-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BgNSLm8bQSK8Kd8fvMFd1G2L0DwPNhN2iJrb/Q7bw1/at1oo1+ouaEpiyaSX3gc0 P0lENgFycUXNsSXwXp+6bg== 0000912057-96-004321.txt : 19960312 0000912057-96-004321.hdr.sgml : 19960312 ACCESSION NUMBER: 0000912057-96-004321 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960311 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: FRANKLIN LIFE VARIABLE ANNUITY FUND A CENTRAL INDEX KEY: 0000038748 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 370281650 STATE OF INCORPORATION: IL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-01990 FILM NUMBER: 96533582 BUSINESS ADDRESS: STREET 1: FRANKLIN SQ CITY: SPRINGFIELD STATE: IL ZIP: 62713 BUSINESS PHONE: 2175282011 MAIL ADDRESS: STREET 1: FRANKLIN SQUARE CITY: SPRINGFIELD STATE: IL ZIP: 62713-0001 N-30D 1 FORM N-30D [THE FRANKLIN LIFE INSURANCE COMPANY LETTERHEAD] Dear Contract Owner: We are pleased to provide this 1995 annual report which shows the status of and balances in your Franklin Life Variable Annuity Fund A contract.
Investment Position as of December 31, 1995 ------------------------------------------- Accumulation Unit Value $69.20 ------ Fixed Portion Interest Rate on Amounts Contributed During Most Recent Contract Year. Current Crediting Rate Not Guaranteed For Future Years. 6.50% * ------
*LESS A CONTRACT EXPENSE CHARGE The economy showed reasonable growth in 1995, with unemployment staying around the 5.6% level and corporate profits continuing to show good growth. The stock market continued its strong performance in the second half of 1995, with the Standard & Poor's 500 Index up 13.1%. The Standard & Poor's 500 Index was up 34.1% for the year.
Variable Portion: December 31, 1995 June 30, 1995 December 31, 1994 ----------------- ----------------- ------------- ----------------- Accumulation Unit Value $69.20 $60.09 $53.99 ----- ------ ------- Percentage Change From: December 31,1994 +28.2% ------ June 30, 1995 +15.2% ------
The accumulation unit value is based on the market price of the investments held by the Fund. A listing of the investments held at December 31, 1995 appears on page 3. FIXED PORTION: As noted above, additional units in the fixed rate portion of your annuity arising from contributions credited during the contract year ending in 1995 were based on a 6.50% interest rate, less a contract expense charge. If your contract anniversary is in the first half of 1996, the interest rate for the fixed portion of your annuity applicable to contributions made during the contract year ending in 1996 is anticipated to be 6.25%, less a contract expense charge. Amounts selected for investment in the fixed rather than the variable portion of your annuity do not participate in the investment experience of the Fund. Contract units resulting from interest added or contributions made during or prior to the contract year ending in 1994 continue to be credited with additional interest based on investment yields which reflect the years during which such units were purchased. Crediting rates are not guaranteed for future years. The U. S. economy, for the first three quarters of 1995, slowed to a more normal 2.5% to 3.0% growth pace, after being up 4.1% in 1994, as indicated by the Gross Domestic Product. The Federal Reserve has changed its interest rate position and lowered the Fed Funds rate in July and December. This rate currently stands at 5.50%. Congress is working on a budget plan that would eliminate the deficit in seven years. This proposed action has created a positive force for both the fixed income and equity markets. Inflation continues to be at an acceptable level. Short term interest rates could stay around the current level, with the possibility of slightly lower rates during the year. The stock market has some potential for an upward move, but many factors will need to be positive for this to happen in 1996. In today's fast-paced world, products, markets, client's needs, and individual risk tolerance all change. In this environment, you may want to take some extra time and review how well this product continues to meet your retirement investment objectives. A Franklin Life representative would be happy to review your financial situation with you and suggest the most appropriate mix of products to provide financial security consistent with your risk tolerance. Cordially yours, /s/Robert J. Gibbons Robert J. Gibbons President and Chief Executive Officer FRANKLIN LIFE VARIABLE ANNUITY FUND A STATEMENT OF ASSETS AND LIABILITIES DECEMBER 31, 1995
Assets Investments-at fair value (cost-$8,118,227): Common stocks $ 8,634,319 Short-term note 1,661,216 ------------ 10,295,535 Cash on deposit 114,797 Dividends and interest receivable 31,435 ------------ Total Assets 10,441,767 Liability - Due to The Franklin Life Insurance Company 12,854 ------------ Contract Owners' Equity Annuity reserves $ 16,105 Value of 150,474 Accumulation Units outstanding, equivalent to $69.199949 per unit 10,412,808 $ 10,428,913 ------------ ------------ STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 1995 Investment Income Dividends $ 167,553 Interest 145,370 Total Income ------------ $ 312,923 Expenses Mortality and expense charges $ 97,809 Investment management services 42,758 Total Expenses 140,567 ------------ ------------ Net Investment Income 172,356 Realized and Unrealized Gain (Loss) on Investments Net realized gain from investment transactions Proceeds from sales $ 1,044,876 Cost of investments sold (identified cost method) 1,028,020 ------------ Net Realized Gain 16,856 Net unrealized appreciation (depreciation) of investments Beginning of year $ ( 77,823) ------------ End of year 2,177,308 ------------ Net Unrealized Appreciation 2,255,131 ------------ Net Gain On Investments 2,271,987 ------------ Net Increase In Contract Owners' Equity Resulting From Operations $ 2,444,343 ------------ ------------
STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY
YEAR ENDED DECEMBER 31 1995 1994 --------------------------- Net investment income $ 172,356 $ 116,171 Net realized gain from investment transactions 16,856 708,267 Net unrealized appreciation (depreciation) of investments 2,255,131 (749,740) --------------------------- Net Increase In Contract Owners' Equity Resulting From Operations 2,444,343 74,698 Net contract purchase payments 354,276 521,549 Reimbursement for contract guarantees 407 3,436 Annuity payments (3,262) (3,002) Withdrawals (1,694,308) (1,936,673) --------------------------- Net Increase (Decrease) in Contract Owners' Equity 1,101,456 (1,339,992) Contract Owners' Equity at Beginning of Year 9,327,457 10,667,449 --------------------------- Contract Owners' Equity At End of Year $10,428,913 $ 9,327,457 --------------------------- ---------------------------
SEE NOTES TO FINANCIAL STATEMENTS 2 FRANKLIN LIFE VARIABLE ANNUITY FUND A PORTFOLIO OF INVESTMENTS DECEMBER 31, 1995
NUMBER OF FAIR SHARES VALUE - ------ ----- COMMON STOCKS (82.8%) BANKING (2.3%) 3,675 Student Loan Marketing Association $242,550 BEVERAGES (3.2%) 3,200 Anheuser-Busch Companies, Inc. 214,000 2,200 PepsiCo, Incorporated 122,925 --------- 336,925 BUSINESS SERVICES (1.2%) 5,600 Equifax Inc. 119,700 CHEMICALS (1.8%) 2,700 Dow Chemical 189,675 COMPUTER SERVICES (3.2%) 8,100 Ceridian Corporation* 334,125 COSMETICS & HOUSEHOLD PRODUCTS (3.5%) 3,200 Dial Corp. 94,800 5,200 Gillette Company 271,050 --------- 365,850 DRUGS & HEALTH CARE (16.9%) 6,100 Eckerd Corporation* 272,213 4,000 Eli Lilly and Company 225,000 4,300 Merck & Company, Inc. 282,187 2,100 Pfizer, Incorporated 132,300 6,450 St. Jude Medical, Inc. 277,350 3,300 Schering-Plough Corporation 180,675 3,000 Stryker Corporation 157,500 8,000 Walgreen Company 239,000 --------- 1,766,225 ELECTRONICS & INSTRUMENTATIONS (2.3%) 2,900 Hewlett-Packard Company 242,875 FOOD PROCESSING (2.1%) 5,300 ConAgra, Inc. 218,625 FOOD - RETAIL (1.8%) 5,700 Albertson's, Inc. 187,387 HOUSEHOLD PRODUCTS (.9%) 3,700 Newell Co. 95,738 MACHINERY - INDUSTRIAL & CONSTRUCTION (1.9%) 1,500 Fluor Corporation 99,000 3000 Trinity Industry 94,500 --------- 193,500 MINING & MINERALS (.8%) 2,000 Cleveland-Cliffs Inc. 82,000 OFFICE EQUIPMENT & SERVICES (9.0%) 2,000 Compaq Computers Corporation* 96,000 5,350 Digital Equipment Corporation* 343,069 2,400 International Business Machines Corporation 219,300 5,900 Policy Management Systems Corporation* 280,987 --------- 939,356 OIL SERVICES & DRILLING (1.5%) 3,100 Halliburton Company $156,938 OILS & OIL RELATED PRODUCTS (9.2%) 2,700 Amoco Corporation 193,050 1,300 Atlantic Richfield Company 143,975 2,500 British Petroleum Company, p.l.c. 255,312 3,700 Diamond Shamrock, Inc. 95,738 2,600 Kerr-McGee Corporation 165,100 3,700 Unocal Corporation 107,763 --------- 960,938 PHOTOGRAPHY (2.6%) 4,100 Eastman Kodak Company 274,700 RESTAURANTS/LODGING (1.3%) 3,400 Marriott International, Inc. 130,050 RETAIL-SPECIALTY (2.4%) 3,600 NIKE, Inc. 250,650 TECHNOLOGY (6.7%) 5,000 AMP, INCORPORATED 191,250 2,200 Diebold, Incorporated 121,825 2,400 Intel Corporation 136,200 3,100 Marshall, Incorporated* 99,587 3,600 Millipore Corporation 148,050 --------- 696,912 UTILITIES-ELECTRIC (6.1%) 6,500 American Electric Power Company, Inc. 263,250 6,900 Baltimore Gas and Electric Company 196,650 4,200 Texas Utilities Company 172,200 --------- UTILITIES - TELEPHONE (2.1%) 632,100 5,000 BellSouth Corporation 217,500 --------- TOTAL COMMON STOCKS (COST-$6,457,011) 8,634,319
PRINCIPAL AMOUNT --------- SHORT-TERM NOTE (15.9%) $1,675,000 United States Treasury Bill due 1/4/96 (cost-$1,661,216) 1,661,216 ----------- TOTAL INVESTMENTS (98.7%) (COST -$8,118,227) 10,295,535 CASH AND RECEIVABLES, LESS LIABILITY (1.3%) 133,378 ----------- TOTAL CONTRACT OWNERS' EQUITY (100.0%) $10,428,913 ----------- -----------
*NON-INCOME PRODUCING INVESTMENT IN 1995. SEE NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- THIS REPORT HAS BEEN PREPARED FOR THE INFORMATION OF FRANKLIN LIFE VARIABLE ANNUITY FUND A CONTRACT OWNERS. IT IS NOT AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS UNLESS PRECEDED OR ACCOMPANIED BY A CURRENT PROSPECTUS. 3 NOTES TO FINANCIAL STATEMENTS NOTE A-SIGNIFICANT ACCOUNTING POLICIES Franklin Life Variable Annuity Fund A (Fund) is a segregated investment account of The Franklin Life Insurance Company (The Franklin) and is registered as an open-end diversified management investment company under the Investment Company Act of 1940, as amended. The Fund no longer issues new contracts. Significant accounting policies of the Fund are as follows: VALUATION OF INVESTMENTS: Investments in common stocks listed on national stock exchanges are valued at closing sales prices. Unlisted common stocks are valued at the most recent bid prices, as supplied by broker-dealers. Short-term notes are valued at cost, which approximates fair value. INVESTMENT TRANSACTIONS AND RELATED INVESTMENT INCOME: Investment transactions are accounted for on the trade date. Dividend income is recorded on the ex- dividend date and interest income is recorded on the accrual basis. FEDERAL INCOME TAXES: Operations of the Fund will form a part of, and be taxed with those of, The Franklin, which is taxed as a "life insurance company" under the Internal Revenue Code. Under current law, no federal income taxes are payable with respect to the Fund. ANNUITY RESERVES: Reserves on contracts, all involving life contingencies, are calculated using the Progressive Annuity Table with an assumed investment rate of 3-1/2%. NOTE B-INVESTMENTS Exclusive of short-term investments, the cost of investments purchased and the proceeds from investments sold during 1995 aggregated $1,578,489 and $1,044,876, respectively. NOTE C-EXPENSES Amounts are paid to The Franklin for investment management services at the rate of .0012% of the current value of the Fund per day (.438% on an annual basis) and for mortality and expense risk assurances at the rate of .002745% of the current value of the Fund per day (1.002% on an annual basis). NOTE D-SALES AND ADMINISTRATIVE CHARGES During the year ended December 31, 1995, sales and administrative charges aggregating $30,845 were deducted from the proceeds of the sales of accumulation units and retained by Franklin Financial Services Corporation and The Franklin. Franklin Financial Services Corporation is a wholly-owned subsidiary of The Franklin and principal underwriter for the Fund. NOTE E-SUMMARY OF CHANGES IN ACCUMULATION UNITS
YEAR ENDED YEAR ENDED DECEMBER 31, 1995 DECEMBER 31, 1994 --------------------- ---------------------- UNITS AMOUNT UNITS AMOUNT ----- ------ ----- ------ Balance at beginning of year 172,507 $ 9,313,322 198,763 $10,652,285 Purchases 5,872 354,276 9,726 521,549 Net investment income* - 171,988 - 113,239 Net realized gain from investment transactions* - 16,819 - 690,391 Net unrealized appreciation (depreciation) of investments* - 2,250,305 - (730,818) Withdrawals (27,905) (1,694,308) (35,982) (1,936,673) Reimbursement for contract guarantees* - 406 - 3,349 ------------------------------------------------- Balance at end of year 150,474 $10,412,808 172,507 $ 9,313,322 ------------------------------------------------- -------------------------------------------------
*Excludes portion allocated to annuity reserves on a pro rata basis. NOTE F-REMUNERATION OF MANAGEMENT No person receives any remuneration from the Fund because The Franklin pays the fees of members of the Board of Managers and officers and employees of the Fund pursuant to expense assurances. Certain members of the Board of Managers and officers of the Fund are also directors, officers or employees of The Franklin or Franklin Financial Services Corporation. Amounts paid by the Fund to The Franklin and to Franklin Financial Services Corporation are disclosed in this report. NOTE G-NET UNREALIZED APPRECIATION/DEPRECIATION OF INVESTMENTS Net unrealized appreciation/depreciation of investments at December 31, 1995 and 1994 was as follows:
DECEMBER 31 DECEMBER 31 1995 1994 ----------- ----------- Gross unrealized appreciation $2,225,359 $351,869 Gross unrealized depreciation 48,051 429,692 ------------------------------ Net unrealized appreciation (depreciation) of investments $2,177,308 $(77,823) ------------------------------ ------------------------------
4 SUPPLEMENTARY INFORMATION PER-UNIT INCOME AND CHANGES IN ACCUMULATION UNIT VALUE (SELECTED DATA AND RATIOS FOR AN ACCUMULATION UNIT OUTSTANDING THROUGHOUT EACH YEAR)
YEAR ENDED DECEMBER 31 1995 1994 1993 1992 1991 ----------------------------------------------- Investment income $1.948 $1.408 $1.231 $1.064 $1.194 Expenses .875 .773 .773 .723 .654 ----------------------------------------------- Net investment income 1.073 .635 .458 .341 .540 Net realized and unrealized gain (loss) on investments 14.139 (.240) .112 .770 14.238 ----------------------------------------------- Net increase in accumulation unit value 15.212 .395 .570 1.111 14.778 Accumulation unit value: Beginning of year 53.988 53.593 53.023 51.912 37.134 ----------------------------------------------- End of year $69.200 $53.988 $53.593 $53.023 $51.912 ----------------------------------------------- ----------------------------------------------- Ratio of expenses to average net assets 1.44% 1.44% 1.44% 2.44% 1.44% Ratio of net investment income to average net assets 1.76% 1.18% .85% .68% 1.19% Portfolio turnover rate 14.66% 88.99% 68.62% 59.84% 28.47% Number of accumulation units outstanding at end of year 150,474 172,507 198,763 217,948 229,368 - ---------------------------------------------------------------------------------------------------------
MATTERS SUBMITTED TO VOTE OF CONTRACT OWNERS An annual meeting of Contract Owners of the Fund was held on April 17, 1995. At the meeting, the individuals named below were elected as Members of the Board of Managers of the Fund, a new Investment Management Agreement between The Franklin and the Fund was approved and Ernst & Young LLP was ratified as the Fund's independent auditors for the ensuing fiscal year. The number of votes cast for, against or withheld, as well as the number of abstentions and broker non-votes, if applicable, as to each matter is set forth in the table below.
Matter Votes: - -------------------------- ---------------------------------------------------- For Against Abstain --- ------- ------- Election of Robert G. Spencer as Member, Board of Managers 84,620 3,192 0 Election of Dr. Robert C. Spencer as Member, Board of Managers 84,908 2,904 0 Election of James W. Voth as Member, Board of Managers 84,858 2,954 0 Election of Clifford L. Greenwalt as Member, Board of Managers 84,858 2,954 0 Approval of new Investment Management Agreement between the Fund and The Franklin 80,996 2,493 4,323 Ratification of Selection of Ernst & Young LLP as independent auditors 82,781 1,137 3,894
5 REPORT OF INDEPENDENT AUDITORS Board of Managers and Contract Owners Franklin Life Variable Annuity Fund A We have audited the accompanying statement of assets and liabilities of Franklin Life Variable Annuity Fund A, including the portfolio of investments, as of December 31, 1995, and the related statements of operations, changes in contract owners' equity, and the table of per-unit income and changes in accumulation unit value for the year then ended. These financial statements and the table of per-unit income and changes in accumulation unit value are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and the table of per-unit income and changes in accumulation unit value based on our audit. The statement of changes in contract owners' equity for the year ended December 31, 1994, and the table of per-unit income and changes in accumulation unit value for each of the four years in the period then ended, were audited by other auditors whose report dated February 1, 1995, expressed an unqualified opinion on that statement and table. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and the table of per-unit income and changes in accumulation unit value are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of investments held by the custodian as of December 31, 1995. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the 1995 financial statements and the 1995 table of per-unit income and changes in accumulation unit value referred to above present fairly, in all material respects, the financial position of Franklin Life Variable Annuity Fund A at December 31, 1995, and the results of its operations, changes in its contract owners' equity, and per-unit income and changes in accumulation unit value for the year then ended in conformity with generally accepted accounting principles. Ernst & Young LLP Chicago, Illinois February 2, 1996 6 -----END PRIVACY-ENHANCED MESSAGE-----