclosure document for more information.

The table shows Fund-level ongoing expenses and can help you understand these expenses and compare them with those of other mutual funds offered through the Contract. The table assumes a $1,000 investment held for the six months indicated. Please refer to the Fund prospectus for additional information on operating expenses.

Actual Fund Expenses

The first line (Actual) of the table provides actual account values and expenses. The “Ending Account Value” is derived from the Fund’s actual return, which includes the effect of ongoing Fund expenses, but does not include the effect of ongoing Contract expenses.

You can estimate the Fund-level expenses you incurred during the period by following these steps. Of course, your account value and expenses will differ from those in this illustration:

1. Divide your account value by $1,000.

If an account had an $8,600 value,

then $8,600 ÷ $1,000 = 8.6.

2. Multiply the result by the number under the heading “Fund-Level Expenses Incurred During Period.”

If Fund-Level Expenses Incurred During Period were $7.50,

then 8.6 × $7.50 = $64.50.

In this illustration, the estimated expenses incurred this period at the Fund level are $64.50.

Hypothetical Example for Comparison

with Other Mutual Funds

Information in the second line (Hypothetical) of the table can help you compare ongoing expenses of the Fund with those of other mutual funds offered through the Contract. This information may not be used to estimate the actual ending account balance or expenses you incurred during the period. The hypothetical “Ending Account Value” is based on the Fund’s actual expense ratio and an assumed 5% annual rate of return before expenses, which does not represent the Fund’s actual return. The figure under the heading “Fund-Level Expenses Incurred During Period” shows the hypothetical expenses your account would have incurred under this scenario. You can compare this figure with the 5% hypothetical examples that appear in shareholder reports of other funds offered through a Contract.

Class 2	Beginning Account Value 1/1/14		Ending Account Value 6/30/14		Fund-Level Expenses Incurred During Period* 1/1/14–6/30/14
Actual		$1,000		$1,050.30		$5.29
Hypothetical (5% return before expenses)		$1,000		$1,019.64		$5.21

*Expenses are calculated using the most recent six-month annualized expense ratio for the Fund’s Class 2 shares (1.04%), which does not include any ongoing expenses of the Contract for which the Fund is an investment option, multiplied by the average account value over the period, multiplied by 181/365 to reflect the one-half year period.

TG-6 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Financial Highlights

Templeton Growth VIP Fund

	Six Months Ended June 30, 2014 (unaudited)			Year Ended December 31,
				2013			2012			2011			2010			2009
Class 1
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$15.47			$12.16			$10.27			$11.19			$10.56			$  8.34
Income from investment operationsa:
Net investment incomeb		0.29	c		0.22			0.27			0.25			0.17			0.17
Net realized and unrealized gains (losses)		0.52			3.49			1.88			(0.99	)		0.62			2.36
Total from investment operations		0.81			3.71			2.15			(0.74	)		0.79			2.53
Less distributions from net investment income		(0.25	)		(0.40	)		(0.26	)		(0.18	)		(0.16	)		(0.31	)
Net asset value, end of period		$16.03			$15.47			$12.16			$10.27			$11.19			$10.56
Total returnd		5.21%			31.05%			21.40%			(6.80)%			7.74%			31.33%
Ratios to average net assetse
Expenses		0.79%			0.78%	f		0.78%	f		0.78%	f		0.77%	f		0.79%	f
Net investment income		3.64%	c		1.62%			2.31%			2.22%			1.71%			2.00%
Supplemental data
Net assets, end of period (000’s)		$622,810			$588,409			$476,954			$1,200,682			$1,348,622			$824,575
Portfolio turnover rate		10.30%			11.60%			18.73%	g		42.13%	g		9.61%			14.95%

^aThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.

^bBased on average daily shares outstanding.

^cNet investment income per share includes approximately $0.09 per share received in the form of special dividends. Excluding these amounts, the ratio of net investment income to average net assets would have been 2.52%.

^dTotal return does not include fees, charges or expenses imposed by the variable annuity and life insurance contracts for which the Franklin Templeton Variable Insurance Products Trust serves as an underlying investment vehicle. Total return is not annualized for periods less than one year.

^eRatios are annualized for periods less than one year.

^fBenefit of expense reduction rounds to less than 0.01%.

^gExcludes the value of portfolio securities delivered as a result of a redemption in-kind.

The accompanying notes are an integral part of these financial statements.    |   Semiannual Report TG-7

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL HIGHLIGHTS

Templeton Growth VIP Fund (continued)

	Six Months Ended June 30, 2014 (unaudited)			Year Ended December 31,
				2013			2012			2011			2010			2009
Class 2
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$15.23			$11.97			$10.11			$11.01			$10.40			$  8.20
Income from investment operationsa:
Net investment incomeb		0.26	c		0.19			0.21			0.21			0.15			0.16
Net realized and unrealized gains (losses)		0.51			3.44			1.88			(0.96	)		0.60			2.32
Total from investment operations		0.77			3.63			2.09			(0.75	)		0.75			2.48
Less distributions from net investment income		(0.21	)		(0.37	)		(0.23	)		(0.15	)		(0.14	)		(0.28	)
Net asset value, end of period		$15.79			$15.23			$11.97			$10.11			$11.01			$10.40
Total returnd		5.03%			30.82%			21.07%			(6.97)%			7.39%			31.10%
Ratios to average net assetse
Expenses		1.04%			1.03%	f		1.03%	f		1.03%	f		1.02%	f		1.04%	f
Net investment income		3.39%	c		1.37%			2.06%			1.97%			1.46%			1.75%
Supplemental data
Net assets, end of period (000’s)		$1,399,118			$1,450,304			$1,352,554			$1,254,193			$1,626,885			$1,718,894
Portfolio turnover rate		10.30%			11.60%			18.73%	g		42.13%	g		9.61%			14.95%

^aThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.

^bBased on average daily shares outstanding.

^cNet investment income per share includes approximately $0.09 per share received in the form of special dividends. Excluding these amounts, the ratio of net investment income to average net assets would have been 2.27%.

^dTotal return does not include fees, charges or expenses imposed by the variable annuity and life insurance contracts for which the Franklin Templeton Variable Insurance Products Trust serves as an underlying investment vehicle. Total return is not annualized for periods less than one year.

^eRatios are annualized for periods less than one year.

^fBenefit of expense reduction rounds to less than 0.01%.

^gExcludes the value of portfolio securities delivered as a result of a redemption in-kind.

TG-8 Semiannual Report   |    The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL HIGHLIGHTS

Templeton Growth VIP Fund (continued)

	Six Months Ended June 30, 2014 (unaudited)			Year Ended December 31,
				2013			2012			2011			2010			2009
Class 4
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$15.35			$12.07			$10.19			$11.11			$10.50			$  8.31
Income from investment operationsa:
Net investment incomeb		0.25	c		0.17			0.20			0.20			0.14			0.14
Net realized and unrealized gains (losses)		0.51			3.47			1.90			(0.98	)		0.61			2.36
Total from investment operations		0.76			3.64			2.10			(0.78	)		0.75			2.50
Less distributions from net investment income		(0.19	)		(0.36	)		(0.22	)		(0.14	)		(0.14	)		(0.31	)
Net asset value, end of period		$15.92			$15.35			$12.07			$10.19			$11.11			$10.50
Total returnd		4.97%			30.64%			21.02%			(7.14)%			7.31%			30.98%
Ratios to average net assetse
Expenses		1.14%			1.13%	f		1.13%	f		1.13%	f		1.12%	f		1.14%	f
Net investment income		3.29%	c		1.27%			1.96%			1.87%			1.36%			1.65%
Supplemental data
Net assets, end of period (000’s)		$71,165			$72,683			$67,158			$56,170			$60,569			$56,218
Portfolio turnover rate		10.30%			11.60%			18.73%	g		42.13%	g		9.61%			14.95%

^aThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.

^bBased on average daily shares outstanding.

^cNet investment income per share includes approximately $0.09 per share received in the form of special dividends. Excluding these amounts, the ratio of net investment income to average net assets would have been 2.17%.

^dTotal return does not include fees, charges or expenses imposed by the variable annuity and life insurance contracts for which the Franklin Templeton Variable Insurance Products Trust serves as an underlying investment vehicle. Total return is not annualized for periods less than one year.

^eRatios are annualized for periods less than one year.

^fBenefit of expense reduction rounds to less than 0.01%.

^gExcludes the value of portfolio securities delivered as a result of a redemption in-kind.

The accompanying notes are an integral part of these financial statements.    |   Semiannual Report TG-9

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Statement of Investments, June 30, 2014 (unaudited)

Templeton Growth VIP Fund
		Country		Shares		Value
	Common Stocks 98.3%
	Aerospace & Defense 0.6%
	BAE Systems PLC		United Kingdom		1,730,147	$	12,816,557
	Air Freight & Logistics 2.0%
	FedEx Corp.		United States		100,270		15,178,873
	TNT Express NV		Netherlands		646,272		5,850,095
a	TNT Express NV, 144A		Netherlands		441,000		3,991,960
	United Parcel Service Inc., B		United States		160,030		16,428,680
							41,449,608
	Airlines 2.5%
	Deutsche Lufthansa AG		Germany		1,609,064		34,551,391
b	International Consolidated Airlines Group SA		United Kingdom		2,633,247		16,694,776
							51,246,167
	Auto Components 1.5%
	Cie Generale des Etablissements Michelin, B		France		259,469		31,006,079
	Automobiles 2.5%
	Mazda Motor Corp.		Japan		2,351,180		11,024,239
	Nissan Motor Co. Ltd.		Japan		2,342,720		22,223,522
	Toyota Motor Corp.		Japan		312,490		18,766,982
							52,014,743
	Banks 12.2%
	Bangkok Bank PCL, fgn.		Thailand		913,600		5,435,413
	BNP Paribas SA		France		401,637		27,250,828
	Citigroup Inc.		United States		770,990		36,313,629
b	Commerzbank AG		Germany		547,840		8,612,749
	Credit Agricole SA		France		1,640,346		23,137,629
	DBS Group Holdings Ltd.		Singapore		932,690		12,531,631
	HSBC Holdings PLC		United Kingdom		2,567,864		26,041,599
	ICICI Bank Ltd., ADR		India		261,909		13,069,259
	Intesa Sanpaolo SpA		Italy		3,054,444		9,436,641
	JPMorgan Chase & Co.		United States		440,760		25,396,591
	KB Financial Group Inc.		South Korea		657,984		22,886,400
	SunTrust Banks Inc.		United States		478,520		19,169,511
	UniCredit SpA		Italy		3,118,881		26,118,090
							255,399,970
	Biotechnology 1.5%
	Amgen Inc.		United States		272,230		32,223,865
	Capital Markets 2.8%
	Credit Suisse Group AG		Switzerland		1,026,980		29,367,100
	Morgan Stanley		United States		886,050		28,645,997
							58,013,097
	Chemicals 1.4%
	Akzo Nobel NV		Netherlands		397,282		29,787,165
	Commercial Services & Supplies 0.7%
	Serco Group PLC		United Kingdom		2,417,267		15,118,643
	Communications Equipment 2.6%
	Brocade Communications Systems Inc.		United States		298,490		2,746,108
	Cisco Systems Inc.		United States		1,040,800		25,863,880

TG-10 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Templeton Growth VIP Fund (continued)

		Country		Shares		Value
	Common Stocks (continued)
	Communications Equipment (continued)
	Ericsson, B		Sweden		2,161,202	$	26,121,007
							54,730,995
	Construction & Engineering 0.7%
c	FLSmidth & Co. AS		Denmark		250,000		13,967,455
	Construction Materials 1.6%
	CRH PLC		Ireland		1,277,393		32,782,365
	Diversified Financial Services 1.1%
b	ING Groep NV, IDR		Netherlands		1,617,386		22,725,173
	Diversified Telecommunication Services 4.1%
	China Telecom Corp. Ltd., ADR		China		179,195		8,771,595
	Singapore Telecommunications Ltd.		Singapore		7,063,710		21,814,690
	Telefonica SA		Spain		1,682,480		28,846,983
	Verizon Communications Inc.		United States		158,750		7,778,750
	Vivendi SA		France		739,654		18,100,865
							85,312,883
	Electrical Equipment 0.7%
	Alstom SA		France		299,697		10,927,433
	Dongfang Electric Corp. Ltd., H		China		2,016,600		3,465,749
							14,393,182
	Electronic Equipment, Instruments & Components 0.4%
b	Flextronics International Ltd.		Singapore		691,118		7,650,676
	Energy Equipment & Services 4.1%
	Baker Hughes Inc.		United States		358,770		26,710,427
	Fugro NV, IDR		Netherlands		339,969		19,467,831
	Halliburton Co.		United States		225,414		16,006,648
	Noble Corp. PLC		United States		698,190		23,431,257
							85,616,163
	Food & Staples Retailing 2.5%
	CVS Caremark Corp.		United States		330,420		24,903,755
b	Metro AG		Germany		156,280		6,812,181
	Tesco PLC		United Kingdom		4,054,493		19,717,935
							51,433,871
	Health Care Equipment & Supplies 2.4%
	Getinge AB, B		Sweden		712,770		18,733,803
	Medtronic Inc.		United States		497,540		31,723,151
							50,456,954
	Industrial Conglomerates 2.0%
	Koninklijke Philips NV		Netherlands		459,718		14,590,071
	Siemens AG		Germany		201,712		26,642,816
							41,232,887
	Insurance 6.1%
	American International Group Inc.		United States		569,370		31,076,215
	Aviva PLC		United Kingdom		3,361,950		29,368,907
	AXA SA		France		1,091,068		26,080,615
	Muenchener Rueckversicherungs-Gesellschaft AG		Germany		78,511		17,406,983

Semiannual Report TG-11

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Templeton Growth VIP Fund (continued)

		Country		Shares		Value
	Common Stocks (continued)
	Insurance (continued)
	Swiss Re AG		Switzerland		270,006	$	24,021,507
							127,954,227
	Life Sciences Tools & Services 0.4%
b	QIAGEN NV		Netherlands		357,300		8,660,689
	Machinery 1.3%
b	Navistar International Corp.		United States		725,430		27,189,116
	Media 4.2%
	Comcast Corp., Special A		United States		648,892		34,605,410
b	News Corp., A		United States		319,435		5,730,664
	Twenty-First Century Fox Inc., A		United States		641,182		22,537,547
	The Walt Disney Co.		United States		296,070		25,385,042
							88,258,663
	Metals & Mining 2.0%
	Mining and Metallurgical Co. Norilsk Nickel OJSC, ADR		Russia		1,077,050		21,336,360
	POSCO		South Korea		63,730		19,144,190
	POSCO, ADR		South Korea		27,740		2,064,966
							42,545,516
	Multiline Retail 0.5%
	Target Corp.		United States		191,680		11,107,856
	Oil, Gas & Consumable Fuels 10.8%
	BP PLC		United Kingdom		2,807,128		24,733,518
	Chevron Corp.		United States		137,470		17,946,709
	China Shenhua Energy Co. Ltd., H		China		5,271,520		15,235,509
	Eni SpA		Italy		776,759		21,253,376
	Galp Energia SGPS SA, B		Portugal		1,575,520		28,868,631
	Kunlun Energy Co. Ltd.		China		9,057,840		14,935,803
	LUKOIL Holdings, ADR (London Stock Exchange)		Russia		203,010		12,121,727
	Royal Dutch Shell PLC, B		United Kingdom		299,573		13,033,601
	Talisman Energy Inc.		Canada		3,158,600		33,408,981
	Total SA, B		France		618,659		44,716,405
							226,254,260
	Pharmaceuticals 11.8%
b	Forest Laboratories Inc.		United States		232,470		23,014,530
	GlaxoSmithKline PLC		United Kingdom		1,165,640		31,196,220
	Merck & Co. Inc.		United States		558,641		32,317,382
	Merck KGaA		Germany		229,554		19,927,452
	Pfizer Inc.		United States		1,111,443		32,987,628
	Roche Holding AG		Switzerland		128,303		38,265,934
	Sanofi		France		308,607		32,787,002
	Teva Pharmaceutical Industries Ltd., ADR		Israel		686,230		35,972,177
							246,468,325
	Professional Services 0.3%
	Hays PLC		United Kingdom		2,280		5,700
	Randstad Holding NV		Netherlands		125,110		6,783,029
							6,788,729

TG-12 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Templeton Growth VIP Fund (continued)

		Country		Shares		Value
	Common Stocks (continued)
	Semiconductors & Semiconductor Equipment 2.5%
	Samsung Electronics Co. Ltd.		South Korea		40,730	$	53,206,581
	Software 2.6%
	Microsoft Corp.		United States		1,177,169		49,087,948
	SAP AG		Germany		80,912		6,249,398
							55,337,346
	Specialty Retail 1.5%
	Best Buy Co. Inc.		United States		355,360		11,019,714
	Kingfisher PLC		United Kingdom		3,350,261		20,581,351
							31,601,065
	Technology Hardware, Storage & Peripherals 1.7%
	Hewlett-Packard Co.		United States		1,036,700		34,916,056
	Wireless Telecommunication Services 2.7%
	Mobile TeleSystems, ADR		Russia		812,930		16,047,238
b	Sprint Corp.		United States		539,599		4,602,780
b	Turkcell Iletisim Hizmetleri AS, ADR		Turkey		1,647,543		25,701,671
	Vodafone Group PLC		United Kingdom		3,292,417		10,986,269
							57,337,958
	Total Common Stocks (Cost $1,494,680,547)						2,057,004,885
	Preferred Stocks (Cost $27,756,720) 1.1%
	Oil, Gas & Consumable Fuels 1.1%
	Petroleo Brasileiro SA, ADR, pfd.		Brazil		1,528,452		23,904,989
	Total Investments before Short Term Investments (Cost $1,522,437,267)						2,080,909,874
				Principal Amount*
	Short Term Investments 0.6%
	Time Deposits 0.5%
	Royal Bank of Canada, 0.05%, 7/01/14		Canada		10,000,000		10,000,000
	Total Investments before Money Market Funds (Cost $1,532,437,267)						2,090,909,874

Semiannual Report TG-13

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

		Country		Shares		Value
d	Investments from Cash Collateral Received for Loaned Securities (Cost $1,727,113) 0.1%
	Money Market Funds 0.1%
e	BNY Mellon Overnight Government Fund, 0.082%		United States		1,727,113	$	1,727,113
	Total Investments (Cost $1,534,164,380) 100.0%						2,092,636,987
	Other Assets, less Liabilities 0.0%†						456,273
	Net Assets 100.0%					$	2,093,093,260

See Abbreviations on page TG-25.

^†Rounds to less than 0.1% of net assets.

*The principal amount is stated in U.S. dollars unless otherwise indicated.

^aSecurity was purchased pursuant to Rule 144A under the Securities Act of 1933 and may be sold in transactions exempt from registration only to qualified institutional buyers or in a public offering registered under the Securities Act of 1933. This security has been deemed liquid under guidelines approved by the Trust’s Board of Trustees. At June 30, 2014, the value of this security was $3,991,960, representing 0.19% of net assets.

^bNon-income producing.

^cA portion or all of the security is on loan at June 30, 2014. See Note 1(c).

^dSee Note 1(c) regarding securities on loan.

^eThe rate shown is the annualized seven-day yield at period end.

TG-14 Semiannual Report   |    The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Financial Statements

Statement of Assets and Liabilities

June 30, 2014 (unaudited)

	Templeton Growth VIP Fund
Assets:
Investments in securities:
Cost	$	1,534,164,380
Value (Includes securities loaned in the amount of $1,656,540)	$	2,092,636,987
Cash		719,190
Receivables:
Investment securities sold		4,241,749
Capital shares sold		72,704
Dividends and interest		4,396,361
Other assets		936
Total assets		2,102,067,927
Liabilities:
Payables:
Investment securities purchased		3,121,836
Capital shares redeemed		1,646,752
Management fees		1,305,821
Distribution fees		633,853
Payable upon return of securities loaned		1,727,113
Accrued expenses and other liabilities		539,292
Total liabilities		8,974,667
Net assets, at value	$	2,093,093,260
Net assets consist of:
Paid-in capital	$	1,637,246,382
Undistributed net investment income		33,705,772
Net unrealized appreciation (depreciation)		558,522,565
Accumulated net realized gain (loss)		(136,381,459	)
Net assets, at value	$	2,093,093,260

The accompanying notes are an integral part of these financial statements.    |   Semiannual Report TG-15

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL STATEMENTS

Statement of Assets and Liabilities (continued)

June 30, 2014 (unaudited)

	Templeton Growth VIP Fund
Class 1:
Net assets, at value	$	622,810,174
Shares outstanding		38,864,374
Net asset value and maximum offering price per share	$	16.03
Class 2:
Net assets, at value	$	1,399,118,487
Shares outstanding		88,622,433
Net asset value and maximum offering price per share	$	15.79
Class 4:
Net assets, at value	$	71,164,599
Shares outstanding		4,469,164
Net asset value and maximum offering price per share	$	15.92

TG-16 Semiannual Report   |    The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL STATEMENTS

Statement of Operations

for the six months ended June 30, 2014 (unaudited)

	Templeton Growth VIP Fund
Investment income:
Dividends (net of foreign taxes of $3,207,528)	$	44,916,134
Interest		6,465
Income from securities loaned		927,931
Total investment income		45,850,530
Expenses:
Management fees (Note 3a)		7,795,739
Distribution fees: (Note 3c)
Class 2		1,756,036
Class 4		125,247
Custodian fees (Note 4)		119,832
Reports to shareholders		168,065
Professional fees		45,335
Trustees’ fees and expenses		4,057
Other		28,772
Total expenses		10,043,083
Net investment income		35,807,447
Realized and unrealized gains (losses):
Net realized gain (loss) from:
Investments:
Unaffiliated issuers		56,981,531
Non-controlled affiliated issuers (Note 8)		773,990
Foreign currency transactions		(42,714	)
Net realized gain (loss)		57,712,807
Net change in unrealized appreciation (depreciation) on:
Investments		9,288,662
Translation of other assets and liabilities denominated in foreign currencies		2,443
Net change in unrealized appreciation (depreciation)		9,291,105
Net realized and unrealized gain (loss)		67,003,912
Net increase (decrease) in net assets resulting from operations	$	102,811,359

The accompanying notes are an integral part of these financial statements.    |   Semiannual Report TG-17

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL STATEMENTS

Statements of Changes in Net Assets

	Templeton Growth VIP Fund
	Six Months Ended June 30, 2014 (unaudited)			Year Ended December 31, 2013
Increase (decrease) in net assets:
Operations:
Net investment income	$	35,807,447		$	28,850,993
Net realized gain (loss) from investments and foreign currency transactions		57,712,807			98,725,339
Net change in unrealized appreciation (depreciation) on investments and translation of other assets and liabilities denominated in foreign currencies		9,291,105			412,375,570
Net increase (decrease) in net assets resulting from operations		102,811,359			539,951,902
Distributions to shareholders from:
Net investment income:
Class 1		(9,482,577	)		(15,214,157	)
Class 2		(18,300,865	)		(38,639,867	)
Class 4		(885,005	)		(1,946,523	)
Total distributions to shareholders		(28,668,447	)		(55,800,547	)
Capital share transactions: (Note 2)
Class 1		13,625,810			(17,266,459	)
Class 2		(101,891,617	)		(240,507,877	)
Class 4		(4,179,503	)		(11,647,677	)
Total capital share transactions		(92,445,310	)		(269,422,013	)
Net increase (decrease) in net assets		(18,302,398	)		214,729,342
Net assets:
Beginning of period		2,111,395,658			1,896,666,316
End of period	$	2,093,093,260		$	2,111,395,658
Undistributed net investment income included in net assets:
End of period	$	33,705,772		$	26,566,772

TG-18 Semiannual Report   |    The accompanying notes are an integral part of these financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Notes to Financial Statements (unaudited)

Templeton Growth VIP Fund

1. Organization and Significant Accounting Policies

Franklin Templeton Variable Insurance Products Trust (Trust) is registered under the Investment Company Act of 1940, as amended, (1940 Act) as an open-end management investment company, consisting of twenty separate funds and applies the specialized accounting and reporting guidance in U.S. Generally Accepted Accounting Principles (U.S. GAAP). The Templeton Growth VIP Fund (Fund) is included in this report. The financial statements of the remaining funds in the Trust are presented separately. Shares of the Fund are generally sold only to insurance company separate accounts to fund the benefits of variable life insurance policies or variable annuity contracts. The Fund offers three classes of shares: Class 1, Class 2 and Class 4. Each class of shares differs by its distribution fees, voting rights on matters affecting a single class and its exchange privilege.

Effective May 1, 2014, the Templeton Growth Securities Fund was renamed the Templeton Growth VIP Fund.

The following summarizes the Fund’s significant accounting policies.

a. Financial Instrument Valuation

The Fund’s investments in financial instruments are carried at fair value daily. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. The Fund calculates the net asset value (NAV) per share at the close of the New York Stock Exchange (NYSE), generally at 4 p.m. Eastern time (NYSE close) on each day the NYSE is open for trading. Under compliance policies and procedures approved by the Trust’s Board of Trustees (the Board), the Fund’s administrator has responsibility for oversight of valuation, including leading the cross-functional Valuation and Liquidity Oversight Committee (VLOC). The VLOC provides administration and oversight of the Fund’s valuation policies and procedures, which are approved annually by the Board. Among other things, these procedures allow the Fund to utilize independent pricing services, quotations from securities and financial instrument dealers, and other market sources to determine fair value.

Equity securities listed on an exchange or on the NASDAQ National Market System are valued at the last quoted sale price or the official closing price of the day, respectively. Foreign

equity securities are valued as of the close of trading on the foreign stock exchange on which the security is primarily traded or as of the NYSE close, whichever is earlier. The value is then converted into its U.S. dollar equivalent at the foreign exchange rate in effect at the NYSE close on the day that the value of the security is determined. Over-the-counter (OTC) securities are valued within the range of the most recent quoted bid and ask prices. Securities that trade in multiple markets or on multiple exchanges are valued according to the broadest and most representative market. Certain equity securities are valued based upon fundamental characteristics or relationships to similar securities. Investments in non-registered money market funds are valued at the closing net asset value. Time deposits are valued at cost, which approximates fair value.

The Fund has procedures to determine the fair value of financial instruments for which market prices are not reliable or readily available. Under these procedures, the VLOC convenes on a regular basis to review such financial instruments and considers a number of factors, including significant unobservable valuation inputs, when arriving at fair value. The VLOC primarily employs a market-based approach which may use related or comparable assets or liabilities, recent transactions, market multiples, book values, and other relevant information for the investment to determine the fair value of the investment. An income-based valuation approach may also be used in which the anticipated future cash flows of the investment are discounted to calculate fair value. Discounts may also be applied due to the nature or duration of any restrictions on the disposition of the investments. Due to the inherent uncertainty of valuations of such investments, the fair values may differ significantly from the values that would have been used had an active market existed. The VLOC employs various methods for calibrating these valuation approaches including a regular review of key inputs and assumptions, transactional back-testing or disposition analysis, and reviews of any related market activity.

Trading in securities on foreign securities stock exchanges and OTC markets may be completed before the daily NYSE close. In addition, trading in certain foreign markets may not take place on every NYSE business day. Occasionally, events occur between the time at which trading in a foreign security is completed and the close of the NYSE that might call into question the reliability of the value of a portfolio security held by the Fund. As a result, differences may arise between the value of the Fund’s portfolio securities as determined at the foreign

Semiannual Report TG-19

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Templeton Growth VIP Fund (continued)

1. Organization and Significant Accounting Policies (continued)

a. Financial Instrument Valuation (continued)

market close and the latest indications of value at the close of the NYSE. In order to minimize the potential for these differences, the VLOC monitors price movements following the close of trading in foreign stock markets through a series of country specific market proxies (such as baskets of American Depositary Receipts, futures contracts and exchange traded funds). These price movements are measured against established trigger thresholds for each specific market proxy to assist in determining if an event has occurred that may call into question the reliability of the values of the foreign securities held by the Fund. If such an event occurs, the securities may be valued using fair value procedures, which may include the use of independent pricing services.

Also, when the last day of the reporting period is a non-business day, certain foreign markets may be open on those days that the NYSE is closed, which could result in differences between the value of the Fund’s portfolio securities on the last business day and the last calendar day of the reporting period. Any significant security valuation changes due to an open foreign market are adjusted and reflected by the Fund for financial reporting purposes.

b. Foreign Currency Translation

Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars based on the exchange rate of such currencies against U.S. dollars on the date of valuation. The Fund may enter into foreign currency exchange contracts to facilitate transactions denominated in a foreign currency. Purchases and sales of securities, income and expense items denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date. Portfolio securities and assets and liabilities denominated in foreign currencies contain risks that those currencies will decline in value relative to the U.S. dollar. Occasionally, events may impact the availability or reliability of foreign exchange rates used to convert the U.S. dollar equivalent value. If such an event occurs, the foreign exchange rate will be valued at fair value using procedures established and approved by the Board.

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

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

c. Securities Lending

The Fund participates in an agency based securities lending program. The Fund receives cash collateral against the loaned securities in an amount equal to at least 102% of the fair value of the loaned securities. Collateral is maintained over the life of the loan in an amount not less than 100% of the fair value of loaned securities, as determined at the close of fund business each day; any additional collateral required due to changes in security values is delivered to the Fund on the next business day. The collateral is invested in a non-registered money fund as indicated on the Statement of Investments. The Fund receives income from the investment of cash collateral, in addition to lending fees and rebates paid by the borrower. The Fund bears the market risk with respect to the collateral investment, securities loaned, and the risk that the agent may default on its obligations to the Fund. The securities lending agent has agreed to indemnify the Fund in the event of default by a third party borrower.

d. Income and Deferred Taxes

It is the Fund’s policy to qualify as a regulated investment company under the Internal Revenue Code. The Fund intends to distribute to shareholders substantially all of its taxable income and net realized gains to relieve it from federal income and if applicable, excise taxes. As a result, no provision for U.S. federal income taxes is required.

The Fund may be subject to foreign taxation related to income received, capital gains on the sale of securities and certain foreign currency transactions in the foreign jurisdictions in which it invests. Foreign taxes, if any, are recorded based on the tax regulations and rates that exist in the foreign markets in which the Fund invests. When a capital gain tax is determined to apply the Fund records an estimated deferred tax liability in an amount that would be payable if the securities were disposed of on the valuation date.

TG-20 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Templeton Growth VIP Fund (continued)

The Fund recognizes the tax benefits of uncertain tax positions only when the position is “more likely than not” to be sustained upon examination by the tax authorities based on the technical merits of the tax position. As of June 30, 2014, and for all open tax years, the Fund has determined that no liability for unrecognized tax benefits is required in the Fund’s financial statements related to uncertain tax positions taken on a tax return (or expected to be taken on future tax returns). Open tax years are those that remain subject to examination and are based on each tax jurisdiction statute of limitation.

e. Security Transactions, Investment Income, Expenses and Distributions

Security transactions are accounted for on trade date. Realized gains and losses on security transactions are determined on a specific identification basis. Interest income and estimated expenses are accrued daily. Dividend income is recorded on the ex-dividend date except that certain dividends from foreign securities are recognized as soon as the Fund is notified of the ex-dividend date. Distributions to shareholders are recorded on the ex-dividend date and are determined according to income tax regulations (tax basis). Distributable earnings determined on a tax basis may differ from earnings recorded in accordance with accounting principles generally accepted in the United States of America. These differences may be permanent or temporary. Permanent differences are reclassified among capital accounts to reflect their tax character. These reclassifications have no impact on net assets or the results of operations. Temporary differences are not reclassified, as they may reverse in subsequent periods.

Common expenses incurred by the Trust are allocated among the funds based on the ratio of net assets of each fund to the combined net assets of the Trust. Fund specific expenses are charged directly to the fund that incurred the expense.

Realized and unrealized gains and losses and net investment income, not including class specific expenses, are allocated daily to each class of shares based upon the relative proportion of net assets of each class. Differences in per share distributions, by class, are generally due to differences in class specific expenses.

f. Accounting Estimates

The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the amounts of income and expenses during the reporting period. Actual results could differ from those estimates.

g. Guarantees and Indemnifications

Under the Trust’s organizational documents, its officers and trustees are indemnified by the Trust against certain liabilities arising out of the performance of their duties to the Trust. Additionally, in the normal course of business, the Trust, on behalf of the Fund, enters into contracts with service providers that contain general indemnification clauses. The Trust’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Trust that have not yet occurred. Currently, the Trust expects the risk of loss to be remote.

2. Shares of Beneficial Interest

At June 30, 2014, there were an unlimited number of shares authorized (without par value). Transactions in the Fund’s shares were as follows:

	Six Months Ended June 30, 2014						Year Ended December 31, 2013
	Shares			Amount			Shares			Amount
Class 1 Shares:
Shares sold		1,171,010		$	18,626,956			896,927		$	12,053,666
Shares issued in reinvestment of distributions		589,713			9,482,577			1,149,106			15,214,157
Shares redeemed		(923,380	)		(14,483,723	)		(3,250,296	)		(44,534,282	)
Net increase (decrease)		837,343		$	13,625,810			(1,204,263	)	$	(17,266,459	)

Semiannual Report TG-21

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Templeton Growth VIP Fund (continued)

2. Shares of Beneficial Interest (continued)

	Six Months Ended June 30, 2014						Year Ended December 31, 2013
	Shares			Amount			Shares			Amount
Class 2 Shares:
Shares sold		1,267,922		$	19,613,913			7,540,783		$	101,234,976
Shares issued in reinvestment of distributions		1,155,358			18,300,865			2,963,180			38,639,867
Shares redeemed		(9,038,415	)		(139,806,395	)		(28,236,625	)		(380,382,720	)
Net increase (decrease)		(6,615,135	)	$	(101,891,617	)		(17,732,662	)	$	(240,507,877	)
Class 4 Shares:
Shares sold		189,752		$	2,968,440			683,745		$	9,107,528
Shares issued on reinvestment of distributions		55,382			885,005			147,912			1,946,523
Shares redeemed		(510,473	)		(8,032,948	)		(1,660,931	)		(22,701,728	)
Net increase (decrease)		(265,339	)	$	(4,179,503	)		(829,274	)	$	(11,647,677	)

3. Transactions With Affiliates

Franklin Resources, Inc. is the holding company for various subsidiaries that together are referred to as Franklin Templeton Investments. Certain officers and trustees of the Fund are also officers and/or directors of the following subsidiaries:

Subsidiary	Affiliation
Templeton Global Advisors Limited (TGAL)	Investment manager
Franklin Templeton Services, LLC (FT Services)	Administrative manager
Franklin Templeton Distributors, Inc. (Distributors)	Principal underwriter
Franklin Templeton Investor Services, LLC (Investor Services)	Transfer agent

a. Management Fees

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

Annualized Fee Rate	Net Assets
1.000%	Up to and including $100 million
0.900%	Over $100 million, up to and including $250 million
0.800%	Over $250 million, up to and including $500 million
0.750%	Over $500 million, up to and including $1 billion
0.700%	Over $1 billion, up to and including $5 billion
0.675%	Over $5 billion, up to and including $10 billion
0.655%	Over $10 billion, up to and including $15 billion
0.635%	Over $15 billion, up to and including $20 billion
0.615%	In excess of $20 billion

b. Administrative Fees

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

TG-22 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Templeton Growth VIP Fund (continued)

c. Distribution Fees

The Board has adopted distribution plans for Class 2 and Class 4 shares pursuant to Rule 12b-1 under the 1940 Act. Under the Fund’s compensation distribution plans, the Fund pays Distributors for costs incurred in connection with the servicing, sale and distribution of the Fund’s shares up to 0.35% per year of its average daily net assets of each class. Some distribution fees are not charged on shares held by affiliates. The Board has agreed to limit the current rate to 0.25% per year for Class 2. The plan year, for purposes of monitoring compliance with the maximum annual plan rates, is February 1 through January 31.

d. Transfer Agent Fees

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

e. Other Affiliated Transactions

At June 30, 2014, Franklin Templeton Variable Insurance Products Trust – Franklin Founding Funds Allocation VIP Fund owned 20.96% of the Fund’s outstanding shares. Investment activities of this investment company could have a material impact on the Fund.

4. Expense Offset Arrangement

The Fund has entered into an arrangement with its custodian whereby credits realized as a result of uninvested cash balances are used to reduce a portion of the Fund’s custodian expenses. During the period ended June 30, 2014, there were no credits earned.

5. Income Taxes

For tax purposes, capital losses may be carried over to offset future capital gains. Capital loss carryforwards with no expiration, if any, must be fully utilized before those losses with expiration dates.

At December 31, 2013, capital loss carryforwards were as follows:

Capital loss carryforwards expiring in:
2017	$117,602,940
2018	55,299,629
	$172,902,569

At June 30, 2014, the cost of investments and net unrealized appreciation (depreciation) for income tax purposes were as follows:

Cost of investments	$1,552,912,581
Unrealized appreciation	$   595,730,718
Unrealized depreciation	(56,006,312)
Net unrealized appreciation (depreciation)	$   539,724,406

Differences between income and/or capital gains as determined on a book basis and a tax basis are primarily due to differing treatments of foreign currency transactions and wash sales.

6. Investment Transactions

Purchases and sales of investments (excluding short term securities) for the period ended June 30, 2014, aggregated $211,038,453 and $267,687,369, respectively.

Semiannual Report TG-23

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Templeton Growth VIP Fund (continued)

7. Concentration of Risk

Investing in foreign securities may include certain risks and considerations not typically associated with investing in U.S. securities, such as fluctuating currency values and changing local and regional economic, political and social conditions, which may result in greater market volatility. In addition, certain foreign securities may not be as liquid as U.S. securities.

8. Holdings of 5% Voting Securities of Portfolio Companies

The 1940 Act defines “affiliated companies” to include investments in portfolio companies in which a fund owns 5% or more of the outstanding voting securities. Investments in “affiliated companies” for the Fund for the period ended June 30, 2014, were as shown below.

Name of Issuer	Number of Shares Held at Beginning of Period		Gross Additions		Gross Reductions			Number of Shares Held at End of Period		Value at End of Period		Investment Income		Realized Capital Gain (Loss)
Non-Controlled Affiliates
Templeton China Opportunities Fund Ltd., Reg D		1,195,196		—		(1,195,196	)		—	$	—*	$	—	$	773,990
Total Affiliated Securities (Value is -% of Net Assets)

*As of June 30, 2014, no longer an affiliate.

9. Credit Facility

The Fund, together with other U.S. registered and foreign investment funds (collectively, Borrowers), managed by Franklin Templeton Investments, are borrowers in a joint syndicated senior unsecured credit facility totaling $1.5 billion (Global Credit Facility) which matures on February 13, 2015. This Global Credit Facility provides a source of funds to the Borrowers for temporary and emergency purposes, including the ability to meet future unanticipated or unusually large redemption requests.

Under the terms of the Global Credit Facility, the Fund shall, in addition to interest charged on any borrowings made by the Fund and other costs incurred by the Fund, pay its share of fees and expenses incurred in connection with the implementation and maintenance of the Global Credit Facility, based upon its relative share of the aggregate net assets of all of the Borrowers, including an annual commitment fee of 0.07% based upon the unused portion of the Global Credit Facility. These fees are reflected in other expenses on the Statement of Operations. During the period ended June 30, 2014, the Fund did not use the Global Credit Facility.

10. Fair Value Measurements

The Fund follows a fair value hierarchy that distinguishes between market data obtained from independent sources (observable inputs) and the Fund’s own market assumptions (unobservable inputs). These inputs are used in determining the value of the Fund’s financial instruments and are summarized in the following fair value hierarchy:

• Level 1 – quoted prices in active markets for identical financial instruments

• Level 2 – other significant observable inputs (including quoted prices for similar financial instruments, interest rates, prepayment speed, credit risk, etc.)

• Level 3 – significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of financial instruments)

The input levels are not necessarily an indication of the risk or liquidity associated with financial instruments at that level.

TG-24 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Templeton Growth VIP Fund (continued)

For movements between the levels within the fair value hierarchy, the Fund has adopted a policy of recognizing the transfers as of the date of the underlying event which caused the movement.

A summary of inputs used as of June 30, 2014, in valuing the Fund’s assets carried at fair value, is as follows:

	Level 1		Level 2		Level 3		Total
Assets:
Investments in Securities:
Equity Investmentsa,b	$	2,080,909,874	$	—	$	—	$	2,080,909,874
Short Term investments		—		11,727,113		—		11,727,113
Total Investments in Securities	$	2,080,909,874	$	11,727,113	$	—	$	2,092,636,987

^aIncludes common and preferred stocks.

^bFor detailed categories, see the accompanying Statement of Investments.

11. New Accounting Pronouncements

In June 2014, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) No. 2014-11, Transfers and Servicing (Topic 860), Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures. The ASU changes the accounting for certain repurchase agreements and expands disclosure requirements related to repurchase agreements, securities lending, repurchase-to-maturity and similar transactions. The ASU is effective for interim and annual reporting periods beginning after December 15, 2014. Management is currently evaluating the impact, if any, of applying this provision.

12. Subsequent Events

The Fund has evaluated subsequent events through the issuance of the financial statements and determined that no events have occurred that require disclosure.

Abbreviations

Selected Portfolio
ADR	American Depositary Receipt
IDR	International Depositary Receipt

Semiannual Report TG-25

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

TAX INFORMATION (UNAUDITED)

Templeton Growth VIP Fund

At December 31, 2013 more than 50% of the Fund’s total assets were invested in securities of foreign issuers. In most instances, foreign taxes were withheld from income paid to the Fund on these investments. As shown in the table below, the Fund hereby reports to shareholders the foreign source income and foreign taxes paid, pursuant to Section 853 of the Internal Revenue Code (Code). This written statement will allow shareholders of record on June 12, 2014, to treat their proportionate share of foreign taxes paid by the Fund as having been paid directly by them. The shareholder shall consider these amounts as foreign taxes paid in the tax year in which they receive the Fund distribution.

The following table provides a detailed analysis of foreign tax paid and foreign source income as reported by the Fund, to Class 1, Class 2, and Class 4 shareholders of record.

Class	Foreign Tax Paid Per Share	Foreign Source Income Per Share
Class 1	$0.0152	$0.2047
Class 2	$0.0152	$0.1740
Class 4	$0.0152	$0.1628

Foreign Tax Paid Per Share (Column 1) is the amount per share available to you, as a tax credit (assuming you held your shares in the Fund for a minimum of 16 days during the 31-day period beginning 15 days before the ex-dividend date of the Fund’s distribution to which the foreign taxes relate), or, as a tax deduction.

Foreign Source Income Per Share (Column 2) is the amount per share of income dividends attributable to foreign securities held by the Fund, plus any foreign taxes withheld on these dividends.

TG-26 Semiannual Report

FRANKLIN MANAGED VOLATILITY GLOBAL ALLOCATION VIP FUND

Fund Goals and Main Investments: Franklin Managed Volatility Global Allocation VIP Fund seeks total return (including income and capital gains) while seeking to manage volatility.

Fund Risks: All investments involve risks, including possible loss of principal. There can be no guarantee that the Fund will achieve its target volatility. Also, the managed volatility strategy could negatively impact the Fund’s return and expose the Fund to additional costs. Generally, investors should be comfortable with fluctuation in the value of their investments, especially over the short term. Stock prices fluctuate, sometimes rapidly and dramatically, due to factors affecting individual companies, particular industries or sectors, or general market conditions. Bond prices generally move in the opposite direction of interest rates. Foreign investing carries additional risks such as currency and market volatility and political or social instability, which are heightened in developing countries. Derivatives, including currency management strategies, involve costs and can create economic leverage in the portfolio which may result in significant volatility and cause the Fund to participate in losses on an amount that exceeds the Fund’s initial investment. The Fund may not achieve the anticipated benefits, and may realize losses when a counterparty fails to perform. Because the Fund allocates assets to a variety of investment strategies, ETFs and other mutual funds, which involve certain risks, it may be subject to those same risks. The Fund is actively managed but there is no guarantee that the manager’s investment decisions will produce the desired results. The Fund’s prospectus also includes a description of the main investment risks.

Investment Strategy: Under normal market conditions, the Fund seeks to achieve its investment goal by using an asset allocation strategy that seeks to diversify the Fund’s portfolio across global asset classes (principally global equity and global fixed income securities), regions and sectors while seeking to limit the expected volatility of the Fund’s returns to about 10% or less per year. Currently, the Fund intends to seek a target volatility of 9% or less per year (“Target Volatility”). This strategy may result in the Fund outperforming the general securities market during periods of flat

or negative market performance, and underperforming the general securities market during periods of positive market performance. There is no guarantee that the Fund will achieve its Target Volatility.

Franklin Managed Volatility Global Allocation VIP Fund — Class 2 delivered a +5.62% total return and Class 5 delivered a +5.62% total return* for the six-month period ended 6/30/14.

*The Fund has an expense reduction contractually guaranteed through at least 4/30/15 and a few waiver related to a management fee paid by a subsidiary. Fund investment results reflect the expense reduction and fee waiver, to the extent applicable; without these reductions, the results would have been lower.

Semiannual Report FMV-1

FRANKLIN MANAGED VOLATILITY GLOBAL ALLOCATION VIP FUND

Portfolio Breakdown*
Based on Total Net Assets
6/30/14
	% of Total Net Assets
Exchange Traded Funds		52.2%
Foreign Equity		30.8%
Domestic Equity		21.4%
Bonds		35.8%
Foreign Government & Agency Securities		25.4%
U.S. Government & Agency Securities		10.4%
Stocks**		4.8%
Banks		0.8%
Consumer Durables & Apparel		0.7%
Automobiles & Components		0.7%
Software & Services		0.6%
Food, Beverage & Tobacco		0.5%
Energy		0.3%
Transportation		0.3%
Materials		0.3%
Semiconductors & Semiconductor Equipment		0.2%
Household & Personal Products		0.2%
Food & Staples Retailing		0.1%
Telecommunication Services		0.1%
Commodities		4.4%
Exchange Traded Notes		4.4%
Short-Term Investments & Other Net Assets		2.8%

*Portfolio Breakdown figures are stated as a percentage of total and may not equal 100% or may be negative due to rounding, use of any derivatives, unsettled trades or other factors.

**Includes common and preferred shares.

FMV-2 Semiannual Report

FRANKLIN MANAGED VOLATILITY GLOBAL ALLOCATION VIP FUND

Class 2 Fund Expenses

As an investor in a variable insurance contract (Contract) that indirectly provides for investment in an underlying mutual fund, you can incur transaction and/or ongoing expenses at both the Fund level and the Contract level.

• Transaction expenses can include sales charges (loads) on purchases, surrender fees, transfer fees and premium taxes.

• Ongoing expenses can include management fees, distribution and service (12b-1) fees, contract fees, annual maintenance fees, mortality and expense risk fees and other fees and expenses. All mutual funds and Contracts have some types of ongoing expenses.

The expenses shown in the table are meant to highlight ongoing expenses at the Fund level only and do not include ongoing expenses at the Contract level, or transaction expenses at either the Fund or Contract levels. While the Fund does not have transaction expenses, if the transaction and ongoing expenses at the Contract level were included, the expenses shown below would be higher. You should consult your Contract prospectus or disclosure document for more information.

The table shows Fund-level ongoing expenses and can help you understand these expenses and compare them with those of other mutual funds offered through the Contract. The table assumes a $1,000 investment held for the six months indicated. Please refer to the Fund prospectus for additional information on operating expenses.

Actual Fund Expenses

The first line (Actual) of the table provides actual account values and expenses. The “Ending Account Value” is derived from the Fund’s actual return, which includes the effect of ongoing Fund expenses, but does not include the effect of ongoing Contract expenses.

You can estimate the Fund-level expenses you incurred during the period by following these steps. Of course, your account value and expenses will differ from those in this illustration:

1. Divide your account value by $1,000.

If an account had an $8,600 value,

then $8,600 ÷ $1,000 = 8.6.

2. Multiply the result by the number under the heading “Fund-Level Expenses Incurred During Period.”

If Fund-Level Expenses Incurred During Period were $7.50, then 8.6 × $7.50 = $64.50.

In this illustration, the estimated expenses incurred this period at the Fund level are $64.50.

Semiannual Report FMV-3

FRANKLIN MANAGED VOLATILITY GLOBAL ALLOCATION VIP FUND

Hypothetical Example for Comparison with Other Mutual Funds

Information in the second line (Hypothetical) of the table can help you compare ongoing expenses of the Fund with those of other mutual funds offered through the Contract. This information may not be used to estimate the actual ending account balance or expenses you incurred during the period. The hypothetical “Ending Account Value” is based on the Fund’s actual expense ratio and an assumed 5% annual rate of return before expenses, which does not represent the Fund’s actual return. The figure under the heading “Fund-Level Expenses Incurred During Period” shows the hypothetical expenses your account would have incurred under this scenario. You can compare this figure with the 5% hypothetical examples that appear in shareholder reports of other funds offered through a Contract.

Class 2	Beginning Account Value 1/1/14		Ending Account Value 6/30/14		Fund-Level Expenses Incurred During Period* 1/1/14–6/30/14
Actual		$1,000		$1,056.20		$5.51
Hypothetical (5% return before expenses)		$1,000		$1,019.44		$5.41

*Expenses are calculated using the most recent six-month annualized

expense ratio, net of expense waivers, for the Fund’s Class 2 shares (1.08%), which does not include any ongoing expenses of the Contract for which the Fund is an investment option, multiplied by the average account value over the period, multiplied by 181/365 to reflect the one-half year period.

FMV-4 Semiannual Report

FRANKLIN MANAGED VOLATILITY GLOBAL ALLOCATION VIP FUND

Class 5 Fund Expenses

As an investor in a variable insurance contract (Contract) that indirectly provides for investment in an underlying mutual fund, you can incur transaction and/or ongoing expenses at both the Fund level and the Contract level.

• Transaction expenses can include sales charges (loads) on purchases, surrender fees, transfer fees and premium taxes.

• Ongoing expenses can include management fees, distribution and service (12b-1) fees, contract fees, annual maintenance fees, mortality and expense risk fees and other fees and expenses. All mutual funds and Contracts have some types of ongoing expenses.

The expenses shown in the table are meant to highlight ongoing expenses at the Fund level only and do not include ongoing expenses at the Contract level, or transaction expenses at either the Fund or Contract levels. While the Fund does not have transaction expenses, if the transaction and ongoing expenses at the Contract level were included, the expenses shown below would be higher. You should consult your Contract prospectus or disclosure document for more information.

The table shows Fund-level ongoing expenses and can help you understand these expenses and compare them with those of other mutual funds offered through the Contract. The table assumes a $1,000 investment held for the six months indicated. Please refer to the Fund prospectus for additional information on operating expenses.

Actual Fund Expenses

The first line (Actual) of the table provides actual account values and expenses. The “Ending Account Value” is derived from the Fund’s actual return, which includes the effect of ongoing Fund expenses, but does not include the effect of ongoing Contract expenses.

You can estimate the Fund-level expenses you incurred during the period by following these steps. Of course, your account value and expenses will differ from those in this illustration:

1. Divide your account value by $1,000.

If an account had an $8,600 value,

then $8,600 ÷ $1,000 = 8.6.

2. Multiply the result by the number under the heading “Fund-Level Expenses Incurred During Period.”

If Fund-Level Expenses Incurred During Period were $7.50, then 8.6 × $7.50 = $64.50.

In this illustration, the estimated expenses incurred this period at the Fund level are $64.50.

Semiannual Report FMV-5

FRANKLIN MANAGED VOLATILITY GLOBAL ALLOCATION VIP FUND

Hypothetical Example for Comparison with Other Mutual Funds

Information in the second line (Hypothetical) of the table can help you compare ongoing expenses of the Fund with those of other mutual funds offered through the Contract. This information may not be used to estimate the actual ending account balance or expenses you incurred during the period. The hypothetical “Ending Account Value” is based on the Fund’s actual expense ratio and an assumed 5% annual rate of return before expenses, which does not represent the Fund’s actual return. The figure under the heading “Fund-Level Expenses Incurred During Period” shows the hypothetical expenses your account would have incurred under this scenario. You can compare this figure with the 5% hypothetical examples that appear in shareholder reports of other funds offered through a Contract.

Class 5	Beginning Account Value 1/1/14		Ending Account Value 6/30/14		Fund-Level Expenses Incurred During  Period* 1/1/14–6/30/14
Actual		$1,000		$1,056.20		$4.74
Hypothetical (5% return before expenses)		$1,000		$1,020.18		$4.66

*Expenses are calculated using the most recent six-month annualized expense ratio, net of expense waivers, for the Fund’s Class 5 shares (0.93%), which does not include any ongoing expenses of the Contract for which the Fund is an investment option, multiplied by the average account value over the period, multiplied by 181/365 to reflect the one-half year period.

FMV-6 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Consolidated Financial Highlights

Franklin Managed Volatility Global Allocation VIP Fund

	Six Months Ended June 30, 2014 (unaudited)			Period Ended December 31, 2013a
Class 2
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$10.07			$10.00
Income from investment operationsb:
Net investment incomec		0.07			0.09
Net realized and unrealized gains (losses)		0.50			0.17
Total from investment operations		0.57			0.26
Less distributions from net investment income		(0.01	)		(0.19	)
Net asset value, end of period		$10.63			$10.07
Total returnd		5.62%			2.56%
Ratios to average net assetse
Expenses before waiver and payments by affiliatesf		1.84%			2.97%
Expenses net of waiver and payments by affiliatesf,g		1.08%			1.08%
Net investment income		1.41%			1.21%
Supplemental data
Net assets, end of period (000’s)		$10,625			$10,065
Portfolio turnover rate		3.93%			8.12%

^aFor the period April 1, 2013 (commencement of operations) to December 31, 2013.

^bThe amount shown for a share outstanding throughout the period may not correlate with the Consolidated Statement of Operations for the period due to the timing of sales and repurchases of the Fund shares in relation to income earned and/or fluctuating market value of the investments of the Fund.

^cBased on average daily shares outstanding.

^dTotal return does not include fees, charges or expenses imposed by the variable annuity and life insurance contracts for which the Franklin Templeton Variable Insurance Products Trust serves as an underlying investment vehicle. Total return is not annualized for periods less than one year.

^eRatios are annualized for periods less than one year.

^fDoes not include expenses of the exchange traded funds in which the Fund invests. The weighted average indirect expenses of the exchange traded funds was 0.09% for the period ended June 30, 2014.

^gBenefit of expense reduction rounds to less than 0.01%.

The accompanying notes are an integral part of these consolidated financial  statements.    |   Semiannual Report FMV-7

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

CONSOLIDATED FINANCIAL HIGHLIGHTS

Franklin Managed Volatility Global Allocation VIP Fund (continued)

	Six Months Ended June 30, 2014 (unaudited)			Period Ended December 31, 2013a
Class 5
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$10.07			$10.00
Income from investment operationsb:
Net investment incomec		0.08			0.10
Net realized and unrealized gains (losses)		0.49			0.17
Total from investment operations		0.57			0.27
Less distributions from net investment income		(0.01	)		(0.20	)
Net asset value, end of period		$10.63			$10.07
Total returnd		5.62%			2.68%
Ratios to average net assetse
Expenses before waiver and payments by affiliatesf		1.69%			2.82%
Expenses net of waiver and payments by affiliatesf,g		0.93%			0.93%
Net investment income		1.56%			1.36%
Supplemental data
Net assets, end of period (000’s)		$10,633			$10,065
Portfolio turnover rate		3.93%			8.12%

^aFor the period April 1, 2013 (commencement of operations) to December 31, 2013.

^bThe amount shown for a share outstanding throughout the period may not correlate with the Consolidated Statement of Operations for the period due to the timing of sales and repurchases of the Fund shares in relation to income earned and/or fluctuating market value of the investments of the Fund.

^cBased on average daily shares outstanding.

^dTotal return does not include fees, charges or expenses imposed by the variable annuity and life insurance contracts for which the Franklin Templeton Variable Insurance Products Trust serves as an underlying investment vehicle. Total return is not annualized for periods less than one year.

^eRatios are annualized for periods less than one year.

^fDoes not include expenses of the exchange traded funds in which the Fund invests. The weighted average indirect expenses of the exchange traded funds was 0.09% for the period ended June 30, 2014.

^gBenefit of expense reduction rounds to less than 0.01%.

FMV-8 Semiannual Report   |    The accompanying notes are an integral part of these consolidated  financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Consolidated Statement of Investments, June 30, 2014 (unaudited)

Franklin Managed Volatility Global Allocation VIP Fund
		Country		Shares/Units		Value
	Common Stocks 4.4%
	Automobiles & Components 0.7%
	Astra International Tbk PT		Indonesia		74,000	$	45,411
	Brilliance China Automotive Holdings Ltd.		China		52,000		97,285
							142,696
	Banks 0.6%
	ICICI Bank Ltd., ADR		India		1,500		74,850
a	National Bank of Greece SA		Greece		861		3,148
	Sberbank of Russia, ADR		Russia		4,615		46,750
							124,748
	Capital Goods 0.0%†
	Samsung Heavy Industries Co. Ltd.		South Korea		10		267
	Consumer Durables & Apparel 0.7%
	Compagnie Financiere Richemont SA		Switzerland		727		76,278
	Fila Korea Ltd.		South Korea		480		45,581
	LF Corp.		South Korea		1,087		29,699
							151,558
	Energy 0.3%
	Gazprom OAO, ADR		Russia		1,200		10,458
b	LUKOIL Holdings, ADR		Russia		900		53,739
	SK Innovation Co. Ltd.		South Korea		38		4,243
							68,440
	Food & Staples Retailing 0.1%
	Bizim Toptan Satis Magazalari AS		Turkey		3,016		26,827
	Food, Beverage & Tobacco 0.5%
	Eastern Tobacco		Egypt		2,100		44,059
	Pinar Sut Mamulleri Sanayii AS		Turkey		4,260		36,183
	Thai Beverage PCL		Thailand		61,000		30,337
							110,579
	Household & Personal Products 0.2%
	Avon Products Inc.		United States		2,927		42,764
	Materials 0.1%
	Compania de Minas Buenaventura SA, ADR		Peru		1,200		14,172
	Semen Indonesia (Persero) Tbk PT		Indonesia		1,500		1,907
							16,079
	Retailing 0.0%†
	Luk Fook Holdings (International) Ltd.		Hong Kong		2,000		5,858
	Semiconductors & Semiconductor Equipment 0.2%
	Taiwan Semiconductor Manufacturing Co. Ltd.		Taiwan		11,000		46,581
	Software & Services 0.6%
a,c	Mail.ru Group Ltd., GDR, Reg S		Russia		558		19,670
	Travelsky Technology Ltd., H		China		90,000		82,795
a	Yandex NV, A		Russia		636		22,667
							125,132
	Telecommunication Services 0.1%
	China Unicom (Hong Kong) Ltd.		China		12,000		18,580
	Transportation 0.3%
	COSCO Pacific Ltd.		China		44,308		61,513
	Total Common Stocks (Cost $877,421)						941,622
d	Exchange Traded Funds 52.2%
	Domestic Equity 21.4%
	iShares MSCI USA Minimum Volatility Index ETF		United States		122,000		4,540,840
	Foreign Equity 30.8%
	iShares MSCI EAFE Minimum Volatility Index ETF		United States		100,100		6,544,538
	Total Exchange Traded Funds (Cost $9,892,641)						11,085,378

Semiannual Report FMV-9

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

CONSOLIDATED STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Managed Volatility Global Allocation VIP Fund (continued)

		Country		Shares/Units			Value
e	Exchange Traded Notes (Cost $927,123) 4.4%
	Diversified Financials 4.4%
a,f,g	iPATH Dow Jones-UBS Commodity Index Total Return ETN, 6/12/36		United States		23,800			938,672
	Preferred Stocks 0.4%
	Banks 0.2%
	Banco Bradesco SA, ADR, pfd.		Brazil		3,500			50,820
	Materials 0.2%
	Vale SA, ADR, pfd., A		Brazil		3,500			41,650
	Total Preferred Stocks (Cost $115,822)							92,470
				Principal Amount*
	Foreign Government and Agency Securities 25.4%
	Development Bank of Japan,
	1.70%, 9/20/22		Japan		10,000,000	JPY		108,573
	senior bond, 2.30%, 3/19/26		Japan		10,000,000	JPY		115,702
	France Treasury Note, 1.75%, 2/25/17		France		200,000	EUR		285,629
	Government of Canada, 2.75%, 6/01/22		Canada		160,000	CAD		158,365
c	Government of Finland, senior bond, Reg S, 4.375%, 7/04/19		Finland		150,000	EUR		244,659
	Government of France, 3.25%, 4/25/16		France		150,000	EUR		217,242
	Government of Ireland, 5.50%, 10/18/17		Ireland		150,000	EUR		239,124
	Government of Japan, senior bond,
	0.40%, 6/20/16		Japan		35,000,000	JPY		347,678
	1.20%, 6/20/21		Japan		30,000,000	JPY		314,748
	1.90%, 6/20/31		Japan		15,000,000	JPY		164,885
	2.20%, 3/20/41		Japan		15,000,000	JPY		166,738
	Government of Malaysia, 3.197%, 10/15/15		Malaysia		500,000	MYR		155,621
	Government of Mexico, 8.00%, 12/07/23		Mexico		15,000	h MXN		135,453
c	Government of Netherlands, Reg S, 1.75%, 7/15/23		Netherlands		200,000	EUR		283,798
	Government of Poland,
	5.75%, 9/23/22		Poland		300,000	PLN		115,544
	4.00%, 10/25/23		Poland		300,000	PLN		103,117
	Government of Singapore, senior note, 1.375%, 10/01/14		Singapore		200,000	SGD		160,894
	Government of Spain, 5.75%, 7/30/32		Spain		150,000	EUR		267,982
	Italy Treasury Bond,
c	Reg S, 3.50%, 3/01/30		Italy		150,000	EUR		209,629
	senior bond, 4.25%, 9/01/19		Italy		150,000	EUR		234,073
	senior bond, 5.50%, 9/01/22		Italy		150,000	EUR		252,273
c	senior bond, Reg S, 4.75%, 9/01/44		Italy		200,000	EUR		312,684
	Queensland Treasury Corp.,
	senior bond, 5.75%, 7/22/24		Australia		150,000	AUD		162,126
	senior note, 6.00%, 7/21/22		Australia		150,000	AUD		163,454
c	U.K. Treasury Note, Reg S, 4.00%, 3/07/22		United Kingdom		250,000	GBP		475,158
	Total Foreign Government and Agency Securities (Cost $5,277,065)							5,395,149
	U.S. Government and Agency Securities 10.4%
	U.S. Treasury Bond, 4.25%, 5/15/39		United States		100,000			117,234
	U.S. Treasury Note,
	2.375%, 8/31/14		United States		100,000			100,387
	0.25%, 9/30/14		United States		350,000			350,185
	0.25%, 1/15/15		United States		400,000			400,398
	4.625%, 11/15/16		United States		300,000			328,465
	4.00%, 8/15/18		United States		300,000			332,449
	2.00%, 11/15/21		United States		300,000			296,192
	1.75%, 5/15/22		United States		300,000			288,703
	Total U.S. Government and Agency Securities (Cost $2,250,156)							2,214,013
	Total Investments before Short Term Investments (Cost $19,340,228)							20,667,304
				Shares
	Short Term Investments (Cost $262,320) 1.3%
	Money Market Funds 1.3%		United States		262,320			262,320
a,i	Institutional Fiduciary Trust Money Market Portfolio

FMV-10 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

CONSOLIDATED STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Managed Volatility Global Allocation VIP Fund (continued)

Total Investments (Cost $19,602,548) 98.5%		20,929,624
Other Assets, less Liabilities 1.5%		328,659
Net Assets 100.0%	$	21,258,283

^†Rounds to less than 0.1% of net assets.

^*The principal amount is stated in U.S. dollars unless otherwise indicated.

^aNon-income producing.

^bAt June 30, 2014, pursuant to the Fund’s policies and the requirements of applicable securities law, the Fund may be restricted from trading this security for a limited or extended period of time due to ownership limits and/or potential possession of material non-public information.

^cSecurity was purchased pursuant to Regulation S under the Securities Act of 1933, which exempts from registration securities offered and sold outside of the United States. Such a security cannot be sold in the United States without either an effective registration statement filed pursuant to the Securities Act of 1933, or pursuant to an exemption from registration. These securities have been deemed liquid under guidelines approved by the Trust’s Board of Trustees. At June 30, 2014, the aggregate value of these securities was $1,545,598, representing 7.27% of net assets.

^dSee Note 1(d) regarding exchange traded funds.

^eSee Note 1(e) regarding exchange traded notes.

^fThe security is owned by MVGAF Holdings Corp., a wholly-owned subsidiary of the Fund. See Note 1(f).

^gSecurity does not guarantee any return of principal at maturity, upon redemption or otherwise. Cash payment at maturity or upon early redemption is based on the performance of the indicated index less an investor fee.

^hPrincipal amount is stated in 100 Mexican Peso Units.

ⁱSee Note 3(e) regarding investments in the Institutional Fiduciary Trust Money Market Portfolio.

At June 30, 2014, the fund had the following forward exchange contracts outstanding. See Note 1(c).

Forward Exchange Contracts
Currency	Counterpartya		Type		Quantity		Contract Amount		Settlement Date		Unrealized Appreciation		Unrealized Depreciation
Euro		BZWS		Sell		300,000	$	406,536		9/08/14	$	—	$	(4,404	)
Australian Dollar		BZWS		Sell		330,000		304,435		9/10/14		—		(5,244	)
British Pound		BZWS		Sell		20,000		33,490		9/10/14		—		(713	)
Net unrealized appreciation (depreciation)													$	(10,361	)

^aMay be comprised of multiple contracts using the same currency and settlement date.

See Abbreviations on page 25.

The accompanying notes are an integral part of these financial statements.    |   Semiannual Report FMV-11

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Consolidated Financial Statements

Consolidated Statement of Assets and Liabilities

June 30, 2014 (unaudited)

	Franklin Managed Volatility Global Allocation VIP Fund
Assets:
Investments in securities:
Cost - Unaffiliated issuers	$	19,340,228
Cost - Sweep Money Fund (Note 3e)		262,320
Total cost of investments	$	19,602,548
Value - Unaffiliated issuers	$	20,667,304
Value - Sweep Money Fund (Note 3e)		262,320
Total value of investments		20,929,624
Cash		132,815
Receivables:
Dividends and interest		246,940
Affiliates		7,016
Other assets		9
Total assets		21,316,404
Liabilities:
Payables:
Investment securities purchased		15,278
Management fees		884
Distribution fees		6,142
Professional fees		22,285
Unrealized depreciation on forward exchange contracts		10,361
Accrued expenses and other liabilities		3,171
Total liabilities		58,121
Net assets, at value	$	21,258,283
Net assets consist of:
Paid-in capital	$	19,887,306
Undistributed net investment income		98,601
Net unrealized appreciation (depreciation)		1,317,090
Accumulated net realized gain (loss)		(44,714	)
Net assets, at value	$	21,258,283
Class 2:
Net assets, at value	$	10,625,153
Shares outstanding		1,000,000
Net asset value and maximum offering price per share	$	10.63
Class 5
Net assets, at value	$	10,633,130
Shares outstanding		1,000,000
Net asset value and maximum offering price per share	$	10.63

FMV-12 Semiannual Report   |    The accompanying notes are an integral part of these consolidated financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

CONSOLIDATED FINANCIAL STATEMENTS

Consolidated Statement of Operations

for the six months ended June 30, 2014 (unaudited)

	Franklin Managed Volatility Global Allocation VIP Fund
Investment income:
Dividends	$	10,632
Dividends - Exchange traded funds		182,544
Interest		60,255
Total investment income		253,431
Expenses:
Management fees (Note 3a)		101,713
Distribution fees: (Note 3c)
Class 2		12,712
Class 5		5,087
Custodian fees (Note 4)		369
Reports to shareholders		1,342
Registration and filing fees		2,107
Professional fees		29,123
Amortization of offering costs		51,188
Other		2,043
Total expenses		205,684
Expense reductions (Note 4)		(29	)
Expenses waived/paid by affiliates (Note 3f)		(103,434	)
Net expenses		102,221
Net investment income		151,210
Realized and unrealized gains (losses):
Net realized gain (loss) from:
Investments		81,336
Foreign currency transactions		(10,670	)
Net realized gain (loss)		70,666
Net change in unrealized appreciation (depreciation) on:
Investments		930,158
Translation of other assets and liabilities denominated in foreign currencies		(13,110	)
Net change in unrealized appreciation (depreciation)		917,048
Net realized and unrealized gain (loss)		987,714
Net increase (decrease) in net assets resulting from operations	$	1,138,924

The accompanying notes are an integral part of these consolidated financial  statements.    |   Semiannual Report FMV-13

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

CONSOLIDATED FINANCIAL STATEMENTS

Consolidated Statements of Changes in Net Assets

	Franklin Managed Volatility Global Allocation VIP Fund
	Six Months Ended June 30, 2014 (unaudited)			Period Ended December 31, 2013a
Increase (decrease) in net assets:
Operations:
Net investment income	$	151,210		$	194,538
Net realized gain (loss) from investments, foreign currency transactions and futures contracts		70,666			(79,821	)
Net change in unrealized appreciation (depreciation) on investments and translation of other assets and liabilities denominated in foreign currencies		917,048			400,042
Net increase (decrease) in net assets resulting from operations		1,138,924			514,759
Distributions to shareholders from:
Net investment income:
Class 2		(5,700	)		(186,300	)
Class 5		(5,700	)		(197,700	)
Total distributions to shareholders		(11,400	)		(384,000	)
Capital share transactions: (Note 2)
Class 2		—			10,000,000
Class 5		—			10,000,000
Total capital share transactions		—			20,000,000
Net increase (decrease) in net assets		1,127,524			20,130,759
Net assets:
Beginning of period		20,130,759			—
End of period	$	21,258,283		$	20,130,759
Undistributed net investment income (distributions in excess of net investment income) included in net assets:
End of period	$	98,601		$	(41,209	)

^aFor the period April 1, 2013 (commencement of operations) to December 31, 2013.

FMV-14 Semiannual Report   |    The accompanying notes are an integral part of these consolidated financial statements.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Notes to Consolidated Financial Statements (unaudited)

Franklin Managed Volatility Global Allocation VIP Fund

1. Organization and Significant Accounting Policies

Franklin Templeton Variable Insurance Products Trust (Trust) is registered under the Investment Company Act of 1940, as amended, (1940 Act) as an open-end management investment company, consisting of twenty separate funds and applies the specialized accounting and reporting guidance in U.S. Generally Accepted Accounting Principles (U.S. GAAP). The Franklin Managed Volatility Global Allocation VIP Fund (Fund) is included in this report. The financial statements of the remaining funds in the Trust are presented separately. Shares of the Fund are generally sold only to insurance company separate accounts to fund the benefits of variable life insurance policies or variable annuity contracts. The Fund offers two classes of shares: Class 2 and Class 5. Each class of shares differs by its distribution fees, voting rights on matters affecting a single class and its exchange privilege.

The Fund invests a significant portion of its assets in exchange traded funds (ETFs). The Fund relies on exemptive orders granted by the U.S. Securities and Exchange Commission (SEC) to the ETFs that permit the Fund to invest in certain ETFs beyond the 1940 Act’s limitations on a fund’s investment in other investment companies, subject to certain terms and conditions set forth in the exemptive orders. The accounting policies of the ETFs are outlined in their respective shareholder reports. A copy of each ETF’s shareholder report, in which the Fund invests, is available on the SEC website at sec.gov or at the SEC’s Public Reference Room in Washington, D.C. The ETFs’ shareholder reports are not covered by this report.

The following summarizes the Fund’s significant accounting policies.

a. Financial Instrument Valuation

The Fund’s investments in financial instruments are carried at fair value daily. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. The Fund calculates the net asset value (NAV) per share at the close of the New York Stock Exchange (NYSE), generally at 4 p.m. Eastern time (NYSE close) on each day the NYSE is open for trading. Under compliance policies and procedures approved by the Trust’s Board of Trustees (the Board), the Fund’s administrator has responsibility for oversight of valuation, including leading the cross-functional Valuation and Liquidity Oversight Committee (VLOC). The VLOC provides administration and oversight of the Fund’s valuation policies and procedures, which are approved annually by the Board. Among other things, these procedures allow the Fund to utilize independent pricing services, quotations from securities and financial instrument dealers, and other market sources to determine fair value.

Equity securities, ETFs, and exchange traded notes listed on an exchange or on the NASDAQ National Market System are valued at the last quoted sale price or the official closing price of the day, respectively. Foreign equity securities are valued as of the close of trading on the foreign stock exchange on which the security is primarily traded or as of the NYSE close, whichever is earlier. The value is then converted into its U.S. dollar equivalent at the foreign exchange rate in effect at the NYSE close on the day that the value of the security is determined. Over-the-counter (OTC) securities are valued within the range of the most recent quoted bid and ask prices. Securities that trade in multiple markets or on multiple exchanges are valued according to the broadest and most representative market. Certain equity securities are valued based upon fundamental characteristics or relationships to similar securities. Investments in open-end mutual funds are valued at the closing net asset value.

Semiannual Report FMV-15

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Franklin Managed Volatility Global Allocation VIP Fund (continued)

Debt securities generally trade in the OTC market rather than on a securities exchange. The Fund’s pricing services use multiple valuation techniques to determine fair value. In instances where sufficient market activity exists, the pricing services may utilize a market-based approach through which quotes from market makers are used to determine fair value. In instances where sufficient market activity may not exist or is limited, the pricing services also utilize proprietary valuation models which may consider market characteristics such as benchmark yield curves, credit spreads, estimated default rates, anticipated market interest rate volatility, coupon rates, anticipated timing of principal repayments, underlying collateral, and other unique security features in order to estimate the relevant cash flows, which are then discounted to calculate the fair value. Securities denominated in a foreign currency are converted into their U.S. dollar equivalent at the foreign exchange rate in effect at the NYSE close on the date that the values of the foreign debt securities are determined.

Certain derivative financial instruments (derivatives) trade in the OTC market. The Fund’s pricing services use various techniques including industry standard option pricing models and proprietary discounted cash flow models to determine the fair value of those instruments. The Fund’s net benefit or obligation under the derivative contract, as measured by the fair value of the contract, is included in net assets.

The Fund has procedures to determine the fair value of financial instruments for which market prices are not reliable or readily available. Under these procedures, the VLOC convenes on a regular basis to review such financial instruments and considers a number of factors, including significant unobservable valuation inputs, when arriving at fair value. The VLOC primarily employs a market-based approach which may use related or comparable assets or liabilities, recent transactions, market multiples, book values, and other relevant information for the investment to determine the fair value of the investment. An income-based valuation approach may also be used in which the anticipated future cash flows of the investment are discounted to calculate fair value. Discounts may also be applied due to the nature or duration of any restrictions on the disposition of the investments. Due to the inherent uncertainty of valuations of such investments, the fair values may differ significantly from

the values that would have been used had an active market existed. The VLOC employs various methods for calibrating these valuation approaches including a regular review of key inputs and assumptions, transactional back-testing or disposition analysis, and reviews of any related market activity.

Trading in securities on foreign securities stock exchanges and OTC markets may be completed before the daily NYSE close. In addition, trading in certain foreign markets may not take place on every NYSE business day. Occasionally, events occur between the time at which trading in a foreign security is completed and the close of the NYSE that might call into question the reliability of the value of a portfolio security held by the Fund. As a result, differences may arise between the value of the Fund’s portfolio securities as determined at the foreign market close and the latest indications of value at the close of the NYSE. In order to minimize the potential for these differences, the VLOC monitors price movements following the close of trading in foreign stock markets through a series of country specific market proxies (such as baskets of American Depositary Receipts, futures contracts and exchange traded funds). These price movements are measured against established trigger thresholds for each specific market proxy to assist in determining if an event has occurred that may call into question the reliability of the values of the foreign securities held by the Fund. If such an event occurs, the securities may be valued using fair value procedures, which may include the use of independent pricing services.

Also, when the last day of the reporting period is a non-business day, certain foreign markets may be open on those days that the NYSE is closed, which could result in differences between the value of the Fund’s portfolio securities on the last business day and the last calendar day of the reporting period. Any significant security valuation changes due to an open foreign market are adjusted and reflected by the Fund for financial reporting purposes.

b. Foreign Currency Translation

Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars based on the exchange rate of such currencies against U.S. dollars on the date of valuation. The

FMV-16 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Franklin Managed Volatility Global Allocation VIP Fund (continued)

Fund may enter into foreign currency exchange contracts to facilitate transactions denominated in a foreign currency. Purchases and sales of securities, income and expense items denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date. Portfolio securities and assets and liabilities denominated in foreign currencies contain risks that those currencies will decline in value relative to the U.S. dollar. Occasionally, events may impact the availability or reliability of foreign exchange rates used to convert the U.S. dollar equivalent value. If such an event occurs, the foreign exchange rate will be valued at fair value using procedures established and approved by the Board.

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

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

c. Derivative Financial Instruments

The Fund invested in derivatives in order to manage risk or gain exposure to various other investments or markets. Derivatives are financial contracts based on an underlying or notional amount, require no initial investment or an initial net investment that is smaller than would normally be required to have a similar response to changes in market factors, and require or permit net settlement. Derivatives contain various risks including the potential inability of the counterparty to fulfill their obligations under the terms of the contract, the potential for an illiquid secondary market, and/or the potential for market movements which expose the Fund to gains or losses in excess of the

amounts shown on the Consolidated Statement of Assets and Liabilities. Realized gain and loss and unrealized appreciation and depreciation on these contracts for the period are included in the Consolidated Statement of Operations.

Derivative counterparty credit risk is managed through a formal evaluation of the creditworthiness of all potential counterparties. The Fund attempts to reduce its exposure to counterparty credit risk on OTC derivatives, whenever possible, by entering into International Swaps and Derivatives Association (ISDA) master agreements with certain counterparties. These agreements contain various provisions, including but not limited to collateral requirements, events of default, or early termination. Termination events applicable to the counterparty include certain deteriorations in the credit quality of the counterparty. Termination events applicable to the Fund include failure of the Fund to maintain certain net asset levels and/or limit the decline in net assets over various periods of time. In the event of default or early termination, the ISDA master agreement gives the non-defaulting party the right to net and close-out all transactions traded, whether or not arising under the ISDA agreement, to one net amount payable by one counterparty to the other. However, absent an event of default or early termination, OTC derivative assets and liabilities are presented gross and not offset in the Statement of Assets and Liabilities. Early termination by the counterparty may result in an immediate payment by the Fund of any net liability owed to that counterparty under the ISDA agreement. At June 30, 2014, the Fund had OTC derivatives in a net liability position of $10,361.

Collateral requirements differ by type of derivative. Collateral terms are contract specific for OTC derivatives. For OTC derivatives traded under an ISDA master agreement, posting of collateral is required by either the fund or the applicable counterparty if the total net exposure of all OTC derivatives with the applicable counterparty exceeds the minimum transfer amount, which typically ranges from $100,000 to $250,000, and can vary depending on the counterparty and the type of the agreement. Generally, collateral is determined at the close of fund business each day and any additional collateral required due to changes in derivative values may be delivered by the fund or the counterparty within a few business days. Collateral

Semiannual Report FMV-17

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Franklin Managed Volatility Global Allocation VIP Fund (continued)

pledged and/or received by the fund, if any, is held in segregated accounts with the fund’s custodian/counterparty broker and can be in the form of cash and/or securities. Unrestricted cash may be invested according to the Fund’s investment objectives.

The Fund entered into OTC forward exchange contracts primarily to manage and/or gain exposure to certain foreign currencies. A forward exchange contract is an agreement between the Fund and a counterparty to buy or sell a foreign currency at a specific exchange rate on a future date.

See Note 8 regarding other derivative information.

d. Exchange Traded Funds

The Fund purchases ETFs. ETFs are registered investment companies under the 1940 Act and provide access to the returns of stock indices, bond indices, or a basket of assets and are intended to replicate the economic effects that would apply had the Fund directly purchased the underlying referenced asset or basket of assets. There is a risk that the investment managers of the ETFs may make investment decisions that have a negative impact on the performance of the Fund.

e. Exchange Traded Notes

The Fund purchases exchange traded notes. Exchange traded notes are senior, unsecured, unsubordinated debt securities issued by an underwriting bank. Exchange traded notes are designed to provide investors access to the returns of various market benchmarks and intended to replicate the economic effects that would apply had the Fund directly purchased the underlying referenced asset or basket of assets. The risks of exchange traded notes include the credit risk of the issuer, counterparty risk, and the potential inability of the Fund to dispose of the exchange traded note in the normal course of business.

f. Investment in MVGAF Holdings Corp. (MVGAF Subsidiary)

The Fund invests in certain financial instruments through its investment in the MVGAF Subsidiary. The MVGAF Subsidiary is a Cayman Islands exempted liability company, is a wholly-owned subsidiary of the Fund, and is able to invest in certain financial instruments consistent with the investment objective of the Fund. At June 30, 2014, the MVGAF Subsidiary investments as well as any other assets and liabilities of the MVGAF Subsidiary are reflected in the Fund’s Consolidated Statement of Investments and Consolidated Statement of Assets and Liabilities. The financial statements have been consolidated and include the accounts of the Fund and the MVGAF Subsidiary. All intercompany transactions and balances have been eliminated. At June 30, 2014, the net assets of the MVGAF Subsidiary were $1,071,929, representing 5.04% of the Fund’s consolidated net assets. The Fund’s investment in the MVGAF Subsidiary is limited to 25% of consolidated assets.

g. Income and Deferred Taxes

It is the Fund’s policy to qualify as a regulated investment company under the Internal Revenue Code. The Fund intends to distribute to shareholders substantially all of its taxable income and net realized gains to relieve it from federal income and if applicable, excise taxes. As a result, no provision for U.S. federal income taxes is required.

The Fund may be subject to foreign taxation related to income received, capital gains on the sale of securities and certain foreign currency transactions in the foreign jurisdictions in which it invests. Foreign taxes, if any, are recorded based on the tax regulations and rates that exist in the foreign markets in which the Fund invests. When a capital gain tax is determined to apply the Fund records an estimated deferred tax liability in an amount that would be payable if the securities were disposed of on the valuation date.

FMV-18 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Franklin Managed Volatility Global Allocation VIP Fund (continued)

The Fund recognizes the tax benefits of uncertain tax positions only when the position is “more likely than not” to be sustained upon examination by the tax authorities based on the technical merits of the tax position. As of June 30, 2014, and for all open tax years, the Fund has determined that no liability for unrecognized tax benefits is required in the Fund’s financial statements related to uncertain tax positions taken on a tax return (or expected to be taken on future tax returns). Open tax years are those that remain subject to examination and are based on each tax jurisdiction statute of limitation.

h. Security Transactions, Investment Income, Expenses and Distributions

Security transactions are accounted for on trade date. Realized gains and losses on security transactions are determined on a specific identification basis. Interest income and estimated expenses are accrued daily. Amortization of premium and accretion of discount on debt securities are included in interest income. Dividend income is recorded on the ex-dividend date except that certain dividends from foreign securities are recognized as soon as the Fund is notified of the ex-dividend date. Distributions to shareholders are recorded on the ex-dividend date and are determined according to income tax regulations (tax basis). Distributable earnings determined on a tax basis may differ from earnings recorded in accordance with accounting principles generally accepted in the United States of America. These differences may be permanent or temporary. Permanent differences are reclassified among capital accounts to reflect their tax character. These reclassifications have no impact on net assets or the results of operations. Temporary differences are not reclassified, as they may reverse in subsequent periods.

Common expenses incurred by the Trust are allocated among the funds based on the ratio of net assets of each fund to the combined net assets of the Trust. Fund specific expenses are charged directly to the fund that incurred the expense.

The Fund indirectly bears its proportionate share of expenses from the ETFs. Since the ETFs have varied expense levels and the Fund may own different proportions of the ETFs at different times, the amount of expenses incurred indirectly by the Fund will vary.

Realized and unrealized gains and losses and net investment income, not including class specific expenses, are allocated daily to each class of shares based upon the relative proportion of net assets of each class. Differences in per share distributions, by class, are generally due to differences in class specific expenses.

i. Organization and Offering Costs

Organization costs were expensed as incurred. Offering costs are amortized on a straight line basis over twelve months.

j. Accounting Estimates

The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the amounts of income and expenses during the reporting period. Actual results could differ from those estimates.

k. Guarantees and Indemnifications

Under the Trust’s organizational documents, its officers and trustees are indemnified by the Trust against certain liabilities arising out of the performance of their duties to the Trust. Additionally, in the normal course of business, the Trust, on behalf of the Fund, enters into contracts with service providers that contain general indemnification clauses. The Trust’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Trust that have not yet occurred. Currently, the Trust expects the risk of loss to be remote.

Semiannual Report FMV-19

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Franklin Managed Volatility Global Allocation VIP Fund (continued)

2. Shares of Beneficial Interest

At June 30, 2014, there were an unlimited number of shares authorized (without par value). Transactions in the Fund’s shares were as follows:

	Six Months Ended June 30, 2014				Period Ended December 31, 2013a
	Shares		Amount		Shares		Amount
Class 2 Shares:
Shares sold		—	$	—		1,000,000	$	10,000,000
Class 5 Shares:
Shares sold		—	$	—		1,000,000	$	10,000,000

^aFor the period April 1, 2013 (commencement of operations) to December 31, 2013.

3. Transactions with Affiliates

Franklin Resources, Inc. is the holding company for various subsidiaries that together are referred to as Franklin Templeton Investments. Certain officers and trustees of the Fund are also officers and/or directors of the following subsidiaries:

Subsidiary	Affiliation
Franklin Advisers, Inc. (Advisers)	Investment manager
Franklin Alternative Strategies Advisors, LLC (FASA)	Investment manager
Franklin Templeton Investment Management Limited (FTIML)	Investment manager
Templeton Asset Management Ltd. (TAML)	Investment manager
Franklin Templeton Services, LLC (FT Services)	Administrative manager
Franklin Templeton Distributors, Inc. (Distributors)	Principal underwriter
Franklin Templeton Investor Services, LLC (Investor Services)	Transfer agent

Effective April 1, 2014, the Fund’s investment manager is FASA. Prior to April 1, 2014, Advisers was the Fund’s investment manager.

a. Management Fees

Effective April 1, 2014, the Fund and the MVGAF Subsidiary pay an investment management fee to FASA based on the average daily net assets of the Fund and the MVGAF Subsidiary as follows:

Annualized Fee Rate	Net Assets
1.000%	Up to and including $1 billion
0.980%	Over $1 billion, up to and including $5 billion
0.960%	Over $5 billion, up to and including $10 billion
0.940%	Over $10 billion, up to and including $15 billion
0.920%	Over $15 billion, up to and including $20 billion
0.900%	In excess of $20 billion

Prior to April 1, 2014, the Fund and the MVGAF Subsidiary paid the investment management fee to Advisers.

Management fees paid by the Fund are reduced on assets invested in the MVGAF Subsidiary, in an amount not to exceed the management fees paid by MVGAF Subsidiary.

FMV-20 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Franklin Managed Volatility Global Allocation VIP Fund (continued)

Under a subadvisory agreement, Advisers, FTIML and TAML, affiliates of FASA, provide subadvisory services to the Fund. The subadvisory fee is paid by FASA based on the Fund’s average daily net assets, and is not an additional expense of the Fund.

b. Administrative Fees

Effective April 1, 2014, under an agreement with FASA, FT Services provides administrative services to the Fund and the MVGAF Subsidiary. The fees are paid by FASA based on the Fund and the MVGAF Subsidiary’s average daily net assets, and are not additional expenses of the Fund and the MVGAF Subsidiary. Prior to April 1, 2014, the fees were paid by Advisers.

c. Distribution Fees

The Board has adopted distribution plans for Class 2 and Class 5 shares pursuant to Rule 12b-1 under the 1940 Act. Under the Fund’s compensation distribution plans, the Fund pays Distributors for costs incurred in connection with the servicing, sale and distribution of the Fund’s shares up to 0.35% and 0.10% per year of its average daily net assets of Class 2 and Class 5, respectively. Some distribution fees are not charged on shares held by affiliates. The Board has agreed to limit the current rate to 0.25% per year for Class 2. The plan year, for purposes of monitoring compliance with the maximum annual plan rates, is February 1 through January 31.

d. Transfer Agent Fees

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

e. Investment in Institutional Fiduciary Trust Money Market Portfolio

The Fund invests in the Institutional Fiduciary Trust Money Market Portfolio (Sweep Money Fund), an affiliated open-end management investment company. Management fees paid by the Fund are waived on assets invested in the Sweep Money Fund, in an amount not to exceed the management and administrative fees paid directly or indirectly by the Sweep Money Fund, as noted on the Consolidated Statement of Operations. Prior to January 1, 2014, the waiver was accounted for as a reduction to management fees.

f. Waiver and Expense Reimbursements

FASA has contractually agreed in advance to waive or limit its fees and to assume as its own expense certain expenses otherwise payable by the Fund so that the expenses (excluding distribution fees, and acquired fund fees and expenses), for each class of the Fund do not exceed 0.83% based on the average net assets of each class (other than certain non-routine expenses or costs, including those relating to litigation, indemnification, reorganizations, and liquidations) until April 30, 2015.

g. Other Affiliated Transactions

At June 30, 2014, Advisers owned 100% of the Fund’s outstanding shares. Investment activities of this shareholder could have a material impact on the Fund.

4. Expense Offset Arrangement

The Fund and the MVGAF Subsidiary have entered into an arrangement with their custodian whereby credits realized as a result of uninvested cash balances are used to reduce a portion of the Fund’s and the MVGAF Subsidiary’s custodian expenses. During the period ended June 30, 2014, the custodian fees were reduced as noted in the Consolidated Statement of Operations.

Semiannual Report FMV-21

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Franklin Managed Volatility Global Allocation VIP Fund (continued)

5. Income Taxes

For tax purposes, capital losses may be carried over to offset future capital gains, if any.

At December 31, 2013, the Fund had capital loss carryforwards as follows:

Capital loss carryforwards:
Short term	$	44,055
Long term		71,325
Total capital loss carryforwards	$	115,380

At June 30, 2014, the cost of investments and net unrealized appreciation (depreciation) for income tax purposes were as follows:

Cost of investments	$	19,677,534
Unrealized appreciation	$	1,579,494
Unrealized depreciation		(327,404	)
Net unrealized appreciation (depreciation)	$	1,252,090

Differences between income and/or capital gains as determined on a book basis and a tax basis are primarily due to differing treatments of foreign currency transactions, bond discounts and premiums, and offering costs.

6. Investment Transactions

Purchases and sales of investments (excluding short term securities) for the period ended June 30, 2014, aggregated $1,013,821 and $775,854, respectively.

7. Concentration of Risk

Investing in foreign securities may include certain risks and considerations not typically associated with investing in U.S. securities, such as fluctuating currency values and changing local and regional economic, political and social conditions, which may result in greater market volatility. In addition, certain foreign securities may not be as liquid as U.S. securities.

FMV-22 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Franklin Managed Volatility Global Allocation VIP Fund (continued)

8. Other Derivative Information

At June 30, 2014, the Fund’s investments in derivative contracts are reflected on the Consolidated Statement of Assets and Liabilities as follows:

	Asset Derivatives			Liability Derivatives
Derivative Contracts Not Accounted for as Hedging Instruments	Consolidated Statement of Assets and Liabilities Location	Fair Value Amount		Consolidated Statement of Assets and Liabilities Location	Fair Value Amount
Foreign exchange contracts	Unrealized appreciation on forward exchange contracts	$	—	Unrealized depreciation on forward exchange contracts	$	10,361

For the period ended June 30, 2014, the effect of derivative contracts on the Fund’s Consolidated Statement of Operations was as follows:

Derivative Contracts Not Accounted for as Hedging Instruments	Consolidated Statement of Operations Locations	Realized Gain (Loss) for the Period			Change in Unrealized Appreciation (Depreciation) for the Period
Foreign exchange contracts	Net realized gain (loss) from foreign currency transactions / Net change in unrealized appreciation (depreciation) on translation of other assets and liabilities denominated in foreign currencies	$	(12,880	)	$	(12,910	)

For the period ended June 30, 2014, the average month end fair value of derivatives represented 0.05% of average month end net assets. The average month end number of open derivative contracts for the period was 2.

See Note 1(c) regarding derivative financial instruments.

9. Credit Facility

The Fund, together with other U.S. registered and foreign investment funds (collectively, Borrowers), managed by Franklin Templeton Investments, are borrowers in a joint syndicated senior unsecured credit facility totaling $1.5 billion (Global Credit Facility) which matures on February 13, 2015. This Global Credit Facility provides a source of funds to the Borrowers for temporary and emergency purposes, including the ability to meet future unanticipated or unusually large redemption requests.

Under the terms of the Global Credit Facility, the Fund shall, in addition to interest charged on any borrowings made by the Fund and other costs incurred by the Fund, pay its share of fees and expenses incurred in connection with the implementation and maintenance of the Global Credit Facility, based upon its relative share of the aggregate net assets of all of the Borrowers, including an annual commitment fee of 0.07% based upon the unused portion of the Global Credit Facility. These fees are reflected in other expenses on the Consolidated Statement of Operations. During the period ended June 30, 2014, the Fund did not use the Global Credit Facility.

10. Fair Value Measurements

The Fund follows a fair value hierarchy that distinguishes between market data obtained from independent sources (observable inputs) and the Fund’s own market assumptions (unobservable inputs). These inputs are used in determining the value of the Fund’s financial instruments and are summarized in the following fair value hierarchy:

• Level 1 – quoted prices in active markets for identical financial instruments

Semiannual Report FMV-23

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Franklin Managed Volatility Global Allocation VIP Fund (continued)

10. Fair Value Measurements (continued)

• Level 2 – other significant observable inputs (including quoted prices for similar financial instruments, interest rates, prepayment speed, credit risk, etc.)

• Level 3 – significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of financial instruments)

The input levels are not necessarily an indication of the risk or liquidity associated with financial instruments at that level.

For movements between the levels within the fair value hierarchy, the Fund has adopted a policy of recognizing the transfers as of the date of the underlying event which caused the movement.

A summary of inputs used as of June 30, 2014, in valuing the Fund’s assets and liabilities carried at fair value, is as follows:

	Level 1		Level 2		Level 3		Total
Assets:
Investments in Securities:
Equity Investments:a
Energy	$	4,243	$	64,197	$	—	$	68,440
Other Equity Investmentsb		965,652		—		—		965,652
Exchange Traded Funds		11,085,378		—		—		11,085,378
Exchange Traded Notes		938,672		—		—		938,672
Foreign Government and Agency Securities		—		5,395,149		—		5,395,149
U.S. Government and Agency Securities		—		2,214,013		—		2,214,013
Short Term Investments		262,320		—		—		262,320
Total Investments in Securities	$	13,256,265	$	7,673,359	$	—	$	20,929,624
Liabilities:
Other Financial Instruments
Forward Exchange Contracts	$	—	$	10,361	$	—	$	10,361

^aIncludes common and preferred stocks as well as other equity investments.

^bFor detailed categories, see the accompanying Consolidated Statement of Investments.

11. New Accounting Pronouncements

In June 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-11, Transfers and Servicing (Topic 860), Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures. The ASU changes the accounting for certain repurchase agreements and expands disclosure requirements related to repurchase agreements, securities lending, repurchase-to-maturity and similar transactions. The ASU is effective for interim and annual reporting periods beginning after December 15, 2014. Management is currently evaluating the impact, if any, of applying this provision.

12. Subsequent Events

The Fund has evaluated subsequent events through the issuance of the financial statements and determined that no events have occurred that require disclosure.

FMV-24 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Franklin Managed Volatility Global Allocation VIP Fund (continued)

Abbreviations

Counterparty		Currency		Selected Portfolio
BZWS	- Barclays Bank PLC	AUD	- Australian Dollar	ADR	- American Depositary Receipt
		CAD	- Canadian Dollar	ETF	- Exchange Traded Fund
		EUR	- Euro	ETN	- Exchange Traded Note
		GBP	- British Pound	GDR	- Global Depositary Receipt
		JPY	- Japanese Yen
		MXN	- Mexican Peso
		MYR	- Malaysian Ringgit
		PLN	- Polish Zloty
		SGD	- Singapore Dollar

Semiannual Report FMV-25

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

INDEX DESCRIPTIONS

The indexes are unmanaged and include reinvested distributions.

For indexes sourced by Morningstar: © 2014 Morningstar. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information.

Source for MSCI Indexes: MSCI.

For Russell Indexes: Frank Russell Company is the source and owner of the Russell Index data contained or reflected in this material and all trademarks and copyrights related thereto. This is a presentation of Licensee. The presentation may contain confidential information and unauthorized use, disclosure, copying, dissemination or redistribution is strictly prohibited. Frank Russell Company is not responsible for the formatting or configuration of this material or for any inaccuracy in Licensee’s presentation thereof.

Barclays U.S. Aggregate Index is a market capitalization-weighted index representing the U.S. investment-grade, fixed-rate, taxable bond market with index components for government and corporate, mortgage pass-through and asset-backed securities. All issues included are SEC registered, taxable, dollar denominated and nonconvertible, must have at least one year to final maturity and must be rated investment grade (Baa3/BBB-/BBB- or higher) using the middle rating of Moody’s, Standard & Poor’s and Fitch, respectively.

Barclays U.S. Government Index: Intermediate Component is the intermediate component of the Barclays U.S. Government Index, which includes public obligations of the U.S. Treasury with at least one year to final maturity and publicly issued debt of U.S. government agencies, quasi-federal corporations, and corporate or foreign debt guaranteed by the U.S. government.

Citigroup World Government Bond Index is a market capitalization-weighted index consisting of investment-grade world government bond markets.

Consumer Price Index (CPI) is a commonly used measure of the inflation rate.

Credit Suisse (CS) High Yield Index is designed to mirror the investable universe of the U.S. dollar-denominated high yield debt market.

Dow Jones Industrial Average is a price-weighted average of blue-chip stocks that are generally the leaders in their industry.

Dow Jones-UBS Commodity Index is a broadly diversified index designed to allow investors to track commodity futures through a single, simple measure. The index reflects the return on fully collateralized positions in the underlying futures contracts on physical commodities, which are reweighted and rebalanced annually on a price-percentage basis. The Dow Jones-UBS Commodity Indices^SM are a joint product of DJI Opco, LLC, a subsidiary of S&P Dow Jones Indices LLC, and UBS Securities LLC (“UBS”) and have been licensed for use to S&P Opco, LLC and Franklin Templeton Companies, LLC. S&P^® is a registered trademark of Standard & Poor’s Financial Services LLC, Dow Jones^® and DJ are registered trademarks of Dow Jones Trademark Holdings LLC, and “UBS” is a registered trademark of UBS AG. All content of the Dow Jones-UBS Commodity Indices^SM © S&P Dow Jones Indices LLC and UBS and their respective affiliates 2014. Reproduction of Dow Jones-UBS Commodity Indices^SM in any form is prohibited except with the prior written permission of S&P. S&P does not guarantee the accuracy, adequacy, completeness or availability of any information and is not responsible for any errors or omissions, regardless of the cause or for the results obtained from the use of such information. S&P DISCLAIMS ANY AND ALL EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE. In no event shall S&P be liable for any direct, indirect, special or consequential damages, costs, expenses, legal fees, or losses (including lost income or lost profit and opportunity costs) in connection with subscriber’s or others’ use of Dow Jones-UBS Commodity Indices^SM.

FTSE EPRA/NAREIT Developed Index is a free float-adjusted index designed to measure the performance of publicly traded real estate securities in the North American, European and Asian real estate markets. The FTSE EPRA/NAREIT Developed Index (“the Index”) is not in any way sponsored, endorsed, sold or promoted by FTSE International Limited (“FTSE”), by the London Stock Exchange Group companies (“LSEG”), Euronext N.V. (“Euronext”), European Public Real Estate Association (“EPRA”), or the National Association of Real Estate Investment Trusts (“NAREIT”) (together the “Licensor Parties”) and none of the Licensor Parties makes any warranty or representation whatsoever, expressly or impliedly, either as to the results to be obtained from the use of the Index and/or the figure at which the said Index stands at any particular

Semiannual Report I-1

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

INDEX DESCRIPTIONS

time on any particular day or otherwise. The Index is compiled and calculated by FTSE. However, none of the Licensor Parties shall be liable (whether in negligence or otherwise) to any person for any error in the Index and none of the Licensor Parties shall be under any obligation to advise any person of any error therein. “FTSE^®” is a trademark of LSEG, “NAREIT^®” is a trademark of the National Association of Real Estate Investment Trusts and “EPRA^®” is a trademark of EPRA and all are used by FTSE under license.

J.P. Morgan (JPM) Global Government Bond Index (GGBI) tracks total returns for liquid, fixed-rate, domestic government bonds with maturities greater than one year issued by developed countries globally.

Lipper Multi-Sector Income Funds Classification Average is calculated by averaging the total returns of all funds within the Lipper Multi-Sector Income Funds classification in the Lipper Open-End underlying funds universe. Lipper Multi-Sector Income Funds are defined as funds that seek current income by allocating assets among different fixed income securities sectors (not primarily in one sector except for defensive purposes), including U.S. and foreign governments, with a significant portion rated below investment grade. For the six-month period ended 6/30/14, there were 254 funds in this category. Lipper calculations do not include contract fees, expenses or sales charges, and may have been different if such charges had been considered.

Lipper VIP Equity Income Funds Classification Average is an equally weighted average calculation of performance figures for all funds within the Lipper Equity Income Funds classification in the Lipper VIP underlying funds universe. Lipper Equity Income Funds seek relatively high current income and growth of income through investing 60% or more of their portfolios in equities. For the six-month period ended 6/30/14, there were 65 funds in this category. Lipper calculations do not include contract fees, expenses or sales charges, and may have been different if such charges had been considered.

Lipper VIP General U.S. Government Funds Classification Average is an equally weighted average calculation of performance figures for all funds within the Lipper General U.S. Government Funds classification in the Lipper VIP underlying funds universe. Lipper General U.S. Government Funds invest primarily in U.S. government and agency issues. For the six-month period ended 6/30/14, there were 49 funds in this category. Lipper calculations do not include contract fees, expenses or sales charges, and may have been different if such charges had been considered.

Lipper VIP High Yield Funds Classification Average is an equally weighted average calculation of performance figures for all funds within the Lipper High Yield Funds Classification in the Lipper VIP underlying funds universe. Lipper High Yield Funds aim at high (relative) current yield from fixed income securities, have no quality or maturity restrictions, and tend to invest in lower grade debt issues. For the six-month period ended 6/30/14, there were 112 funds in this category. Lipper calculations do not include contract fees, expenses or sales charges, and may have been different if such charges had been considered.

MSCI All Country World Index (ACWI) is a free float-adjusted, market capitalization-weighted index designed to measure equity market performance in global developed and emerging markets.

MSCI Emerging Markets (EM) Index is a free float-adjusted, market capitalization-weighted index designed to measure equity market performance in global emerging markets.

MSCI Europe, Australasia, Far East (EAFE) Index is a free float-adjusted, market capitalization-weighted index designed to measure equity market performance in global developed markets excluding the U.S. and Canada.

MSCI Europe, Australasia, Far East (EAFE) Index Net Return (Local Currency) is a free float-adjusted, market capitalization-weighted index designed to measure equity market performance of global developed markets excluding the U.S. and Canada. The index is calculated in local currency and includes reinvested daily net dividends.

MSCI World Index is a free float-adjusted, market capitalization-weighted index designed to measure equity market performance in global developed markets.

Russell 1000^® Growth Index is market capitalization weighted and measures performance of those Russell 1000 Index companies with higher price-to-book ratios and higher forecasted growth values.

Russell 1000 Index is market capitalization weighted and measures performance of the largest companies in the Russell 3000^® Index, which represents the majority of the U.S. market’s total capitalization.

Russell 1000 Value Index is market capitalization weighted and measures performance of those Russell 1000 Index companies with lower price-to-book ratios and lower forecasted growth values.

I-2 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

INDEX DESCRIPTIONS

Russell 2500^TM Index is market capitalization weighted and measures performance of the smallest companies in the Russell 3000 Index, which represent a modest amount of the Russell 3000 Index’s total market capitalization.

Russell 2500 Value Index is market capitalization weighted and measures performance of those Russell 2500 Index companies with lower price-to-book ratios and lower forecasted growth values.

Russell 3000 Growth Index is market capitalization weighted and measures performance of those Russell 3000 Index companies with higher price-to-book ratios and higher forecasted growth values.

Russell 3000 Index is market capitalization weighted and measures performance of the largest U.S. companies based on total market capitalization and represents the majority of the investable U.S. equity market.

Russell Midcap^® Growth Index is market capitalization weighted and measures performance of those Russell Midcap Index companies with higher price-to-book ratios and higher forecasted growth values.

Russell Midcap Index is market capitalization weighted and measures performance of the smallest companies in the Russell 1000 Index, which represent a modest amount of the Russell 1000 Index’s total market capitalization.

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Standard & Poor’s/International Finance Corporation Investable (S&P/IFCI) Composite Index is a free float-adjusted, market capitalization-weighted index designed to measure equity performance in global emerging markets. S&P/IFCI Composite Index: Copyright © 2014, S&P Dow Jones Indices LLC. All rights reserved. Reproduction of S&P IFCI index data in any form is prohibited except with the prior written permission of S&P. S&P does not guarantee the accuracy, adequacy, completeness or availability of any information and is not responsible for any errors or omissions, regardless of the cause or for the results obtained from the use of such information. S&P DISCLAIMS ANY AND ALL EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE. In no event shall S&P be liable for any direct, indirect, special or consequential damages, costs, expenses, legal fees, or losses (including lost income or lost profit and opportunity costs) in connection with subscriber’s or others’ use of S&P IFCI index data.

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Board Review of Investment Management Agreement

At a meeting held April 15, 2014, the Board of Trustees (Board), including a majority of non-interested or independent Trustees, approved renewal of the investment management agreement for each of the separate funds within the Trust (Fund(s)). In reaching this decision, the Board took into account information furnished throughout the year at regular Board meetings, as well as information prepared specifically in connection with the annual renewal review process. Information furnished and discussed throughout the year included investment performance reports and related financial information for each Fund, along with periodic reports on expenses, shareholder services, legal and compliance matters, pricing, brokerage commissions and execution and other services provided by the Investment Manager (Manager) and its affiliates. Information furnished specifically in connection with the renewal process included reports prepared by Lipper, Inc. (Lipper), an independent organization, as well as additional material, including a Fund profitability analysis prepared by management. The Lipper reports compared a Fund’s investment performance and expenses with those of other mutual funds deemed comparable to the Fund as selected by Lipper. No Lipper reports, however, were furnished with respect to the newly formed Franklin Managed Volatility Global Allocation VIP Fund in view of its short period of operation and absence of third-party shareholders. The Fund profitability analysis discussed the profitability to Franklin Templeton Investments from its overall U.S. fund operations, as well as on an individual fund-by-fund basis. Additional material accompanying such profitability analysis included information on a fund-by-fund basis listing portfolio managers and other accounts they manage, as well as information on management fees charged by the Manager and its affiliates to U.S. mutual funds and other accounts, including management’s explanation of differences where relevant. Such material also included a memorandum prepared by management describing project initiatives and capital investments relating to the services provided to the Funds by the Franklin Templeton Investments organization, as well as a memorandum relating to economies of scale.

In considering such materials, the independent Trustees received assistance and advice from and met separately with independent counsel. While the investment management agreements for all Funds were considered at the same Board meeting, the Board dealt with each Fund separately. In approving continuance of the investment management agreement for each Fund, the Board, including a majority of independent Trustees, determined that the existing management fee structure was fair and reasonable and that continuance of the investment management agreement was in the best interests of each Fund and its shareholders. While attention was given to all

information furnished, the following discusses some primary factors relevant to the Board’s decision.

Nature, Extent and Quality of Service. The Board was satisfied with the nature and quality of the overall services provided by the Manager and its affiliates to the Funds and their shareholders. In addition to investment performance and expenses discussed later, the Board’s opinion was based, in part, upon periodic reports furnished them showing that the investment policies and restrictions for each Fund were consistently complied with as well as other reports periodically furnished the Board covering matters such as the compliance of portfolio managers and other management personnel with the code of ethics adopted throughout the Franklin Templeton fund complex, the adherence to fair value pricing procedures established by the Board, and the accuracy of net asset value calculations. Favorable consideration was given to management’s continual efforts and expenditures in establishing back-up systems and recovery procedures to function in the event of a natural disaster, it being noted that such systems and procedures had functioned well during the Florida hurricanes and blackouts experienced in previous years, and that those operations in the New York/New Jersey area ran smoothly during the period of the 2012 Hurricane Sandy. Among other factors taken into account by the Board were the Manager’s best execution trading policies, including a favorable report by an independent portfolio trading analytical firm, which also covered FOREX transactions. Consideration was also given to the experience of each Fund’s portfolio management team, the number of accounts managed and general method of compensation. In this latter respect, the Board noted that a primary factor in management’s determination of a portfolio manager’s bonus compensation was the relative investment performance of the funds he or she managed and that a portion of such bonus was required to be invested in a predesignated list of funds within such person’s fund management area so as to be aligned with the interests of shareholders. Particular attention was given to management’s conservative approach and diligent risk management procedures, including continual monitoring of counterparty credit risk and attention given to derivatives and other complex instruments, including expanded collateralization requirements. The Board also took into account, among other things, management’s efforts in establishing a global credit facility for the benefit of the Funds and other accounts managed by Franklin Templeton Investments to provide a source of cash for temporary and emergency purposes or to meet unusual redemption requests as well as the strong financial position of the Manager’s parent company and its commitment to the mutual fund business as evidenced by its subsidization of money market funds.

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Investment Performance. The Board placed significant emphasis on the investment performance of each of the Funds in view of its importance to shareholders. While consideration was given to performance reports and discussions with portfolio managers at Board meetings throughout the year, particular attention in assessing performance was given to the Lipper reports furnished for the agreement renewals of all Funds. The Lipper reports prepared for each of the individual Funds showed the investment performance of Class 1 shares for those having such class of shares and Class 2 shares for those Funds that did not have Class 1 shares, in comparison to a performance universe selected by Lipper. Comparative performance for each Fund was shown for the one-year period ended January 31, 2014, and previous periods ended that date of up to 10 years unless otherwise noted. Performance was shown on a total return basis for each Fund and in certain cases, as indicated, on an income return basis as well. The following summarizes the performance results for each of the Funds and the Board’s view of such performance.

Franklin Flex Cap Growth Securities Fund – The performance universe for this Fund, which has been in operation for less than 10 full years, consisted of the Fund and all multi-cap growth funds underlying variable insurance products as selected by Lipper. The Lipper report showed the Fund’s comparative total return for the one-year period to be in the second-highest performing quintile of its performance universe, and on an annualized basis to be in the lowest performing quintile of such universe for each of the previous three- and five-year periods. The Board discussed with management the reasons for the Fund’s underperformance during the previous three- and five-year periods, but found the Fund’s overall comparative performance as shown in the Lipper report to be acceptable, noting its favorable one-year performance and that its three- and five-year performance exceeded 11.5% and 18%, respectively, as shown in the Lipper report.

Franklin Global Real Estate Securities Fund – The performance universe for this Fund consisted of the Fund and all global real estate funds underlying variable insurance products as selected by Lipper. The Lipper report showed the Fund’s total return to be in the second-lowest performing quintile of such universe for the one-year period, and on an annualized basis to be in the highest performing quintile of such universe for the previous three-year period, but in the lowest performing quintile of such universe for each of the previous five- and 10-year periods. The Board discussed with management the reasons for the underperformance of the Fund in the one-year period and steps that had been taken by management in recent years to improve

the Fund’s performance, noting that the Fund’s total return as shown in the Lipper report exceeded the median of its Lipper performance universe in each of the previous two-, three- and four-year periods. While the Board intends to continue to monitor the Fund’s performance, it determined that such performance was acceptable.

Franklin Growth and Income Securities Fund – The performance universe for this Fund consisted of the Fund and all equity income funds underlying variable insurance products as selected by Lipper. The Lipper report showed the Fund’s income return during the one-year period to be in the highest or best performing quintile of its performance universe, and on an annualized basis in each of the previous three-, five- and 10-year periods to also be in the highest quintile of such universe. The Lipper report showed the Fund’s total return for the one-year period to be in the highest performing quintile of its performance universe, and on an annualized basis to be in the second-highest performing quintile of such universe for each of the previous three- and five-year periods, and the second-lowest performing quintile of such universe for the previous 10-year period. The Board was satisfied with the Fund’s comparative performance as shown in the Lipper report.

Franklin High Income Securities Fund – The performance universe for this Fund consisted of the Fund and all high yield funds underlying variable insurance products as selected by Lipper. The Lipper report showed the Fund’s income return for the one-year period to be in the highest performing quintile of such universe, and on an annualized basis to be in the second-highest and middle performing quintiles of such universe for the previous three- and five-year periods, respectively, and to be in the second-lowest quintile of such universe for the previous 10-year period. The Lipper report showed the Fund’s total return to be in the highest performing quintile of its performance universe for the one-year period, and on an annualized basis to be in the highest performing quintile of such universe for the previous three-year period, the middle quintile of such universe for the previous five-year period, and the second-highest quintile of such universe for the previous 10-year period. The Board was satisfied with the Fund’s comparative performance as shown in the Lipper report.

Franklin Income Securities Fund – The performance universe for this Fund consisted of the Fund and all mixed-asset target allocation moderate funds underlying variable insurance products as selected by Lipper. The Lipper report showed the Fund’s income return to be in the highest or best performing quintile of such universe for the one-year period and to also be in the highest performing quintile of such universe for each of the previous

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three-, five- and 10-year periods on an annualized basis. The Lipper report showed the Fund’s total return to be in the middle performing quintile of its performance universe for the one-year period, and on an annualized basis to be in the second-highest performing quintile of such universe for the previous three-year period, and the highest or best performing quintiles of such universe for the previous five- and 10-year periods. The Board was satisfied with the Fund’s comparative performance as shown in the Lipper report.

Franklin Large Cap Growth Securities Fund – The performance universe for this Fund consisted of the Fund and all retail and institutional large-cap core funds underlying variable insurance products as selected by Lipper. The Lipper report showed the Fund’s total return to be in the second-lowest performing quintile of such universe for the one-year period, and on an annualized basis to be in the second-lowest performing quintile of such universe for the previous three-year period, and the lowest performing quintile of such universe for each of the previous five- and 10-year periods. The Board discussed with management the reasons for the Fund’s one-year comparative underperformance, which had dragged down its overall annualized performance, and the steps being taken to improve it. In particular, the Board discussed with management the appointment of a new portfolio manager for the Fund, effective May 1, 2014. In view of such discussions, the Board believed that appropriate action was being taken by management to improve performance and that no further changes in portfolio management or investment strategy were warranted, It also observed that, as shown in the Lipper report, the Fund’s total return for the one-year period exceeded 19%, its five-year annualized total return was within 1.33% of the median for the performance universe for such period, and its 10-year annualized total return was within 1.0% of the median for the performance universe for such period.

Franklin Large Cap Value Securities Fund – The performance universe for this Fund, which has been in operation for less than 10 full years, consisted of the Fund and all large-cap value funds underlying variable insurance products as selected by Lipper. The Lipper report showed the Fund’s total return to be in the middle performing quintile of such universe for the one-year period and on an annualized basis to also be in the lowest performing quintile of such universe for the previous three-year period, and the middle performing quintile of such universe for the previous five-year period. The Board found the Fund’s performance acceptable, noting that management was taking appropriate steps to improve it, including the hiring of an experienced analyst to assist the portfolio management team. The Board also noted that the Lipper report showed the Fund’s

one-year total return to exceed the median of its performance universe, its annualized three-year return to be within less than 1 ¹⁄₂% of the performance universe median for such period, and its annualized five-year return to be at the median of the performance universe for such period.

Franklin Rising Dividends Securities Fund – The performance universe for this Fund consisted of the Fund and all multi-cap core funds underlying variable insurance products as selected by Lipper. The Lipper report showed the Fund’s comparative total return to be in the middle performing quintile of the performance universe for the one-year period, and on an annualized basis to be in the highest performing quintile of such universe for the previous three-year period, and the middle performing quintile of such universe for each of the previous five- and 10-year periods. The Board found the Fund’s comparative performance as set forth in the Lipper report to be satisfactory and that no change was needed to the investment strategy followed or manner in which the Fund operates.

Franklin Small Cap Value Securities Fund – The performance universe for this Fund consisted of the Fund and all small-cap value funds underlying variable insurance products as selected by Lipper. The Lipper report showed the Fund’s total return for the one-year period to be in the middle performing quintile of such performance universe, and on an annualized basis to be in either the highest performing quintile or second-highest performing quintile of such universe for each of the previous three-, five- and 10-year periods. The Board was satisfied with the Fund’s comparative performance as set forth in the Lipper report.

Franklin Small-Mid Cap Growth Securities Fund – The performance universe for this Fund consisted of the Fund and all mid-cap growth funds underlying variable insurance products as selected by Lipper. The Lipper report showed the Fund’s total return for the one-year period to be in the second-highest performing quintile of such universe, and on an annualized basis to be in the middle performing quintile of such universe for each of the previous three- and five-year periods, and the second-lowest performing quintile of such universe for the previous 10-year period. The Board noted the Fund’s improved performance and discussed with management portfolio adjustments and the commitment of additional resources to the portfolio team. The Board found the Fund’s performance to be acceptable and noted that the 10-year annualized performance was less than 1% below the performance universe median.

Franklin Strategic Income Securities Fund – The performance universe for this Fund consisted of the Fund and all general bond funds underlying variable insurance products as selected

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by Lipper. The Lipper report showed the Fund’s income return to be in the highest or best performing quintile of such performance universe for the one-year period, and on an annualized basis to also be in the highest performing quintile of such universe during each of the previous three- and five-year periods, and in the second-highest performing quintile of such universe for the previous 10-year period. The Lipper report showed the Fund’s total return to be in the highest performing quintile of such universe during the one-year period, and on an annualized basis to be in either the highest performing or second-highest performing quintile of such universe for each of the previous three-, five- and 10-year periods. The Board was satisfied with the Fund’s performance as shown in the Lipper report.

Franklin Templeton VIP Founding Funds Allocation Fund – The performance universe for this Fund consisted of the Fund and all mixed-asset target allocation growth funds underlying variable insurance products as selected by Lipper. The Fund has been in existence for only six full years and the Lipper report showed its income return to be in the highest performing quintile of such performance universe for the one-year period, and on an annualized basis to also be in the highest performing quintile of such universe for each of the previous three- and five-year periods. The Lipper report showed the Fund’s total return for the one-year period to be in the second-highest performing quintile of such performance universe and on an annualized basis to be in the highest performing quintile of such universe for each of the previous three- and five-year periods. In assessing the relevance of such comparative performance, the Board noted the Fund is not actively managed and that its performance reflects those of the three underlying funds in which it invests in equal portions. The Board was satisfied with the Fund’s performance as shown in the Lipper report.

Franklin U.S. Government Fund – The performance universe for this Fund consisted of the Fund and all general U.S. government funds underlying variable insurance products as selected by Lipper. The Lipper report showed the Fund’s income return for the one-year period to be in the highest performing quintile of such universe and on an annualized basis to also be in the highest performing quintile of such universe for each of the previous three-, five- and 10-year periods. The Lipper report showed the Fund’s total return to be in the second-highest performing quintile of such universe for the one-year period, and on an annualized basis to be in the second-lowest performing quintile of such universe for the previous three-year period, the middle performing quintile of such universe for the previous five-year period, and the second-highest performing quintile of such universe for the previous 10-year period. The Board found the Fund’s comparative performance as shown in

the Lipper report to be acceptable, noting the Fund’s income objective and the nature of the Fund’s investments, which were primarily in U.S. mortgage-backed securities.

Mutual Global Discovery Securities Fund – The performance universe for this Fund consisted of the Fund and all global value funds underlying variable insurance products as selected by Lipper. The Lipper report showed the Fund’s total return to be in the second-highest performing quintile of such universe for the one-year period, and on an annualized basis to be in the middle quintile of such universe for the previous three-year period, the second-lowest performing quintile of such universe for the previous five-year period, and the highest or best performing quintile of such universe for the previous 10-year period. The Board found the Fund’s overall comparative performance as set forth in the Lipper report to be satisfactory, noting that the five-year annualized total return exceeded 14%.

Mutual Shares Securities Fund – The performance universe for this Fund consisted of the Fund and all large-cap value funds underlying variable insurance products as selected by Lipper. The Lipper report showed the Fund’s total return for the one-year period to be in the lowest performing quintile of the performance universe, and on an annualized basis to be in the second-lowest performing quintile of such universe for the previous three-year period, the lowest performing quintile of such universe for the previous five-year period, and the middle performing quintile of such universe for the previous 10-year period. The Board discussed with management the reasons for the one-year underperformance of the Fund and found the Fund’s overall performance as shown in the Lipper report to be acceptable in view of the Manager’s conservative style of investing and its emphasis on risk-adjusted long-term returns and limited volatility. The Board noted that the Fund was in the top half of its Lipper universe when performance is evaluated on a risk-adjusted basis. The Board also observed that the Fund’s one-year total return as shown in the Lipper report was 17.76%.

Templeton Developing Markets Securities Fund – The performance universe for this Fund consisted of the Fund and all emerging markets funds underlying variable insurance products as selected by Lipper. The Lipper report showed the Fund’s comparative total return for the one-year period to be in the second-lowest performing quintile of such performance universe and on an annualized basis to be in the middle performing quintile of such universe for each of the previous three- and five-year periods, and the second-lowest performing quintile of such universe during the previous 10-year period. The Board found the comparative performance of the Fund as set forth in the Lipper report to be acceptable in view of management’s

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explanation that such performance was reflective of the Manager’s bottom-up approach to investing, which was out of favor in current markets, and noted that the annualized performance for the three- and five-year periods exceeded the median while the performance for the 10-year period exceeded 8%. The Board also discussed with management steps it was contemplating to improve the performance, including a more rigorous ongoing review of the fundamentals of each portfolio holding and increased selling discipline where prices have declined.

Templeton Foreign Securities Fund – The performance universe for this Fund consisted of the Fund and all international value funds underlying variable insurance products as selected by Lipper. The Lipper report showed the Fund’s comparative total return for the one-year period to be in the second-highest performing quintile of such performance universe and on an annualized basis to be in either the highest performing quintile or second-highest performing quintile of such universe in each of the previous three-, five- and 10-year periods. The Board was satisfied with the Fund’s comparative investment performance as set forth in the Lipper report.

Templeton Global Bond Securities Fund – The performance universe for this Fund consisted of the Fund and all global income funds underlying variable insurance products as selected by Lipper. The Lipper report showed the Fund’s income return for the one-year period to be in the second-highest performing quintile of such performance universe, and on an annualized basis to be in the highest performing quintile of such universe for each of the previous three-, five- and 10-year periods. The Lipper report showed the Fund’s total return for the one-year period to be in the second-highest performing quintile of its performance universe, and on an annualized basis to be in either the highest or second-highest performing quintile of such universe for each of the previous three-, five- and 10-year periods. The Board was satisfied with the Fund’s comparative performance as set forth in the Lipper report.

Templeton Growth Securities Fund – The performance universe for this Fund consisted of the Fund and all global value funds underlying variable insurance products as selected by Lipper. The Lipper report showed the Fund’s total return for the one-year period to be in the highest or best performing quintile of such performance universe and on an annualized basis to be in the second-highest performing quintile of such universe for each of the previous three- and five-year periods, and the second-lowest performing quintile of such universe for the previous 10-year period. The Board found the Fund’s comparative performance as set forth in the Lipper report to be satisfactory.

Comparative Expenses. Consideration was given to expense comparison information contained in the Lipper reports furnished for each Fund, which compared its management fee and total expense ratio with those of a group of other funds selected by Lipper as its appropriate Lipper expense group. Lipper expense data is based upon information taken from each fund’s most recent annual report, which reflects historical asset levels that may be quite different from those currently existing, particularly in a period of market volatility. While recognizing such inherent limitation and the fact that expense ratios generally increase as assets decline and decrease as assets grow, the Board believed the independent analysis conducted by Lipper to be an appropriate measure of comparative expenses. In reviewing comparative costs, Lipper provides information on the Funds’ contractual investment management fee rate in comparison with the contractual investment management fee rate that would have been charged by other funds within its Lipper expense group assuming they were similar in size to the Fund, as well as the actual total expense ratio of the Fund in comparison with those of its Lipper expense group. The Lipper contractual investment management fee analysis includes administrative charges at the fund level as being part of a management fee, and actual total expenses, for comparative consistency, are shown by Lipper for the same class of shares for all funds within a particular Lipper expense group. The results of such comparisons showed that both the contractual investment management fee rates and actual total expense ratios of the following Funds were in the least expensive quintiles of their respective Lipper expense groups: Franklin Income Securities Fund, Franklin Small Cap Value Securities Fund, Franklin Growth and Income Securities Fund, Franklin High Income Securities Fund, Franklin Strategic Income Securities Fund and Templeton Global Bond Securities Fund. The Board was satisfied with the comparative contractual investment management fees and expenses of these Funds as shown in their Lipper reports. The contractual investment management fee rates of each of Franklin Rising Dividends Securities Fund, Franklin Small-Mid Cap Growth Securities Fund, Franklin U.S. Government Fund, Templeton Foreign Securities Fund and Franklin Templeton VIP Founding Funds Allocation Fund were at or below the medians of their Lipper expense groups, and their actual total expense ratios in each case were below the medians of their Lipper expense groups. The Board was satisfied with the comparative contractual investment management fees and expenses of these Funds as shown in their Lipper reports. The contractual investment management fee rates for Franklin Flex Cap Growth Securities Fund and Franklin Large Cap Value Securities Fund were the highest in their Lipper expense groups, but in each case their actual total expense ratios

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were below the medians of such groups. The Board was satisfied with the comparative expenses of these Funds as shown in their Lipper reports, noting that the expenses of each of these Funds were subsidized through fee waivers. The contractual investment management fee rate as well as actual expense ratio for Franklin Large Cap Growth Securities Fund was in each case above, but within five basis points of, the median of its Lipper expense group. The contractual investment fee rate of Mutual Shares Securities Fund was less than seven basis points higher than the median of its Lipper expense group while its actual expense ratio was at the median of such expense group. The contractual management fee rate and actual expense ratio of Templeton Growth Securities Fund in both cases were above, but within, 12 and six basis points, respectively, of the median of its Lipper expense group. The Board found the comparative expenses of these Funds as shown in their Lipper reports to be acceptable. The contractual investment management fee rate of Templeton Developing Markets Securities Fund was less than five basis points above the median of its Lipper expense group, and its actual total expense ratio was less than eight basis points above the median of its Lipper expense group. The Board found the comparative expenses of this Fund to be acceptable. The contractual investment management fee rate and actual total expense ratio of Mutual Global Discovery Securities Fund were the most expensive in its Lipper expense group, but within 26 basis points and 12 basis points, respectively, of the expense group median. The Board found such expenses to be acceptable in view of the Fund’s overall investment performance and the quality and experience of its portfolio managers. The contractual management fee rate and actual total expense ratio of Franklin Global Real Estate Securities Fund were the most expensive in its Lipper expense group, but within 10 basis points and 22 basis points, respectively, of the expense group median. The Board found such expenses to be acceptable.

Management Profitability. The Board also considered the level of profits realized by the Manager and its affiliates in connection with the operation of each Fund. In this respect, the Board reviewed the Fund profitability analysis that addresses the overall profitability of Franklin Templeton’s U.S. fund business, as well as its profits in providing management and other services to each of the individual funds during the 12-month period ended September 30, 2013, being the most recent fiscal year-end for Franklin Resources, Inc., the Manager’s parent. In reviewing the analysis, the Board recognized that allocation methodologies are inherently subjective and various allocation methodologies may be reasonable while producing different results. In this respect, the Board noted that while management continually makes refinements to its methodologies in response to organizational

and product related changes, the overall approach as defined by the primary drivers and activity measurements has remained consistent with that used in the Funds’ profitability report presentations from prior years. Additionally, the Funds’ independent registered public accounting firm had been engaged by the Manager to periodically review the reasonableness of the allocation methodologies to be used solely by the Funds’ Board in reference to the profitability analysis. In reviewing and discussing such analysis, management discussed with the Board its belief that costs incurred in establishing the infrastructure necessary for the type of mutual fund operations conducted by the Manager and its affiliates may not be fully reflected in the expenses allocated to each Fund in determining its profitability, as well as the fact that the level of profits, to a certain extent, reflected operational cost savings and efficiencies initiated by management. The Board also took into account management’s expenditures in improving services provided the Funds, as well as the need to implement systems to meet additional regulatory and compliance requirements resulting from statutes such as the Sarbanes-Oxley and Dodd-Frank Acts and recent SEC and other regulatory requirements. In addition, the Board considered a third-party study comparing the profitability of the Manager’s parent on an overall basis to other publicly held managers broken down to show profitability from management operations exclusive of distribution expenses, as well as profitability including distribution expenses. The Board also considered the extent to which the Manager and its affiliates might derive ancillary benefits from Fund operations, including potential benefits resulting from allocation of fund brokerage and the use of commission dollars to pay for research. Based upon its consideration of all these factors, the Board determined that the level of profits realized by the Manager and its affiliates from providing services to each Fund was not excessive in view of the nature, quality and extent of services provided.

Economies of Scale. The Board also considered whether economies of scale are realized by the Manager as the Funds grow larger and the extent to which this is reflected in the level of management fees charged. While recognizing that any precise determination is inherently subjective, the Board noted that based upon the Fund profitability analysis, it appears that as some funds get larger, at some point economies of scale do result in the Manager realizing a larger profit margin on management services provided such a fund. The Board also noted that economies of scale are shared with a fund and its shareholders through management fee breakpoints so that as a fund grows in size, its effective management fee rate declines. In the case of Franklin Templeton VIP Founding Funds Allocation Fund, the management fees of the underlying funds in

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which it invests have management fee breakpoints that extend beyond their existing asset sizes, and in the case of each of the other Funds, other than Franklin Rising Dividends Securities Fund, their management fees contain breakpoints that extend beyond their existing asset sizes. To the extent economies of scale may be realized by the manager and its affiliates, the Board believed the schedule of investment management fees provides a sharing of benefits for each Fund and its shareholders. The investment management fee structure of Franklin Rising Dividends Securities Fund provides for a fee of 0.75% on the first $500 million of assets; 0.625% on the next $500 million of assets; and 0.500% on assets in excess of $1 billion. This Fund had assets of $1.8 billion at December 31, 2013, and in reviewing its fee structure, management stated its belief that this fee structure reaches a relatively low rate quickly reflecting anticipated economies of scale. In support of such position, management pointed out the favorable management fee and total expense comparisons of this Fund within its Lipper expense group as previously discussed under “Comparative Expenses.” In light of such position and taking into account the fact that the reduced rate on assets in excess of the last breakpoint lowers the Fund’s overall investment management fee rate, the Board believed that the schedule of investment management fees provides a sharing of benefits for the Fund and its shareholders, but intends to monitor future growth and the appropriateness of adding additional breakpoints. In addition to the investment advisory services provided Franklin Small Cap Value Securities Fund, Mutual Global Discovery Securities Fund, Mutual Shares Securities Fund, Templeton Developing Markets Securities Fund and Templeton Foreign Securities Fund, administrative services are provided each such Fund under a separate agreement at a charge of 0.150% on the first $200 million of assets; 0.135% on the next $500 million of assets; 0.100% on the next $500 million of assets; and 0.75% on assets in excess of $1.2 billion. At the April 15, 2014, Board meeting, the Board eliminated the separate investment management and administrative agreements and approved a new form of investment management agreement for Franklin Small Cap Value Securities Fund, Mutual Global Discovery Securities Fund, Mutual Shares Securities Fund, Templeton Developing Markets Securities Fund and Templeton Foreign Securities Fund combining such services. In approving the new form of investment management agreement, the Board took into account that the types of services would be the same as provided under the previous separate agreements and that the aggregate fee, including breakpoints, would be the same as that charged under the previous separate agreements. The Board noted that combining such services was consistent with Lipper’s methodology of

considering contractual investment management fees to include any separately charged administrative fee.

Proxy Voting Policies and Procedures

The Trust’s investment manager has established Proxy Voting Policies and Procedures (Policies) that the Trust uses to determine how to vote proxies relating to portfolio securities. Shareholders may view the Trust’s complete Policies online at franklintempleton.com. Alternatively, shareholders may request copies of the Policies free of charge by calling the Proxy Group collect at (954) 527-7678 or by sending a written request to: Franklin Templeton Companies, LLC, 300 S.E. 2nd Street, Fort Lauderdale, FL 33301, Attention: Proxy Group. Copies of the Trust’s proxy voting records are also made available online at franklintempleton.com and posted on the U.S. Securities and Exchange Commission’s website at sec.gov and reflect the most recent 12-month period ended June 30.

Quarterly Statement of Investments

The Trust files a complete statement of investments with the U.S. Securities and Exchange Commission for the first and third quarters for each fiscal year on Form N-Q. Shareholders may view the filed Form N-Q by visiting the Commission’s website at sec.gov. The filed form may also be viewed and copied at the Commission’s Public Reference Room in Washington, DC. Information regarding the operations of the Public Reference Room may be obtained by calling (800) SEC-0330.

Semiannual Report SI-7

Semiannual Report

Franklin Templeton

Variable Insurance Products Trust

Investment Managers

Franklin Advisers, Inc.

Franklin Advisory Services, LLC

Franklin Mutual Advisers, LLC

Franklin Templeton Institutional, LLC

Templeton Asset Management Ltd.

Templeton Global Advisors Limited

Templeton Investment Counsel, LLC

Fund Administrator

Franklin Templeton Services, LLC

Distributor

Franklin Templeton Distributors, Inc.

Franklin Templeton Variable Insurance Products Trust (FTVIP) shares are not offered to the public; they are offered and sold only to:

(1) insurance company separate accounts (Separate Account) to serve as the underlying investment vehicle for variable contracts;

(2) certain qualified plans; and (3) other mutual funds (funds of funds).

Authorized for distribution to investors in Separate Accounts only when accompanied or preceded by the current prospectus for the applicable contract, which includes the Separate Account and the FTVIP prospectuses. Investors should carefully consider a fund’s investment goals, risks, charges and expenses before investing. The prospectus contains this and other information; please read it carefully before investing.

To help ensure we provide you with quality service, all calls to and from our service areas are monitored and/or recorded.

©2014 Franklin Templeton Investments. All rights reserved. VIP2 S 08/14

Item 2. Code of Ethics.

(a) The Registrant has adopted a code of ethics that applies to its principal executive officers and principal financial and accounting officer.

(c) N/A

(d) N/A

(f) Pursuant to Item 12(a)(1), the Registrant is attaching as an exhibit a copy of its code of ethics that applies to its principal executive officers and principal financial and accounting officer.

Item 3. Audit Committee Financial Expert.

(a)(1) The Registrant has an audit committee financial expert serving on its audit committee.

   (2) The audit committee financial expert is John B. Wilson and he is “independent” as defined under the relevant Securities and Exchange Commission Rules and Releases.

Item 4. Principal Accountant Fees and Services.            N/A

Item 5. Audit Committee of Listed Registrants.            N/A

Item 6. Schedule of Investments.            N/A

Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.            N/A

Item 8. Portfolio Managers of Closed-End Management Investment Companies.            N/A

Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.            N/A

Item 10. Submission of Matters to a Vote of Security Holders.

There have been no changes to the procedures by which shareholders may recommend nominees to the Registrant’s Board of Trustees that would require disclosure herein.

Item 11. Controls and Procedures.

(a) Evaluation of Disclosure Controls and Procedures. The Registrant maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Registrant’s filings under the Securities Exchange Act of 1934 and the Investment Company Act of 1940 is recorded, processed, summarized and reported within the periods specified in the rules and forms of the Securities and Exchange Commission. Such information is accumulated and communicated to the Registrant’s management, including its principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. The Registrant’s management, including the principal executive officer and the principal financial officer, recognizes that any set of controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

Within 90 days prior to the filing date of this Shareholder Report on Form N-CSR, the Registrant had carried out an evaluation, under the supervision and with the participation of the Registrant’s management, including the Registrant’s principal executive officer and the Registrant’s principal financial officer, of the effectiveness of the design and operation of the Registrant’s disclosure controls and procedures. Based on such evaluation, the Registrant’s principal executive officer and principal financial officer concluded that the Registrant’s disclosure controls and procedures are effective.

(b) Changes in Internal Controls. There have been no changes in the Registrant’s internal controls or in other factors that could materially affect the internal controls over financial reporting subsequent to the date of their evaluation in connection with the preparation of this Shareholder Report on Form N-CSR.

Item 12. Exhibits.

(a)(1) Code of Ethics

(a)(2) Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of Laura F. Fergerson, Chief Executive Officer – Finance and Administration, and Gaston Gardey, Chief Financial Officer and Chief Accounting Officer

(b) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of Laura F. Fergerson, Chief Executive Officer – Finance and Administration, and Gaston Gardey, Chief Financial Officer and Chief Accounting Officer

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Franklin Templeton Variable Insurance Products Trust

By	/s/  LAURA F. FERGERSON
	Laura F. Fergerson
	Chief Executive Officer –
	Finance and Administration
Date August 27, 2014

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

By	/s/  LAURA F. FERGERSON
	Laura F. Fergerson
	Chief Executive Officer –
	Finance and Administration
Date August 27, 2014

By	/s/  GASTON GARDEY
	Gaston Gardey
	Chief Financial Officer and
	Chief Accounting Officer
Date August 27, 2014