N-CSRS

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: 06/30/15        

Item 1. Reports to Stockholders.

Semiannual Report June 30, 2015

Franklin Templeton

Variable Insurance Products Trust

Franklin Templeton Variable Insurance

Products Trust Semiannual Report

Table of Contents
Important Notes to Performance Information	i
*Statement of Additional Information Supplements for all Funds	SAI-1
Fund Summaries
Franklin Flex Cap Growth VIP Fund	FFC-1
Franklin Founding Funds Allocation VIP Fund	FFA-1
Franklin Global Real Estate VIP Fund	FGR-1
Franklin Growth and Income VIP Fund	FGI-1
Franklin High Income VIP Fund	FH-1
Franklin Income VIP Fund	FI-1
Franklin Large Cap Growth VIP Fund	FLG-1
Franklin Mutual Global Discovery VIP Fund	MGD-1
*Prospectus Supplement	MGD-8
Franklin Mutual Shares VIP Fund	MS-1
Franklin Rising Dividends VIP Fund	FRD-1
Franklin Small Cap Value VIP Fund	FSV-1
Franklin Small-Mid Cap Growth VIP Fund	FSC-1
Franklin Strategic Income VIP Fund	FSI-1
Franklin U.S. Government Securities VIP Fund	FUS-1
Franklin VolSmart Allocation VIP Fund (formerly, Franklin Managed Volatility Global Allocation VIP Fund)	FVA-1
Templeton Developing Markets VIP Fund	TD-1
Templeton Foreign VIP Fund	TF-1
Templeton Global Bond VIP Fund	TGB-1
Templeton Growth VIP Fund	TG-1
*Prospectus Supplement	TG-8
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

SUPPLEMENT DATED JUNE 30, 2015

TO THE STATEMENT OF ADDITIONAL INFORMATION

DATED MAY 1, 2015

OF FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

The statement of additional information (SAI) is amended as follows:

In the section “Glossary of Investments, Techniques, Strategies and Their Risks” under the heading “Foreign securities” the following is added before the paragraph on page 40 that begins with “Developing markets or emerging markets:”

Investing through Stock Connect. Foreign investors may now invest in eligible China A shares (“Stock Connect Securities”) listed and traded on the Shanghai Stock Exchange (“SSE”) through the Shanghai – Hong Kong Stock Connect (“Stock Connect”) program. Stock Connect is a securities trading and clearing program developed by The Stock Exchange of Hong Kong Limited (“SEHK”), SSE, Hong Kong Securities Clearing Company Limited and China Securities Depository and Clearing Corporation Limited for the establishment of mutual market access between SEHK and SSE. In contrast to certain other regimes for foreign investment in Chinese securities, no individual investment quotas or licensing requirements apply to investors in Stock Connect Securities through Stock Connect. In addition, there are no lock-up periods or restrictions on the repatriation of principal and profits.

However, trading through Stock Connect is subject to a number of restrictions that may affect a Fund’s investments and returns. For example, a primary feature of the Stock Connect program is the application of the home market’s laws and rules to investors in a security. Thus, investors in Stock Connect Securities are generally subject to PRC securities regulations and SSE listing rules, among other restrictions. In addition, Stock Connect Securities generally may not be sold, purchased or otherwise transferred other than through Stock Connect in accordance with applicable rules. While Stock Connect is not subject to individual investment quotas, daily and aggregate investment quotas apply to all Stock Connect participants, which may restrict or preclude a Fund’s ability to invest in Stock Connect Securities. For example, an investor cannot purchase and sell the same security on the same trading day. Stock Connect also is generally available only on business days when both the SSE and the SEHK are open. Trading in the Stock Connect Program is subject to trading, clearance and settlement procedures that are untested in the PRC, which could pose risks to a Fund. Finally, the withholding tax treatment of dividends and capital gains payable to overseas investors currently is unsettled.

Stock Connect is in its initial stages. Further developments are likely and there can be no assurance as to whether or how such developments may restrict or affect a Fund’s investments or returns. In addition, the application and interpretation of the laws and regulations of Hong Kong and the PRC, and the rules, policies or guidelines published or applied by relevant regulators and exchanges in respect of the Stock Connect program, are uncertain, and they may have a detrimental effect on a Fund’s investments and returns.

Please keep this supplement with your Statement of Additional Information for future reference.

SAI-1

SUPPLEMENT DATED MAY 1, 2015

TO THE STATEMENT OF ADDITIONAL INFORMATION

DATED MAY 1, 2015

OF FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

The statement of additional information (SAI) is amended as follows:

I. The section entitled “Calculation of Net Asset Value” in the SAI is removed in its entirety.

Please keep this supplement with your statement of additional information for future reference.

SAI-2

Franklin Flex Cap Growth VIP Fund

We are pleased to bring you Franklin Flex Cap Growth VIP Fund’s semiannual report for the period ended June 30, 2015.

Class 2 Performance Summary as of June 30, 2015

The Fund’s Class 2 Shares delivered a +7.02% total return* for the six-month period ended June 30, 2015.

*The Fund has an expense reduction contractually guaranteed through at least 4/30/16 and a fee waiver associated with any investment 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 FFC-1

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 +3.96% total return, the Russell 3000^® Growth Index delivered a +4.33% total return, and the Standard & Poor’s^® 500 Index (S&P 500^®) produced a +1.23% total return for the same period.¹

Economic and Market Overview

U.S. economic growth was mixed during the six months under review. In 2015’s first quarter, U.S. dollar strength, low energy prices, and a labor dispute at West Coast ports led exports to decline. Lower business investment and state and local government spending also weighed on the economy, while increases in consumer spending, residential investment and private inventory investment offered some support. In the

second quarter, business capital spending rebounded and manufacturing and non-manufacturing activities increased, contributing to strong job gains that helped the unemployment rate decline from 5.6% in December 2014 to 5.3% in June 2015.² Housing market data were generally encouraging as home sales and prices rose. After a brief, winter slump, retail sales rebounded in the spring as strong employment gains led to broad-based improvement, especially for auto and gasoline sales. Inflation, as measured by the Consumer Price Index, rose during the six months amid generally higher energy prices bouncing from recent lows.

During the six-month period, the Federal Reserve Board (Fed) kept its target interest rate at 0%–0.25% while considering when an increase would be appropriate. The Fed anticipated raising its target rate when it saw further labor market progress and was reasonably confident that inflation would move back to 2% over the medium term. In its June meeting, the Fed lowered its 2015 economic growth forecast and raised unemployment estimates given the weak start to the year.

Investor confidence grew during the period as corporate profits remained healthy, the Fed showed caution about raising interest rates, economic data in Europe and Japan improved and China introduced more stimulus measures. However, the stock markets endured some sell-offs when many investors reacted to debt negotiations between Greece and its creditors, geopolitical tensions in certain regions, and less robust growth in China. For the six months under review, U.S. stocks, as measured by the S&P 500 and the Dow Jones Industrial Average, rose marginally after both reached all-time highs in May.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

1. Source: 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

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.

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, key contributors included stock selection in information technology (IT), as well as stock selection and an overweighting in health care.⁴ Also helping relative results was stock selection in financials.⁵

In the IT sector, video game developer Electronic Arts, network security company Palo Alto Networks and off-benchmark, Netherlands-based semiconductor company NXP Semiconductors were among the top performers. Electronic Arts performed well during the period under the new leadership of chief executive officer Andrew Wilson and chief financial officer Blake Jorgenson. The company benefited from three factors: the new generation of video game consoles, the proliferation of mobile gaming on smartphones and the margin-enhancing shift to digital game downloads. Palo Alto Networks demonstrated solid market share and operating income gains in an environment characterized by cyber attacks and strong enterprise security spending. NXP is a leading supplier of highly secure communication and microcontroller products. The company benefited from its leading intellectual properties in the fields of cryptography and near field communications. NXP products enable secure passports, toll passes and emerging wireless payments via smartphones and chip-based credit cards. The company will merge with Freescale Semiconductor, which will create one of the largest mixed-signal semiconductor companies in the world.

In the health care sector, major contributors included Biogen, DexCom and our off-benchmark position in Valeant Pharmaceuticals International. Biotechnology company Biogen’s stock rose after the company presented positive phase I and II trial data for Aducanumab, a therapy for Alzheimer’s disease. Biogen heightened investor sentiment months before the data were released by issuing positive news about the drug. The company’s stock price, however, corrected following disappointing first-quarter results amid slowed growth of Tecfidera, a drug used to treat multiple sclerosis. DexCom, a manufacturer of glucose

monitoring systems for diabetes management, announced it expected the Food and Drug Administration to approve the

4. The IT sector comprises semiconductors and semiconductor equipment, software and services, and technology hardware and equipment in the SOI. The health care sector comprises health care equipment and services; and pharmaceuticals, biotechnology and life sciences in the SOI.

5. The financials sector comprises banks and diversified financials in the SOI.

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FRANKLIN FLEX CAP GROWTH VIP FUND

launch of two new products later this year that could sustain the company’s penetration into the continuous glucose monitor market. Headquartered in Canada, Valeant Pharmaceuticals contributed to relative returns following its report of strong revenue growth in 2015’s first quarter. The company also stated that it expected its acquisition of Salix Pharmaceuticals to expand its product offering in future years.

Although all Fund sectors contributed to relative results during the period, the Fund had a number of major individual detractors. Precision Castparts continued to struggle amid weak power and energy end markets.⁶ Further hurting its shares were a large aerospace customer’s inventory reduction of Precision Castparts’ products and new competitive pressures from Alcoa’s titanium aerospace components business. Spirit Airlines was negatively affected by lower airfares as a result of excess capacity, particularly in the Dallas market after the Dallas Love Field Airport opened to national routes. Business-oriented social networking service LinkedIn in IT suffered from a disappointing first quarter after having a strong rebound in the latter half of 2014. The company announced that future earnings could be dampened by foreign currency exchange rates and confusion around the accounting for its acquisition of online education company Lynda.com. Also, the popularity of LinkedIn’s current advertising display format offset the strength of its newer ad formats. Medical device maker Insulet in health care announced it expected distributors would reduce their inventory levels in the company’s first quarter, a move that could significantly curtail Insulet’s 2015 revenue growth.⁶

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, 2015, 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 10 Holdings
6/30/15
Company Sector/Industry	% of Total Net Assets
Apple Inc. Technology Hardware & Equipment		6.9%
Allergan PLC Pharmaceuticals, Biotechnology & Life Sciences		4.6%
MasterCard Inc., A Software & Services		3.7%
Biogen Inc. Pharmaceuticals, Biotechnology & Life Sciences		3.3%
Celgene Corp. Pharmaceuticals, Biotechnology & Life Sciences		3.0%
Affiliated Managers Group Inc. Diversified Financials		2.5%
McKesson Corp. Health Care Equipment & Services		2.4%
Facebook Inc., A Software & Services		2.4%
NIKE Inc., B Consumer Durables & Apparel		2.3%
Amazon.com Inc. Retailing		2.2%

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

6. Sold by period-end.

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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 1/1/15		Ending Account Value 6/30/15		Fund-Level Expenses Incurred During Period* 1/1/15–6/30/15
Actual		$1,000		$1,070.20		$4.93
Hypothetical (5% return before expenses)		$1,000		$1,020.03		$4.81

*Expenses are calculated using the most recent six-month annualized expense ratio, net of expense waivers, for the Fund’s Class 2 shares (0.96%), 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, 2015 (unaudited)			Year Ended December 31,
				2014			2013			2012		2011			2010
Class 2
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$16.61			$18.11			$13.21			$12.09		$12.70			$10.93
Income from investment operationsa:
Net investment income (loss)b		(0.06	)		(0.08	)		(0.01	)		0.01		(0.02	)		(0.02	)
Net realized and unrealized gains (losses)		1.18			1.09			4.95			1.11		(0.59	)		1.79
Total from investment operations		1.12			1.01			4.94			1.12		(0.61	)		1.77
Less distributions from:
Net investment income		—			—			(—	)c		—		—			—
Net realized gains		(10.46	)		(2.51	)		(0.04	)		—		—			—
Total distributions		(10.46	)		(2.51	)		(0.04	)		—		—			—
Net asset value, end of period		$7.27			$16.61			$18.11			$13.21		$12.09			$12.70
Total returnd		7.02%			6.11%			37.48%			9.26%		(4.80)%			16.19%
Ratios to average net assetse
Expenses before waiver and payments by affiliates		1.30%			1.20%			1.18%			1.18%		1.16%			1.18%
Expenses net of waiver and payments by affiliates		0.96%			0.95%			0.93%			0.93%		0.93%			0.93%
Net investment income (loss)		(0.75)%			(0.46)%			(0.09)%			0.09%		(0.14)%			(0.17)%
Supplemental data
Net assets, end of period (000’s)		$93,663			$93,354			$169,123			$159,122		$188,527			$227,774
Portfolio turnover rate		46.56%			52.83%			52.15%			43.50%		63.99%			60.00%

^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’s 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 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.

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, 2015 (unaudited)			Year Ended December 31,
				2014			2013			2012			2011			2010
Class 4
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$16.44			$17.96			$13.12			$12.01			$12.63			$10.88
Income from investment operationsa:
Net investment income (loss)b		(0.06	)		(0.10	)		(0.03	)		(—	)c		(0.03	)		(0.03	)
Net realized and unrealized gains (losses)		1.15			1.09			4.91			1.11			(0.59	)		1.78
Total from investment operations		1.09			0.99			4.88			1.11			(0.62	)		1.75
Less distributions from net realized gains		(10.46	)		(2.51	)		(0.04	)		—			—			—
Net asset value, end of period		$7.07			$16.44			$17.96			$13.12			$12.01			$12.63
Total returnd		6.89%			5.98%			37.28%			9.24%			(4.91)%			16.08%
Ratios to average net assetse
Expenses before waiver and payments by affiliates		1.40%			1.30%			1.28%			1.28%			1.26%			1.28%
Expenses net of waiver and payments by affiliates		1.06%			1.05%			1.03%			1.03%			1.03%			1.03%
Net investment income (loss)		(0.85)%			(0.56)%			(0.19)%			(0.01)%			(0.24)%			(0.27)%
Supplemental data
Net assets, end of period (000’s)		$32,911			$31,355			$251,339			$216,607			$270,598			$263,746
Portfolio turnover rate		46.56%			52.83%			52.15%			43.50%			63.99%			60.00%

^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’s 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 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.

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, 2015 (unaudited)

Franklin Flex Cap Growth VIP Fund
		Shares		Value
	Common Stocks 95.1%
	Automobiles & Components 0.4%
a	Tesla Motors Inc.		1,850	$	496,281
	Banks 3.0%
a	Signature Bank		15,000		2,195,850
a	SVB Financial Group		11,500		1,655,770
					3,851,620
	Capital Goods 3.9%
a	HD Supply Holdings Inc.		67,500		2,374,650
	Honeywell International Inc.		11,500		1,172,655
	Roper Technologies Inc.		7,700		1,327,943
					4,875,248
	Commercial & Professional Services 2.2%
a	IHS Inc., A		11,500		1,479,245
a	Stericycle Inc.		9,500		1,272,145
					2,751,390
	Consumer Durables & Apparel 4.5%
	NIKE Inc., B		27,000		2,916,540
a	TRI Pointe Homes Inc.		92,500		1,415,250
a	Under Armour Inc., A		16,000		1,335,040
					5,666,830
	Consumer Services 0.5%
	Starbucks Corp.		12,500		670,187
	Diversified Financials 3.2%
a	Affiliated Managers Group Inc.		14,500		3,169,700
	Intercontinental Exchange Inc.		4,000		894,440
					4,064,140
	Energy 0.6%
a	Diamondback Energy Inc.		6,000		452,280
a	FMC Technologies Inc.		8,000		331,920
					784,200
	Food & Staples Retailing 0.5%
	Whole Foods Market Inc.		16,500		650,760
	Food, Beverage & Tobacco 2.6%
	Constellation Brands Inc., A		16,500		1,914,330
a	Monster Beverage Corp.		10,000		1,340,200
					3,254,530
	Health Care Equipment & Services 9.7%
a	Cerner Corp.		33,500		2,313,510
a	DexCom Inc.		16,500		1,319,670
a	Edwards Lifesciences Corp.		6,800		968,524
a	Envision Healthcare Holdings Inc.		70,000		2,763,600
	McKesson Corp.		13,500		3,034,935
	Medtronic PLC		25,000		1,852,500
					12,252,739
	Materials 2.7%
	Cytec Industries Inc.		25,000		1,513,250
	Ecolab Inc.		17,000		1,922,190
					3,435,440

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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)
	Media 2.9%
a	Charter Communications Inc., A		5,000	$	856,250
a	IMAX Corp. (Canada)		9,000		362,430
	The Walt Disney Co.		21,000		2,396,940
					3,615,620
	Pharmaceuticals, Biotechnology & Life Sciences 18.2%
a	Allergan PLC		19,000		5,765,740
a	Biogen Inc.		10,500		4,241,370
a	BioMarin Pharmaceutical Inc.		3,800		519,764
	Bristol-Myers Squibb Co.		25,000		1,663,500
a	Celgene Corp.		33,000		3,819,255
a	Celldex Therapeutics Inc.		21,000		529,620
a	Illumina Inc.		7,000		1,528,520
a	Jazz Pharmaceuticals PLC		2,000		352,140
a	Prestige Brands Holdings Inc.		12,500		578,000
a	Regeneron Pharmaceuticals Inc.		1,900		969,247
a	Revance Therapeutics Inc.		10,200		326,196
a	Valeant Pharmaceuticals International Inc.		12,500		2,776,875
					23,070,227
	Retailing 5.4%
	Advance Auto Parts Inc.		10,500		1,672,545
a	Amazon.com Inc.		6,500		2,821,585
a	The Priceline Group Inc.		1,400		1,611,918
	Tractor Supply Co.		8,000		719,520
					6,825,568
	Semiconductors & Semiconductor Equipment 4.7%
a	Cavium Inc.		25,000		1,720,250
a	Nanometrics Inc.		20,468		329,944
a	NXP Semiconductors NV (Netherlands)		27,000		2,651,400
	Skyworks Solutions Inc.		12,500		1,301,250
					6,002,844
	Software & Services 19.1%
a	Alibaba Group Holding Ltd., ADR (China)		11,500		946,105
a	CoStar Group Inc.		7,700		1,549,702
a	Electronic Arts Inc.		29,500		1,961,750
	Equinix Inc.		3,500		889,000
a	Facebook Inc., A		35,000		3,001,775
a	FleetCor Technologies Inc.		13,000		2,028,780
a	LinkedIn Corp., A		11,500		2,376,245
	MasterCard Inc., A		50,000		4,674,000
a	Mobileye NV		12,500		664,625
a	Salesforce.com Inc.		23,500		1,636,305
a	ServiceNow Inc.		25,000		1,857,750
a	Splunk Inc.		6,300		438,606
	Visa Inc., A		33,000		2,215,950
					24,240,593
	Technology Hardware & Equipment 9.0%
	Apple Inc.		70,000		8,779,750
a	FitBit Inc., A		3,000		114,690

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)
	Technology Hardware & Equipment (continued)
a	Palo Alto Networks Inc.		14,000	$	2,445,800
					11,340,240
	Transportation 2.0%
a	Genesee & Wyoming Inc.		15,000		1,142,700
a	Spirit Airlines Inc.		23,000		1,428,300
					2,571,000
	Total Common Stocks (Cost $75,555,926)				120,419,457
	Short Term Investments (Cost $6,792,401) 5.4%
	Money Market Funds 5.4%
a,b	Institutional Fiduciary Trust Money Market Portfolio		6,792,401		6,792,401
	Total Investments (Cost $82,348,327) 100.5%				127,211,858
	Other Assets, less Liabilities (0.5)%				(637,763	)
	Net Assets 100.0%			$	126,574,095

See Abbreviations on page FFC-19.

^aNon-income producing.

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

FFC-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, 2015 (unaudited)

	Franklin Flex Cap Growth VIP Fund
Assets:
Investments in securities:
Cost - Unaffiliated issuers	$	75,555,926
Cost - Sweep Money Fund (Note 3e)		6,792,401
Total cost of investments	$	82,348,327
Value - Unaffiliated issuers	$	120,419,457
Value - Sweep Money Fund (Note 3e)		6,792,401
Total value of investments		127,211,858
Receivables:
Investment securities sold		6,595
Capital shares sold		20,450
Dividends		29,869
Other assets		51
Total assets		127,268,823
Liabilities:
Payables:
Investment securities purchased		360,063
Capital shares redeemed		186,640
Management fees		65,366
Distribution fees		57,264
Trustees’ fees and expenses		413
Accrued expenses and other liabilities		24,982
Total liabilities		694,728
Net assets, at value	$	126,574,095
Net assets consist of:
Paid-in capital	$	70,399,114
Undistributed net investment income (loss)		(484,089	)
Net unrealized appreciation (depreciation)		44,863,531
Accumulated net realized gain (loss)		11,795,539
Net assets, at value	$	126,574,095
Class 2:
Net assets, at value	$	93,662,955
Shares outstanding		12,892,147
Net asset value and maximum offering price per share	$	7.27
Class 4:
Net assets, at value	$	32,911,140
Shares outstanding		4,652,800
Net asset value and maximum offering price per share	$	7.07

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

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL STATEMENTS

Statement of Operations

for the six months ended June 30, 2015 (unaudited)

	Franklin Flex Cap Growth VIP Fund
Investment income:
Dividends	$	135,248
Expenses:
Management fees (Note 3a)		616,074
Distribution fees: (Note 3c)
Class 2		116,290
Class 4		56,054
Custodian fees (Note 4)		437
Reports to shareholders		19,693
Professional fees		21,590
Trustees’ fees and expenses		719
Other		4,695
Total expenses		835,552
Expenses waived/paid by affiliates (Note 3e and 3f)		(216,215	)
Net expenses		619,337
Net investment income (loss)		(484,089	)
Realized and unrealized gains (losses):
Net realized gain (loss) from investments		12,440,218
Net change in unrealized appreciation (depreciation) on investments		(3,487,098	)
Net realized and unrealized gain (loss)		8,953,120
Net increase (decrease) in net assets resulting from operations	$	8,469,031

FFC-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 Flex Cap Growth VIP Fund
	Six Months Ended June 30, 2015 (unaudited)			Year Ended December 31, 2014
Increase (decrease) in net assets:
Operations:
Net investment income (loss)	$	(484,089	)	$	(1,796,043	)
Net realized gain (loss)		12,440,218			136,983,635
Net change in unrealized appreciation (depreciation)		(3,487,098	)		(121,113,931	)
Net increase (decrease) in net assets resulting from operations		8,469,031			14,073,661
Distributions to shareholders from:
Net realized gains:
Class 2		(55,457,455	)		(23,244,460	)
Class 4		(20,021,151	)		(34,835,360	)
Total distributions to shareholders		(75,478,606	)		(58,079,820	)
Capital share transactions: (Note 2)
Class 2		49,448,958			(59,517,033	)
Class 4		19,425,412			(192,229,021	)
Total capital share transactions		68,874,370			(251,746,054	)
Net increase (decrease) in net assets		1,864,795			(295,752,213	)
Net assets:
Beginning of period		124,709,300			420,461,513
End of period	$	126,574,095		$	124,709,300
Undistributed net investment income (loss) included in net assets:
End of period	$	(484,089	)	$	—

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

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 (1940 Act) as an open-end management investment company, consisting of nineteen separate funds and applies the specialized accounting and reporting guidance in U.S. Generally Accepted Accounting Principles (U.S. GAAP). 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. 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.

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 NAV.

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

FFC-14 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Flex Cap Growth VIP Fund (continued)

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.

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. Securities Lending

The Fund participates in an agency based securities lending program to earn additional income. 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 deposited into a joint cash account with other funds and is used to invest in a money market fund managed by Franklin Advisers, Inc., an affiliate of the Fund. The Fund may receive 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. If the borrower defaults on its obligation to return the securities loaned, the Fund has the right to repurchase the securities in the open market using the collateral received. The securities lending agent has agreed to indemnify the Fund in the event of default by a third party borrower. At June 30, 2015, the Fund had no securities on loan.

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, 2015, 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’s 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. 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 U.S. GAAP. 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.

Semiannual Report FFC-15

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Flex Cap Growth VIP Fund (continued)

1. Organization and Significant Accounting Policies (continued)

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.

2. Shares of Beneficial Interest

At June 30, 2015, 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, 2015						Year Ended December 31, 2014
	Shares			Amount			Shares			Amount
Class 2 Shares:
Shares sold		334,094		$	5,377,237			1,271,685		$	22,546,625
Shares issued in reinvestment of distributions		7,659,869			55,457,455			1,454,597			23,244,460
Shares redeemed		(722,709	)		(11,385,734	)		(6,444,966	)		(105,308,118	)
Net increase (decrease)		7,271,254		$	49,448,958			(3,718,684	)	$	(59,517,033	)
Class 4 Shares:
Shares sold		203,851		$	3,378,936			1,157,788		$	20,021,648
Shares issued in reinvestment of distributions		2,839,880			20,021,151			2,201,982			34,835,359
Shares redeemed		(298,769	)		(3,974,675	)		(15,445,351	)		(247,086,028	)
Net increase (decrease)		2,744,962		$	19,425,412			(12,085,581	)	$	(192,229,021	)

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

FFC-16 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Flex 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
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.

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. Investments in Institutional Fiduciary Trust Money Market Portfolio

The Fund invests in 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, as noted in the Statement of Operations, in an amount not to exceed the management and administrative fees paid directly or indirectly by the Sweep Money Fund. 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, 2016.

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, 2015, there were no credits earned.

Semiannual Report FFC-17

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Flex Cap Growth VIP Fund (continued)

5. Income Taxes

At June 30, 2015, the cost of investments and net unrealized appreciation (depreciation) for income tax purposes were as follows:

Cost of investments	$	82,578,354
Unrealized appreciation	$	44,975,117
Unrealized depreciation		(341,613	)
Net unrealized appreciation (depreciation)	$	44,633,504

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, 2015, aggregated $ 56,895,981 and $ 69,188,559, 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 $2 billion (Global Credit Facility) which matures on February 12, 2016. 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 in the Statement of Operations. During the period ended June 30, 2015, 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, 2015, 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.

FFC-18 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Flex Cap Growth VIP Fund (continued)

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 certain transactions accounted for as a sale for interim and annual reporting periods beginning after December 15, 2014, and transactions accounted for as secured borrowings for annual periods beginning after December 15, 2014, and for interim periods beginning after March 15, 2015. Management has reviewed the requirements and believes the adoption of this ASU will not have a material impact on the financial statements.

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

Semiannual Report FFC-19

Franklin Founding Funds Allocation VIP Fund

This semiannual report for Franklin Founding Funds Allocation VIP Fund covers the period ended June 30, 2015.

Class 2 Performance Summary as of June 30, 2015

The Fund’s Class 2 shares delivered a +0.60% total return* for the six-month period ended June 30, 2015.

*The Fund has an expense reduction contractually guaranteed through at least 4/30/16. Fund investment results reflect the expense reduction, 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 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 +1.23% total return and the MSCI World Index produced a +2.95% total return for the same period.¹

Economic and Market Overview

The global economy expanded moderately during the six months under review despite slowing growth in some countries. As measured by the MSCI World Index, stocks in global developed markets advanced overall during the six-month period amid a generally accommodative monetary policy environment and signs of economic improvement in Europe and Japan. Oil prices rebounded from earlier lows as demand picked up despite rising inventories and strong global supply, while gold prices declined marginally during the period under review.

U.S. economic growth was mixed during the six months under review. In 2015’s first quarter, U.S. dollar strength, low energy prices, and a labor dispute at West Coast ports led exports to decline. In the second quarter, business capital spending rebounded and manufacturing and non-manufacturing activities increased, contributing to strong job gains. During the six-month period, the U.S. Federal Reserve Board (Fed) kept its target interest rate at 0%–0.25% while considering when an increase would be appropriate, based on labor market and inflation data.

Outside the U.S., the U.K. economy slowed in 2015’s first quarter as the mining and agriculture sectors contracted. In the eurozone, economic growth improved somewhat during the six-month period. The region avoided deflation as the annual inflation rate rose in May. The European Central Bank (ECB) maintained its benchmark interest rates during the period and also expanded its asset purchases to boost inflation and the economy. The region generally benefited from a weaker euro that helped exports, the ECB’s accommodative policy and an improved 2015 eurozone growth forecast, which helped limit fears about Greece’s debt situation.

The Japanese economy continued to grow in 2015’s first quarter after exiting recession in the previous quarter, driven by an increase in private demand as business investment and private consumption rose. The Bank of Japan maintained its monetary policy during the review period but lowered its economic growth and inflation forecasts at its April meeting.

*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.

1. Source: 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.

FFA-2 Semiannual Report

FRANKLIN FOUNDING FUNDS ALLOCATION VIP FUND

In emerging markets, economic growth generally moderated. Greece’s credit default due to the lack of progress in negotiations weighed on emerging market stocks toward period-end. China’s government implemented market-friendly policies to support new economic drivers that could help steer the economy toward more sustainable growth. Lower interest rates there fueled massive stock market speculation and a 60% price gain up to mid-June 2015 for the domestic A-share market.² Concerned the market was overheated, the People’s Bank of China reduced liquidity, which led to a market panic in the last two weeks of June, exacerbated by certain government intervention measures. Central bank actions varied across emerging markets, as some banks raised interest rates in response to rising inflation and weakening currencies, while others lowered interest rates to promote economic growth. In the recent global environment, emerging market stocks, as measured by the MSCI Emerging Markets Index, rose for the six-month period.³

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 underperformed the S&P 500, while Franklin Mutual Shares VIP Fund – Class 1 outperformed the S&P 500. 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, 2015, 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.

2. Source: MSCI. Please see Index Descriptions following the Fund Summaries.

3. Please see Index Descriptions following the Fund Summaries.

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 1/1/15		Ending Account Value 6/30/15		Fund-Level Expenses Incurred During Period* 1/1/15–6/30/15		Fund-Level Expenses Incurred During Period** 1/1/15–6/30/15
Actual		$1,000		$1,006.00		$1.74		$5.02
Hypothetical (5% return before expenses)		$1,000		$1,023.06		$1.76		$5.06

*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 (1.01%), 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, 2015 (unaudited)			Year Ended December 31,
				2014			2013			2012			2011			2010
Class 1
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$7.47			$7.47			$8.55			$7.63			$7.73			$7.15
Income from investment operationsa:
Net investment incomeb,c		0.19			0.22			0.30			0.26			0.25			0.24
Net realized and unrealized gains (losses)		(0.13	)		0.02			1.42			0.90			(0.35	)		0.52
Total from investment operations		0.06			0.24			1.72			1.16			(0.10	)		0.76
Less distributions from:
Net investment income		(0.24	)		(0.23	)		(1.15	)		(0.24	)		(—	)d		(0.18	)
Net realized gains		(0.01	)		(0.01	)		(1.65	)		—			—			(—	)d
Total distributions		(0.25	)		(0.24	)		(2.80	)		(0.24	)		(—	)d		(0.18	)
Net asset value, end of period		$7.28			$7.47			$7.47			$8.55			$7.63			$7.73
Total returne		0.72%			3.05%			24.14%			15.56%			(1.28)%			10.64%
Ratios to average net assetsf
Expenses before waiver and payments by affiliatesg		0.11%			0.11%			0.11%			0.11%			0.11%			0.11%
Expenses net of waiver and payments by affiliatesg		0.10%			0.10%			0.10%			0.10%			0.10%			0.10%
Net investment incomec		4.72%			2.88%			3.67%			4.06%			3.44%			3.04%
Supplemental data
Net assets, end of period (000’s)		$1,165			$1,114			$952			$767			$470			$437
Portfolio turnover rate		2.50%			4.80%			3.91%			28.46%	h		58.42%			17.81%

^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’s 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 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 0.66% for the period ended June 30, 2015.

^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, 2015 (unaudited)			Year Ended December 31,
				2014			2013			2012			2011			2010
Class 2
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$7.42			$7.42			$8.51			$7.59			$7.71			$7.14
Income from investment operationsa:
Net investment incomeb,c		0.17			0.20			0.27			0.25			0.23			0.21
Net realized and unrealized gains (losses)		(0.12	)		0.02			1.42			0.89			(0.35	)		0.52
Total from investment operations		0.05			0.22			1.69			1.14			(0.12	)		0.73
Less distributions from:
Net investment income		(0.22	)		(0.21	)		(1.13	)		(0.22	)		(—	)d		(0.16	)
Net realized gains		(0.01	)		(0.01	)		(1.65	)		—			—			(—	)d
Total distributions		(0.23	)		(0.22	)		(2.78	)		(0.22	)		(—	)d		(0.16	)
Net asset value, end of period		$7.24			$7.42			$7.42			$8.51			$7.59			$7.71
Total returne		0.60%			2.85%			23.77%			15.33%			(1.54)%			10.25%
Ratios to average net assetsf
Expenses before waiver and payments by affiliatesg		0.36%			0.36%			0.36%			0.36%			0.36%			0.36%
Expenses net of waiver and payments by affiliatesg		0.35%			0.35%			0.35%			0.35%			0.35%			0.35%
Net investment incomec		4.47%			2.63%			3.42%			3.81%			3.19%			2.79%
Supplemental data
Net assets, end of period (000’s)		$536,039			$557,704			$547,506			$472,686			$448,101			$488,057
Portfolio turnover rate		2.50%			4.80%			3.91%			28.46%	h		58.42%			17.81%

^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’s 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 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 0.66% for the period ended June 30, 2015.

^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, 2015 (unaudited)			Year Ended December 31,
				2014			2013			2012			2011			2010
Class 4
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$7.54			$7.54			$8.49			$7.58			$7.71			$7.14
Income from investment operationsa:
Net investment incomeb,c		0.17			0.20			0.26			0.30			0.24			0.19
Net realized and unrealized gains (losses)		(0.13	)		0.02			1.43			0.83			(0.37	)		0.54
Total from investment operations		0.04			0.22			1.69			1.13			(0.13	)		0.73
Less distributions from:
Net investment income		(0.21	)		(0.21	)		(0.99	)		(0.22	)		(—	)d		(0.16	)
Net realized gains		(0.01	)		(0.01	)		(1.65	)		—			—			(—	)d
Total distributions		(0.22	)		(0.22	)		(2.64	)		(0.22	)		(—	)d		(0.16	)
Net asset value, end of period		$7.36			$7.54			$7.54			$8.49			$7.58			$7.71
Total returne		0.45%			2.75%			23.68%			15.17%			(1.67)%			10.24%
Ratios to average net assetsf
Expenses before waiver and payments by affiliatesg		0.46%			0.46%			0.46%			0.46%			0.46%			0.46%
Expenses net of waiver and payments by affiliatesg		0.45%			0.45%			0.45%			0.45%			0.45%			0.45%
Net investment incomec		4.37%			2.53%			3.32%			3.71%			3.09%			2.69%
Supplemental data
Net assets, end of period (000’s)		$649,348			$702,324			$676,781			$493,813			$2,860,928			$3,036,272
Portfolio turnover rate		2.50%			4.80%			3.91%			28.46%	h		58.42%			17.81%

^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’s 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 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 0.66% for the period ended June 30, 2015.

^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, 2015 (unaudited)

Franklin Founding Funds Allocation VIP Fund

	Shares		Value
Investments in Underlying Fundsa
Domestic Equity 33.2%
Franklin Mutual Shares VIP Fund, Class 1		16,815,586	$	393,652,857
Domestic Hybrid 33.1%
Franklin Income VIP Fund, Class 1		25,231,943		392,609,031
Foreign Equity 32.8%
Templeton Growth VIP Fund, Class 1		26,663,630		389,555,629
Total Investments in Underlying Funds (Cost $851,373,690) 99.1%				1,175,817,517
Other Assets, less Liabilities 0.9%				10,734,917
Net Assets 100.0%			$	1,186,552,434

^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, 2015 (unaudited)

	Franklin Founding Funds Allocation VIP Fund
Assets:
Investments in Underlying Funds: (Note 3d)
Cost	$	851,373,690
Value	$	1,175,817,517
Cash		11,312,261
Receivables from capital shares sold		406,389
Other assets		513
Total assets		1,187,536,680
Liabilities:
Payables:
Capital shares redeemed		197,514
Administrative fees		87,135
Distribution fees		625,786
Reports to shareholders		53,990
Accrued expenses and other liabilities		19,821
Total liabilities		984,246
Net assets, at value	$	1,186,552,434
Net assets consist of:
Paid-in capital	$	885,970,754
Undistributed net investment income		25,499,289
Net unrealized appreciation (depreciation)		324,443,827
Accumulated net realized gain (loss)		(49,361,436	)
Net assets, at value	$	1,186,552,434
Class 1:
Net assets, at value	$	1,165,136
Shares outstanding		159,986
Net asset value and maximum offering price per share	$	7.28
Class 2:
Net assets, at value	$	536,038,874
Shares outstanding		74,026,307
Net asset value and maximum offering price per share	$	7.24
Class 4:
Net assets, at value	$	649,348,424
Shares outstanding		88,168,720
Net asset value and maximum offering price per share	$	7.36

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, 2015 (unaudited)

	Franklin Founding Funds Allocation VIP Fund
Investment income:
Dividends from Underlying Funds (Note 3d)	$	29,569,903
Expenses:
Administrative fees (Note 3a)		613,189
Distribution fees: (Note 3b)
Class 2		686,069
Class 4		1,181,615
Reports to shareholders		47,392
Professional fees		16,338
Trustees’ fees and expenses		2,696
Other		6,362
Total expenses		2,553,661
Expenses waived/paid by affiliates (Note 3e)		(72,792	)
Net expenses		2,480,869
Net investment income		27,089,034
Realized and unrealized gains (losses):
Net realized gain (loss) from sale of investments in Underlying Funds (Note 3d)		5,867,736
Net change in unrealized appreciation (depreciation) on investments in Underlying Funds		(24,727,651	)
Net realized and unrealized gain (loss)		(18,859,915	)
Net increase (decrease) in net assets resulting from operations	$	8,229,119

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, 2015 (unaudited)			Year Ended December 31, 2014
Increase (decrease) in net assets:
Operations:
Net investment income	$	27,089,034		$	33,255,768
Net realized gain (loss)		5,867,736			1,584,965
Net change in unrealized appreciation (depreciation)		(24,727,651	)		(1,653,471	)
Net increase (decrease) in net assets resulting from operations		8,229,119			33,187,262
Distributions to shareholders from:
Net investment income:
Class 1		(36,795	)		(32,764	)
Class 2		(15,525,526	)		(15,578,364	)
Class 4		(17,645,320	)		(19,895,877	)
Net realized gains:
Class 1		(1,845	)		(924	)
Class 2		(848,940	)		(475,173	)
Class 4		(1,013,211	)		(618,180	)
Total distributions to shareholders		(35,071,637	)		(36,601,282	)
Capital share transactions: (Note 2)
Class 1		82,435			164,958
Class 2		(9,093,407	)		11,105,994
Class 4		(38,735,289	)		28,046,285
Total capital share transactions		(47,746,261	)		39,317,237
Net increase (decrease) in net assets		(74,588,779	)		35,903,217
Net assets:
Beginning of period		1,261,141,213			1,225,237,996
End of period	$	1,186,552,434		$	1,261,141,213
Undistributed net investment income included in net assets:
End of period	$	25,499,289		$	31,617,896

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 (1940 Act) as an open-end management investment company, consisting of nineteen separate funds and applies the specialized accounting and reporting guidance in U.S. Generally Accepted Accounting Principles (U.S. GAAP). 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.

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. Investments in the Underlying Funds are valued at their closing NAV 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, 2015, 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’s 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 U.S. GAAP. 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 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.

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FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS

Franklin Founding Funds Allocation VIP Fund (continued)

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, 2015, 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, 2015						Year Ended December 31, 2014
	Shares			Amount			Shares			Amount
Class 1 Shares:
Shares sold		13,554		$	103,680			37,779		$	289,740
Shares issued in reinvestment of distributions		5,229			38,640			4,341			33,688
Shares redeemed		(7,884	)		(59,885	)		(20,435	)		(158,470	)
Net increase (decrease)		10,899		$	82,435			21,685		$	164,958
Class 2 Shares:
Shares sold		3,221,994		$	24,332,577			11,044,608		$	83,657,513
Shares issued in reinvestment of distributions		2,227,819			16,374,466			2,082,171			16,053,537
Shares redeemed		(6,598,388	)		(49,800,450	)		(11,722,596	)		(88,605,056	)
Net increase (decrease)		(1,148,575	)	$	(9,093,407	)		1,404,183		$	11,105,994
Class 4 Shares:
Shares sold		1,873,838		$	14,361,530			13,809,688		$	106,773,129
Shares issued in reinvestment of distributions		2,494,456			18,658,531			2,616,589			20,514,057
Shares redeemed		(9,404,929	)		(71,755,350	)		(12,995,650	)		(99,240,901	)
Net increase (decrease)		(5,036,635	)	$	(38,735,289	)		3,430,627		$	28,046,285

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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, 2015, 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 Gain (Loss)			% of Underlying Fund Shares Outstanding Held at End of Period
Franklin Income VIP Fund, Class 1		25,395,586		1,180,811		(1,344,454	)		25,231,943	$	392,609,031	$	18,633,204	$	(648,417	)		5.73%
Franklin Mutual Shares VIP Fund, Class 1		18,222,604		—		(1,407,018	)		16,815,586		393,652,857		—		6,924,148			7.97%
Templeton Growth VIP Fund, Class 1		28,094,843		802,743		(2,233,956	)		26,663,630		389,555,629		10,936,699		(407,995	)		22.86%
Total										$	1,175,817,517	$	29,569,903	$	5,867,736

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, 2016.

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NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Founding Funds Allocation 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, 2015, there were no credits earned.

5. Income Taxes

At June 30, 2015, the cost of investments and net unrealized appreciation (depreciation) for income tax purposes were as follows:

Cost of investments	$	905,033,651
Unrealized appreciation	$	270,783,866
Unrealized depreciation		—
Net unrealized appreciation (depreciation)	$	270,783,866

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, 2015, aggregated $30,569,903 and $89,100,000, 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 $2 billion (Global Credit Facility) which matures on February 12, 2016. 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 in the Statement of Operations. During the period ended June 30, 2015, 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.

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FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Founding Funds Allocation 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.

At June 30, 2015, all of the Fund’s investments in financial instruments carried at fair value were valued using Level 1. 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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Tax Information (unaudited)

Franklin Founding Funds Allocation VIP Fund

During the fiscal year ended December 31, 2014, 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, 2015, 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	$0.0026	$0.0353
Class 2	$0.0026	$0.0353
Class 4	$0.0026	$0.0353

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 Global Real Estate VIP Fund

This semiannual report for Franklin Global Real Estate VIP Fund covers the period ended June 30, 2015.

Class 2 Performance Summary as of June 30, 2015

The Fund’s Class 2 shares had a -2.93% total return for the six-month period ended June 30, 2015.

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 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 had a -2.78% total return for the same period.¹

Economic and Market Overview

The global economy expanded moderately during the six months under review despite slowing growth in some countries. As measured by the MSCI World Index, stocks in global developed markets advanced overall during the six-month period amid a generally accommodative monetary policy environment and signs of economic improvement in Europe and Japan. Oil prices rebounded from earlier lows as demand picked up despite

rising inventories and strong global supply, while gold prices declined marginally during the period under review.

U.S. economic growth was mixed during the six months under review. In 2015’s first quarter, U.S. dollar strength, low energy prices, and a labor dispute at West Coast ports led exports to decline. In the second quarter, business capital spending rebounded and manufacturing and non-manufacturing activities increased, contributing to strong job gains. During the six-month period, the U.S. Federal Reserve Board (Fed) kept its target interest rate at 0%–0.25% while considering when an

1. Source: 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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increase would be appropriate, based on labor market and inflation data. In its June meeting, the Fed lowered its economic growth forecast for 2015 and raised unemployment estimates given the weak start to the year.

Outside the U.S., the U.K. economy slowed in 2015’s first quarter as the mining and agriculture sectors contracted. Near period-end, the Conservative Party’s unexpected victory in the U.K. general elections supported investor sentiment. In the eurozone, economic growth improved somewhat during the six-month period. Spain expanded at a solid pace, and France and Italy returned to growth in 2015’s first quarter. However, Germany, the region’s largest economy, slowed during the first quarter amid sluggish exports. The region avoided deflation as the annual inflation rate rose in May. The European Central Bank (ECB) maintained its benchmark interest rates during the period and also expanded its asset purchases to boost inflation and the economy. The region generally benefited from a weaker euro that helped exports, the ECB’s accommodative policy and an improved 2015 eurozone growth forecast, but Greece’s debt situation remained a major concern.

The Japanese economy continued to grow in 2015’s first quarter after exiting recession in the previous quarter, driven by an increase in private demand as business investment and private consumption rose. The Bank of Japan maintained its monetary policy during the review period but lowered its economic growth and inflation forecasts at its April meeting.

In emerging markets, economic growth generally moderated. A ceasefire agreement between Russia and Ukraine helped emerging market stocks early in the period. However, Greece’s credit default due to the lack of progress in negotiations weighed on emerging market stocks toward period-end. China’s government implemented market-friendly policies to support new economic drivers that could help steer the economy toward more sustainable growth. Lower interest rates there fueled massive stock market speculation and a 60% price gain up to mid-June 2015 for the domestic A-share market.² Concerned the market was overheated, the People’s Bank of China reduced liquidity, which led to a market panic in the last two weeks of June, exacerbated by certain government intervention measures. Central bank actions varied across emerging markets, as some banks raised interest rates in response to rising inflation and weakening currencies, while others lowered interest rates to promote economic growth. In the recent global environment, emerging market stocks, as measured by the MSCI Emerging Markets Index, rose for the six-month period.³

Global Real Estate Market Overview

Overall, global real estate markets declined modestly during the six months under review. According to the FTSE EPRA/NAREIT Developed Index, in U.S. dollar terms, China and Spain far outpaced the index and led global real estate markets. The U.K., Hong Kong and Singapore also posted solid results. In contrast, some markets represented in the index lost value, including the Netherlands, Canada, Germany, Sweden and the U.S., the index’s largest country weighting.

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 office space sector, notably our position in Derwent London. Shares of the

Top 10 Countries
6/30/15
	% of Total Net Assets
U.S.		51.8%
Japan		11.9%
Hong Kong		7.5%
U.K.		7.1%
Australia		5.5%
France		4.2%
Singapore		3.2%
Germany		2.3%
Sweden		1.4%
China		1.2%

2. Source: MSCI. Please see Index Descriptions following the Fund Summaries.

3. Please see Index Descriptions following the Fund Summaries.

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FRANKLIN GLOBAL REAL ESTATE VIP FUND

U.K.-based office REIT outperformed many European peers, as the central London office market continued to show strength. Derwent acquired assets early in the period, and the company maintained a solid development pipeline and significant potential for rental reversions (rental renewals with amendments) in its portfolio. In our analysis, the company has strong potential growth from portfolio properties with fundamentals that are favorable compared to many peers. Company management expected healthy rental growth in 2015 amid robust tenant demand, as the overall market’s vacancy levels remained low.

The Fund’s investment in U.S.-based Extra Space Storage also enhanced relative performance for the first half of 2015. Among self-storage REITs, Extra Space Storage performed exceptionally well and outperformed the benchmark index, reflecting strong self-storage operating fundamentals.⁴ In the past few years, the company sought to take advantage of consolidation opportunities within the self-storage sector by acquiring portfolios it believed had the potential to contribute to its revenues and earnings. As a result, the company continued to generate robust core operational results with accelerating revenue growth.

Shares of U.K.-based, student housing REIT Unite Group outperformed many European peers during the period, supporting relative Fund performance. Student-housing investment transactions in the U.K. reached record volumes in the first quarter of 2015. Market transactions are expected to have a positive impact on Unite’s 2015 valuation and development pipeline, as property yields compressed, especially in London. On the operational side, Unite expected solid rental growth as student demand continued to strengthen and reservations outpaced those in prior years.

In contrast, key detractors from the Fund’s relative performance included stock selection in the industrial property sector, particulary Nippon Prologis REIT. Shares of the Japanese REIT underperformed the benchmark index during the six-month period, resulting from investor concerns about the upcoming influx of supply in the Tokyo logistics market in late 2015 and 2016. Overall, Nippon Prologis’s occupancy rate continued to be high, as the company has a high-quality portfolio, and demand for class-A logistics facilities remained healthy. We believe the company will continue to pursue external growth by leveraging the ample pipeline of its sponsor, U.S.-based REIT Prologis, but the pace may slow given the longer lease-up time for newly built properties.

Security selection in the diversified sector also hampered relative results, notably our position in Wereldhave. Shares of the Netherlands REIT underperformed many European peers, as investors anticipated the company would sell new shares to finance acquisitions. Near period-end, the company completed an equity offering to finance the acquisition of a portfolio of medium-sized Dutch shopping centers from French REIT Klepierre (also a Fund holding). We reduced our position in Wereldhave during the period. The company’s 2014 operational performance was stable, with healthy year-over-year rental growth. We expect Wereldhave to focus on property management to improve occupancy levels and tenant mix and to integrate its latest acquisitions to its shopping center platform.

Although stock selection in the hotel/resort sector contributed to relative performance, the Fund’s investment in U.S.-based Host Hotels & Resorts hurt results. Shares underperformed the benchmark index primarily due to the hotel operator’s weaker-than-expected first-quarter earnings report and the lower-than-expected full-year earnings guidance the company provided in early 2015. Notwithstanding the industry’s overall healthy

Top 10 Holdings
6/30/15
Company Sector/Industry, Country	% of Total Net Assets
Simon Property Group Inc. Retail REITs, U.S.		4.8%
Mitsui Fudosan Co. Ltd. Diversified Real Estate Activities, Japan		3.6%
Unibail-Rodamco SE Retail REITs, France		3.1%
Equity Residential Residential REITs, U.S.		2.7%
Mitsubishi Estate Co. Ltd. Diversified Real Estate Activities, Japan		2.6%
Hong Kong Land Holdings Ltd. Real Estate Operating Companies, Hong Kong		2.0%
Boston Properties Inc. Office REITs, U.S.		2.0%
Prologis Inc. Industrial REITs, U.S.		1.9%
Vornado Realty Trust Office REITs, U.S.		1.9%
Health Care REIT Inc. Health Care 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 (SOI).

4. Self-storage REITs are in specialized REITs in the SOI.

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FRANKLIN GLOBAL REAL ESTATE VIP FUND

lodging fundamentals, the company’s earnings results were negatively affected by ongoing renovations at some properties, as well as by soft market fundamentals in New York City, the company’s largest market, where room rate growth slowed because of new supply in this market.

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, 2015, the U.S. dollar rose in value relative to most currencies. As a result, the Fund’s performance was negatively affected by the portfolio’s substantial investment in securities with non-U.S. currency exposure.

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, 2015, 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 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 1/1/15		Ending Account Value 6/30/15		Fund-Level Expenses Incurred During Period* 1/1/15–6/30/15
Actual		$1,000		$   970.70		$6.65
Hypothetical (5% return before expenses)		$1,000		$1,018.05		$6.80

*Expenses are calculated using the most recent six-month annualized expense ratio for the Fund’s Class 2 shares (1.36%), 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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Financial Highlights

Franklin Global Real Estate VIP Fund

	Six Months Ended June 30, 2015 (unaudited)			Year Ended December 31,
				2014			2013			2012		2011			2010
Class 1
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$16.36			$14.29			$14.66			$11.47		$13.12			$11.16
Income from investment operationsa:
Net investment incomeb		0.09			0.26			0.24			0.25		0.21			0.38
Net realized and unrealized gains (losses)		(0.55	)		1.92			0.13			2.94		(0.83	)		1.94
Total from investment operations		(0.46	)		2.18			0.37			3.19		(0.62	)		2.32
Less distributions from net investment income and net foreign currency gains		(0.55	)		(0.11	)		(0.74	)		—		(1.03	)		(0.36	)
Net asset value, end of period		$15.35			$16.36			$14.29			$14.66		$11.47			$13.12
Total returnc		(2.85)%			15.27%			2.61%			27.81%		(5.45)%			21.24%
Ratios to average net assetsd
Expenses before waiver and payments by affiliates		1.11%			1.10%			1.10%			1.11%		1.12%			1.11%
Expenses net of waiver and payments by affiliates		1.11%			1.10%	e		1.10%			1.07%		0.98%			0.86%
Net investment income		1.06%			1.66%			1.62%			1.92%		1.64%			3.24%
Supplemental data
Net assets, end of period (000’s)		$33,250			$35,686			$34,276			$38,329		$33,670			$40,430
Portfolio turnover rate		12.22%			16.67%			21.29%			22.29%		28.95%			76.52%

^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’s 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 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, 2015 (unaudited)			Year Ended December 31,
				2014			2013			2012		2011			2010
Class 2
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$15.95			$13.93			$14.27			$11.20		$12.83			$10.92
Income from investment operationsa:
Net investment incomeb		0.07			0.21			0.20			0.21		0.17			0.34
Net realized and unrealized gains (losses)		(0.53	)		1.88			0.13			2.86		(0.81	)		1.90
Total from investment operations		(0.46	)		2.09			0.33			3.07		(0.64	)		2.24
Less distributions from net investment income and net foreign currency gains		(0.51	)		(0.07	)		(0.67	)		—		(0.99	)		(0.33	)
Net asset value, end of period		$14.98			$15.95			$13.93			$14.27		$11.20			$12.83
Total returnc		(2.93)%			15.01%			2.32%			27.41%		(5.65)%			20.97%
Ratios to average net assetsd
Expenses before waiver and payments by affiliates		1.36%			1.35%			1.35%			1.36%		1.37%			1.36%
Expenses net of waiver and payments by affiliates		1.36%			1.35%	e		1.35%			1.32%		1.23%			1.11%
Net investment income		0.81%			1.41%			1.37%			1.67%		1.39%			2.99%
Supplemental data
Net assets, end of period (000’s)		$304,371			$333,554			$328,825			$344,044		$292,356			$352,854
Portfolio turnover rate		12.22%			16.67%			21.29%			22.29%		28.95%			76.52%

^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’s 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 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, 2015 (unaudited)

Franklin Global Real Estate VIP Fund
		Country		Shares/Warrants		Value
	Common Stocks and Other Equity Interests 99.1%
	Diversified Real Estate Activities 10.8%
	CapitaLand Ltd.		Singapore		1,527,462	$	3,969,201
	Mitsubishi Estate Co. Ltd.		Japan		404,360		8,710,639
	Mitsui Fudosan Co. Ltd.		Japan		434,857		12,176,280
	Sun Hung Kai Properties Ltd.		Hong Kong		338,533		5,498,353
	Sun Hung Kai Properties Ltd., wts., 4/22/16		Hong Kong		30,644		108,911
	Tokyo Tatemono Co. Ltd.		Japan		183,408		2,547,535
	The Wharf Holdings Ltd.		Hong Kong		509,906		3,394,264
							36,405,183
	Diversified REITs 10.6%
a	Activia Properties Inc., 144A		Japan		235		1,991,135
	American Assets Trust Inc.		United States		63,039		2,471,759
	British Land Co. PLC		United Kingdom		366,131		4,564,147
	Canadian REIT		Canada		52,814		1,794,999
	Duke Realty Corp.		United States		116,000		2,154,120
	Hulic REIT Inc.		Japan		537		765,200
a	Hulic REIT Inc., 144A		Japan		1,101		1,568,873
	Kenedix Office Investment Corp.		Japan		533		2,673,928
	Land Securities Group PLC		United Kingdom		316,181		5,980,513
	Mirvac Group		Australia		1,517,712		2,165,631
	Stockland		Australia		1,126,314		3,561,777
	Suntec REIT		Singapore		1,410,030		1,805,852
	Wereldhave N.V.		Netherlands		30,388		1,724,791
	WP Carey Inc.		United States		43,626		2,571,316
							35,794,041
	Health Care REITs 6.0%
	HCP Inc.		United States		127,141		4,636,832
	Health Care REIT Inc.		United States		96,264		6,317,807
	OMEGA Healthcare Investors Inc.		United States		46,000		1,579,180
	Sabra Health Care REIT Inc.		United States		68,626		1,766,433
	Ventas Inc.		United States		95,487		5,928,788
							20,229,040
	Hotel & Resort REITs 3.7%
	Hoshino Resorts REIT Inc.		Japan		83		917,551
	Host Hotels & Resorts Inc.		United States		199,967		3,965,346
	Pebblebrook Hotel Trust		United States		84,222		3,611,439
	Summit Hotel Properties Inc.		United States		110,600		1,438,906
	Sunstone Hotel Investors Inc.		United States		159,537		2,394,650
							12,327,892
	Hotels, Resorts & Cruise Lines 0.9%
b	Hilton Worldwide Holdings Inc.		United States		62,190		1,713,334
	Melia Hotels International SA		Spain		113,533		1,498,078
							3,211,412
	Industrial REITs 5.4%
	First Industrial Realty Trust Inc.		United States		96,300		1,803,699
	Goodman Group		Australia		873,626		4,224,900
	Mapletree Logistics Trust		Singapore		1,756,030		1,473,245
	Nippon Prologis REIT Inc.		Japan		1,498		2,758,797
	PLA Administradora Industrial S de RL de CV		Mexico		383,400		750,065

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 (continued)
a	PLA Administradora Industrial S de RL de CV, 144A		Mexico		354,370	$	693,272
	Prologis Inc.		United States		175,664		6,517,134
							18,221,112
	Office REITs 14.0%
	Alexandria Real Estate Equities Inc.		United States		49,907		4,364,866
	Boston Properties Inc.		United States		55,380		6,703,195
	Brandywine Realty Trust		United States		85,546		1,136,051
	Coresite Realty Corp.		United States		30,887		1,403,505
	CyrusOne Inc.		United States		45,400		1,337,030
	Daiwa Office Investment Corp.		Japan		70		335,158
a	Daiwa Office Investment Corp., 144A		Japan		198		948,019
	Derwent London PLC		United Kingdom		74,799		3,997,664
	Digital Realty Trust Inc.		United States		22,443		1,496,499
	Great Portland Estates PLC		United Kingdom		310,426		3,784,391
	Highwoods Properties Inc.		United States		55,217		2,205,919
	Japan Real Estate Investment Corp.		Japan		466		2,116,971
	Kilroy Realty Corp.		United States		72,018		4,836,009
	Paramount Group Inc.		United States		97,590		1,674,645
	SL Green Realty Corp.		United States		41,493		4,559,666
	Vornado Realty Trust		United States		66,568		6,319,300
							47,218,888
	Real Estate Development 1.8%
	China Overseas Land & Investment Ltd.		China		500,657		1,772,917
	China Resources Land Ltd.		China		268,000		869,518
	KWG Property Holdings Ltd.		China		1,513,000		1,274,553
	Sino Land Co. Ltd.		Hong Kong		1,332,288		2,230,893
							6,147,881
	Real Estate Operating Companies 8.5%
	Brookfield Property Partners LP		United States		106,100		2,346,263
	Castellum AB		Sweden		93,920		1,319,491
	Deutsche Annington Immobilien SE		Germany		117,513		3,313,348
	Deutsche Euroshop AG		Germany		34,187		1,500,747
a	Deutsche Euroshop AG, 144A		Germany		8,259		362,555
	Global Logistic Properties Ltd.		Singapore		1,486,170		2,791,603
	Hemfosa Fastigheter AB		Sweden		74,730		761,507
a	Hemfosa Fastigheter AB, 144A		Sweden		77,200		786,677
a,b	Hispania Activos Inmobiliarios SAU, 144A		Spain		34,316		503,284
	Hong Kong Land Holdings Ltd.		Hong Kong		828,943		6,797,332
	Hufvudstaden AB, A		Sweden		157,946		1,921,862
	Hysan Development Co. Ltd.		Hong Kong		500,347		2,165,557
	LEG Immobilien AG		Germany		5,690		395,185
a	LEG Immobilien AG, 144A		Germany		33,110		2,299,573
	Unite Group PLC		United Kingdom		167,585		1,504,623
a	Unite Group PLC, 144A		United Kingdom		9,344		83,893
							28,853,500
	Residential REITs 9.8%
	Apartment Investment & Management Co., A		United States		94,705		3,497,456
	AvalonBay Communities Inc.		United States		33,467		5,350,369
	Equity Lifestyle Properties Inc.		United States		56,400		2,965,512

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 (continued)
	Equity Residential		United States		128,928	$	9,046,878
	Essex Property Trust Inc.		United States		28,005		5,951,062
	Invincible Investment Corp.		Japan		3,538		1,887,666
	UDR Inc.		United States		136,131		4,360,276
							33,059,219
	Retail REITs 23.9%
	Brixmor Property Group Inc.		United States		73,400		1,697,742
	CapitaLand Mall Trust		Singapore		384,879		614,366
	Eurocommercial Properties NV, IDR		Netherlands		34,695		1,446,296
	Federal Realty Investment Trust		United States		24,409		3,126,549
	General Growth Properties Inc.		United States		225,617		5,789,332
	Hammerson PLC		United Kingdom		409,353		3,958,241
a,b	Kenedix Retail REIT Corp., 144A		Japan		360		854,482
	Kimco Realty Corp.		United States		76,869		1,732,627
	Klepierre		France		83,400		3,667,150
	The Link REIT		Hong Kong		866,788		5,082,210
	The Macerich Co.		United States		44,164		3,294,635
	Realty Income Corp.		United States		86,303		3,830,990
	Regency Centers Corp.		United States		63,193		3,727,123
	RioCan REIT		Canada		92,026		1,972,407
	Scentre Group		Australia		1,303,403		3,769,930
	Simon Property Group Inc.		United States		93,608		16,196,056
	Taubman Centers Inc.		United States		34,582		2,403,449
	Unibail-Rodamco SE		France		40,804		10,308,960
	Weingarten Realty Investors		United States		73,510		2,403,042
	Westfield Corp.		Australia		680,562		4,787,247
							80,662,834
	Specialized REITs 3.7%
	CubeSmart		United States		128,484		2,975,689
	Extra Space Storage Inc.		United States		57,504		3,750,411
	Public Storage		United States		30,614		5,644,303
							12,370,403
	Total Common Stocks and Other Equity Interests (Cost $222,863,443)						334,501,405

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 $2,739,889) 0.8%
	Repurchase Agreements 0.8%
c	Joint Repurchase Agreement, 0.095%, 7/01/15 (Maturity Value $2,739,897)		United States	$	2,739,889	$	2,739,889
	BNP Paribas Securities Corp. (Maturity Value $672,371)
	HSBC Securities (USA) Inc. (Maturity Value $1,411,978)
	Merrill Lynch, Pierce, Fenner & Smith Inc. (Maturity Value $655,548)
	Collateralized by U.S. Government Agency Securities, 0.000% - 5.50%, 12/01/15 - 6/12/20; U.S. Government Agency Securities, Strips, 6/01/17; dU.S. Treasury Bills, 3/31/16; U.S. Treasury Bonds, 3.125%, 8/15/44; and U.S. Treasury Notes, 1.25% - 1.75%, 1/31/19 - 9/30/19 (valued at $2,795,248)
	Total Investments (Cost $225,603,332) 99.9%						337,241,294
	Other Assets, less Liabilities 0.1%						380,057
	Net Assets 100.0%					$	337,621,351

See Abbreviations on page FGR-22.

^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, 2015, the aggregate value of these securities was $10,091,763, representing 2.99% 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, 2015 (unaudited)

	Franklin Global Real Estate VIP Fund
Assets:
Investments in securities:
Cost - Unaffiliated issuers	$	222,863,443
Cost - Repurchase agreements		2,739,889
Total cost of investments	$	225,603,332
Value - Unaffiliated issuers	$	334,501,405
Value - Repurchase agreements		2,739,889
Total value of investments		337,241,294
Foreign currency, at value (cost $56,736)		56,685
Receivables:
Capital shares sold		24,225
Dividends		1,218,028
Other assets		163
Total assets		338,540,395
Liabilities:
Payables:
Capital shares redeemed		359,002
Management fees		299,646
Distribution fees		133,668
Reports to shareholders		84,873
Accrued expenses and other liabilities		41,855
Total liabilities		919,044
Net assets, at value	$	337,621,351
Net assets consist of:
Paid-in capital	$	549,021,184
Distributions in excess of net investment income		(5,741,120	)
Net unrealized appreciation (depreciation)		111,633,545
Accumulated net realized gain (loss)		(317,292,258	)
Net assets, at value	$	337,621,351
Class 1:
Net assets, at value	$	33,249,888
Shares outstanding		2,165,712
Net asset value and maximum offering price per share	$	15.35
Class 2:
Net assets, at value	$	304,371,463
Shares outstanding		20,322,711
Net asset value and maximum offering price per share	$	14.98

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 Operations

for the six months ended June 30, 2015 (unaudited)

	Franklin Global Real Estate VIP Fund
Investment income:
Dividends (net of foreign taxes of $216,802)	$	3,980,100
Interest		872
Total investment income		3,980,972
Expenses:
Management fees (Note 3a)		1,927,989
Distribution fees - Class 2 (Note 3c)		413,535
Custodian fees (Note 4)		15,644
Reports to shareholders		43,179
Professional fees		34,088
Trustees’ fees and expenses		789
Other		8,389
Total expenses		2,443,613
Net investment income		1,537,359
Realized and unrealized gains (losses):
Net realized gain (loss) from:
Investments		15,141,287
Realized gain distributions from REITs		1,431,733
Foreign currency transactions		2,393
Net realized gain (loss)		16,575,413
Net change in unrealized appreciation (depreciation) on:
Investments		(27,627,670	)
Translation of other assets and liabilities denominated in foreign currencies		3,433
Net change in unrealized appreciation (depreciation)		(27,624,237	)
Net realized and unrealized gain (loss)		(11,048,824	)
Net increase (decrease) in net assets resulting from operations	$	(9,511,465	)

FGR-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 Global Real Estate VIP Fund
	Six Months Ended June 30, 2015 (unaudited)			Year Ended December 31, 2014
Increase (decrease) in net assets:
Operations:
Net investment income	$	1,537,359		$	5,302,835
Net realized gain (loss)		16,575,413			19,806,993
Net change in unrealized appreciation (depreciation)		(27,624,237	)		26,399,081
Net increase (decrease) in net assets resulting from operations		(9,511,465	)		51,508,909
Distributions to shareholders from:
Net investment income:
Class 1		(1,164,404	)		(245,080	)
Class 2		(10,130,962	)		(1,512,651	)
Total distributions to shareholders		(11,295,366	)		(1,757,731	)
Capital share transactions: (Note 2)
Class 1		(356,624	)		(3,375,482	)
Class 2		(10,455,273	)		(40,236,768	)
Total capital share transactions		(10,811,897	)		(43,612,250	)
Net increase (decrease) in net assets		(31,618,728	)		6,138,928
Net assets:
Beginning of period		369,240,079			363,101,151
End of period	$	337,621,351		$	369,240,079
Undistributed net investment income (distributions in excess of net investment income) included in net assets:
End of period	$	(5,741,120	)	$	4,016,887

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

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 (1940 Act) as an open-end management investment company, consisting of nineteen separate funds and applies the specialized accounting and reporting guidance in U.S. Generally Accepted Accounting Principles (U.S. GAAP). 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, 2015, 59.81% 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 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.

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.

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 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

FGR-16 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Global Real Estate VIP Fund (continued)

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.

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 in 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, 2015.

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-

Semiannual Report FGR-17

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Global Real Estate VIP Fund (continued)

1. Organization and Significant Accounting Policies (continued)

d. Income and Deferred Taxes (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. As a result of several court cases, in certain countries across the European Union, the Fund has filed additional tax reclaims for previously withheld taxes on dividends earned in those countries. These additional filings are subject to various administrative proceedings by the local jurisdictions’ tax authorities within the European Union, as well as a number of related judicial proceedings. At this time, uncertainty exists as to the ultimate resolution of these proceedings, the likelihood of receipt of these reclaims, and the potential timing of payment, and accordingly, no amounts are reflected in the financial statements.

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, 2015, 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’s 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 for certain dividends from foreign securities where the dividend rate is not available. In such cases, the dividend is recorded as soon as the information is received by the Fund. 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 U.S. GAAP. 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 Trust 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. For Real Estate Investment Trust (REIT) securities, the Fund records ROC estimates, if any, on the ex-dividend date and are adjusted once actual tax designations are known.

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 Global Real Estate VIP Fund (continued)

2. Shares of Beneficial Interest

At June 30, 2015, 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, 2015						Year Ended December 31, 2014
	Shares			Amount			Shares			Amount
Class 1 Shares:
Shares sold		15,913		$	268,745			35,637		$	504,194
Shares issued in reinvestment of distributions		74,498			1,164,404			15,710			245,080
Shares redeemed		(106,370	)		(1,789,773	)		(268,861	)		(4,124,756	)
Net increase (decrease)		(15,959	)	$	(356,624	)		(217,514	)	$	(3,375,482	)
Class 2 Shares:
Shares sold		334,853		$	5,495,453			356,475		$	5,291,990
Shares issued in reinvestment of distributions		664,325			10,130,962			99,321			1,512,651
Shares redeemed		(1,592,442	)		(26,081,688	)		(3,144,492	)		(47,041,409	)
Net increase (decrease)		(593,264	)	$	(10,455,273	)		(2,688,696	)	$	(40,236,768	)

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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FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Global Real Estate VIP Fund (continued)

3. Transactions With Affiliates (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 distribution plans 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 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, 2015, 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, 2014, capital loss carryforwards were as follows:

Capital loss carryforwards subject to expiration:
2016	$	112,838,568
2017		207,448,609
2018		2,192,369
Total capital loss carryforwards	$	322,479,546

At June 30, 2015, the cost of investments and net unrealized appreciation (depreciation) for income tax purposes were as follows:

Cost of investments	$	243,680,938
Unrealized appreciation	$	100,805,074
Unrealized depreciation		(7,244,718	)
Net unrealized appreciation (depreciation)	$	93,560,356

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, 2015, aggregated $44,280,823 and $61,670,928, respectively.

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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.

The Fund invests a large percentage of its total assets in REIT securities. Such concentration may subject the Fund to special risks associated with real estate securities. These securities may be more sensitive to economic or regulatory developments due to a variety of factors such as local, regional, national and global economic conditions, interest rates and tax considerations.

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 $2 billion (Global Credit Facility) which matures on February 12, 2016. 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 in the Statement of Operations. During the period ended June 30, 2015, 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, 2015, 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	$	334,501,405	$	—	$	—	$	334,501,405
Short Term Investments		—		2,739,889		—		2,739,889
Total Investments in Securities	$	334,501,405	$	2,739,889	$	—	$	337,241,294

^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 Pronouncement

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 certain transactions accounted for as a sale for interim and annual reporting periods beginning after December 15, 2014, and transactions accounted for as secured borrowings for annual periods beginning after December 15, 2014, and for interim periods beginning after March 15, 2015. Management has reviewed the requirements and believes the adoption of this ASU will not have a material impact on the financial statements.

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

FGR-22 Semiannual Report

Franklin Growth and Income VIP Fund

This semiannual report for Franklin Growth and Income VIP Fund covers the period ended June 30, 2015.

Class 2 Performance Summary as of June 30, 2015

The Fund’s Class 2 shares delivered a -0.72% total return for the six-month period ended June 30, 2015.

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 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 +1.23% total return.¹ The Fund’s peers as measured by the Lipper VIP Equity Income Funds Classification Average posted a +1.41% return for the same period.²

Economic and Market Overview

U.S. economic growth was mixed during the six months under review. In 2015’s first quarter, U.S. dollar strength, low energy price, and a labor dispute at West Coast ports led exports to decline. Lower business investment and state and local government spending also weighed on the economy, while increases in consumer spending, residential investment and private inventory investment offered some support. In the second quarter, business capital spending rebounded and manufacturing and non-manufacturing activities increased, contributing to strong job gains that helped the unemployment rate decline from 5.6% in December 2014 to 5.3% in June 2015.³ Housing market data were generally encouraging as home sales and prices rose. After a brief, winter slump, retail

sales rebounded in the spring as strong employment gains led to broad-based improvement, especially for auto and gasoline sales. Inflation, as measured by the Consumer Price Index, rose during the six months amid generally higher energy prices bouncing from recent lows.

During the six-month period, the Federal Reserve Board (Fed) kept its target interest rate at 0%–0.25% while considering when an increase would be appropriate. The Fed anticipated raising its target rate when it saw further labor market progress and was reasonably confident that inflation would move back to 2% over the medium term. In its June meeting, the Fed lowered its 2015 economic growth forecast and raised unemployment estimates given the weak start to the year.

1. Source: 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

Investor confidence grew during the period as corporate profits remained healthy, the Fed showed caution about raising interest rates, economic data in Europe and Japan improved and China introduced more stimulus measures. However, the stock markets endured some sell-offs when many investors reacted to debt negotiations between Greece and its creditors, geopolitical tensions in certain regions, and less robust growth in China. For the six months under review, U.S. stocks, as measured by the S&P 500 and the Dow Jones Industrial Average, rose marginally after both reached all-time highs in May.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 period under review, several sectors the Fund invested in rose in value, including consumer discretionary and health care. In contrast, many other sectors the Fund invested in declined in value. Key detracting sectors included information technology (IT), utilities and energy.

In consumer discretionary, key contributors included our equity-linked security in Internet retailer Amazon.com and our stock position in sports footwear, apparel, equipment, accessories and services company NIKE. Amazon.com helped relative results, as the Internet retailer generated year-over-year margin expansion in 2014’s fourth quarter and in 2015’s first quarter. In its first-quarter earnings report, Amazon.com announced a loss that investors appeared to overlook as the company disclosed the revenues and profitability of Amazon Web Services (AWS), its cloud computing platform, for the first time. With

robust annual revenue growth and a high profit margin, AWS was more profitable than many analysts had estimated. The company’s core retail business generated strong revenue growth in North America and internationally. NIKE continued to benefit from the strong growth trend in global athletic participation. Additionally, factors including the company’s strong brand, innovation and geographic expansion spurred growth exceeding that of its peers. NIKE’s margins expanded as a result of its premium price product mix and a shift in distribution channels. NIKE generated strong free cash flow and had a favorable capital return strategy that consistently raised dividends and implemented share buybacks. The company’s balance sheet was healthy, in our view, and allowed for further capital returns opportunities.

In health care, pharmaceutical companies Eli Lilly & Co. and Sanofi and pharmaceuticals and diagnostics developer Roche Holding⁵ were key contributors. Eli Lilly experienced a strong first quarter that suggested to us that it was moving past a challenging period in which a number of its patents expired. The company announced that phase III results for its experimental Alzheimer’s drug would become available earlier than

Top 10 Holdings
6/30/15
Company Sector/Industry	% of Total Net Assets
Eli Lilly & Co. Health Care		2.4%
NIKE Inc., B Consumer Discretionary		2.4%
Barclays Bank PLC into Amazon.com Inc., 144A Consumer Discretionary		2.3%
Target Corp. Consumer Discretionary		2.2%
JPMorgan Chase & Co. Financials		2.2%
Cisco Systems Inc. Information Technology		2.2%
Ford Motor Co. Consumer Discretionary		2.2%
BlackRock Inc. Financials		2.2%
Microsoft Corp. Information Technology		2.1%
L Brands Inc. Consumer Discretionary		2.1%

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

4. Please see Index Descriptions following the Fund Summaries.

5. Sold by period-end.

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FRANKLIN GROWTH AND INCOME VIP FUND

expected. Sanofi benefited from the appointment of a new chief executive officer. Roche showed promising results from its product pipeline, particularly among its non-cancer drugs. The company announced that in clinical trials, its experimental multiple sclerosis drug met expectations and outperformed a competitor’s medication.

In contrast, among IT holdings, top detractors included data storage company Seagate Technology, semiconductor maker Intel and software firm Microsoft. The personal computer (PC) market struggled during the period owing largely to unfavorable currency exchange rates in overseas markets, which delayed demand. Additionally, Microsoft terminated support of its Windows XP operating system during late 2014, effectively ending a PC replacement cycle. Finally, distributors reduced PC inventories in advance of the Windows 10 operating system launch. Seagate suffered from weak revenue levels in its first quarter driven by a slowdown in the PC market, which accounts for nearly half of Seagate’s revenue. Shares of Intel, the world’s leading microprocessor supplier, were hurt by weak global desktop and notebook computer sales during the period. The company also struggled to execute and gain market share in the smartphone market. Intel shares also were pressured after the announcement of its intention to acquire Altera, a leading programmable logic semiconductor company. Microsoft was also hurt by weakness in the PC market, which accounts for a considerable portion of the company’s gross profit. Microsoft had low earnings in its first quarter as sales from its devices and consumer business, licensing, phone and hardware divisions declined.

Within utilities, electric power company Duke Energy and power and energy company Dominion Resources were major detractors. Duke Energy lagged the utility average during the period as U.S. dollar strength weighed on translated earnings of the company’s international operations. Our position in Dominion Resources was hurt by falling power prices in New England.

In the energy sector, significant detractors included a convertible preferred stock holding in oil and natural gas exploration and production company Chesapeake Energy as well as stocks of oil and natural gas producer Royal Dutch Shell and multinational energy corporation Chevron. Energy stocks underperformed the broader markets despite a modest recovery in crude oil prices by period-end, which helped offset a drop in

natural gas prices. U.S. crude oil inventory levels rapidly increased during the first half of the reporting period and sparked fears of the U.S. reaching full oil storage capacity, which could have led to further price weakness. Yet these fears were fleeting as crude oil inventories resumed their normal seasonal withdrawal in May and into June, helped by strong demand for gasoline and resumption in refinery runs following maintenance.

Investors then turned their attention to broader economic events such as the Greek debt crisis, the possibility of the United Nations lifting Iranian export sanctions and the Chinese stock market collapse. These events at period-end stoked fears that strong oil demand growth could fade in the second half of the calendar year and increase the oil surplus as production in the U.S. and Middle East continued to grow. In this environment, Royal Dutch Shell and Chevron suffered losses. Chesapeake Energy declined as natural gas prices fell because of warm winter weather, which also negatively affected natural gas liquid prices as propane inventories surged above export demand. These factors weighed on prices for a considerable amount of the company’s output. Chesapeake was also burdened by contracts designed to support a midstream business the company sold off. These contracts carried substantial long-term commitments that limited operational flexibility and resulted in natural gas prices that were lower than those of Chesapeake’s peers.

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, 2015, 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 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 1/1/15		Ending Account Value 6/30/15		Fund-Level Expenses Incurred During Period* 1/1/15–6/30/15
Actual		$1,000		$   992.80		$4.10
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.

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FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Financial Highlights

Franklin Growth and Income VIP Fund

	Six Months Ended June 30, 2015 (unaudited)			Year Ended December 31,
				2014			2013			2012			2011			2010
Class 1
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$17.02			$15.97			$12.64			$11.60			$11.76			$10.47
Income from investment operationsa:
Net investment incomeb		0.26			0.53	c		0.33			0.35			0.33			0.38
Net realized and unrealized gains (losses)		(0.35	)		0.95			3.40			1.08			(0.03	)		1.32
Total from investment operations		(0.09	)		1.48			3.73			1.43			0.30			1.70
Less distributions from:
Net investment income		(0.61	)		(0.43	)		(0.40	)		(0.39	)		(0.46	)		(0.41	)
Net realized gains		(0.38	)		—			—			—			—			—
Total distributions		(0.99	)		(0.43	)		(0.40	)		(0.39	)		(0.46	)		(0.41	)
Net asset value, end of period		$15.94			$17.02			$15.97			$12.64			$11.60			$11.76
Total returnd		(0.62)%			9.40%			29.96%			12.53%			2.64%			16.93%
Ratios to average net assetse
Expenses		0.58%			0.57%	f		0.58%	f		0.60%			0.59%			0.59%
Net investment income		3.01%			3.26%	c		2.29%			2.86%			2.80%			3.62%
Supplemental data
Net assets, end of period (000’s)		$156,243			$168,961			$175,860			$154,463			$156,830			$176,590
Portfolio turnover rate		13.45%			20.54%			35.16%			30.00%			32.93%			26.83%

^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’s 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 special dividends paid in connection with certain Fund holdings. Excluding these amounts, the ratio of net investment income to average net assets would have been 2.53%.

^dTotal return does not include fees, charges or expenses imposed by the variable annuity and life insurance contracts for which 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, 2015 (unaudited)			Year Ended December 31,
				2014			2013			2012			2011			2010
Class 2
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$16.76			$15.73			$12.46			$11.44			$11.60			$10.33
Income from investment operationsa:
Net investment incomeb		0.23			0.48	c		0.29			0.32			0.29			0.35
Net realized and unrealized gains (losses)		(0.34	)		0.94			3.35			1.05			(0.02	)		1.31
Total from investment operations		(0.11	)		1.42			3.64			1.37			0.27			1.66
Less distributions from:
Net investment income		(0.56	)		(0.39	)		(0.37	)		(0.35	)		(0.43	)		(0.39	)
Net realized gains		(0.38	)		—			—			—			—			—
Total distributions		(0.94	)		(0.39	)		(0.37	)		(0.35	)		(0.43	)		(0.39	)
Net asset value, end of period		$15.71			$16.76			$15.73			$12.46			$11.44			$11.60
Total returnd		(0.72)%			9.14%			29.60%			12.23%			2.41%			16.68%
Ratios to average net assetse
Expenses		0.83%			0.82%	f		0.83%	f		0.85%			0.84%			0.84%
Net investment income		2.76%			3.01%	c		2.04%			2.61%			2.55%			3.37%
Supplemental data
Net assets, end of period (000’s)		$129,417			$138,191			$150,966			$131,400			$129,309			$151,481
Portfolio turnover rate		13.45%			20.54%			35.16%			30.00%			32.93%			26.83%

^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’s 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 special dividends paid in connection with certain Fund holdings. Excluding these amounts, the ratio of net investment income to average net assets would have been 2.28%.

^dTotal return does not include fees, charges or expenses imposed by the variable annuity and life insurance contracts for which 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, 2015 (unaudited)

Franklin Growth and Income VIP Fund
		Country		Shares		Value
	Common Stocks 86.7%
	Consumer Discretionary 14.0%
	Ford Motor Co.		United States		413,000	$	6,199,130
	L Brands Inc.		United States		70,100		6,009,673
	Las Vegas Sands Corp.		United States		63,600		3,343,452
	Lowe’s Cos. Inc.		United States		81,700		5,471,449
	NIKE Inc., B		United States		62,900		6,794,458
	Starwood Hotels & Resorts Worldwide Inc.		United States		70,000		5,676,300
	Target Corp.		United States		78,500		6,407,955
							39,902,417
	Consumer Staples 6.9%
	Anheuser-Busch InBev NV, ADR		Belgium		35,000		4,223,450
	Mead Johnson Nutrition Co., A		United States		45,400		4,095,988
	Nestle SA		Switzerland		44,700		3,226,660
	PepsiCo Inc.		United States		61,500		5,740,410
	The Procter & Gamble Co.		United States		31,600		2,472,384
							19,758,892
	Energy 5.5%
	Chevron Corp.		United States		42,700		4,119,269
	Exxon Mobil Corp.		United States		49,744		4,138,701
	HollyFrontier Corp.		United States		81,600		3,483,504
	Royal Dutch Shell PLC, A, ADR		United Kingdom		69,100		3,939,391
							15,680,865
	Financials 13.7%
	Aflac Inc.		United States		72,300		4,497,060
	Arthur J. Gallagher & Co.		United States		94,400		4,465,120
	Bank of America Corp.		United States		128,300		2,183,666
	BlackRock Inc.		United States		17,900		6,193,042
	JPMorgan Chase & Co.		United States		93,370		6,326,751
	MetLife Inc.		United States		93,778		5,250,630
	T. Rowe Price Group Inc.		United States		61,100		4,749,303
	Wells Fargo & Co.		United States		98,300		5,528,392
							39,193,964
	Health Care 9.6%
	Bristol-Myers Squibb Co.		United States		89,900		5,981,946
	Eli Lilly & Co.		United States		81,400		6,796,086
	Johnson & Johnson		United States		44,600		4,346,716
	Pfizer Inc.		United States		132,400		4,439,372
	Sanofi, ADR		France		120,000		5,943,600
							27,507,720
	Industrials 15.3%
	Caterpillar Inc.		United States		58,800		4,987,416
	General Electric Co.		United States		166,200		4,415,934
	Honeywell International Inc.		United States		58,100		5,924,457
	Lockheed Martin Corp.		United States		30,500		5,669,950
	Nielsen NV		United States		95,500		4,275,535
	Raytheon Co.		United States		39,800		3,808,064
	Republic Services Inc.		United States		146,200		5,726,654
	United Parcel Service Inc., B		United States		41,200		3,992,692
	United Technologies Corp.		United States		44,800		4,969,664
							43,770,366

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)
	Information Technology 9.6%
	Cisco Systems Inc.		United States		229,208	$	6,294,052
	Intel Corp.		United States		182,800		5,559,862
	Maxim Integrated Products Inc.		United States		168,200		5,815,515
	Microsoft Corp.		United States		137,800		6,083,870
	Seagate Technology PLC		United States		78,800		3,743,000
							27,496,299
	Materials 4.6%
	BHP Billiton PLC		Australia		111,700		2,191,754
	The Dow Chemical Co.		United States		111,500		5,705,455
	Freeport-McMoRan Inc., B		United States		82,788		1,541,513
	Potash Corp. of Saskatchewan Inc.		Canada		115,500		3,577,035
							13,015,757
	Telecommunication Services 2.0%
	Rogers Communications Inc., B		Canada		159,100		5,652,823
	Utilities 5.5%
	Dominion Resources Inc.		United States		52,600		3,517,362
	Duke Energy Corp.		United States		56,703		4,004,366
	PG&E Corp.		United States		110,500		5,425,550
	Xcel Energy Inc.		United States		89,800		2,889,764
							15,837,042
	Total Common Stocks (Cost $189,609,733)						247,816,145
a	Equity-Linked Securities (Cost $5,125,650) 2.3%
	Consumer Discretionary 2.3%
b	Barclays Bank PLC into Amazon.com Inc., 3.00%, 144A		United States		15,000		6,441,570
	Convertible Preferred Stocks 8.5%
	Energy 0.6%
	Chesapeake Energy Corp., 5.75%, cvt. pfd.		United States		2,700		1,856,282
	Financials 1.2%
	Bank of America Corp., 7.25%, cvt. pfd., L		United States		3,100		3,447,200
	Health Care 1.5%
	Allergan PLC, 5.50%, cvt. pfd.		United States		4,000		4,170,320
	Industrials 2.2%
	Genesee & Wyoming Inc., 5.00%, cvt. pfd.		United States		9,200		931,500
	Stanley Black & Decker Inc., 6.25%, cvt. pfd.		United States		45,300		5,402,025
							6,333,525
	Materials 1.2%
	Alcoa Inc., 5.375%, cvt. pfd.		United States		84,800		3,352,144
	Utilities 1.8%
	NextEra Energy Inc., 5.799%, cvt. pfd.		United States		62,000		3,317,000
	NextEra Energy Inc., 5.889%, cvt. pfd.		United States		28,100		1,734,051
							5,051,051
	Total Convertible Preferred Stocks (Cost $22,820,497)						24,210,522
	Total Investments before Short Term Investments (Cost $217,555,880)						278,468,237

Semiannual Report FGI-9

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Growth and Income VIP Fund (continued)

		Country		Principal Amount		Value
	Short Term Investments (Cost $7,036,215) 2.4%
	Repurchase Agreements 2.4%
c	Joint Repurchase Agreement, 0.095%, 7/01/15 (Maturity Value $7,036,234)		United States	$	7,036,215	$	7,036,215
	BNP Paribas Securities Corp. (Maturity Value $1,726,692)
	HSBC Securities (USA) Inc. (Maturity Value $3,626,053) Merrill Lynch, Pierce, Fenner & Smith Inc. (Maturity Value $1,683,489)
	Collateralized by U.S. Government Agency Securities, 0.000% - 5.50%, 12/01/15 - 6/12/20; U.S. Government Agency Securities, Strips, 6/01/17; dU.S. Treasury Bills, 3/31/16; U.S. Treasury Bonds, 3.125%, 8/15/44; and U.S. Treasury Notes, 1.25% - 1.75%, 1/31/19 - 9/30/19 (valued at $7,178,379)
	Total Investments (Cost $224,592,095) 99.9%						285,504,452
	Other Assets, less Liabilities 0.1%						155,801
	Net Assets 100.0%					$	285,660,253

See Abbreviations on page FGI-19.

^aSee Note 1(d) regarding equity-linked securities.

^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.

^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, 2015 (unaudited)

	Franklin Growth and Income VIP Fund
Assets:
Investments in securities:
Cost - Unaffiliated issuers	$	217,555,880
Cost - Repurchase agreements		7,036,215
Total cost of investments	$	224,592,095
Value - Unaffiliated issuers	$	278,468,237
Value - Repurchase agreements		7,036,215
Total value of investments		285,504,452
Receivables:
Capital shares sold		16,181
Dividends		508,253
Other assets		125
Total assets		286,029,011
Liabilities:
Payables:
Capital shares redeemed		128,662
Management fees		128,423
Distribution fees		55,662
Reports to shareholders		37,575
Accrued expenses and other liabilities		18,436
Total liabilities		368,758
Net assets, at value	$	285,660,253
Net assets consist of:
Paid-in capital	$	205,562,325
Undistributed net investment income		4,290,886
Net unrealized appreciation (depreciation)		60,913,719
Accumulated net realized gain (loss)		14,893,323
Net assets, at value	$	285,660,253
Class 1:
Net assets, at value	$	156,243,156
Shares outstanding		9,799,719
Net asset value and maximum offering price per share	$	15.94
Class 2:
Net assets, at value	$	129,417,097
Shares outstanding		8,239,365
Net asset value and maximum offering price per share	$	15.71

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, 2015 (unaudited)

	Franklin Growth and Income VIP Fund
Investment income:
Dividends	$	5,335,452
Interest		1,468
Total investment income		5,336,920
Expenses:
Management fees (Note 3a)		792,872
Distribution fees - Class 2 (Note 3c)		167,095
Custodian fees (Note 4)		1,913
Reports to shareholders		38,749
Professional fees		19,087
Trustees’ fees and expenses		650
Other		5,374
Total expenses		1,025,740
Net investment income		4,311,180
Realized and unrealized gains (losses):
Net realized gain (loss) from:
Investments		14,825,984
Foreign currency transactions		39,480
Net realized gain (loss)		14,865,464
Net change in unrealized appreciation (depreciation) on:
Investments		(20,930,878	)
Translation of other assets and liabilities denominated in foreign currencies		10,477
Net change in unrealized appreciation (depreciation)		(20,920,401	)
Net realized and unrealized gain (loss)		(6,054,937	)
Net increase (decrease) in net assets resulting from operations	$	(1,743,757	)

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, 2015 (unaudited)			Year Ended December 31, 2014
Increase (decrease) in net assets:
Operations:
Net investment income	$	4,311,180		$	9,837,662
Net realized gain (loss)		14,865,464			23,764,024
Net change in unrealized appreciation (depreciation)		(20,920,401	)		(6,144,449	)
Net increase (decrease) in net assets resulting from operations		(1,743,757	)		27,457,237
Distributions to shareholders from:
Net investment income:
Class 1		(5,633,682	)		(4,441,593	)
Class 2		(4,366,077	)		(3,421,107	)
Net realized gains:
Class 1		(3,526,285	)		—
Class 2		(2,955,426	)		—
Total distributions to shareholders		(16,481,470	)		(7,862,700	)
Capital share transactions: (Note 2)
Class 1		(2,717,964	)		(17,675,242	)
Class 2		(548,885	)		(21,593,267	)
Total capital share transactions		(3,266,849	)		(39,268,509	)
Net increase (decrease) in net assets		(21,492,076	)		(19,673,972	)
Net assets:
Beginning of period		307,152,329			326,826,301
End of period	$	285,660,253		$	307,152,329
Undistributed net investment income included in net assets:
End of period	$	4,290,886		$	9,979,465

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 (1940 Act) as an open-end management investment company, consisting of nineteen separate funds and applies the specialized accounting and reporting guidance in U.S. Generally Accepted Accounting Principles (U.S. GAAP). 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, 2015, 77.93% 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.

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.

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 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

FGI-14 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Growth and Income VIP Fund (continued)

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.

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 in 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, 2015.

d. 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

Semiannual Report FGI-15

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. Equity-Linked Securities (continued)

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.

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. As a result of several court cases, in certain countries across the European Union, the Fund has filed additional tax reclaims for previously withheld taxes on dividends earned in those countries. These additional filings are subject to various administrative proceedings by the local jurisdictions’ tax authorities within the European Union, as well as a number of related judicial proceedings. At this time, uncertainty exists as to the ultimate resolution of these proceedings, the likelihood of receipt of these reclaims, and the potential timing of payment, and accordingly, no amounts are reflected in the financial statements.

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, 2015, 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’s 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. Interest income and estimated expenses are accrued daily. Dividend income is recorded on the ex-dividend date except for certain dividends from foreign securities where the dividend rate is not available. In such cases, the dividend is recorded as soon as the information is received by the Fund. 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 U.S. GAAP. 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

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FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Growth and Income VIP Fund (continued)

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, 2015, 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, 2015						Year Ended December 31, 2014
	Shares			Amount			Shares			Amount
Class 1 Shares:
Shares sold		5,479		$	91,968			1,787		$	29,600
Shares issued in reinvestment of distributions		568,589			9,159,967			273,329			4,441,593
Shares redeemed		(701,563	)		(11,969,899	)		(1,356,798	)		(22,146,435	)
Net increase (decrease)		(127,495	)	$	(2,717,964	)		(1,081,682	)	$	(17,675,242	)
Class 2 Shares:
Shares sold		266,953		$	4,486,108			349,345		$	5,677,772
Shares issued in reinvestment of distributions		461,342			7,321,503			213,552			3,421,107
Shares redeemed		(735,360	)		(12,356,496	)		(1,911,427	)		(30,692,146	)
Net increase (decrease)		(7,065	)	$	(548,885	)		(1,348,530	)	$	(21,593,267	)

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

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)

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, 2015, there were no credits earned.

5. Income Taxes

At June 30, 2015, the cost of investments and net unrealized appreciation (depreciation) for income tax purposes were as follows:

Cost of investments	$	224,694,756
Unrealized appreciation	$	69,763,391
Unrealized depreciation		(8,953,695	)
Net unrealized appreciation (depreciation)	$	60,809,696

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

6. Investment Transactions

Purchases and sales of investments (excluding short term securities) for the period ended June 30, 2015, aggregated $39,375,004 and $59,848,156, 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 $2 billion (Global Credit Facility) which matures on February 12, 2016. 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

FGI-18 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Growth and Income VIP Fund (continued)

annual commitment fee of 0.07% based upon the unused portion of the Global Credit Facility. These fees are reflected in other expenses in the Statement of Operations. During the period ended June 30, 2015, 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, 2015, 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	$	15,680,865	$	1,856,282	$	—	$	17,537,147
All Other Equity Investmentsb		254,489,520		—		—		254,489,520
Equity-Linked Securities		—		6,441,570		—		6,441,570
Short Term Investments		—		7,036,215		—		7,036,215
Total Investments in Securities	$	270,170,385	$	15,334,067	$	—	$	285,504,452

^aIncludes common and convertible preferred stocks.

^bFor 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.

Abbreviations

Selected Portfolio
ADR	American Depositary Receipt

Semiannual Report FGI-19

Franklin High Income VIP Fund

This semiannual report for Franklin High Income VIP Fund covers the period ended June 30, 2015.

Class 2 Performance Summary as of June 30, 2015

The Fund’s Class 2 shares delivered a +1.40% total return for the six-month period ended June 30, 2015.

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 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 +2.90% 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 +2.49% total return.²

Economic and Market Overview

U.S. economic growth was mixed during the six-months under review. In 2015’s first quarter, U.S. dollar strength, low energy prices and a labor dispute at West Coast ports led exports to decline. Lower business investment and state and local government spending also weighed on the economy, while increases in consumer spending, residential investment and private inventory investment offered some support. In the second quarter, business capital spending rebounded and manufacturing and non-manufacturing activities increased, contributing to strong job gains that helped the unemployment rate decline from 5.6% in December 2014 to 5.3% in June

*Includes common and convertible preferred shares.

2015.³ Housing market data were generally encouraging as home sales and prices rose. After a brief, winter slump, retail sales rebounded in the spring as strong employment gains led to broad-based improvement, especially for auto and gasoline sales. Inflation, as measured by the Consumer Price Index, rose during the six months amid generally higher energy prices bouncing from recent lows.

During the six-month period, the Federal Reserve Board (Fed) kept its target interest rate at 0%–0.25% while considering when an increase might be appropriate. The Fed anticipated raising its target rate when it saw further labor market progress and was reasonably confident that inflation would move back to 2% over the medium term. In its June meeting, the Fed lowered its 2015 economic growth forecast and raised unemployment estimates given the weak start to the year.

The 10-year Treasury yield, which moves inversely to price, declined from 2.17% at the start of the period to a six-month low of 1.68% in early February as investors sought less risky assets given concerns about soft domestic data, Greece’s debt negotiations, less robust growth in China and the Fed’s cautious tone on raising interest rates. At period-end, the yield rose to 2.35% based partly on upbeat domestic and eurozone economic data and expectations of an agreement between Greece and its international creditors.

Investment Strategy

We are research-driven, fundamental investors who rely on a team of analysts to provide in-depth industry expertise and use

1. Source: Credit Suisse Group.

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 HIGH INCOME VIP FUND

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.

Top 10 Sectors/Industries
6/30/15
	% of Total Net Assets
Energy		17.3%
Materials		13.1%
Telecommunication Services		9.1%
Media		8.9%
Health Care Equipment & Services		6.4%
Banks		5.5%
Software & Services		4.4%
Consumer Services		4.0%
Pharmaceuticals, Biotechnology & Life Sciences		3.7%
Utilities		3.5%

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).

Manager’s Discussion

The high yield corporate bond market was impacted by conflicting market trends during the first half of 2015. Concerns about slower economic growth and deflationary fears prompted quantitative easing in Japan and the eurozone, while conversely in the U.S. the Federal Reserve provided guidance toward an increase in its short-term target rate before year-end given healthy employment gains and an expectation for stronger domestic economic growth. The general market’s outlook for Chinese economic growth became more downbeat, which continued to pressure the global commodities markets, while ongoing Greek negotiations weighed on the financial markets at period-end.

More specifically in the high yield market, the energy sector, which suffered in the fourth quarter of 2014, recovered some of its losses as oil prices rose from their early 2015 lows. U.S. producers initiated significant cutbacks in their drilling activity,

which contributed to the price increase. Although investor risk appetite for high yield bonds fluctuated during the period in conjunction with overall financial market volatility, by period-end a slowdown in new-issue supply relative to 2014 helped support high yield bond prices. Overall, high yield spreads relative to Treasuries narrowed modestly during the period, allowing the market to generate a positive total return. In terms of Fund performance, Fund returns underperformed the CS High Yield Index due to certain individual energy issues that did not participate in the energy rebound, as well as other commodity-related holdings that came under pressure with the slowdown in Chinese demand. At period-end, the Fund was positioned with a higher relative risk stance, primarily given its positioning in the energy and metals and mining industries.⁴

As is typical, during the period we drew on our fundamental research process to make individual investment decisions and to position our industry exposure relative to the CS High Yield Index. Overall, our industry exposures had a negative impact on relative returns during the period. For instance, our overweighting of the metals and mining sector compared with the CS High Yield Index dragged on performance. Although the sector’s bond valuations appeared attractive to us, the sector was affected by weak demand fundamentals out of China and Europe combined with increasing supply that continued to pressure pricing for commodities such as coal and iron ore. Correspondingly, bond prices suffered and the sector underperformed the benchmark. In contrast, bonds in the retailing industry outperformed the benchmark despite tepid consumer spending. We remained underweighted in the industry given what we considered the generally bondholder-unfriendly balance sheets of retailers as well as concerns about continued margin pressures and long-term challenges for certain retail concepts. However, positive company-specific events helped drive strong returns for certain large issuers in this rather small sector. Our overweighted positioning in cable television also hampered relative performance as the industry underperformed.⁵ The satellite television subindustry suffered from a delay in satellite launches and a perceived broader decline trend, while pay television faced a competitive environment.⁵ Potential consolidation in the pay television industry also added volatility to the sector, as did the prospect of possible new-issue supply coming into the market.

Conversely, certain industry exposures positively impacted relative Fund returns. As mentioned earlier, the energy sector partially rebounded in the first half of 2015 and was one of the

4. Metals and mining is part of materials in the SOI.

5. Cable, satellite and pay television are in media in the SOI.

Semiannual Report FH-3

FRANKLIN HIGH INCOME VIP FUND

high yield market’s top performing industries. We had maintained a sector overweighting relative to the CS High Yield Index and so the recovery aided relative returns. At the same time, security selection within energy hampered the Fund as it was more aggressively positioned and some of the more leveraged energy issues did not participate in the rally. Along the same lines, our modest overweighting in the gaming industry, which outperformed the benchmark, benefited the Fund.⁶ Stabilization of regional gaming markets and healthy demand in Las Vegas helped buoy the sector as did the recovery in the bond prices of Caesars Entertainment Operating Co., a large gaming issuer that filed for bankruptcy during the period. Finally, our overweighting in the wireless sector also aided relative performance.⁷ Some operators benefited from improving results, and the potential for consolidation in the industry also supported bond prices. For instance, the bonds of Wind Acquisition Finance gained due to expectations of a potential merger or partnership with a competitor in the Italian mobile market.

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, 2015, 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. Gaming is part of consumer services in the SOI.

7. Wireless is part of telecommunication services in the SOI.

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 1/1/15		Ending Account Value 6/30/15		Fund-Level Expenses Incurred During Period* 1/1/15–6/30/15
Actual		$1,000		$1,014.00		$4.14
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 FH-5

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Financial Highlights

Franklin High Income VIP Fund

	Six Months Ended June 30, 2015 (unaudited)			Year Ended December 31,
				2014			2013			2012			2011			2010
Class 1
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$6.62			$7.02			$7.01			$6.52			$6.63			$6.26
Income from investment operationsa:
Net investment incomeb		0.20			0.42			0.46			0.48			0.50			0.49
Net realized and unrealized gains (losses)		(0.10	)		(0.38	)		0.09			0.51			(0.19	)		0.32
Total from investment operations		0.10			0.04			0.55			0.99			0.31			0.81
Less distributions from net investment income		(0.45	)		(0.44	)		(0.54	)		(0.50	)		(0.42	)		(0.44	)
Net asset value, end of period		$6.27			$6.62			$7.02			$7.01			$6.52			$6.63
Total returnc		1.48%			0.21%			8.17%			15.94%			4.63%			13.71%
Ratios to average net assetsd
Expenses		0.58%			0.57%	e		0.58%	e		0.58%			0.58%			0.61%
Net investment income		6.02%			6.00%			6.63%			7.15%			7.52%			7.71%
Supplemental data
Net assets, end of period (000’s)		$32,257			$34,552			$39,300			$42,166			$41,971			$48,051
Portfolio turnover rate		18.68%			39.46%			30.78%			37.03%			45.11%			60.80%

^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’s 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 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, 2015 (unaudited)			Year Ended December 31,
				2014			2013			2012			2011			2010
Class 2
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$6.41			$6.81			$6.82			$6.36			$6.47			$6.13
Income from investment operationsa:
Net investment incomeb		0.19			0.39			0.43			0.46			0.47			0.47
Net realized and unrealized gains (losses)		(0.10	)		(0.37	)		0.08			0.48			(0.18	)		0.30
Total from investment operations		0.09			0.02			0.51			0.94			0.29			0.77
Less distributions from net investment income		(0.43	)		(0.42	)		(0.52	)		(0.48	)		(0.40	)		(0.43	)
Net asset value, end of period		$6.07			$6.41			$6.81			$6.82			$6.36			$6.47
Total returnc		1.40%			(0.02)%			7.83%			15.56%			4.56%			13.26%
Ratios to average net assetsd
Expenses		0.83%			0.82%	e		0.83%	e		0.83%			0.83%			0.86%
Net investment income		5.77%			5.75%			6.38%			6.90%			7.27%			7.46%
Supplemental data
Net assets, end of period (000’s)		$247,407			$261,944			$291,826			$281,851			$249,452			$239,824
Portfolio turnover rate		18.68%			39.46%			30.78%			37.03%			45.11%			60.80%

^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’s 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 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, 2015 (unaudited)			Year Ended December 31,
				2014			2013			2012			2011			2010
Class 4
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$6.54			$6.94			$6.94			$6.46			$6.57			$6.22
Income from investment operationsa:
Net investment incomeb		0.19			0.39			0.43			0.46			0.47			0.47
Net realized and unrealized gains (losses)		(0.10	)		(0.38	)		0.08			0.49			(0.18	)		0.31
Total from investment operations		0.09			0.01			0.51			0.95			0.29			0.78
Less distributions from net investment income		(0.43	)		(0.41	)		(0.51	)		(0.47	)		(0.40	)		(0.43	)
Net asset value, end of period		$6.20			$6.54			$6.94			$6.94			$6.46			$6.57
Total returnc		1.25%			(0.15)%			7.72%			15.50%			4.39%			13.31%
Ratios to average net assetsd
Expenses		0.93%			0.92%	e		0.93%	e		0.93%			0.93%			0.96%
Net investment income		5.67%			5.65%			6.28%			6.80%			7.17%			7.36%
Supplemental data
Net assets, end of period (000’s)		$25,001			$25,740			$27,789			$27,664			$27,055			$25,934
Portfolio turnover rate		18.68%			39.46%			30.78%			37.03%			45.11%			60.80%

^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’s 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 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, 2015 (unaudited)

Franklin High Income VIP Fund
		Country		Shares		Value
	Common Stocks 0.1%
	Materials 0.0%†
a	Verso Corp.		United States		9,431	$	6,225
	Transportation 0.1%
a	CEVA Holdings LLC		United Kingdom		224		165,967
	Total Common Stocks (Cost $366,150)						172,192
	Convertible Preferred Stocks 0.1%
	Transportation 0.1%
a	CEVA Holdings LLC, cvt. pfd., A-1		United Kingdom		6		6,000
a	CEVA Holdings LLC, cvt. pfd., A-2		United Kingdom		486		359,277
	Total Convertible Preferred Stocks (Cost $731,856)						365,277
				Principal Amount*
	Corporate Bonds 95.8%
	Automobiles & Components 1.7%
b	Fiat Chrysler Automobiles NV, senior note, 144A, 5.25%, 4/15/23		United Kingdom		3,000,000		2,943,750
	The Goodyear Tire & Rubber Co., senior note, 6.50%, 3/01/21		United States		2,200,000		2,337,500
							5,281,250
	Banks 5.5%
c	Bank of America Corp., junior sub. bond, M, 8.125% to 5/15/18, FRN thereafter, Perpetual		United States		2,500,000		2,656,250
	CIT Group Inc., senior note,
	5.375%, 5/15/20		United States		1,700,000		1,776,500
	5.00%, 8/15/22		United States		2,700,000		2,679,750
c	Citigroup Inc., junior sub. bond, M, 6.30% to 5/15/24, FRN thereafter, Perpetual		United States		2,800,000		2,737,000
c	JPMorgan Chase & Co., junior sub. bond,
	R, 6.00% to 8/01/23, FRN thereafter, Perpetual		United States		2,500,000		2,487,500
	V, 5.00% to 7/30/19, FRN thereafter, Perpetual		United States		1,400,000		1,372,000
	Royal Bank of Scotland Group PLC, sub. note,
	6.125%, 12/15/22		United Kingdom		2,000,000		2,147,500
	5.125%, 5/28/24		United Kingdom		900,000		900,563
							16,757,063
	Capital Goods 2.8%
b	Abengoa Finance SAU, senior note, 144A,
	8.875%, 11/01/17		Spain		1,300,000		1,356,062
	7.75%, 2/01/20		Spain		250,000		249,844
b	Bombardier Inc., senior bond, 144A, 7.50%, 3/15/25		Canada		3,000,000		2,737,500
	Navistar International Corp., senior note, 8.25%, 11/01/21		United States		1,500,000		1,432,500
	TransDigm Inc.,
	senior sub. bond, 6.50%, 7/15/24		United States		1,000,000		992,500
	b senior sub. bond, 144A, 6.50%, 5/15/25		United States		200,000		198,750
	senior sub. note, 6.00%, 7/15/22		United States		500,000		496,250
b	Zachry Holdings Inc., senior note, 144A, 7.50%, 2/01/20		United States		1,100,000		1,100,000
							8,563,406

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 1.6%
b	Algeco Scotsman Global Finance PLC, senior secured note, first lien, 144A, 8.50%, 10/15/18		United Kingdom		300,000	$	290,813
b	Anna Merger Sub Inc., senior note, 144A, 7.75%, 10/01/22		United States		1,600,000		1,616,000
d,e	Goss Graphic Systems Inc., senior sub. note, 12.25%, 11/19/05		United States		1,912,374		191
b	IHS Inc., senior note, 144A, 5.00%, 11/01/22		United States		600,000		598,500
	United Rentals North America Inc., senior bond, 5.75%, 11/15/24		United States		2,500,000		2,475,000
							4,980,504
	Consumer Durables & Apparel 2.6%
	KB Home,
	senior bond, 7.50%, 9/15/22		United States		2,100,000		2,194,500
	senior note, 4.75%, 5/15/19		United States		600,000		598,500
	senior note, 7.00%, 12/15/21		United States		700,000		726,250
b	Taylor Morrison Communities Inc./Monarch Communities Inc., senior note, 144A,
	5.25%, 4/15/21		United States		900,000		891,000
	5.875%, 4/15/23		United States		600,000		592,500
	5.625%, 3/01/24		United States		1,500,000		1,451,250
	Visant Corp., senior note, 10.00%, 10/01/17		United States		1,900,000		1,541,375
							7,995,375
	Consumer Services 4.0%
b	1011778 BC ULC/New Red Finance Inc.,
	secured note, second lien, 144A, 6.00%, 4/01/22		Canada		2,000,000		2,060,000
	senior secured note, first lien, 144A, 4.625%, 1/15/22		Canada		900,000		888,750
b	24 Hour Holdings III LLC, senior note, 144A, 8.00%, 6/01/22		United States		2,500,000		2,034,375
d	Caesars Entertainment Operating Co. Inc., senior secured note, first lien, 11.25%, 6/01/17		United States		2,000,000		1,580,000
b,d	Fontainebleau Las Vegas, senior secured note, first lien, 144A, 11.00%, 6/15/15		United States		1,700,000		8,585
b	International Game Technology PLC, senior secured bond, 144A, 6.50%, 2/15/25		United States		3,000,000		2,791,875
b	Sabre GLBL Inc., first lien, 144A, 5.375%, 4/15/23		United States		2,000,000		1,980,000
b	Wynn Macau Ltd., senior note, 144A, 5.25%, 10/15/21		Macau		1,000,000		949,375
							12,292,960
	Diversified Financials 2.3%
	E*TRADE Financial Corp., senior note,
	5.375%, 11/15/22		United States		1,300,000		1,335,750
	4.625%, 9/15/23		United States		600,000		591,000
	Navient Corp., senior note, 5.50%, 1/15/19		United States		3,500,000		3,577,420
b	OneMain Financial Holdings Inc., senior note, 144A, 7.25%, 12/15/21		United States		1,500,000		1,556,250
							7,060,420
	Energy 17.3%
	California Resources Corp.,
	senior bond, 6.00%, 11/15/24		United States		2,000,000		1,727,500
	senior note, 5.50%, 9/15/21		United States		800,000		697,000
b	Calumet Specialty Products Partners LP/Finance Co., senior note, 144A, 7.75%, 4/15/23		United States		1,500,000		1,548,750

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 (continued)
	CGG SA, senior note, 6.875%, 1/15/22		France		2,300,000	$	1,927,688
	CHC Helicopter SA,
	senior note, 9.375%, 6/01/21		Canada		260,000		156,000
	senior secured note, first lien, 9.25%, 10/15/20		Canada		2,700,000		1,969,312
	Chesapeake Energy Corp., senior note, 6.625%, 8/15/20		United States		3,000,000		2,940,000
b	Compressco Partners LP/Finance Corp., senior note, 144A, 7.25%, 8/15/22		United States		700,000		672,000
	CONSOL Energy Inc., senior note,
	5.875%, 4/15/22		United States		1,100,000		939,532
	b 144A, 8.00%, 4/01/23		United States		1,800,000		1,714,500
b	Drill Rigs Holdings Inc., secured note, 144A, 6.50%, 10/01/17		United States		2,000,000		1,765,000
	Energy Transfer Equity LP,
	senior bond, 5.875%, 1/15/24		United States		400,000		416,800
	senior note, first lien, 7.50%, 10/15/20		United States		2,600,000		2,944,500
	senior secured bond, first lien, 5.50%, 6/01/27		United States		500,000		498,750
	Energy XXI Gulf Coast Inc., senior note,
	7.50%, 12/15/21		United States		1,000,000		330,000
	6.875%, 3/15/24		United States		1,200,000		396,000
b	EnQuest PLC, senior note, 144A, 7.00%, 4/15/22		United Kingdom		2,000,000		1,611,250
	EPL Oil & Gas Inc., senior note, 8.25%, 2/15/18		United States		1,400,000		850,500
	Goodrich Petroleum Corp., senior note, 8.875%, 3/15/19		United States		2,500,000		1,087,500
	Halcon Resources Corp., senior note,
	8.875%, 5/15/21		United States		2,500,000		1,656,250
	9.25%, 2/15/22		United States		1,100,000		717,750
	Linn Energy LLC/Finance Corp., senior note,
	8.625%, 4/15/20		United States		2,000,000		1,650,420
	7.75%, 2/01/21		United States		700,000		547,750
	6.50%, 9/15/21		United States		300,000		225,000
	Martin Midstream Partners LP/Martin Midstream Finance Corp., senior note, 7.25%, 2/15/21		United States		1,100,000		1,086,250
	Memorial Resource Development Corp., senior note, 5.875%, 7/01/22		United States		1,100,000		1,067,770
	Midstates Petroleum Co. Inc./LLC, senior note, 9.25%, 6/01/21		United States		1,500,000		630,000
b	Murray Energy Corp., secured note, second lien, 144A, 11.25%, 4/15/21		United States		1,200,000		1,014,000
b	Ocean Rig UDW Inc., senior note, 144A, 7.25%, 4/01/19		United States		2,700,000		2,104,312
	Offshore Group Investment Ltd.,
	senior bond, first lien, 7.125%, 4/01/23		United States		1,000,000		615,000
	senior secured note, first lien, 7.50%, 11/01/19		United States		2,000,000		1,236,250
	PBF Holding Co. LLC, first lien, 8.25%, 2/15/20		United States		2,000,000		2,123,000
	Peabody Energy Corp., senior note,
	6.50%, 9/15/20		United States		1,700,000		586,500
	6.25%, 11/15/21		United States		1,700,000		552,500
	Penn Virginia Corp., senior note, 8.50%, 5/01/20		United States		1,200,000		1,083,000
	Penn Virginia Resource Partners LP/Penn Virginia Resource Finance Corp., senior note, 6.50%, 5/15/21		United States		600,000		635,250
	QEP Resources Inc., senior note,
	5.375%, 10/01/22		United States		1,500,000		1,456,050
	5.25%, 5/01/23		United States		1,500,000		1,443,750

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,d,f	Quicksilver Resources Inc., secured note, second lien, 144A, FRN, 7.00%, 6/21/19		United States		600,000	$	367,500
	Sabine Pass Liquefaction LLC,
	first lien, 5.625%, 2/01/21		United States		2,400,000		2,460,000
	first lien, 5.625%, 4/15/23		United States		900,000		901,404
	senior secured note, first lien, 5.75%, 5/15/24		United States		200,000		200,250
	Sanchez Energy Corp., senior note,
	7.75%, 6/15/21		United States		1,800,000		1,800,000
	6.125%, 1/15/23		United States		700,000		630,000
b	Ultra Petroleum Corp., senior bond, 144A, 6.125%, 10/01/24		United States		2,100,000		1,853,250
							52,835,788
	Food, Beverage & Tobacco 3.4%
b	Cott Beverages Inc., senior note, 144A, 6.75%, 1/01/20		United States		1,100,000		1,144,000
b	Dole Food Co. Inc., senior secured note, 144A, 7.25%, 5/01/19		United States		1,500,000		1,518,750
b	JBS USA LLC/Finance Inc.,
	senior bond, 144A, 5.875%, 7/15/24		United States		600,000		606,375
	senior note, 144A, 8.25%, 2/01/20		United States		2,600,000		2,769,000
	Post Holdings Inc., senior note,
	7.375%, 2/15/22		United States		1,600,000		1,634,000
	b 144A, 6.75%, 12/01/21		United States		1,100,000		1,102,750
	b 144A, 6.00%, 12/15/22		United States		300,000		289,875
	WhiteWave Foods Co., senior note, 5.375%, 10/01/22		United States		1,100,000		1,166,000
							10,230,750
	Health Care Equipment & Services 6.4%
	Alere Inc.,
	senior note, 7.25%, 7/01/18		United States		2,200,000		2,312,750
	senior sub. note, 6.50%, 6/15/20		United States		300,000		312,000
	CHS/Community Health Systems Inc., senior note,
	8.00%, 11/15/19		United States		1,200,000		1,267,500
	7.125%, 7/15/20		United States		700,000		743,400
	6.875%, 2/01/22		United States		2,000,000		2,117,500
	DaVita HealthCare Partners Inc., senior bond, 5.125%, 7/15/24		United States		2,000,000		1,970,000
	HCA Inc.,
	senior bond, 5.375%, 2/01/25		United States		1,500,000		1,518,750
	senior note, 5.875%, 5/01/23		United States		2,000,000		2,130,000
	senior secured note, first lien, 5.00%, 3/15/24		United States		2,300,000		2,346,000
b,g	Hologic Inc., senior note, 144A, 5.25%, 7/15/22		United States		900,000		921,375
	Tenet Healthcare Corp., senior note,
	8.125%, 4/01/22		United States		3,000,000		3,292,500
	b 144A, 5.00%, 3/01/19		United States		200,000		200,750
b	Tenet Healthcare Corp. II, senior note, 144A, 6.75%, 6/15/23		United States		300,000		306,563
							19,439,088
	Materials 13.1%
	ArcelorMittal, senior note,
	6.25%, 3/01/21		Luxembourg		1,900,000		2,004,395
	6.125%, 6/01/25		Luxembourg		700,000		700,875
b	Ardagh Packaging Finance PLC, senior note, 144A, 9.125%, 10/15/20		Luxembourg		600,000		637,500

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)
	Materials (continued)
b	Ardagh Packaging Finance PLC/Ardagh MP Holdings USA Inc., senior note, 144A,
	7.00%, 11/15/20		Luxembourg		176,471	$	180,551
	6.75%, 1/31/21		Luxembourg		300,000		308,250
	6.00%, 6/30/21		Luxembourg		1,900,000		1,914,250
b	Barminco Finance Pty. Ltd., senior note, 144A, 9.00%, 6/01/18		Australia		1,900,000		1,806,188
b	BlueScope Steel Ltd./BlueScope Steel Finance, senior note, 144A, 7.125%, 5/01/18		Australia		2,000,000		2,050,000
b	Cemex Finance LLC, senior secured note, first lien, 144A, 6.00%, 4/01/24		Mexico		1,700,000		1,685,125
b	Cemex SAB de CV, senior secured bond, first lien, 144A, 6.125%, 5/05/25		Mexico		1,400,000		1,383,375
b	The Chemours Co.,
	senior bond, 144A, 7.00%, 5/15/25		United States		500,000		486,250
	senior note, 144A, 6.625%, 5/15/23		United States		1,800,000		1,748,250
b	Eldorado Gold Corp., senior note, 144A, 6.125%, 12/15/20		Canada		3,100,000		3,080,625
b	First Quantum Minerals Ltd., senior note, 144A,
	6.75%, 2/15/20		Canada		2,000,000		1,945,000
	7.00%, 2/15/21		Canada		1,836,000		1,764,855
b	FMG Resources (August 2006) Pty. Ltd., senior secured note, 144A, 9.75%, 3/01/22		Australia		3,500,000		3,611,562
b	NOVA Chemicals Corp., senior bond, 144A, 5.00%, 5/01/25		Canada		2,000,000		2,012,500
b	Owens-Brockway Glass Container Inc., senior note, 144A, 5.00%, 1/15/22		United States		1,400,000		1,387,750
b	Platform Specialty Products Corp., senior note, 144A, 6.50%, 2/01/22		United States		600,000		622,500
b	Polymer Group Inc., senior note, 144A, 6.875%, 6/01/19		United States		1,500,000		1,385,625
b	Rain CII Carbon LLC/CII Carbon Corp., second lien, 144A, 8.25%, 1/15/21		United States		1,200,000		1,173,000
	Reynolds Group Issuer Inc./LLC/SA,
	first lien, 5.75%, 10/15/20		United States		1,000,000		1,027,500
	senior note, 8.50%, 5/15/18		United States		2,800,000		2,859,500
	senior note, 9.00%, 4/15/19		United States		1,200,000		1,246,500
b	Sealed Air Corp., senior bond, 144A, 5.50%, 9/15/25		United States		1,000,000		1,010,000
	Steel Dynamics Inc.,
	senior bond, 5.50%, 10/01/24		United States		800,000		802,000
	senior note, 5.125%, 10/01/21		United States		800,000		805,600
	Verso Paper Holdings LLC/Inc., senior secured note, first lien, 11.75%, 1/15/19		United States		451,000		264,963
							39,904,489
	Media 8.9%
	CCO Holdings LLC/CCO Holdings Capital Corp.,
	senior bond, 5.25%, 9/30/22		United States		1,000,000		987,500
	b senior bond, 144A, 5.375%, 5/01/25		United States		800,000		781,000
	senior note, 6.50%, 4/30/21		United States		1,500,000		1,573,125
	Clear Channel Worldwide Holdings Inc.,
	senior note, 6.50%, 11/15/22		United States		1,000,000		1,045,000
	senior sub. note, 7.625%, 3/15/20		United States		1,100,000		1,150,875
	CSC Holdings LLC, senior note,
	6.75%, 11/15/21		United States		1,500,000		1,586,250
	5.25%, 6/01/24		United States		1,000,000		965,000

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)
	Media (continued)
	DISH DBS Corp., senior note, 5.875%, 11/15/24		United States		3,500,000	$	3,370,937
	Gannett Co. Inc.,
	senior bond, 6.375%, 10/15/23		United States		2,000,000		2,090,000
	senior note, 5.125%, 7/15/20		United States		1,400,000		1,440,250
	iHeartCommunications Inc.,
	senior secured bond, first lien, 9.00%, 3/01/21		United States		2,500,000		2,287,500
	senior secured note, first lien, 9.00%, 9/15/22		United States		700,000		637,000
b	Nielsen Finance LLC/Co., senior note, 144A, 5.00%, 4/15/22		United States		100,000		98,188
b	Radio One Inc., senior sub. note, 144A, 9.25%, 2/15/20		United States		800,000		732,000
b	Sirius XM Radio Inc., senior bond, 144A,
	6.00%, 7/15/24		United States		2,500,000		2,531,250
	5.375%, 4/15/25		United States		400,000		388,000
b	Virgin Media Finance PLC, senior bond, 144A, 6.375%, 4/15/23		United Kingdom		1,700,000		1,763,750
b	Virgin Media Secured Finance PLC, senior secured bond, first lien, 144A, 5.50%, 1/15/25		United Kingdom		1,100,000		1,106,187
b	WMG Acquisition Corp., senior note, 144A, 5.625%, 4/15/22		United States		2,500,000		2,512,500
							27,046,312
	Pharmaceuticals, Biotechnology & Life Sciences 3.7%
b	Concordia Healthcare Corp., senior note, 144A, 7.00%, 4/15/23		Canada		1,000,000		1,002,500
b	Endo Finance LLC/Endo Ltd./Endo Finco Inc.,
	senior bond, 144A, 6.00%, 2/01/25		United States		1,000,000		1,021,250
	g senior note, 144A, 6.00%, 7/15/23		United States		700,000		717,500
b	Horizon Pharma Financing Inc., senior note, 144A, 6.625%, 5/01/23		United States		500,000		521,875
	Par Pharmaceutical Cos. Inc., senior note, 7.375%, 10/15/20		United States		3,300,000		3,531,000
b	Valeant Pharmaceuticals International Inc.,
	senior bond, 144A, 6.125%, 4/15/25		United States		700,000		722,750
	senior note, 144A, 7.50%, 7/15/21		United States		200,000		216,750
	senior note, 144A, 5.625%, 12/01/21		United States		300,000		309,030
b	VPI Escrow Corp., senior note, 144A, 6.375%, 10/15/20		United States		3,000,000		3,166,875
							11,209,530
	Real Estate 0.9%
b	Felcor Lodging LP, senior secured bond, 144A, 6.00%, 6/01/25		United States		700,000		714,000
b	Ferrellgas LP/Ferrellgas Finance Corp., senior note, 144A, 6.75%, 6/15/23		United States		1,900,000		1,919,000
							2,633,000
	Retailing 1.8%
b	American Builders & Contractors Supply Co. Inc., senior note, 144A, 5.625%, 4/15/21		United States		2,100,000		2,147,250
b	Argos Merger Sub Inc., senior note, 144A, 7.125%, 3/15/23		United States		600,000		630,000
b	Family Tree Escrow LLC, senior note, 144A, 5.75%, 3/01/23		United States		800,000		840,000
b	Netflix Inc., senior bond, 144A, 5.875%, 2/15/25		United States		1,900,000		1,976,209
							5,593,459
	Software & Services 4.4%
b	BMC Software Finance Inc., senior note, 144A, 8.125%, 7/15/21		United States		3,000,000		2,441,250
	Equinix Inc., senior bond, 5.375%, 4/01/23		United States		3,300,000		3,316,500
	First Data Corp.,
	senior bond, 12.625%, 1/15/21		United States		1,000,000		1,157,500
	senior note, 11.25%, 1/15/21		United States		646,000		718,675
	b senior secured bond, second lien, 144A, 8.25%, 1/15/21		United States		2,500,000		2,643,750

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)
	Software & Services (continued)
b	Infor (U.S.) Inc., senior note, 144A, 6.50%, 5/15/22		United States		1,900,000	$	1,942,750
	Sterling International Inc., senior note, 11.00%, 10/01/19		United States		1,200,000		1,278,000
							13,498,425
	Technology Hardware & Equipment 1.5%
b	Alcatel-Lucent USA Inc., senior note, 144A, 6.75%, 11/15/20		France		1,500,000		1,591,875
b	Blackboard Inc., senior note, 144A, 7.75%, 11/15/19		United States		2,000,000		1,890,000
b	CommScope Technologies Finance LLC, senior bond, 144A, 6.00%, 6/15/25		United States		1,100,000		1,098,625
							4,580,500
	Telecommunication Services 9.1%
	CenturyLink Inc.,
	senior bond, 6.75%, 12/01/23		United States		100,000		100,688
	senior note, 6.45%, 6/15/21		United States		400,000		405,000
	senior note, 5.80%, 3/15/22		United States		2,500,000		2,396,875
b	Digicel Group Ltd., senior note, 144A, 8.25%, 9/30/20		Bermuda		1,500,000		1,507,500
b	Digicel Ltd., senior note, 144A, 6.00%, 4/15/21		Bermuda		2,200,000		2,128,500
	Frontier Communications Corp., senior note,
	8.50%, 4/15/20		United States		100,000		104,800
	8.75%, 4/15/22		United States		300,000		298,500
	7.875%, 1/15/27		United States		200,000		186,000
	Intelsat Jackson Holdings SA,
	senior bond, 5.50%, 8/01/23		Luxembourg		1,500,000		1,328,437
	senior note, 7.50%, 4/01/21		Luxembourg		3,800,000		3,771,500
	Sprint Communications Inc., senior note,
	8.375%, 8/15/17		United States		2,000,000		2,170,000
	b 144A, 9.00%, 11/15/18		United States		3,000,000		3,395,280
	Sprint Corp., senior bond,
	7.875%, 9/15/23		United States		500,000		488,750
	7.125%, 6/15/24		United States		500,000		465,050
	T-Mobile USA Inc.,
	senior bond, 6.50%, 1/15/24		United States		900,000		931,500
	senior bond, 6.375%, 3/01/25		United States		1,600,000		1,646,000
	senior note, 6.542%, 4/28/20		United States		1,600,000		1,679,184
	senior note, 6.125%, 1/15/22		United States		200,000		207,000
b	Wind Acquisition Finance SA,
	senior note, 144A, 7.375%, 4/23/21		Italy		3,500,000		3,539,375
	senior secured note, first lien, 144A, 4.75%, 7/15/20		Italy		1,000,000		995,000
							27,744,939
	Transportation 1.3%
b	Florida East Coast Holdings Corp.,
	secured note, first lien, 144A, 6.75%, 5/01/19		United States		900,000		904,500
	senior note, 144A, 9.75%, 5/01/20		United States		500,000		476,250
b	Stena AB, senior bond, 144A, 7.00%, 2/01/24		Sweden		1,000,000		970,000
b	Stena International SA, secured bond, 144A, 5.75%, 3/01/24		Sweden		1,500,000		1,436,235
							3,786,985
	Utilities 3.5%
	Calpine Corp.,
	senior bond, 5.75%, 1/15/25		United States		1,200,000		1,171,500
	senior note, 5.375%, 1/15/23		United States		1,300,000		1,283,750

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)
	Utilities (continued)
	Calpine Corp. (continued)
	b senior secured bond, first lien, 144A, 7.875%, 1/15/23		United States		698,000	$	757,330
	b senior secured bond, first lien, 144A, 5.875%, 1/15/24		United States		400,000		425,000
	b senior secured note, first lien, 144A, 6.00%, 1/15/22		United States		100,000		106,250
b	InterGen NV, secured bond, 144A, 7.00%, 6/30/23		Netherlands		2,500,000		2,237,500
	NGL Energy Partners LP/NGL Energy Finance Corp., senior note, 5.125%, 7/15/19		United States		300,000		300,750
b	NRG Yield Operating LLC, senior bond, 144A, 5.375%, 8/15/24		United States		2,000,000		2,025,000
b	PPL Energy Supply LLC, senior bond, 144A, 6.50%, 6/01/25		United States		700,000		700,875
b,d	Texas Competitive Electric Holdings Co. LLC/Texas Competitive Electric Holdings Finance Inc., senior secured note, first lien, 144A, 11.50%, 10/01/20		United States		2,500,000		1,531,250
							10,539,205
	Total Corporate Bonds (Cost $307,357,878)						291,973,448
f,h	Senior Floating Rate Interests (Cost $2,312,723) 0.8%
	Household & Personal Products 0.8%
	Sun Products Corp., Tranche B Term Loan, 5.50%, 3/23/20		United States		2,329,592		2,265,529
				Shares
	Escrows and Litigation Trusts (Cost $ —) 0.0%
a,e	NewPage Corp., Litigation Trust		United States		2,500,000		—
	Total Investments before Short Term Investments (Cost $310,768,607)						294,776,446
				Principal Amount*
	Short Term Investments (Cost $3,309,658) 1.0%
	Repurchase Agreements 1.0%
i	Joint Repurchase Agreement, 0.095%, 7/01/15 (Maturity Value $3,309,666)		United States		3,309,658		3,309,658
	BNP Paribas Securities Corp. (Maturity Value $812,192) HSBC Securities (USA) Inc. (Maturity Value $1,705,603) Merrill Lynch, Pierce, Fenner & Smith Inc. (Maturity Value $791,871)
	Collateralized by U.S. Government Agency Securities, 0.000% - 5.50%, 12/01/15 - 6/12/20; U.S. Government Agency Securities, Strips, 6/01/17; jU.S. Treasury Bills, 3/31/16; U.S. Treasury Bonds, 3.125%, 8/15/44; and U.S. Treasury Notes, 1.25% -1.75%, 1/31/19 - 9/30/19 (valued at $3,376,528)
	Total Investments (Cost $314,078,265) 97.8%						298,086,104
	Other Assets, less Liabilities 2.2%						6,579,449
	Net Assets 100.0%					$	304,665,553

See Abbreviations on page FH-28.

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

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

FH-16 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin High Income VIP Fund (continued)

^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, 2015, the aggregate value of these securities was $138,560,294, representing 45.48% 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, 2015, the aggregate value of these securities was $191, representing less than 0.01% of net assets.

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

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

^hSee Note 1(e) regarding senior floating rate interests.

ⁱSee Note 1(c) regarding joint repurchase agreement.

^jThe 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 FH-17

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Financial Statements

Statement of Assets and Liabilities

June 30, 2015 (unaudited)

	Franklin High Income VIP Fund
Assets:
Investments in securities:
Cost - Unaffiliated issuers	$	310,768,607
Cost - Repurchase agreements		3,309,658
Total cost of investments	$	314,078,265
Value - Unaffiliated issuers	$	294,776,446
Value - Repurchase agreements		3,309,658
Total value of investments		298,086,104
Receivables:
Investment securities sold		5,503,446
Capital shares sold		400,078
Interest		5,078,925
Other assets		134
Total assets		309,068,687
Liabilities:
Payables:
Investment securities purchased		1,893,084
Capital shares redeemed		2,173,157
Management fees		138,543
Distribution fees		125,716
Accrued expenses and other liabilities		72,634
Total liabilities		4,403,134
Net assets, at value	$	304,665,553
Net assets consist of:
Paid-in capital	$	330,901,206
Undistributed net investment income		7,320,091
Net unrealized appreciation (depreciation)		(15,992,161	)
Accumulated net realized gain (loss)		(17,563,583	)
Net assets, at value	$	304,665,553
Class 1:
Net assets, at value	$	32,257,029
Shares outstanding		5,148,141
Net asset value and maximum offering price per share	$	6.27
Class 2:
Net assets, at value	$	247,407,089
Shares outstanding		40,787,799
Net asset value and maximum offering price per share	$	6.07
Class 4:
Net assets, at value	$	25,001,435
Shares outstanding		4,030,587
Net asset value and maximum offering price per share	$	6.20

FH-18 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, 2015 (unaudited)

	Franklin High Income VIP Fund
Investment income:
Interest	$	10,525,915
Expenses:
Management fees (Note 3a)		841,555
Distribution fees: (Note 3c)
Class 2		324,706
Class 4		44,304
Custodian fees (Note 4)		1,550
Reports to shareholders		46,090
Professional fees		24,783
Trustees’ fees and expenses		742
Other		14,333
Total expenses		1,298,063
Net investment income		9,227,852
Realized and unrealized gains (losses):
Net realized gain (loss) from investments		(1,804,631	)
Net change in unrealized appreciation (depreciation) on investments		(3,305,681	)
Net realized and unrealized gain (loss)		(5,110,312	)
Net increase (decrease) in net assets resulting from operations	$	4,117,540

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

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL STATEMENTS

Statements of Changes in Net Assets

	Franklin High Income VIP Fund
	Six Months Ended June 30, 2015 (unaudited)			Year Ended December 31, 2014
Increase (decrease) in net assets:
Operations:
Net investment income	$	9,227,852		$	20,625,453
Net realized gain (loss)		(1,804,631	)		7,929,816
Net change in unrealized appreciation (depreciation)		(3,305,681	)		(26,631,956	)
Net increase (decrease) in net assets resulting from operations		4,117,540			1,923,313
Distributions to shareholders from:
Net investment income:
Class 1		(2,177,640	)		(2,292,485	)
Class 2		(17,219,440	)		(18,595,621	)
Class 4		(1,604,998	)		(1,613,962	)
Total distributions to shareholders		(21,002,078	)		(22,502,068	)
Capital share transactions: (Note 2)
Class 1		(617,816	)		(2,696,242	)
Class 2		(614,424	)		(12,927,786	)
Class 4		545,925			(475,860	)
Total capital share transactions		(686,315	)		(16,099,888	)
Net increase (decrease) in net assets		(17,570,853	)		(36,678,643	)
Net assets:
Beginning of period		322,236,406			358,915,049
End of period	$	304,665,553		$	322,236,406
Undistributed net investment income included in net assets:
End of period	$	7,320,091		$	19,094,317

FH-20 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 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 (1940 Act) as an open-end management investment company, consisting of nineteen separate funds and applies the specialized accounting and reporting guidance in U.S. Generally Accepted Accounting Principles (U.S. GAAP). 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, 2015, 84.88% 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.

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.

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.

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

Semiannual Report FH-21

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin High Income VIP Fund (continued)

1. Organization and Significant Accounting Policies (continued)

a. Financial Instrument Valuation (continued)

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.

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 in 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

FH-22 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin High Income VIP Fund (continued)

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, 2015.

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. 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.

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, 2015, 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’s 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. Facility fees are recognized as income over the expected term of the loan. 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 U.S. GAAP. 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

Semiannual Report FH-23

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin High Income VIP Fund (continued)

1. Organization and Significant Accounting Policies (continued)

g. Security Transactions, Investment Income, Expenses and Distributions (continued)

of net assets of each class. Differences in per share distributions, by class, are generally due to differences in class specific expenses.

h. 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.

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.

2. Shares of Beneficial Interest

At June 30, 2015, 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, 2015						Year Ended December 31, 2014
	Shares			Amount			Shares			Amount
Class 1 Shares:
Shares sold		48,657		$	329,274			120,684		$	836,723
Shares issued in reinvestment of distributions		345,109			2,177,640			329,854			2,292,485
Shares redeemed		(464,818	)		(3,124,730	)		(832,231	)		(5,825,450	)
Net increase (decrease)		(71,052	)	$	(617,816	)		(381,693	)	$	(2,696,242	)
Class 2 Shares:
Shares sold		4,672,453		$	30,532,189			13,791,290		$	93,795,388
Shares issued in reinvestment of distributions		2,818,239			17,219,440			2,754,907			18,595,621
Shares redeemed		(7,548,880	)		(48,366,053	)		(18,545,301	)		(125,318,795	)
Net increase (decrease)		(58,188	)	$	(614,424	)		(1,999,104	)	$	(12,927,786	)
Class 4 Shares:
Shares sold		70,940		$	470,373			276,687		$	1,933,896
Shares issued in reinvestment of distributions		256,800			1,604,998			234,247			1,613,962
Shares redeemed		(230,491	)		(1,529,446	)		(581,606	)		(4,023,718	)
Net increase (decrease)		97,249		$	545,925			(70,672	)	$	(475,860	)

FH-24 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin High Income 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 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.

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, 2015, there were no credits earned.

Semiannual Report FH-25

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin High Income VIP Fund (continued)

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, 2014, capital loss carryforwards were as follows:

Capital loss carryforwards subject to expiration:
2016	$	5,101,475
2017		10,621,353
Total capital loss carryforwards	$	15,722,828

At June 30, 2015, the cost of investments and net unrealized appreciation (depreciation) for income tax purposes were as follows:

Cost of investments	$	314,881,126
Unrealized appreciation	$	5,389,678
Unrealized depreciation		(22,184,700	)
Net unrealized appreciation (depreciation)	$	(16,795,022	)

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 and bond discounts and premiums.

6. Investment Transactions

Purchases and sales of investments (excluding short term securities) for the period ended June 30, 2015, aggregated $57,297,117 and $59,147,628, respectively.

7. Credit Risk and Defaulted Securities

At June 30, 2015, the Fund had 97.33% 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, 2015, the aggregate value of these securities was $3,487,526, representing 1.14% 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 in the accompanying Statement of Investments.

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 $2 billion (Global Credit Facility) which matures on February 12, 2016. 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 in the Statement of Operations. During the period ended June 30, 2015, 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 High Income 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, 2015, 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
Transportation	$	—	$	531,244	$	—		$	531,244
All Other Equity Investmentsb		6,225		—		—			6,225
Corporate Bonds		—		291,808,672		164,776			291,973,448
Senior Floating Rate Interests		—		2,265,529		—			2,265,529
Escrows and Litigation Trusts		—		—		—	c		—
Short Term Investments		—		3,309,658		—			3,309,658
Total Investments in Securities	$	6,225	$	297,915,103	$	164,776		$	298,086,104

^aIncludes common and convertible preferred stocks.

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

^cIncludes securities determined to have no value at June 30, 2015.

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.

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 certain transactions accounted for as a sale for interim and annual reporting periods beginning after December 15, 2014, and transactions accounted for as secured borrowings for annual periods beginning after December 15, 2014, and for interim periods beginning after March 15, 2015. Management has reviewed the requirements and believes the adoption of this ASU will not have a material impact on the financial statements.

Semiannual Report FH-27

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS

Franklin High Income VIP Fund (continued)

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
FRN	Floating Rate Note

FH-28 Semiannual Report

Franklin Income VIP Fund

This semiannual report for Franklin Income VIP Fund covers the period ended June 30, 2015.

Class 2 Performance Summary as of June 30, 2015

The Fund’s Class 2 shares had a -1.10% total return* for the six-month period ended June 30, 2015.

*The Fund has a fee waiver associated with any investment 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 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. Stock prices fluctuate, sometimes rapidly and dramatically, due to factors affecting individual companies, particular industries or sectors, or general market conditions. 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. 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^® (S&P 500^®) 500 Index, produced a +1.23% total return, and its fixed income benchmark, the Barclays U.S. Aggregate Bond Index, had a -0.10% total return for the same period.¹

Economic and Market Overview

U.S. economic growth was mixed during the six months under review. In 2015’s first quarter, U.S. dollar strength, low energy prices, and a labor dispute at West Coast ports led exports to decline. Lower business investment and state and local government spending also weighed on the economy, while increases in consumer spending, residential investment and private inventory investment offered some support. In the

second quarter, business capital spending rebounded and manufacturing and non-manufacturing activities increased, contributing to strong job gains that helped the unemployment rate decline from 5.6% in December 2014 to 5.3% in June 2015.² Housing market data were generally encouraging as home sales and prices rose. After a brief, winter slump, retail sales rebounded in the spring as strong employment gains led to broad-based improvement, especially for auto and gasoline sales. Inflation, as measured by the Consumer Price Index, rose during the six months amid generally higher energy prices bouncing from recent lows.

During the six-month period, the Federal Reserve Board (Fed) kept its target interest rate at 0%–0.25% while considering when an increase would be appropriate. The Fed anticipated raising its target rate when it saw further labor market progress and was reasonably confident that inflation would move back to 2% over the medium term. In its June meeting, the Fed lowered its 2015 economic growth forecast and raised unemployment estimates given the weak start to the year.

Investor confidence grew during the period as corporate profits remained healthy, the Fed showed caution about raising interest rates, economic data in Europe and Japan improved and China introduced more stimulus measures. However, the stock markets endured some sell-offs when many investors reacted to debt negotiations between Greece and its creditors, geopolitical tensions in certain regions, and less robust growth in China. For the six months under review, U.S. stocks, as measured by S&P 500 and the Dow Jones Industrial Average, rose marginally after both reached all-time highs in May.³

The 10-year Treasury yield, which moves inversely to price, declined from 2.17% at the start of the period to a six-month low of 1.68% in early February as investors sought less risky assets given concerns about soft domestic data, Greece’s debt negotiations, less robust growth in China and the Fed’s cautious tone on raising interest rates. At period-end, the yield rose to 2.35% based partly on upbeat domestic and eurozone economic data and expectations of an agreement between Greece and its international creditors.

Investment Strategy

We search for undervalued or out-of-favor securities we believe offer opportunities for income today and growth tomorrow. We

1. Source: 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.

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FRANKLIN INCOME VIP FUND

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.

Manager’s Discussion

During the six months under review, we continued to strategically shift the Fund’s asset mix seeking to manage risks, and our equity and fixed income holdings declined. The Fund’s equity weighting fell to 56.5% from 57.4% of total net assets, and the Fund’s fixed income weighting fell to 33.3% from 34.5%. Our cash position rose during the period to 10.2% from 8.1% of total net assets.

The Fund’s equity portion had a slight negative return compared with the overall market’s slight positive return for the period. Equity gains largely came from continued strength in the health care sector and advances in financials and materials, while the utilities, energy and information technology sectors pressured Fund results. We continued to see what we considered strength in the operations of many U.S. and multinational companies and believed the strong cash flow generation and capital allocation strategies many employed could, in our opinion, support the payment of attractive dividends.

In equities, the health care sector delivered strong absolute returns across Fund holdings. Several large pharmaceutical companies including Pfizer, Eli Lilly & Co. and Sanofi generated impressive gains as they benefited from better-than-expected operating results amid a positive outlook for new drug development. Our analysis led us to maintain a positive outlook for the sector despite its strong absolute returns in recent years.

Although the Fund’s result in financials stocks was largely positive, individual positions we held had divergent performances during the period. Investor speculation about the possibility and timing of potential interest rate hikes contributed to sector volatility. Gains in capital markets activities helped JPMorgan Chase & Co., and Wells Fargo & Co. continue to benefit from a diverse business and an improving credit profile. In contrast, Bank of America was negatively affected by additional profit margin pressure and less robust trading results.

Portfolio Breakdown
6/30/15
	% of Total Net Assets
Equity*		56.5%
Utilities		11.2%
Energy		9.1%
Materials		8.3%
Health Care		5.3%
Industrials		5.0%
Information Technology		4.9%
Financials		4.9%
Consumer Discretionary		4.5%
Telecommunication Services		2.2%
Consumer Staples		1.1%
Fixed Income		33.3%
Energy		6.8%
Consumer Discretionary		6.3%
Information Technology		4.4%
Telecommunication Services		3.8%
Financials		3.1%
Health Care		2.5%
Materials		2.2%
Other		4.2%
Short-Term Investments & Other Net Assets		10.2%

*Includes convertible bonds.

The equity materials sector generated modest gains. Chemical conglomerates The Dow Chemical Co. and LyondellBasell Industries produced strong absolute returns, as did agricultural chemical producer Agrium. Performance was negatively affected, however, by several base metal companies including Freeport-McMoRan and E. I. du Pont de Nemours and Co. They gave disappointing guidance resulting from weaker-than-expected pricing and volumes as well as unfavorable foreign currency exchange rates.

Stocks in the utilities sector were major detractors during the period, as nearly all positions fell in value. Exelon, Duke Energy, The Southern Co., Entergy⁴ and Dominion Resources were among the Fund’s worst detractors. Utilities fell out of favor with investors during the period as the likelihood of future interest rate increases rose and the market viewed sector valuations as elevated early in the period. The Fund’s weighting in utilities was below historical levels, but we continued to find

4. Sold by period-end.

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FRANKLIN INCOME VIP FUND

Top Five Equity Holdings
6/30/15
Company Sector/Industry	% of Total Net Assets
The Dow Chemical Co. Materials		1.9%
Royal Dutch Shell PLC, A, ADR (U.K.) Energy		1.7%
Pfizer Inc. Health Care		1.6%
General Electric Co. Industrials		1.5%
Target Corp. Consumer Discretionary		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).

opportunities across the sector, particularly among non-regulated, higher growth companies.

The Fund’s negative performance in energy stocks was largely driven by uncertainty and volatility in crude oil prices. Most of the Fund’s energy exposure remained in large, global energy conglomerates that we felt had solid balance sheets and could pay attractive dividends. Although we believe they are able to lower costs and production goals to better navigate oil market gyrations, companies such as Royal Dutch Shell and Chevron were not immune to the energy price decline, and their share prices fell. Many investors continued to fear that some independent producers, such as SandRidge Energy⁵ and Halcon Resources, would need to restructure their balance sheets or seek to sell assets in the recent environment, and that sentiment significantly pressured their share prices. In contrast, BP was a notable contributor to Fund performance as the company continued to focus on cash generation and lowering costs in advance of the completion of its Gulf of Mexico legal settlement.

Treasury yields rose significantly during the period after initially dropping during the beginning of the calendar year. The rise in rates was spurred by improvement in many economic indicators and investor concerns about future Fed interest rate hikes. The Fed has not raised rates since 2006.

Rising rates led to a slightly negative return for investment-grade fixed income securities. Below-investment-grade bonds outperformed the fixed income index as yields fell slightly

during the period. High yield corporate bonds remained relatively attractive to many investors in comparison to investment-grade bonds as their yield advantage helped offset concerns over potential rate advances. This low-return environment tended to favor the below-investment-grade corporate debt that is prevalent in the Fund’s fixed income portfolio.

In fixed income, the consumer non-cyclical sector was a major contributor, including our positions in HCA, JBS USA and Valeant Pharmaceuticals International.⁶ Capital goods also delivered positive returns, and our bond positions in Abengoa, Cemex and Reynolds Group notably helped results.⁷ The fixed income technology sector also produced solid returns, particularly our investments in First Data, Freescale Semiconductor and NCR.

In contrast, fixed income returns were negatively affected by our positions in the coal industry within the basic industry⁸ sector, which included Walter Energy,⁴ Peabody Energy and Arch Coal. Depressed coal prices and weak volumes pressured industry cash flows, which resulted in weak performance for these securities. Although the Fund’s fixed income energy sector holdings as a group had a negative return, performance varied widely. Investors rewarded companies that they viewed as capable of navigating the sector downturn but sold off others they perceived to have a higher risk of restructuring. SandRidge Energy, Energy XXI Gulf Coast and Quicksilver Resources⁴

Top Five Fixed Income and Senior Floating Rate Interests Holdings*
6/30/15
Issuer Sector/Industry	% of Total Net Assets
First Data Corp. Information Technology		3.0%
iHeartCommunications Inc. Consumer Discretionary		1.8%
JPMorgan Chase & Co. Financials		1.2%
Sprint Communications Inc. Telecommunication Services		1.2%
Citigroup Inc. Financials		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 SOI.

5. Stock position sold by period-end.

6. Consumer non-cyclical holdings are in consumer discretionary, consumer staples, health care and information technology in the fixed income section of the SOI.

7. Capital goods holdings are in consumer discretionary, industrials, information technology and materials in the fixed income section of the SOI.

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

FI-4 Semiannual Report

FRANKLIN INCOME VIP FUND

were major detractors during the period. We actively repositioned the Fund’s energy sector holdings to seek what we considered the best risk-adjusted returns from a sector that experienced significant change. Many energy companies altered their capital structures, looking to sell assets or potentially participate in a merger or acquisition.

The Fund’s fixed income communications⁹ holdings also had a negative total return largely due to weak performance from Dex Media,⁴ Frontier Communications and Intelsat Jackson Holdings.

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, 2015, 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.

9. Communications companies are in consumer discretionary and telecommunication services in the fixed income section of the SOI.

Semiannual Report FI-5

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 1/1/15		Ending Account Value 6/30/15		Fund-Level Expenses Incurred During Period* 1/1/15–6/30/15
Actual		$1,000		$   989.00		$3.55
Hypothetical (5% return before expenses)		$1,000		$1,021.22		$3.61

*Expenses are calculated using the most recent six-month annualized expense ratio, net of expense waivers, 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.

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FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Financial Highlights

Franklin Income VIP Fund

	Six Months Ended June 30, 2015 (unaudited)			Year Ended December 31,
				2014			2013			2012			2011			2010
Class 1
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$16.48			$16.53			$15.47			$14.68			$15.16			$14.43
Income from investment operationsa:
Net investment incomeb		0.37			0.72			0.81			0.91			0.96			0.89
Net realized and unrealized gains (losses)		(0.52	)		0.11			1.31			0.90			(0.54	)		0.85
Total from investment operations		(0.15	)		0.83			2.12			1.81			0.42			1.74
Less distributions from net investment income		(0.77	)		(0.88	)		(1.06	)		(1.02	)		(0.90	)		(1.01	)
Net asset value, end of period		$15.56			$16.48			$16.53			$15.47			$14.68			$15.16
Total returnc		(0.98)%			4.92%			14.18%			12.91%			2.71%			12.87%
Ratios to average net assetsd
Expenses		0.47%	e,f		0.47%e			0.47%	e		0.47%			0.47%e			0.47%e
Net investment income		4.52%			4.26%			5.07%			6.03%			6.35%			6.28%
Supplemental data
Net assets, end of period (000’s)		$680,656			$714,664			$695,004			$584,391			$1,300,935			$1,449,028
Portfolio turnover rate		11.39%			24.77%			21.71%			26.66%	g		28.65%			41.65%

^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’s 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 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%.

^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 FI-7

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL HIGHLIGHTS

Franklin Income VIP Fund (continued)

	Six Months Ended June 30, 2015 (unaudited)			Year Ended December 31,
				2014			2013			2012			2011			2010
Class 2
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$16.00			$16.07			$15.07			$14.32			$14.82			$14.12
Income from investment operationsa:
Net investment incomeb		0.34			0.66			0.75			0.85			0.90			0.86
Net realized and unrealized gains (losses)		(0.51	)		0.11			1.27			0.88			(0.53	)		0.82
Total from investment operations		(0.17	)		0.77			2.02			1.73			0.37			1.68
Less distributions from net investment income		(0.72	)		(0.84	)		(1.02	)		(0.98	)		(0.87	)		(0.98	)
Net asset value, end of period		$15.11			$16.00			$16.07			$15.07			$14.32			$14.82
Total returnc		(1.10)%			4.62%			13.94%			12.65%			2.38%			12.67%
Ratios to average net assetsd
Expenses		0.72%	e,f		0.72%	e		0.72%	e		0.72%			0.72%	e		0.72%	e
Net investment income		4.27%			4.01%			4.82%			5.78%			6.10%			6.03%
Supplemental data
Net assets, end of period (000’s)		$5,637,834			$6,022,804			$6,188,045			$6,182,997			$5,915,637			$6,309,207
Portfolio turnover rate		11.39%			24.77%			21.71%			26.66%	g		28.65%			41.65%

^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’s 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 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%.

^gExcludes 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

FINANCIAL STATEMENTS

Franklin Income VIP Fund (continued)

	Six Months Ended June 30, 2015 (unaudited)			Year Ended December 31,
				2014			2013			2012			2011			2010
Class 4
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$16.31			$16.36			$15.32			$14.54			$15.04			$14.33
Income from investment operationsa:
Net investment incomeb		0.34			0.66			0.75			0.85			0.90			0.85
Net realized and unrealized gains (losses)		(0.52	)		0.11			1.30			0.90			(0.54	)		0.84
Total from investment operations		(0.18	)		0.77			2.05			1.75			0.36			1.69
Less distributions from net investment income		(0.71	)		(0.82	)		(1.01	)		(0.97	)		(0.86	)		(0.98	)
Net asset value, end of period		$15.42			$16.31			$16.36			$15.32			$14.54			$15.04
Total returnc		(1.19)%			4.52%			13.85%			12.56%			2.29%			12.54%
Ratios to average net assetsd
Expenses		0.82%	e,f		0.82%	e		0.82%	e		0.82%			0.82%	e		0.82%	e
Net investment income		4.17%			3.91%			4.72%			5.68%			6.00%			5.93%
Supplemental data
Net assets, end of period (000’s)		$358,166			$378,545			$397,652			$436,405			$431,435			$415,541
Portfolio turnover rate		11.39%			24.77%			21.71%			26.66%	g		28.65%			41.65%

^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’s 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 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%.

^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 FI-9

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Statement of Investments, June 30, 2015 (unaudited)

Franklin Income VIP Fund
		Country		Shares/Warrants		Value
	Common Stocks and Other Equity Interests 47.7%
	Consumer Discretionary 2.9%
a	Dex Media Inc.		United States		458,876	$	334,980
	Ford Motor Co.		United States		2,500,000		37,525,000
	General Motors Co.		United States		1,454,100		48,465,153
	Las Vegas Sands Corp.		United States		200,000		10,514,000
	Target Corp.		United States		1,181,100		96,413,193
							193,252,326
	Consumer Staples 0.8%
	PepsiCo Inc.		United States		584,000		54,510,560
	Energy 7.6%
	Anadarko Petroleum Corp.		United States		170,000		13,270,200
	BP PLC, ADR		United Kingdom		2,000,000		79,920,000
	Chevron Corp.		United States		800,000		77,176,000
	Devon Energy Corp.		United States		650,000		38,668,500
	Exxon Mobil Corp.		United States		283,000		23,545,600
a	Halcon Resources Corp.		United States		12,071,393		14,002,816
	Halliburton Co.		United States		435,000		18,735,450
	Occidental Petroleum Corp.		United States		150,000		11,665,500
	Royal Dutch Shell PLC, A, ADR		United Kingdom		1,951,748		111,269,153
	Schlumberger Ltd.		United States		450,000		38,785,500
	Spectra Energy Corp.		United States		600,000		19,560,000
	Total SA, B, ADR		France		1,192,900		58,654,893
							505,253,612
	Financials 2.5%
	Bank of America Corp.		United States		1,100,000		18,722,000
	JPMorgan Chase & Co.		United States		735,100		49,810,376
	MetLife Inc.		United States		761,108		42,614,437
	Wells Fargo & Co.		United States		1,000,000		56,240,000
							167,386,813
	Health Care 5.2%
	Bristol-Myers Squibb Co.		United States		275,000		18,298,500
	Eli Lilly & Co.		United States		689,800		57,591,402
	Johnson & Johnson		United States		417,800		40,718,788
	Merck & Co. Inc.		United States		1,023,200		58,250,776
	Pfizer Inc.		United States		3,138,975		105,249,832
	Sanofi, ADR		France		1,368,292		67,771,503
							347,880,801
	Industrials 4.4%
	The Boeing Co.		United States		231,800		32,155,296
a	CEVA Holdings LLC		United Kingdom		13,012		9,629,072
	General Electric Co.		United States		3,756,200		99,802,234
	Lockheed Martin Corp.		United States		253,200		47,069,880
	Raytheon Co.		United States		340,000		32,531,200
	Republic Services Inc.		United States		527,300		20,654,341
	United Technologies Corp.		United States		75,000		8,319,750
	Waste Management Inc.		United States		928,200		43,022,070
							293,183,843
	Information Technology 3.3%
	Cisco Systems Inc.		United States		1,400,000		38,444,000
a,b	First Data Holdings Inc., B		United States		4,929,600		24,855,965

FI-10 Semiannual Report

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 (continued)
	Intel Corp.		United States		1,500,000	$	45,622,500
	Microsoft Corp.		United States		1,022,500		45,143,375
	QUALCOMM Inc.		United States		260,000		16,283,800
	Texas Instruments Inc.		United States		924,800		47,636,448
							217,986,088
	Materials 8.0%
	Agrium Inc.		Canada		500,000		52,975,000
	BASF SE		Germany		250,000		21,960,237
	BHP Billiton PLC		Australia		2,784,192		54,630,834
	The Dow Chemical Co.		United States		2,525,700		129,240,069
	E. I. du Pont de Nemours and Co.		United States		1,247,500		79,777,625
	Freeport-McMoRan Inc., B		United States		1,500,000		27,930,000
	Goldcorp Inc.		Canada		1,508,600		24,439,320
	LyondellBasell Industries NV, A		United States		500,000		51,760,000
	The Mosaic Co.		United States		300,000		14,055,000
	Rio Tinto PLC, ADR		United Kingdom		1,845,100		76,036,571
a	South32 Ltd.		Australia		2,784,192		3,761,611
							536,566,267
	Telecommunication Services 2.2%
	AT&T Inc.		United States		1,621,000		57,577,920
	CenturyLink Inc.		United States		500,000		14,690,000
	Telstra Corp. Ltd.		Australia		3,446,331		16,321,072
	Verizon Communications Inc.		United States		1,123,892		52,384,606
	Vodafone Group PLC		United Kingdom		2,115,279		7,638,154
							148,611,752
	Utilities 10.8%
	AGL Resources Inc.		United States		290,732		13,536,482
	American Electric Power Co. Inc.		United States		400,000		21,188,000
	Dominion Resources Inc.		United States		750,000		50,152,500
	Duke Energy Corp.		United States		1,302,500		91,982,550
a	Dynegy Inc.		United States		330,800		9,675,900
a	Dynegy Inc., wts., 10/02/17		United States		242,666		981,584
	Exelon Corp.		United States		2,877,200		90,401,624
	FirstEnergy Corp.		United States		845,900		27,534,045
	NextEra Energy Inc.		United States		651,300		63,846,939
	PG&E Corp.		United States		1,435,300		70,473,230
	Pinnacle West Capital Corp.		United States		260,500		14,819,845
	PPL Corp.		United States		1,365,400		40,238,338
	Public Service Enterprise Group Inc.		United States		923,500		36,275,080
	Sempra Energy		United States		368,300		36,439,602
	The Southern Co.		United States		1,888,200		79,115,580
	TECO Energy Inc.		United States		1,253,700		22,140,342
	Xcel Energy Inc.		United States		1,510,964		48,622,821
							717,424,462
	Total Common Stocks and Other Equity Interests (Cost $2,720,022,839)						3,182,056,524

Semiannual Report FI-11

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Income VIP Fund (continued)

		Country		Shares/Warrants		Value
c	Equity-Linked Securities 4.9%
	Consumer Discretionary 0.9%
d	Citigroup Global Markets Inc. into Ford Motor Co., 7.00%, 144A		United States		1,700,000	$	26,184,080
d	Deutsche Bank AG/London into General Motors Co., 8.00%, 144A		United States		500,000		16,973,400
d	The Goldman Sachs Group Inc. into General Motors Co., 6.50%, 144A		United States		500,000		16,919,100
							60,076,580
	Consumer Staples 0.3%
d	Citigroup Inc. into Whole Foods Market Inc., 7.00%, 144A		United States		485,000		19,284,376
	Energy 1.1%
d	Citigroup Inc. into Cabot Oil & Gas Corp., 6.00%, 144A		United States		696,000		22,545,876
d	Credit Suisse New York into Baker Hughes Inc., 6.00%, 144A		United States		200,000		11,910,500
d	JPMorgan Chase & Co. into Anadarko Petroleum Corp., 7.00%, 144A		United States		470,000		37,836,880
							72,293,256
	Financials 0.6%
d	The Goldman Sachs Group into Bank of America Corp., 6.00%, 144A		United States		2,150,000		37,051,165
	Industrials 0.4%
d	The Goldman Sachs Group Inc. into General Electric Co., 5.50%, 144A		United States		1,000,000		26,746,100
	Information Technology 1.6%
d	Bank of America Corp. into Freescale Semiconductor Ltd., 7.00%, 144A		United States		950,000		24,891,805
d	Bank of America Corp. into Intel Corp., 6.50%, 144A		United States		1,045,000		32,570,351
d	Citigroup Inc. into Apple Inc., 7.00%, 144A		United States		415,000		52,346,855
							109,809,011
	Total Equity-Linked Securities (Cost $328,702,244)						325,260,488
	Convertible Preferred Stocks 2.9%
	Consumer Discretionary 0.2%
a	Fiat Chrysler Automobiles NV, 7.875%, cvt. pfd.		United Kingdom		100,000		12,800,900
	Energy 0.1%
	Sanchez Energy Corp., 6.50%, cvt. pfd., B		United States		200,000		6,240,000
	Financials 1.6%
	Bank of America Corp., 7.25%, cvt. pfd., L		United States		66,600		74,059,200
	FelCor Lodging Trust Inc., 7.80%, cvt. pfd., A		United States		167,325		4,127,908
a	FNMA, 5.375%, cvt. pfd.		United States		475		6,175,000
	Wells Fargo & Co., 7.50%, cvt. pfd., A		United States		20,000		23,500,000
							107,862,108
	Health Care 0.1%
	Allergan PLC, 5.50%, cvt. pfd.		United States		7,500		7,819,350
	Industrials 0.2%
a	CEVA Holdings LLC, cvt. pfd., A-1		United Kingdom		397		397,000
a	CEVA Holdings LLC, cvt. pfd., A-2		United Kingdom		14,711		10,886,066
							11,283,066

FI-12 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Income VIP Fund (continued)

		Country		Shares/Warrants			Value
	Convertible Preferred Stocks (continued)
	Materials 0.3%
	Alcoa Inc., 5.375%, cvt. pfd.		United States		500,000		$	19,765,000
	ArcelorMittal, 6.00%, cvt. pfd.		Luxembourg		160,000			2,497,600
								22,262,600
	Utilities 0.4%
	Dominion Resources Inc., 6.125%, cvt. pfd., A		United States		145,000			7,770,550
	Dominion Resources Inc., 6.375%, cvt. pfd., A		United States		162,000			7,565,400
	Dominion Resources Inc., 6.00%, cvt. pfd., B		United States		145,000			7,805,350
	NextEra Energy Inc., 5.889%, cvt. pfd.		United States		83,100			5,128,101
								28,269,401
	Total Convertible Preferred Stocks (Cost $217,749,403)							196,537,425
	Preferred Stocks 0.2%
	Financials 0.2%
a	FNMA, 8.25%, pfd.		United States		633,375			2,375,156
	Morgan Stanley, 6.375%, pfd., I		United States		350,000			8,911,000
	Total Preferred Stocks (Cost $24,584,375)							11,286,156
				Principal Amount*
	Convertible Bonds 0.8%
	Consumer Discretionary 0.5%
d	Volkswagen International Finance, cvt., sub. note, 144A, 5.50%, 11/09/15		Germany		25,000,000	EUR		34,144,101
	Energy 0.3%
d,e	American Energy-Permian Basin LLC, cvt., 144A, PIK, 8.00%, 5/01/22		United States		5,000,000			2,775,000
	Cobalt International Energy Inc., cvt., senior bond, 3.125%, 5/15/24		United States		25,000,000			18,234,375
								21,009,375
	Total Convertible Bonds (Cost $61,855,714)							55,153,476
	Corporate Bonds 31.1%
	Consumer Discretionary 5.4%
d	1011778 BC ULC/New Red Finance Inc., secured note, second lien, 144A, 6.00%, 4/01/22		Canada		10,000,000			10,300,000
d	Academy Ltd./Finance Corp., senior note, 144A, 9.25%, 8/01/19		United States		5,300,000			5,595,210
d	Altice SA, senior secured note, 144A, 7.75%, 5/15/22		Luxembourg		3,000,000			2,904,375
d	Argos Merger Sub Inc., senior note, 144A, 7.125%, 3/15/23		United States		3,000,000			3,150,000
	Cablevision Systems Corp., senior note, 7.75%, 4/15/18		United States		10,000,000			10,825,000
	CCO Holdings LLC/CCO Holdings Capital Corp.,
	senior bond, 5.25%, 9/30/22		United States		2,700,000			2,666,250
	senior bond, 5.125%, 2/15/23		United States		10,000,000			9,775,000
	senior note, 6.50%, 4/30/21		United States		15,000,000			15,731,250
	Chrysler Group LLC/CG Co-Issuer Inc., senior secured note, 8.25%, 6/15/21		United States		15,400,000			16,824,500
	Clear Channel Worldwide Holdings Inc., senior sub. note, 7.625%, 3/15/20		United States		8,750,000			9,154,687
	CSC Holdings LLC, senior note, 6.75%, 11/15/21		United States		15,400,000			16,285,500

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)
	Consumer Discretionary (continued)
f	Cumulus Media Holdings Inc., senior note, 7.75%, 5/01/19		United States		10,000,000	$	9,212,500
	DISH DBS Corp.,
	senior bond, 5.00%, 3/15/23		United States		15,000,000		13,950,000
	senior note, 5.875%, 11/15/24		United States		8,300,000		7,993,937
	Dollar General Corp., senior bond, 3.25%, 4/15/23		United States		5,000,000		4,765,715
d	Family Tree Escrow LLC, senior note, 144A, 5.75%, 3/01/23		United States		4,000,000		4,200,000
d	Fiat Chrysler Automobiles NV, senior note, 144A, 5.25%, 4/15/23		United Kingdom		11,300,000		11,088,125
	The Goodyear Tire & Rubber Co., senior note, 6.50%, 3/01/21		United States		12,600,000		13,387,500
	HD Supply Inc.,
	d first lien, 144A, 5.25%, 12/15/21		United States		6,000,000		6,105,000
	senior note, 7.50%, 7/15/20		United States		10,000,000		10,625,000
	iHeartCommunications Inc.,
	e senior note, PIK, 14.00%, 2/01/21		United States		13,599,973		9,706,981
	senior secured bond, first lien, 9.00%, 3/01/21		United States		24,100,000		22,051,500
	senior secured note, first lien, 9.00%, 12/15/19		United States		18,000,000		17,221,500
	senior secured note, first lien, 9.00%, 9/15/22		United States		14,600,000		13,286,000
d	International Game Technology PLC,
	senior secured bond, 144A, 6.50%, 2/15/25		United States		8,500,000		7,910,313
	senior secured note, 144A, 6.25%, 2/15/22		United States		8,500,000		8,255,625
	KB Home,
	senior bond, 7.50%, 9/15/22		United States		6,500,000		6,792,500
	senior note, 7.25%, 6/15/18		United States		10,600,000		11,554,000
	MGM Resorts International, senior note,
	10.00%, 11/01/16		United States		10,000,000		10,900,000
	5.25%, 3/31/20		United States		5,000,000		5,062,500
	6.75%, 10/01/20		United States		5,500,000		5,842,650
d	Numericable Group SA, senior note, first lien, 144A, 6.00%, 5/15/22		France		10,000,000		9,831,250
	Outfront Media Capital LLC/Corp.,
	senior bond, 5.625%, 2/15/24		United States		1,600,000		1,642,000
	senior note, 5.25%, 2/15/22		United States		1,600,000		1,624,000
d	Sirius XM Radio Inc.,
	senior bond, 144A, 6.00%, 7/15/24		United States		14,600,000		14,782,500
	senior note, 144A, 5.75%, 8/01/21		United States		5,000,000		5,156,250
d	Univision Communications Inc., senior secured note, first lien, 144A, 5.125%,
	5/15/23		United States		10,000,000		9,750,000
	2/15/25		United States		5,100,000		4,921,500
d	Virgin Media Secured Finance PLC, senior secured bond, first lien, 144A, 5.50%, 1/15/25		United Kingdom		7,000,000		7,039,375
	Visant Corp., senior note, 10.00%, 10/01/17		United States		4,000,000		3,245,000
							361,114,993
	Consumer Staples 0.6%
	Cott Beverages Inc., senior note, 5.375%, 7/01/22		United States		2,500,000		2,437,500
d	JBS USA LLC/Finance Inc., senior note, 144A,
	8.25%, 2/01/20		United States		10,000,000		10,650,000
	7.25%, 6/01/21		United States		17,400,000		18,422,250
	U.S. Foods Inc., 8.50%, 6/30/19		United States		10,000,000		10,450,000
							41,959,750

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)
	Energy 6.5%
	Alpha Natural Resources Inc.,
	d second lien, 144A, 7.50%, 8/01/20		United States		2,200,000	$	561,000
	senior note, 6.00%, 6/01/19		United States		8,000,000		560,000
d,e	American Energy-Woodford LLC/AEW Finance Corp., senior secured note, second lien, 144A, PIK, 12.00%, 12/30/20		United States		3,500,000		2,520,000
	Antero Resources Corp., senior note, 5.375%, 11/01/21		United States		2,200,000		2,145,000
	Arch Coal Inc., senior note,
	7.00%, 6/15/19		United States		5,500,000		825,000
	7.25%, 6/15/21		United States		2,500,000		362,500
	Bill Barrett Corp., senior note,
	7.625%, 10/01/19		United States		6,630,000		6,364,800
	7.00%, 10/15/22		United States		10,000,000		9,100,000
	California Resources Corp.,
	senior bond, 6.00%, 11/15/24		United States		5,500,000		4,750,625
	senior note, 5.50%, 9/15/21		United States		12,500,000		10,890,625
	Calumet Specialty Products Partners LP/Calumet Finance Corp., senior note, 6.50%, 4/15/21		United States		5,000,000		4,950,000
	CGG SA, senior note, 6.50%, 6/01/21		France		11,100,000		9,268,500
	CHC Helicopter SA, senior secured note, first lien, 9.25%, 10/15/20		Canada		14,400,000		10,503,000
	Chesapeake Energy Corp., senior note, 5.375%, 6/15/21		United States		15,000,000		13,650,000
	CONSOL Energy Inc., senior note, 5.875%, 4/15/22		United States		11,500,000		9,822,380
	Denbury Resources Inc., senior note, 5.50%, 5/01/22		United States		17,000,000		15,257,500
	Energy XXI Gulf Coast Inc.,
	senior note, 9.25%, 12/15/17		United States		23,264,000		12,388,080
	senior note, 6.875%, 3/15/24		United States		37,310,000		12,312,300
	d senior secured note, second lien, 144A, 11.00%, 3/15/20		United States		7,100,000		6,265,750
d	EnQuest PLC, senior note, 144A, 7.00%, 4/15/22		United Kingdom		15,000,000		12,084,375
	EXCO Resources Inc., senior note, 7.50%, 9/15/18		United States		2,500,000		1,600,000
	Halcon Resources Corp., senior note,
	9.75%, 7/15/20		United States		1,700,000		1,151,750
	8.875%, 5/15/21		United States		5,500,000		3,643,750
	9.25%, 2/15/22		United States		5,800,000		3,784,500
	Kinder Morgan Inc.,
	senior note, MTN, 7.75%, 1/15/32		United States		22,000,000		25,278,550
	d senior secured bond, first lien, 144A, 5.625%, 11/15/23		United States		9,800,000		10,428,788
	Linn Energy LLC/Finance Corp., senior note,
	6.50%, 5/15/19		United States		5,000,000		4,062,500
	6.25%, 11/01/19		United States		7,500,000		5,906,250
	8.625%, 4/15/20		United States		20,000,000		16,504,200
	Magnum Hunter Resources Corp., senior note, 9.75%, 5/15/20		United States		5,000,000		4,500,000
	Midstates Petroleum Co. Inc./LLC, senior note, 10.75%, 10/01/20		United States		1,200,000		510,000
d	NGPL PipeCo LLC, secured note, 144A, 7.119%, 12/15/17		United States		3,750,000		3,862,500
d	Ocean Rig UDW Inc., senior note, 144A, 7.25%, 4/01/19		United States		6,000,000		4,676,250
	Offshore Group Investment Ltd., senior secured note, first lien, 7.50%, 11/01/19		United States		6,500,000		4,017,813
	Peabody Energy Corp.,
	d second lien, 144A, 10.00%, 3/15/22		United States		17,500,000		10,893,750
	senior note, 6.25%, 11/15/21		United States		10,000,000		3,250,000
	Penn Virginia Corp., senior note, 8.50%, 5/01/20		United States		9,300,000		8,393,250
	Rex Energy Corp., senior note, 8.875%, 12/01/20		United States		5,000,000		4,525,000
	Rice Energy Inc., senior note, 6.25%, 5/01/22		United States		6,831,000		6,813,922

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)
	Energy (continued)
	Sabine Pass Liquefaction LLC,
	first lien, 5.625%, 2/01/21		United States		15,100,000	$	15,477,500
	senior secured note, first lien, 5.75%, 5/15/24		United States		9,900,000		9,912,375
	d senior secured note, first lien, 144A, 5.625%, 3/01/25		United States		15,000,000		14,906,250
	Sabine Pass LNG LP,
	first lien, 6.50%, 11/01/20		United States		10,000,000		10,400,000
	senior secured note, 7.50%, 11/30/16		United States		10,000,000		10,575,100
	Sanchez Energy Corp., senior note,
	7.75%, 6/15/21		United States		10,000,000		10,000,000
	6.125%, 1/15/23		United States		13,000,000		11,700,000
	SandRidge Energy Inc.,
	d second lien, 144A, 8.75%, 6/01/20		United States		15,000,000		13,856,250
	senior note, 8.75%, 1/15/20		United States		20,000,000		10,150,000
	senior note, 7.50%, 3/15/21		United States		15,000,000		6,675,000
	senior note, 8.125%, 10/15/22		United States		10,000,000		4,325,000
	senior note, 7.50%, 2/15/23		United States		6,600,000		2,822,820
	Stone Energy Corp., senior bond, 7.50%, 11/15/22		United States		20,000,000		17,500,000
	W&T Offshore Inc., senior note, 8.50%, 6/15/19		United States		40,500,000		28,299,375
							434,983,878
	Financials 3.1%
g	Bank of America Corp., junior sub. bond,
	AA, 6.10% to 3/17/25, FRN thereafter, Perpetual		United States		8,000,000		7,950,000
	M, 8.125% to 5/15/18, FRN thereafter, Perpetual		United States		5,000,000		5,312,500
g	Citigroup Inc.,
	junior sub. bond, 5.35% to 5/15/23, FRN thereafter, Perpetual		United States		10,000,000		9,427,500
	junior sub. bond, 5.95% to 1/30/23, FRN thereafter, Perpetual		United States		4,500,000		4,438,125
	junior sub. bond, M, 6.30% to 5/15/24, FRN thereafter, Perpetual		United States		16,800,000		16,422,000
	junior sub. bond, O, 5.875% to 3/27/20, FRN thereafter, Perpetual		United States		25,000,000		25,086,250
	junior sub. note, 5.90% to 2/15/23, FRN thereafter, Perpetual		United States		12,500,000		12,343,750
	International Lease Finance Corp., senior note, 8.75%, 3/15/17		United States		10,000,000		10,966,100
g	JPMorgan Chase & Co.,
	junior sub. bond, R, 6.00% to 8/01/23, FRN thereafter, Perpetual		United States		3,200,000		3,184,000
	junior sub. bond, V, 5.00% to 7/30/19, FRN thereafter, Perpetual		United States		10,000,000		9,800,000
	junior sub. note, I, 7.90% to 4/30/19, FRN thereafter, Perpetual		United States		65,000,000		68,835,000
g	Morgan Stanley, junior sub. bond, 5.55% to 7/15/20, FRN thereafter, Perpetual		United States		7,300,000		7,256,200
	Navient Corp., senior note, 6.125%, 3/25/24		United States		5,000,000		4,800,000
d	OneMain Financial Holdings Inc., senior note, 144A,
	6.75%, 12/15/19		United States		10,000,000		10,450,000
	7.25%, 12/15/21		United States		5,000,000		5,187,500
g	Wells Fargo & Co., junior sub. bond, S, 5.90% to 6/15/24, FRN thereafter, Perpetual		United States		7,900,000		7,939,500
							209,398,425
	Health Care 2.5%
	CHS/Community Health Systems Inc.,
	senior note, 6.875%, 2/01/22		United States		6,400,000		6,776,000
	senior secured note, 5.125%, 8/01/21		United States		2,600,000		2,655,250
	DaVita HealthCare Partners Inc., senior bond, 5.125%, 7/15/24		United States		5,000,000		4,925,000

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)
	Health Care (continued)
	HCA Inc.,
	senior note, 7.50%, 2/15/22		United States		25,000,000	$	28,750,000
	senior note, 5.875%, 5/01/23		United States		7,500,000		7,987,500
	senior secured bond, first lien, 5.25%, 4/15/25		United States		5,000,000		5,196,875
	senior secured note, 6.50%, 2/15/20		United States		7,100,000		7,952,000
	senior secured note, first lien, 5.00%, 3/15/24		United States		10,400,000		10,608,000
d,e	Jaguar Holding Co. I, senior note, 144A, PIK, 9.375%, 10/15/17		United States		10,200,000		10,442,250
	Tenet Healthcare Corp., senior note,
	8.00%, 8/01/20		United States		10,426,000		10,882,138
	8.125%, 4/01/22		United States		22,500,000		24,693,750
	d 144A, 5.00%, 3/01/19		United States		3,400,000		3,412,750
d	Tenet Healthcare Corp. II, senior note, 144A, 6.75%, 6/15/23		United States		8,200,000		8,379,375
d	Valeant Pharmaceuticals International Inc.,
	senior bond, 144A, 6.125%, 4/15/25		United States		9,400,000		9,705,500
	senior note, 144A, 7.50%, 7/15/21		United States		7,700,000		8,344,875
	senior note, 144A, 5.875%, 5/15/23		United States		12,500,000		12,828,125
							163,539,388
	Industrials 1.5%
d	Abengoa Finance SAU, senior note, 144A, 8.875%, 11/01/17		Spain		12,900,000		13,456,312
d	Abengoa Greenfield SA, senior note, 144A, 6.50%, 10/01/19		Spain		5,000,000		4,650,000
d	Algeco Scotsman Global Finance PLC,
	senior note, 144A, 10.75%, 10/15/19		United Kingdom		5,000,000		3,884,375
	senior secured note, first lien, 144A, 8.50%, 10/15/18		United Kingdom		9,900,000		9,596,813
d	Bombardier Inc., senior bond, 144A,
	6.125%, 1/15/23		Canada		7,500,000		6,693,750
	7.50%, 3/15/25		Canada		11,000,000		10,037,500
d	CEVA Group PLC, senior note, first lien, 144A, 4.00%, 5/01/18		United Kingdom		12,691,882		11,700,329
	Hertz Corp., senior note, 6.75%, 4/15/19		United States		9,500,000		9,826,800
	Navistar International Corp., senior note, 8.25%, 11/01/21		United States		7,075,000		6,756,625
d	Stena AB, senior bond, 144A, 7.00%, 2/01/24		Sweden		5,800,000		5,626,000
	TransDigm Inc.,
	senior sub. bond, 6.50%, 7/15/24		United States		2,700,000		2,679,750
	senior sub. note, 6.00%, 7/15/22		United States		2,700,000		2,679,750
d	XPO Logistics Inc., senior note, 144A, 6.50%, 6/15/22		United States		10,000,000		9,812,500
							97,400,504
	Information Technology 4.0%
d	BMC Software Finance Inc., senior note, 144A, 8.125%, 7/15/21		United States		16,500,000		13,426,875
d,e	Boxer Parent Co. Inc., senior note, 144A, PIK, 9.00%, 10/15/19		United States		10,000,000		7,137,500
d,e	CommScope Holdings Co. Inc., senior note, 144A, PIK, 6.625%, 6/01/20		United States		11,200,000		11,662,000
	First Data Corp.,
	senior bond, 12.625%, 1/15/21		United States		80,000,000		92,600,000
	d senior secured bond, second lien, 144A, 8.25%, 1/15/21		United States		45,000,000		47,587,500
	d,e senior secured note, 144A, PIK, 8.75%, 1/15/22		United States		33,188,000		35,365,962
	Freescale Semiconductor Inc., senior note, 10.75%, 8/01/20		United States		35,202,000		37,314,120
	NCR Corp., senior note,
	5.00%, 7/15/22		United States		5,000,000		5,087,500
	6.375%, 12/15/23		United States		7,000,000		7,446,250
	Sterling International Inc., senior note, 11.00%, 10/01/19		United States		6,800,000		7,242,000
							264,869,707

Semiannual Report FI-17

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Income VIP Fund (continued)

		Country		Principal Amount*			Value
	Corporate Bonds (continued)
	Materials 2.2%
d	Ardagh Packaging Finance PLC/Ardagh MP Holdings USA Inc., senior note, 144A,
	6.25%, 1/31/19		Luxembourg		2,800,000		$	2,863,000
	6.75%, 1/31/21		Luxembourg		3,000,000			3,082,500
d	Cemex Finance LLC, senior secured note,
	144A, 9.375%, 10/12/22		Mexico		7,100,000			7,943,125
	first lien, 144A, 6.00%, 4/01/24		Mexico		14,700,000			14,571,375
d	Cemex SAB de CV, senior secured note, 144A, 9.50%, 6/15/18		Mexico		12,000,000			13,312,500
d	Consolidated Minerals Ltd., senior secured note, 144A, 8.00%, 5/15/20		Jersey Islands		5,000,000			4,000,000
d	First Quantum Minerals Ltd., senior note, 144A,
	6.75%, 2/15/20		Canada		2,300,000			2,236,750
	7.00%, 2/15/21		Canada		2,300,000			2,210,875
d	FMG Resources (August 2006) Pty. Ltd.,
	senior note, 144A, 8.25%, 11/01/19		Australia		4,500,000			3,813,750
	senior secured note, 144A, 9.75%, 3/01/22		Australia		25,500,000			26,312,812
d	Kerling PLC, senior secured note, 144A, 10.625%, 2/01/17		United Kingdom		9,400,000	EUR		10,733,012
d	Platform Specialty Products Corp., senior note, 144A, 6.50%, 2/01/22		United States		3,000,000			3,112,500
	Reynolds Group Issuer Inc./LLC/SA,
	first lien, 5.75%, 10/15/20		United States		14,200,000			14,590,500
	senior note, 9.00%, 4/15/19		United States		5,000,000			5,193,750
	senior note, 9.875%, 8/15/19		United States		16,800,000			17,671,500
	senior note, 8.25%, 2/15/21		United States		5,200,000			5,421,000
	senior secured note, 6.875%, 2/15/21		United States		10,000,000			10,475,000
								147,543,949
	Telecommunication Services 3.8%
d	Consolidated Communications Inc., senior note, 144A, 6.50%, 10/01/22		United States		15,000,000			14,531,250
	Frontier Communications Corp., senior note,
	8.50%, 4/15/20		United States		8,700,000			9,117,600
	9.25%, 7/01/21		United States		7,400,000			7,779,250
	7.125%, 1/15/23		United States		7,800,000			6,961,500
	Intelsat Jackson Holdings SA, senior bond, 5.50%, 8/01/23		Luxembourg		13,400,000			11,867,375
	Sprint Communications Inc.,
	11.50%, 11/15/21		United States		30,000,000			35,400,000
	senior note, 9.125%, 3/01/17		United States		13,300,000			14,430,500
	senior note, 7.00%, 8/15/20		United States		7,500,000			7,462,500
	d senior note, 144A, 9.00%, 11/15/18		United States		20,000,000			22,635,200
	Sprint Corp.,
	senior bond, 7.875%, 9/15/23		United States		37,500,000			36,656,250
	senior bond, 7.125%, 6/15/24		United States		8,200,000			7,626,820
	senior note, 7.625%, 2/15/25		United States		15,000,000			14,175,000
	T-Mobile USA Inc.,
	senior bond, 6.625%, 4/01/23		United States		15,000,000			15,618,750
	senior note, 6.542%, 4/28/20		United States		11,200,000			11,754,288
	senior note, 6.633%, 4/28/21		United States		5,000,000			5,200,000
	senior note, 6.731%, 4/28/22		United States		5,000,000			5,225,000
d	Telecom Italia SpA, senior note, 144A, 5.303%, 5/30/24		Italy		5,000,000			5,028,125
	Verizon Communications Inc., senior note, 5.15%, 9/15/23		United States		6,900,000			7,572,791

FI-18 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)
d	Wind Acquisition Finance SA, senior note, 144A, 7.375%, 4/23/21		Italy		15,000,000	$	15,168,750
							254,210,949
	Utilities 1.5%
	Calpine Corp.,
	senior bond, 5.75%, 1/15/25		United States		10,000,000		9,762,500
	senior note, 5.375%, 1/15/23		United States		14,500,000		14,318,750
	d senior secured bond, first lien, 144A, 7.875%, 1/15/23		United States		3,936,000		4,270,560
d	Dynegy Inc., senior note, 144A,
	6.75%, 11/01/19		United States		25,000,000		26,137,500
	7.375%, 11/01/22		United States		18,300,000		19,260,750
d	InterGen NV, secured bond, 144A, 7.00%, 6/30/23		Netherlands		25,000,000		22,375,000
d	NRG Yield Operating LLC, senior bond, 144A, 5.375%, 8/15/24		United States		6,600,000		6,682,500
							102,807,560
	Total Corporate Bonds (Cost $2,111,539,313)						2,077,829,103
h,i	Senior Floating Rate Interests 2.2%
	Consumer Discretionary 0.9%
	iHeartCommunications Inc.,
	Tranche D Term Loan, 6.937%, 1/30/19		United States		50,864,664		47,092,184
	Tranche E Term Loan, 7.687%, 7/30/19		United States		13,142,769		12,345,988
							59,438,172
	Consumer Staples 0.2%
	U.S. Foods Inc., Term Loan, 4.50%, 3/31/19		United States		14,700,000		14,745,938
	Energy 0.3%
	Drillships Financing Holding Inc., Tranche B-1 Term Loan, 6.00%, 3/31/21		Marshall Islands		14,811,558		12,115,854
	Fieldwood Energy LLC, Second Lien Loans, 8.375%, 9/30/20		United States		10,000,000		7,675,000
							19,790,854
	Industrials 0.4%
	CEVA Group PLC, Pre-Funded L/C, 6.50%, 3/19/21		United States		5,418,719		5,080,049
	CEVA Intercompany BV, Dutch BV Term Loan, 6.50%, 3/19/21		Netherlands		5,642,857		5,290,179
	CEVA Logistics Canada ULC, Canadian Term Loan, 6.50%, 3/19/21		Canada		972,906		912,100
	CEVA Logistics U.S. Holdings Inc., U.S. Term Loan, 6.50%, 3/19/21		United States		7,783,251		7,296,798
	Navistar Inc., Tranche B Term Loan, 5.75%, 8/17/17		United States		6,081,022		6,100,025
							24,679,151
	Information Technology 0.4%
	First Data Corp., 2018 New Dollar Term Loan, 3.687%, 3/23/18		United States		22,436,455		22,392,636
	SRA International Inc., Term Loan, 6.50%, 7/20/18		United States		7,469,520		7,497,531
							29,890,167
	Total Senior Floating Rate Interests (Cost $154,454,175)						148,544,282

Semiannual Report FI-19

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Income VIP Fund (continued)

		Country		Shares		Value
	Escrows and Litigation Trusts 0.0%
a,j	Motors Liquidation Co., Escrow Account, cvt. pfd., C		United States		1,400,000	$	—
a,j	SuperMedia Inc., Litigation Trust		United States		3,472,135		—
	Total Escrows and Litigation Trusts (Cost $101,664)						—
	Total Investments before Short Term Investments (Cost $5,619,009,727)						5,996,667,454
				Principal Amount*
	Short Term Investments 7.0%
	U.S. Government and Agency Securities 6.9%
k	FHLB,
	7/08/15		United States		68,600,000		68,599,863
	7/15/15		United States		20,000,000		19,999,920
k	FHLMC, 7/01/15		United States		375,000,000		374,999,896
	Total U.S. Government and Agency Securities (Cost $463,598,653)						463,599,679
	Total Investments before Repurchase Agreements (Cost $6,082,608,380)						6,460,267,133
	Repurchase Agreements (Cost $3,651,357) 0.1%
l	Joint Repurchase Agreement, 0.095%, 7/01/15 (Maturity Value $3,651,367)		United States		3,651,357		3,651,357
	BNP Paribas Securities Corp. (Maturity Value $896,045)
	HSBC Securities (USA) Inc. (Maturity Value $1,881,696) Merrill Lynch, Pierce, Fenner & Smith Inc. (Maturity Value $873,626)
	Collateralized by U.S. Government Agency Securities, 0.000% - 5.50%, 12/01/15 - 6/12/20; U.S. Government Agency Securities, Strips, 6/01/17; kU.S. Treasury Bills, 3/31/16; U.S. Treasury Bonds, 3.125%, 8/15/44; and U.S. Treasury Notes, 1.25% - 1.75%, 1/31/19 - 9/30/19 (valued at $3,725,132)
m	Investments from Cash Collateral Received for Loaned Securities 0.0%†
	Repurchase Agreements 0.0%†
l	Joint Repurchase Agreement, 0.10%, 7/01/15 (Maturity Value $366,478)		United States		366,477		366,477
	HSBC Securities (USA) Inc.,
	Collateralized by U.S. Government and Agency Securities, 0.000% - 5.375%, 2/22/17 - 7/15/32; and U.S. Government Agency Strips, 7/15/15 - 1/15/37 (valued at $373,808)
l	Joint Repurchase Agreement, 0.11%, 7/01/15 (Maturity Value $1,000,003)		United States		1,000,000		1,000,000
	RBS Securities Inc.,
	Collateralized by U.S. Treasury Bonds, 3.625%, 2/15/44; and U.S. Treasury Notes, 1.00% - 3.625%, 9/30/15 - 2/15/24 (valued at $1,020,003)

FI-20 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Income VIP Fund (continued)

		Country		Principal Amount*		Value
m	Investments from Cash Collateral Received for Loaned Securities (continued)
	Repurchase Agreements (continued)
l	Joint Repurchase Agreement, 0.20%, 7/01/15 (Maturity Value $176,577)		United States		176,576	$	176,576
	Barclays Capital Inc.,
	Collateralized by U.S. Treasury Bonds, 3.375%, 5/15/44; U.S. Treasury Notes, 0.50% - 2.75%, 2/28/17 - 2/15/24 (valued at $180,108)
	Total Investments from Cash Collateral Received for Loaned Securities (Cost $1,543,053)						1,543,053
	Total Investments (Cost $6,087,802,790) 96.8%						6,465,461,543
	Other Assets, less Liabilities 3.2%						211,194,731
	Net Assets 100.0%					$	6,676,656,274

See Abbreviations on page FI-33.

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

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

^aNon-income producing.

^bSee Note 8 regarding restricted securities.

^cSee Note 1(d) regarding equity-linked securities.

^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, 2015, the aggregate value of these securities was $1,071,965,900, representing 16.07% of net assets.

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

^fA portion or all of the security is on loan at June 30, 2015. See Note 1(e).

^gPerpetual security with no stated maturity date.

^hSee Note 1(f) regarding senior floating rate interests.

ⁱThe coupon rate shown represents the rate at period end.

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

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

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

^mSee Note 1(e) regarding securities on loan.

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 Assets and Liabilities

June 30, 2015 (unaudited)

	Franklin Income VIP Fund
Assets:
Investments in securities:
Cost - Unaffiliated issuers	$	6,084,151,433
Cost - Repurchase agreements		3,651,357
Total cost of investments	$	6,087,802,790
Value - Unaffiliated issuers	$	6,461,810,186
Value - Repurchase agreements		3,651,357
Total value of investments (includes securities loaned in the amount of $1,480,449)		6,465,461,543
Cash		125,653,540
Receivables:
Investment securities sold		42,948,261
Capital shares sold		2,583,288
Dividends and interest		52,715,408
Other assets		4,533,261
Total assets		6,693,895,301
Liabilities:
Payables:
Capital shares redeemed		9,679,344
Management fees		2,552,363
Distribution fees		2,668,999
Payable upon return of securities loaned		1,543,053
Accrued expenses and other liabilities		795,268
Total liabilities		17,239,027
Net assets, at value	$	6,676,656,274
Net assets consist of:
Paid-in capital	$	6,938,792,614
Undistributed net investment income		126,713,749
Net unrealized appreciation (depreciation)		377,667,816
Accumulated net realized gain (loss)		(766,517,905	)
Net assets, at value	$	6,676,656,274
Class 1:
Net assets, at value	$	680,655,927
Shares outstanding		43,748,316
Net asset value and maximum offering price per share	$	15.56
Class 2:
Net assets, at value	$	5,637,834,126
Shares outstanding		373,218,457
Net asset value and maximum offering price per share	$	15.11
Class 4:
Net assets, at value	$	358,166,221
Shares outstanding		23,227,926
Net asset value and maximum offering price per share	$	15.42

FI-22 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, 2015 (unaudited)

	Franklin Income VIP Fund
Investment income:
Dividends	$	71,180,787
Interest		102,322,989
Income from securities loaned		298,578
Total investment income		173,802,354
Expenses:
Management fees (Note 3a)		15,801,750
Distribution fees: (Note 3c)
Class 2		7,363,166
Class 4		650,715
Custodian fees (Note 4)		47,791
Reports to shareholders		278,494
Professional fees		67,996
Trustees’ fees and expenses		15,022
Other		62,928
Total expenses		24,287,862
Expense reductions (Note 4)		(490	)
Expenses waived/paid by affiliates (Note 3e)		(2,663	)
Net expenses		24,284,709
Net investment income		149,517,645
Realized and unrealized gains (losses):
Net realized gain (loss) from:
Investments		(37,291,402	)
Foreign currency transactions		(281,544	)
Net realized gain (loss)		(37,572,946	)
Net change in unrealized appreciation (depreciation) on:
Investments		(184,472,641	)
Translation of other assets and liabilities denominated in foreign currencies		248,796
Net change in unrealized appreciation (depreciation)		(184,223,845	)
Net realized and unrealized gain (loss)		(221,796,791	)
Net increase (decrease) in net assets resulting from operations	$	(72,279,146	)

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

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL STATEMENTS

Statements of Changes in Net Assets

	Franklin Income VIP Fund
	Six Months Ended June 30, 2015 (unaudited)			Year Ended December 31, 2014
Increase (decrease) in net assets:
Operations:
Net investment income	$	149,517,645		$	300,049,149
Net realized gain (loss)		(37,572,946	)		327,875,766
Net change in unrealized appreciation (depreciation)		(184,223,845	)		(288,670,010	)
Net increase (decrease) in net assets resulting from operations		(72,279,146	)		339,254,905
Distributions to shareholders from:
Net investment income:
Class 1		(32,196,540	)		(37,211,436	)
Class 2		(260,631,132	)		(314,580,044	)
Class 4		(15,803,892	)		(19,237,312	)
Total distributions to shareholders		(308,631,564	)		(371,028,792	)
Capital share transactions: (Note 2)
Class 1		5,023,244			23,158,016
Class 2		(62,911,732	)		(137,432,835	)
Class 4		(557,794	)		(18,639,257	)
Total capital share transactions		(58,446,282	)		(132,914,076	)
Net increase (decrease) in net assets		(439,356,992	)		(164,687,963	)
Net assets:
Beginning of period		7,116,013,266			7,280,701,229
End of period	$	6,676,656,274		$	7,116,013,266
Undistributed net investment income included in net assets:
End of period	$	126,713,749		$	285,827,668

FI-24 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 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 (1940 Act) as an open-end management investment company, consisting of nineteen separate funds and applies the specialized accounting and reporting guidance in U.S. Generally Accepted Accounting Principles (U.S. GAAP). 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.

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.

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

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)

a. Financial Instrument Valuation (continued)

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.

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 in 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

FI-26 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Income VIP Fund (continued)

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, 2015.

d. 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.

e. Securities Lending

The Fund participates in an agency based securities lending program to earn additional income. 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 deposited into a joint cash account with other funds and is used to invest in a money market fund managed by Franklin Advisers, Inc., an affiliate of the Fund, and/or a joint repurchase agreement. The total cash collateral received at period end was $1,543,053. The Fund may receive income from the investment of cash collateral, in addition to lending fees and rebates paid by the borrower. Income from securities loaned is reported separately in the Statement of Operations. 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. If the borrower defaults on its obligation

to return the securities loaned, the Fund has the right to repurchase the securities in the open market using the collateral received. 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. As a result of several court cases, in certain countries across the European Union, the Fund has filed additional tax reclaims for previously withheld taxes on dividends earned in those countries. These additional filings are subject to various administrative proceedings by the local jurisdictions’ tax authorities within the European Union, as well as a number of related judicial proceedings. At this time, uncertainty exists as to the ultimate resolution of these proceedings, the likelihood of receipt of these reclaims, and the potential timing of payment, and accordingly, no amounts are reflected in the financial statements.

The Fund recognizes the tax benefits of uncertain tax positions only when the position is “more likely than not” to be sustained

Semiannual Report FI-27

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Income VIP Fund (continued)

1. Organization and Significant Accounting Policies (continued)

g. Income and Deferred Taxes (continued)

upon examination by the tax authorities based on the technical merits of the tax position. As of June 30, 2015, 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’s 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 is recorded on the ex-dividend date except for certain dividends from foreign securities where the dividend rate is not available. In such cases, the dividend is recorded as soon as the information is received by the Fund. 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 U.S. GAAP. 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, 2015, 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, 2015						Year Ended December 31, 2014
	Shares			Amount			Shares			Amount
Class 1 Shares:
Shares sold		975,200		$	16,178,567			2,465,196		$	42,146,383
Shares issued in reinvestment of distributions		2,040,338			32,196,540			2,182,489			37,211,436
Shares redeemed		(2,630,230	)		(43,351,863	)		(3,341,982	)		(56,199,803	)
Net increase (decrease)		385,308		$	5,023,244			1,305,703		$	23,158,016

FI-28 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Income VIP Fund (continued)

	Six Months Ended June 30, 2015						Year Ended December 31, 2014
	Shares			Amount			Shares			Amount
Class 2 Shares:
Shares sold		13,850,200		$	224,148,778			37,540,981		$	619,277,066
Shares issued in reinvestment of distributions		17,001,378			260,631,132			18,973,465			314,580,044
Shares redeemed		(34,065,375	)		(547,691,642	)		(65,224,564	)		(1,071,289,945	)
Net increase (decrease)		(3,213,797	)	$	(62,911,732	)		(8,710,118	)	$	(137,432,835	)
Class 4 Shares:
Shares sold		1,475,765		$	24,222,813			3,949,673		$	66,366,931
Shares issued in reinvestment of distributions		1,010,479			15,803,892			1,137,629			19,237,312
Shares redeemed		(2,471,651	)		(40,584,499	)		(6,186,364	)		(104,243,500	)
Net increase (decrease)		14,593		$	(557,794	)		(1,099,062	)	$	(18,639,257	)

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.

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.

Semiannual Report FI-29

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Income VIP Fund (continued)

3. Transactions With Affiliates (continued)

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. Investments in Institutional Fiduciary Trust Money Market Portfolio

The Fund invests in 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, as noted in the Statement of Operations, in an amount not to exceed the management and administrative fees paid directly or indirectly by the Sweep Money Fund.

f. Other Affiliated Transactions

At June 30, 2015, Franklin Templeton Variable Insurance Products Trust – Franklin Founding Funds Allocation VIP Fund owned 5.73% 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, 2015, 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, 2014, capital loss carryforwards were as follows:

Capital loss carryforwards subject to expiration:
2016	$	50,251,090
2017		521,405,875
2018		157,561,044
Total capital loss carryforwards	$	729,218,009

At June 30, 2015, the cost of investments and net unrealized appreciation (depreciation) for income tax purposes were as follows:

Cost of investments	$	6,093,599,011
Unrealized appreciation	$	881,755,554
Unrealized depreciation		(509,893,022	)
Net unrealized appreciation (depreciation)	$	371,862,532

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 and equity-linked securities.

6. Investment Transactions

Purchases and sales of investments (excluding short term securities) for the period ended June 30, 2015, aggregated $723,241,970 and $1,039,264,998, respectively.

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FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Income VIP Fund (continued)

7. Credit Risk

At June 30, 2015, the Fund had 32.32% 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, 2015, 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 0.37% of Net Assets)		6/26/14	$	19,718,400	$	24,855,965

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 $2 billion (Global Credit Facility) which matures on February 12, 2016. 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 in the Statement of Operations. During the period ended June 30, 2015, 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.

Semiannual Report FI-31

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Income VIP Fund (continued)

10. Fair Value Measurements (continued)

A summary of inputs used as of June 30, 2015, 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	$	505,253,612	$	6,240,000	$	—		$	511,493,612
Financials		280,360,077		6,175,000		—			286,535,077
Industrials		283,554,771		20,912,138		—			304,466,909
Information Technology		193,130,123		—		24,855,965			217,986,088
All Other Equity Investmentsb		2,069,398,419		—		—			2,069,398,419
Equity-Linked Securities		—		325,260,488		—			325,260,488
Convertible Bonds		—		55,153,476		—			55,153,476
Corporate Bonds		—		2,077,829,103		—			2,077,829,103
Senior Floating Rate Interests		—		148,544,282		—			148,544,282
Escrows and Litigation Trusts		—		—		—	c		—
Short Term Investments		—		468,794,089		—			468,794,089
Total Investments in Securities	$	3,331,697,002	$	3,108,908,576	$	24,855,965		$	6,465,461,543

^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, 2015.

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 certain transactions accounted for as a sale for interim and annual reporting periods beginning after December 15, 2014, and transactions accounted for as secured borrowings for annual periods beginning after December 15, 2014, and for interim periods beginning after March 15, 2015. Management has reviewed the requirements and believes the adoption of this ASU will not have a material impact on the financial statements.

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.

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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
		FHLB	Federal Home Loan Bank
		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

Semiannual Report FI-33

Franklin Large Cap Growth VIP Fund

We are pleased to bring you Franklin Large Cap Growth VIP Fund’s semiannual report for the period ended June 30, 2015.

Class 2 Performance Summary as of June 30, 2015

The Fund’s Class 2 shares delivered a +7.84% total return for the six-month period ended June 30, 2015.

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 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^®), generated a +1.23% total return.²

Economic and Market Overview

U.S. economic growth was mixed during the six months under review. In 2015’s first quarter, U.S. dollar strength, low energy prices, and a labor dispute at West Coast ports led exports to decline. Lower business investment and state and local government spending also weighed on the economy, while increases in consumer spending, residential investment and private inventory investment offered some support. In the second quarter, business capital spending rebounded and manufacturing and non-manufacturing activities increased, contributing to strong job gains that helped the unemployment rate

decline from 5.6% in December 2014 to 5.3% in June 2015.³ Housing market data were generally encouraging as home sales and prices rose. After a brief, winter slump, retail sales rebounded in the spring as strong employment gains led to broad-based improvement, especially for auto and gasoline sales. Inflation, as measured by the Consumer Price Index, rose during the six months amid generally higher energy prices bouncing from recent lows.

During the six-month period, the Federal Reserve Board (Fed) kept its target interest rate at 0%–0.25% while considering when an increase would be appropriate. The Fed anticipated raising its target rate when it saw further labor market progress and was reasonably confident that inflation would move back to 2% over the medium term. In its June meeting, the Fed lowered

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.

1. Please see Index Descriptions following the Fund Summaries.

2. Source: 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 LARGE CAP GROWTH VIP FUND

its 2015 economic growth forecast and raised unemployment estimates given the weak start to the year.

Investor confidence grew during the period as corporate profits remained healthy, the Fed showed caution about raising interest rates, economic data in Europe and Japan improved and China introduced more stimulus measures. However, the stock markets endured some sell-offs when many investors reacted to debt negotiations between Greece and its creditors, geopolitical tensions in certain regions, and less robust growth in China. For the six months under review, U.S. stocks, as measured by the S&P 500 and the Dow Jones Industrial Average, rose marginally after both reached all-time highs in May.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.

During the six months under review, nearly all sectors represented in the Fund’s portfolio contributed to absolute performance. Relative to the S&P 500, key contributors included stock selection and overweightings in health care and consumer discretionary, as well as stock selection in information technology (IT).

Health care was one of the period’s best-performing sectors, driven largely by the biotechnology and pharmaceuticals industries, as many companies received positive responses from the Food and Drug Administration, maintained pricing

Top 10 Holdings
6/30/15
Company Sector/Industry	% of Total Net Assets
Allergan PLC Health Care		4.5%
Celgene Corp. Health Care		3.8%
MasterCard Inc., A Information Technology		3.8%
Apple Inc. Information Technology		3.4%
SBA Communications Corp. Telecommunication Services		3.3%
Amazon.com Inc. Consumer Discretionary		2.8%
Facebook Inc., A Information Technology		2.8%
Valeant Pharmaceuticals International Inc. Health Care		2.7%
Google Inc., A & C Information Technology		2.6%
The Walt Disney Co. Consumer Discretionary		2.6%

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

flexibility and generated solid earnings growth. Further benefiting the sector were many companies’ limited exposure to emerging markets, including Greece and China, and consolidation in several industries. Top contributors to Fund performance included Valeant Pharmaceuticals International⁴ and Allergan PLC (formerly Actavis). Headquartered in Canada, Valeant Pharmaceuticals contributed to relative returns following its report of strong revenue growth in 2015’s first quarter. The company also stated that it expected its acquisition of Salix Pharmaceuticals to expand its product offering in future years. Allergan PLC became one of the world’s top 10 pharmaceutical companies by revenue following its acquisition of Allergan Inc. in March. Allergan PLC reported stronger-than-expected first-quarter earnings, driven by higher generic drug revenues and stronger gross margins across brands. In our view, the company’s broad pipeline, recent and pending launches, and synergies with recent acquisitions could support strong revenue growth.

The Fund’s consumer discretionary holdings performed well overall, as strength in many industries, including athletic apparel, media and Internet retail, more than offset weakness in specialty retail. Amazon.com helped relative results, as the

4. Not part of the index.

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FRANKLIN LARGE CAP GROWTH VIP FUND

Internet retailer generated year-over-year margin expansion in 2014’s fourth quarter and in 2015’s first quarter. In its first-quarter earnings report, Amazon.com announced a loss that investors appeared to overlook as the company disclosed the revenues and profitability of Amazon Web Services (AWS), its cloud computing platform, for the first time. With robust annual revenue growth and a high profit margin, AWS was more profitable than many analysts had estimated. The company’s core retail business generated strong revenue growth in North America and internationally.

In the IT sector, key contributors included Palo Alto Networks⁴ and Avago Technologies. Palo Alto Networks, a network security company, demonstrated solid market share gains and fixed operating costs in an environment characterized by cyber attacks and strong enterprise security spending. Avago Technologies is a Singapore-based leading global supplier of high-performance filters for 4G-enabled devices, which is an attractive growth market. The company also supplies high-speed optical communication chips to equipment suppliers.

In contrast, key detractors from the Fund’s relative performance included stock selection in the industrials sector, which underperformed resulting from slower emerging market economic growth, commodity price declines and the negative effects of foreign currency exchange.

Within the industrials sector, key detractors included Precision Castparts,⁵ American Airlines Group and Kansas City Southern. Precision Castparts continued to struggle amid weak power and energy end markets. Further hurting its shares were a large aerospace customer’s inventory reduction of Precision Castparts’ products and new competitive pressures from Alcoa’s titanium aerospace components business. American Airlines Group suffered from lower airfares as a result of excess capacity, particularly in the Dallas market after the Dallas Love Field Airport opened to national routes. Nonetheless, American Airlines produced record margins and earnings in 2015’s first quarter. We expect the competitive pressure to ease in 2016, allowing further earnings improvement, and believe that many investors would eventually recognize the company’s strong fundamentals. Kansas City Southern was negatively affected by declining coal and oil-related volumes. Additionally, the

company’s Mexico operations were understaffed relative to demand. We believe Kansas City Southern can redeploy assets used for coal and oil transport to the long-term opportunity of transporting more intermodal volumes across the U.S.-Mexico border, a strategy that could potentially help the company grow.

Key individual detractors from relative performance included Las Vegas Sands^4,5 and Anadarko Petroleum. Las Vegas Sands is a global gaming company with casino properties in Macau, Singapore and the U.S. The company was hurt primarily by a gaming revenue decline in its largest market, Macau. China’s new government aggressively pursued an anti-corruption campaign and an increasingly restrictive tourist visa program that resulted in lower-than-expected visits and revenue from mainland China. Anadarko Petroleum is an energy exploration and production company with oil and natural gas assets globally. Its shares declined as energy prices fell due to record crude oil and natural gas production levels and weak demand growth in North America and Asia. In our view, Anadarko is a high-quality company with a strong balance sheet, diversified asset base and talented management team. Although it may take time for energy prices to return to 2013 levels, we believe the company is well positioned for long-term growth.

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, 2015, 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. Not held at period-end.

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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 1/1/15		Ending Account Value 6/30/15		Fund-Level Expenses Incurred During Period* 1/1/15–6/30/15
Actual		$1,000		$1,078.40		$5.36
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, 2015 (unaudited)			Year Ended December 31,
				2014			2013			2012			2011			2010
Class 1
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$23.26			$20.91			$16.43			$14.75			$15.07			$13.62
Income from investment operationsa:
Net investment income (loss)b		(0.04	)		0.11			0.24			0.21			0.15			0.12
Net realized and unrealized gains (losses)		1.92			2.54			4.48			1.65			(0.33	)		1.48
Total from investment operations		1.88			2.65			4.72			1.86			(0.18	)		1.60
Less distributions from:
Net investment income		(0.13	)		(0.30	)		(0.24	)		(0.18	)		(0.14	)		(0.15	)
Net realized gains		(6.21	)		—			—			—			—			—
Total distributions		(6.34	)		(0.30	)		(0.24	)		(0.18	)		(0.14	)		(0.15	)
Net asset value, end of period		$18.80			$23.26			$20.91			$16.43			$14.75			$15.07
Total returnc		8.01%			12.74%			28.92%			12.65%			(1.22)%			11.85%
Ratios to average net assetsd
Expenses		0.79%			0.79%			0.79%			0.80%			0.80%			0.79%
Net investment income (loss)		(0.31)%			0.50%			1.27%			1.31%			0.99%			0.86%
Supplemental data
Net assets, end of period (000’s)		$54,941			$54,971			$54,291			$46,756			$48,666			$58,265
Portfolio turnover rate		13.05%			93.53%			28.27%			33.88%			56.61%			46.75%

^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’s 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 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.

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, 2015 (unaudited)			Year Ended December 31,
				2014			2013			2012			2011			2010
Class 2
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$22.94			$20.62			$16.20			$14.54			$14.86			$13.43
Income from investment operationsa:
Net investment income (loss)b		(0.07	)		0.06			0.19			0.17			0.11			0.08
Net realized and unrealized gains (losses)		1.89			2.50			4.42			1.62			(0.33	)		1.46
Total from investment operations		1.82			2.56			4.61			1.79			(0.22	)		1.54
Less distributions from:
Net investment income		(0.07	)		(0.24	)		(0.19	)		(0.13	)		(0.10	)		(0.11	)
Net realized gains		(6.21	)		—			—			—			—			—
Total distributions		(6.28	)		(0.24	)		(0.19	)		(0.13	)		(0.10	)		(0.11	)
Net asset value, end of period		$18.48			$22.94			$20.62			$16.20			$14.54			$14.86
Total returnc		7.84%			12.46%			28.63%			12.37%			(1.51)%			11.59%
Ratios to average net assetsd
Expenses		1.04%			1.04%			1.04%			1.05%			1.05%			1.04%
Net investment income (loss)		(0.56)%			0.25%			1.02%			1.06%			0.74%			0.61%
Supplemental data
Net assets, end of period (000’s)		$251,003			$256,098			$285,477			$278,989			$293,226			$357,405
Portfolio turnover rate		13.05%			93.53%			28.27%			33.88%			56.61%			46.75%

^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’s 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 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 FLG-7

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Statement of Investments, June 30, 2015 (unaudited)

Franklin Large Cap Growth VIP Fund
		Shares		Value
	Common Stocks 99.7%
	Consumer Discretionary 17.3%
a	Amazon.com Inc.		19,938	$	8,654,886
a	Buffalo Wild Wings Inc.		9,194		1,440,608
a	Chipotle Mexican Grill Inc.		3,780		2,286,862
a	DISH Network Corp., A		25,838		1,749,491
	Hanesbrands Inc.		87,380		2,911,502
	Harman International Industries Inc.		28,096		3,341,738
	Lowe’s Cos. Inc.		47,749		3,197,751
	NIKE Inc., B		42,323		4,571,730
a	The Priceline Group Inc.		4,665		5,371,141
	Starbucks Corp.		123,331		6,612,392
a	Under Armour Inc., A		59,625		4,975,110
	The Walt Disney Co.		68,827		7,855,914
					52,969,125
	Consumer Staples 3.7%
	Constellation Brands Inc., A		29,101		3,376,298
	Mead Johnson Nutrition Co., A		30,080		2,713,818
a	Monster Beverage Corp.		40,358		5,408,779
					11,498,895
	Energy 3.4%
	Anadarko Petroleum Corp.		77,163		6,023,344
a	Diamondback Energy Inc.		36,566		2,756,345
	Schlumberger Ltd.		18,727		1,614,080
					10,393,769
	Financials 6.4%
a	Affiliated Managers Group Inc.		16,323		3,568,208
	American Tower Corp.		16,834		1,570,444
	BlackRock Inc.		6,585		2,278,278
a	CBRE Group Inc.		111,829		4,137,673
	The Charles Schwab Corp.		133,409		4,355,804
a	Signature Bank		25,314		3,705,716
					19,616,123
	Health Care 26.8%
a	Allergan PLC		45,768		13,888,757
a	Alnylam Pharmaceuticals Inc.		12,378		1,483,751
a	Biogen Inc.		15,792		6,379,021
a	Celgene Corp.		100,412		11,621,183
a	Celldex Therapeutics Inc.		74,270		1,873,089
a	Envision Healthcare Holdings Inc.		83,866		3,311,030
	Gilead Sciences Inc.		59,868		7,009,345
a	HMS Holdings Corp.		140,695		2,415,733
a	Illumina Inc.		26,630		5,814,927
a	Impax Laboratories Inc.		38,707		1,777,425
a	Incyte Corp.		30,360		3,163,816
a	Jazz Pharmaceuticals PLC		17,261		3,039,144
a	Karyopharm Therapeutics Inc.		50,352		1,370,078
a	Medivation Inc.		20,263		2,314,035
	Perrigo Co. PLC		21,036		3,888,084
a	Puma Biotechnology Inc.		6,071		708,789
a	Sagent Pharmaceuticals Inc.		50,504		1,227,752

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 (continued)
a	Valeant Pharmaceuticals International Inc.		37,086	$	8,238,655
a	VWR Corp.		93,442		2,497,705
					82,022,319
	Industrials 7.9%
	Allegiant Travel Co.		13,071		2,325,070
	American Airlines Group Inc.		38,879		1,552,633
a	DigitalGlobe Inc.		55,846		1,551,960
	Flowserve Corp.		65,412		3,444,596
	Hexcel Corp.		41,475		2,062,967
a	IHS Inc., A		31,967		4,111,915
	Kansas City Southern		30,696		2,799,475
	Union Pacific Corp.		15,438		1,472,322
a	United Rentals Inc.		22,286		1,952,699
	Univar Inc.		29,700		773,091
a	WABCO Holdings Inc.		16,492		2,040,390
					24,087,118
	Information Technology 27.6%
a	Adobe Systems Inc.		38,350		3,106,734
	Apple Inc.		83,695		10,497,445
	Avago Technologies Ltd. (Singapore)		40,300		5,357,079
a	BroadSoft Inc.		64,206		2,219,601
a	Electronic Arts Inc.		71,876		4,779,754
a	Facebook Inc., A		98,203		8,422,380
a	FitBit Inc., A		10,200		389,946
a	Google Inc., A		8,263		4,462,351
a	Google Inc., C		6,787		3,532,701
a	LinkedIn Corp., A		11,489		2,373,972
	MasterCard Inc., A		122,762		11,475,792
	Microsoft Corp.		88,971		3,928,070
	Mobileye NV		32,379		1,721,591
a	NetSuite Inc.		16,355		1,500,571
a	NXP Semiconductors NV (Netherlands)		49,376		4,848,723
a	Palo Alto Networks Inc.		23,413		4,090,251
a	Salesforce.com Inc.		38,636		2,690,225
a	ServiceNow Inc.		31,560		2,345,224
a	ViaSat Inc.		32,752		1,973,636
	Visa Inc., A		69,032		4,635,499
					84,351,545
	Materials 3.3%
a	Axalta Coating Systems Ltd.		74,389		2,460,788
	Ecolab Inc.		21,432		2,423,316
	LyondellBasell Industries NV, A		30,063		3,112,122
	Martin Marietta Materials Inc.		14,267		2,018,923
					10,015,149
	Telecommunication Services 3.3%
a	SBA Communications Corp.		88,056		10,123,798
	Total Common Stocks (Cost $216,355,725)				305,077,841

Semiannual Report FLG-9

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Large Cap Growth VIP Fund (continued)

		Shares		Value
	Convertible Preferred Stocks (Cost $1,250,406) 0.4%
	Health Care 0.4%
a,b	Acerta Pharma BV, 8.00%, cvt. pfd., B, 144A (Netherlands)		108,731	$	1,250,406
	Total Investments before Short Term Investments (Cost $217,606,131)				306,328,247
		Principal Amount
	Short Term Investments (Cost $427,180) 0.2%
	Repurchase Agreements 0.2%
c	Joint Repurchase Agreement, 0.095%, 7/01/15 (Maturity Value $427,181)	$	427,180		427,180
	BNP Paribas Securities Corp. (Maturity Value $104,830) HSBC Securities (USA) Inc. (Maturity Value $220,144) Merrill Lynch, Pierce, Fenner & Smith Inc. (Maturity Value $102,207)
	Collateralized by U.S. Government Agency Securities, 0.000% - 5.50%, 12/01/15 - 6/12/20; U.S. Government Agency Securities, Strips, 6/01/17; dU.S. Treasury Bills, 3/31/16; U.S. Treasury Bonds, 3.125%, 8/15/44; and U.S. Treasury Notes, 1.25% - 1.75%, 1/31/19 - 9/30/19 (valued at $435,811)
	Total Investments (Cost $218,033,311) 100.3%				306,755,427
	Other Assets, less Liabilities (0.3)%				(812,141	)
	Net Assets 100.0%			$	305,943,286

^aNon-income producing.

^bSee Note 7 regarding restricted securities.

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

^dThe 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, 2015 (unaudited)

	Franklin Large Cap Growth VIP Fund
Assets:
Investments in securities:
Cost - Unaffiliated issuers	$	217,606,131
Cost - Repurchase agreements		427,180
Total cost of investments	$	218,033,311
Value - Unaffiliated issuers	$	306,328,247
Value - Repurchase agreements		427,180
Total value of investments		306,755,427
Receivables:
Investment securities sold		506,142
Capital shares sold		36,718
Dividends		103,011
Other assets		174,359
Total assets		307,575,657
Liabilities:
Payables:
Investment securities purchased		980,355
Capital shares redeemed		277,829
Management fees		190,427
Distribution fees		106,187
Accrued expenses and other liabilities		77,573
Total liabilities		1,632,371
Net assets, at value	$	305,943,286
Net assets consist of:
Paid-in capital	$	213,772,103
Undistributed net investment income (loss)		(781,872	)
Net unrealized appreciation (depreciation)		88,722,116
Accumulated net realized gain (loss)		4,230,939
Net assets, at value	$	305,943,286
Class 1:
Net assets, at value	$	54,940,570
Shares outstanding		2,922,919
Net asset value and maximum offering price per share	$	18.80
Class 2:
Net assets, at value	$	251,002,716
Shares outstanding		13,582,937
Net asset value and maximum offering price per share	$	18.48

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, 2015 (unaudited)

	Franklin Large Cap Growth VIP Fund
Investment income:
Dividends	$	738,839
Interest		624
Total investment income		739,463
Expenses:
Management fees (Note 3a)		1,165,330
Distribution fees - Class 2 (Note 3c)		318,279
Custodian fees (Note 4)		1,593
Reports to shareholders		31,142
Professional fees		20,264
Trustees’ fees and expenses		669
Other		5,056
Total expenses		1,542,333
Net investment income (loss)		(802,870	)
Realized and unrealized gains (losses):
Net realized gain (loss) from Investments		4,509,946
Net change in unrealized appreciation (depreciation) on investments		20,221,581
Net realized and unrealized gain (loss)		24,731,527
Net increase (decrease) in net assets resulting from operations	$	23,928,657

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, 2015 (unaudited)			Year Ended December 31, 2014
Increase (decrease) in net assets:
Operations:
Net investment income (loss)	$	(802,870	)	$	944,121
Net realized gain (loss)		4,509,946			106,966,453
Net change in unrealized appreciation (depreciation)		20,221,581			(70,957,037	)
Net increase (decrease) in net assets resulting from operations		23,928,657			36,953,537
Distributions to shareholders from:
Net investment income:
Class 1		(286,901	)		(729,509	)
Class 2		(675,379	)		(2,842,675	)
Net realized gains:
Class 1		(13,634,161	)		—
Class 2		(63,414,142	)		—
Total distributions to shareholders		(78,010,583	)		(3,572,184	)
Capital share transactions: (Note 2)
Class 1		9,613,908			(5,100,024	)
Class 2		39,343,050			(56,981,465	)
Total capital share transactions		48,956,958			(62,081,489	)
Net increase (decrease) in net assets		(5,124,968	)		(28,700,136	)
Net assets:
Beginning of period		311,068,254			339,768,390
End of period	$	305,943,286		$	311,068,254
Undistributed net investment income (loss) included in net assets:
End of period	$	(781,872	)	$	983,278

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 (1940 Act) as an open-end management investment company, consisting of nineteen separate funds and applies the specialized accounting and reporting guidance in U.S. Generally Accepted Accounting Principles (U.S. GAAP). 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, 2015, 46.40% 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.

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.

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 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

FLG-14 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Large Cap Growth 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.

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 in 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, 2015.

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

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)

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, 2015, 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’s 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 for certain dividends from foreign securities where the dividend rate is not available. In such cases, the dividend is recorded as soon as the information is received by the Fund. 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 U.S. GAAP. 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, 2015, 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, 2015						Year Ended December 31, 2014
	Shares			Amount			Shares			Amount
Class 1 Shares:
Shares sold		3,770		$	92,076			23,998		$	507,108
Shares issued in reinvestment of distributions		740,482			13,921,062			33,235			729,509
Shares redeemed		(184,249	)		(4,399,230	)		(290,268	)		(6,336,641	)
Net increase (decrease)		560,003		$	9,613,908			(233,035	)	$	(5,100,024	)
Class 2 Shares:
Shares sold		349,113		$	8,352,264			570,172		$	12,631,684
Shares issued in reinvestment of distributions		3,468,048			64,089,521			131,120			2,842,675
Shares redeemed		(1,398,202	)		(33,098,735	)		(3,381,155	)		(72,455,824	)
Net increase (decrease)		2,418,959		$	39,343,050			(2,679,863	)	$	(56,981,465	)

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.

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.

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)

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, 2015, there were no credits earned.

5. Income Taxes

At June 30, 2015, the cost of investments and net unrealized appreciation (depreciation) for income tax purposes were as follows:

Cost of investments	$	218,371,240
Unrealized appreciation	$	92,695,234
Unrealized depreciation		(4,311,047	)
Net unrealized appreciation (depreciation)	$	88,384,187

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, 2015, aggregated $40,429,745 and $68,095,023, respectively.

7. 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, 2015, 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
108,731	Acerta Pharma BV, 8.00%, cvt. pfd., B, 144A (Value is 0.41% of Net Assets)		5/06/15	$	1,250,406	$	1,250,406

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 $2 billion (Global Credit Facility) which matures on February 12, 2016. 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 in the Statement of Operations. During the period ended June 30, 2015, 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, 2015, 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
Health care	$	82,022,319	$	—	$	1,250,406	$	83,272,725
All Other Equity Investmentsb		223,055,522		—		—		223,055,522
Short Term Investments		—		427,180		—		427,180
Total Investments in Securities	$	305,077,841	$	427,180	$	1,250,406	$	306,755,427

^aIncludes common and convertible preferred stocks.

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

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 Mutual Global Discovery VIP Fund

We are pleased to bring you Franklin Mutual Global Discovery VIP Fund’s semiannual report for the period ended June 30, 2015.

Class 2 Performance Summary as of June 30, 2015

The Fund’s Class 2 shares delivered a +3.03% total return* for the six-month period ended June 30, 2015.

*The Fund has a fee waiver associated with any investment 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 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. In comparison, the Fund’s benchmark, the MSCI World Index, generated a +2.95% total return and the Standard & Poor’s^® 500 Index posted a +1.23% total return for the same period.¹

Economic and Market Overview

The global economy expanded moderately during the six months under review despite slowing growth in some countries. As measured by the MSCI World Index, stocks in global developed markets advanced overall during the six-month period amid a generally accommodative monetary policy environment and signs of economic improvement in Europe and Japan. Oil prices rebounded from earlier lows as demand picked up despite rising inventories and strong global supply, while gold prices declined marginally during the period under review.

U.S. economic growth was mixed during the six months under review. In 2015’s first quarter, U.S. dollar strength, low energy prices, and a labor dispute at West Coast ports led exports to decline. In the second quarter, business capital spending

rebounded and manufacturing and non-manufacturing activities increased, contributing to strong job gains. During the six-month period, the U.S. Federal Reserve Board (Fed) kept its target interest rate at 0%–0.25% while considering when an increase would be appropriate, based on labor market and inflation data. In its June meeting, the Fed lowered its economic growth forecast for 2015 and raised unemployment estimates given the weak start to the year.

Outside the U.S., the U.K. economy slowed in 2015’s first quarter as the mining and agriculture sectors contracted. Near period-end, the Conservative Party’s unexpected victory in the U.K. general elections supported investor sentiment. In the eurozone, economic growth improved somewhat during the six-month period. Spain expanded at a solid pace, and France and Italy returned to growth in 2015’s first quarter. However, Germany, the region’s largest economy, slowed during the first quarter amid sluggish exports. The region avoided deflation as the annual inflation rate rose in May. The European Central Bank (ECB) maintained its benchmark interest rates during the period and also expanded its asset purchases to boost inflation and the economy. The region generally benefited from a weaker euro that helped exports, the ECB’s accommodative policy and an improved 2015 eurozone growth forecast, but Greece’s debt situation remained a major concern.

The Japanese economy continued to grow in 2015’s first quarter after exiting recession in the previous quarter, driven by an increase in private demand as business investment and private consumption rose. The Bank of Japan maintained its monetary policy during the review period but lowered its economic growth and inflation forecasts at its April meeting.

In emerging markets, economic growth generally moderated. A ceasefire agreement between Russia and Ukraine helped emerging market stocks early in the period. However, Greece’s credit default due to the lack of progress in negotiations weighed on emerging market stocks toward period-end. China’s government implemented market-friendly policies to support new economic drivers that could help steer the economy toward more sustainable growth. Lower interest rates there fueled massive stock market speculation and a 60% price gain up to mid-June 2015 for the domestic A-share market.² Concerned the market was overheated, the People’s Bank of China reduced liquidity, which led to a market panic in the last two weeks of June, exacerbated by certain government intervention measures. Central bank actions varied across emerging markets, as some

1. Source: Morningstar.

2. Source: MSCI.

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

banks raised interest rates in response to rising inflation and weakening currencies, while others lowered interest rates to promote economic growth. In the recent global environment, emerging market stocks, as measured by the MSCI Emerging Markets Index, rose for the six-month period.³

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.

Manager’s Discussion

During the six months ended June 30, 2015, European equities rebounded while overall global markets slowed after a three-year ascent. Globally, major central banks remained accommodative while fiscal authorities focused on budgetary discipline. Large companies also remained disciplined about operating costs, with margins at historically high levels in many industries and

* 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.

3. Please see Index Descriptions following the Fund Summaries.

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FRANKLIN MUTUAL GLOBAL DISCOVERY VIP FUND

regions — Europe being an exception. To drive further growth, companies started looking externally to mergers and acquisitions, taking advantage of low interest rates to finance deals. In this environment, we saw many opportunities.

Equity prices are typically forward looking, reflecting investors’ beliefs about how various factors and events will play out in the future. Global equity prices at period-end were not at distressed levels, but from our perspective, they reflected a consensus view of a modest global recovery and the persistence of historically high profit margins. Some countries, such as Greece and China, and sectors, such as energy, have been subject to significant market movements, but the global equity market as a whole has been relatively stable. Global quantitative easing has provided a supportive backdrop, and corporations, in general, have built strong balance sheets and focused intensely on improving efficiency.

The acceleration of mergers and acquisitions (M&A) that we have been waiting for is now well under way, with announcements of mega mergers in health care, telecommunications and technology. At the same time, regulatory scrutiny increased, as happened with Comcast’s failed attempt to acquire Time Warner Cable. Environments like this — active M&A combined with regulatory uncertainty and market volatility — have historically been a good combination for us. As we discussed in the 2014 annual report, we seek to use a mixture of merger arbitrage positions — positions constructed solely to benefit from deal completion — and investments in one or both of the companies involved in a deal to benefit from a deal spread and from possible value creation once the deal is completed.

Distressed debt remained a difficult market for us to find compelling new opportunities in. Low interest rates have kept credit widely available, and we saw little real distress. The biggest exception continued to be energy, where lower commodity prices created strain for some issuers. However, the modest recovery in energy prices since the beginning of the year relieved some of the pressure, and in the past six months we found fewer new opportunities in this sector than we expected.

The Fund recently added new positions in Nokia and Holcim. Nokia is a radically different firm from the one that dominated world mobile phone sales 15 years ago. Nokia sold its phone business to Microsoft in 2014 and the Navteq maps business that Nokia acquired in 2007 is for sale. The firm is now focusing on telecommunications network equipment and intellectual property, and enhancing this new focus with a proposed merger with Alcatel-Lucent. The combined company would have a range of products across the telecommunications sector and be one of a

few major suppliers left in the market. The merger is also expected to generate material cost savings, which could make the new company even more competitive. The Fund hopes to benefit from this potentially value-creating project.

Holcim is a Swiss manufacturer of cement, aggregates and other construction products. At period-end, the company was in the process of merging with France’s Lafarge, another major European cement maker, with the deal expected to close in July 2015. The merger would create a global company with a presence in over 90 countries that, in our view, would likely produce significant synergies, help to improve operating profitability and generate strong cash flows.

Turning to Fund performance, many Fund holdings increased in value during the six-month period. Top contributors included bank ING Groep, hotel operator Accor and technology leader Apple.

Shares of Netherlands-based bank ING Groep rallied, particularly in the first quarter of 2015, as the company continued to reduce its ownership of NN Group. This is one of the final steps in the company’s transformation into a simple and well-capitalized bank following the sale of its U.S. insurance operations, Voya Financial, and its stake in Brazil-based insurer SulAmerica. NN Group includes ING’s European and Japanese insurance and investment management businesses. The bank also announced in February the resumption of its regular dividend, and the market anticipated a material special dividend once the disposal of NN Group is completed in 2016. Investors were also encouraged by the company’s positive outlook communicated during its first-quarter earnings call.

Top 10 Sectors/Industries
6/30/15
	% of Total Net Assets
Banks		17.9%
Insurance		9.5%
Pharmaceuticals		7.4%
Oil, Gas & Consumable Fuels		6.9%
Media		5.8%
Software		4.8%
Tobacco		4.4%
Technology Hardware, Storage & Peripherals		3.6%
Food & Staples Retailing		3.4%
Health Care Equipment & Supplies		2.5%

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FRANKLIN MUTUAL GLOBAL DISCOVERY VIP FUND

Improving economic conditions in Europe benefited France-based hotel operator Accor. In February, Accor’s management stated that it would accelerate its restructuring plan in 2015, an action that we view positively. The plan involved separating the streamlined, asset-heavy hotel property ownership division from the well-run, asset-light hotel management division. In April, the company reported improved demand in France and other important European markets. Finally, we believed Accor would further benefit from the economic stimulus provided by the ECB’s quantitative easing program that could improve consumer confidence and European demand, as well as from a weaker euro that could encourage tourism in the European region.

Apple reported quarterly results in January and April that were ahead of consensus estimates. The company reported ongoing strength in iPhone 6 and iPhone 6 Plus sales that boosted Apple’s product mix in terms of sales and overall average selling price. Growth in China also surged, and the company announced it would more than double the number of stores there by 2016. In April, Apple raised its dividend and increased its share buyback plan over the next two years.

During the period under review, some of the Fund’s investments negatively affected performance. These included publishing paper supplier Verso, document technology and business process solutions company Xerox, and information technology products provider Hewlett-Packard (HP).

Several negative events impacted Verso. Its merger with NewPage took longer than anticipated, and related legal costs, the lack of synergies, and increased costs amid higher wood prices depleted liquidity and weighed on company performance. During a first-quarter conference call in May, Verso announced that future disclosure of cash flow from operations would be summarized on its cash flow statements, making it more difficult to understand, in detail, the sources and uses of cash, as operations and working capital would be combined. Limiting such disclosure is not a positive development, in our view. Additionally, Verso’s chief financial officer (CFO) resigned to join a competitor, and this loss of the company’s CFO at a difficult time shook investor confidence. Although these factors weighed heavily on Verso’s capital structure, we continued to enjoy a high coupon rate, a first lien senior secured position, and the prospects for significant synergies that we think could be realized by year-end if management follows through on its business plan.

Xerox lowered its 2015 earnings guidance in April and reported disappointing quarterly results as margins deteriorated in its services unit. Company management attributed the margin

decline to execution difficulties, particularly with its large health care-related projects. Xerox struggled with its biggest government health care contracts within its services unit for a considerable time, causing a series of cost-driven misses. Outside of services, the company’s document technology unit performed well and its capital management has been favorable as the company continued to repurchase shares.

HP reported a mixed set of quarterly results in February and lowered its 2015 full-year guidance due to a stronger U.S. dollar. HP also lowered its earnings outlook for 2015 and its full-year free cash flow estimate, a result of separation costs from its plan to break into two companies, higher working capital and lower earnings. Although the cost of splitting into two separate companies was viewed as expensive, we believed it would be a positive move with the potential to unlock some value.

Top 10 Equity Holdings
6/30/15
Company Sector/Industry, Country	% of Total Net Assets
Microsoft Corp. Software, U.S.		2.7%
Merck & Co. Inc. Pharmaceuticals, U.S.		2.6%
Wells Fargo & Co. Banks, U.S.		2.3%
American International Group Inc. Insurance, U.S.		2.0%
Apple Inc. Technology Hardware, Storage & Peripherals, U.S.		2.0%
Vodafone Group PLC Wireless Telecommunication Services, U.K.		1.7%
Citigroup Inc. Banks, U.S.		1.7%
ING Groep NV, IDR Banks, Netherlands		1.7%
Teva Pharmaceutical Industries Ltd., ADR Pharmaceuticals, Israel		1.7%
Royal Dutch Shell PLC, A Oil, Gas & Consumable Fuels, U.K.		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.

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FRANKLIN MUTUAL GLOBAL DISCOVERY VIP FUND

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 positive impact on the Fund’s performance during the period.

What is a currency forward contract?

A currency forward contract, or 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, or 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 underlying instrument or asset at a specific price on a future date.

Thank you for your continued 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, 2015, 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 1/1/15		Ending Account Value 6/30/15		Fund-Level Expenses Incurred During Period* 1/1/15–6/30/15
Actual		$1,000		$1,030.30		$6.34
Hypothetical (5% return before expenses)		$1,000		$1,018.55		$6.31

*Expenses are calculated using the most recent six-month annualized expense ratio, net of expense waivers, for the Fund’s Class 2 shares (1.26%), 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 MGD-7

SUPPLEMENT DATED JULY 1, 2015

TO THE CLASS 1, CLASS 2 AND CLASS 4 PROSPECTUSES

DATED MAY 1, 2015

OF FRANKLIN MUTUAL GLOBAL DISCOVERY VIP FUND

(a series of Franklin Templeton Variable Insurance Products Trust)

The Class 1, Class 2 and Class 4 prospectuses are amended as follows:

In the Fund Summary, the third paragraph under the heading “Principal Investment Strategies,” and in the Fund Details, the seventh paragraph under the heading “Principal Investment Policies and Practices,” are replaced with the following:

The Fund may invest substantially and potentially up to 100% of its assets in foreign securities, which may include sovereign debt and participations in foreign government debt. The Fund presently does not intend to invest more than a portion (no more than 25%) of its assets in securities of issuers located in emerging market countries.

Please keep this supplement with your prospectus for future reference.

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FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Financial Highlights

Franklin Mutual Global Discovery VIP Fund

	Six Months Ended June 30, 2015 (unaudited)			Year Ended December 31,
				2014			2013			2012			2011			2010
Class 1
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$22.61			$23.31			$20.55			$19.66			$21.16			$19.14
Income from investment operationsa:
Net investment incomeb		0.26			0.68	c		0.46			0.43			0.52			0.38
Net realized and unrealized gains (losses)		0.46			0.76			5.03			2.21			(1.09	)		1.94
Total from investment operations		0.72			1.44			5.49			2.64			(0.57	)		2.32
Less distributions from:
Net investment income		—			(0.57	)		(0.58	)		(0.64	)		(0.50	)		(0.30	)
Net realized gains		—			(1.57	)		(2.15	)		(1.11	)		(0.43	)		—
Total distributions		—			(2.14	)		(2.73	)		(1.75	)		(0.93	)		(0.30	)
Net asset value, end of period		$23.33			$22.61			$23.31			$20.55			$19.66			$21.16
Total returnd		3.18%			5.98%			27.95%			13.63%			(2.73)%			12.24%
Ratios to average net assetse
Expensesf		1.01%	g,h		1.00%	g		0.97%	g		0.99%			0.97%	g		1.00%	g
Expenses incurred in connection with securities sold short		0.04%			0.03%			—%	i		—%i			—%	i		0.02%
Net investment income		2.22%			2.85%	c		2.13%			2.12%			2.34%			1.93%
Supplemental data
Net assets, end of period (000’s)		$2,658			$2,313			$2,465			$1,136			$974			$84,213
Portfolio turnover rate		12.09%			22.18%			15.58%			25.63%			26.17%	j		49.31%

^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’s 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 $0.34 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 1.40%.

^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.

^fIncludes dividend 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(e).

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

^hBenefit of waiver and payments by affiliates 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, 2015 (unaudited)			Year Ended December 31,
				2014			2013			2012			2011			2010
Class 2
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$22.11			$22.84			$20.17			$19.30			$20.80			$18.81
Income from investment operationsa:
Net investment incomeb		0.22			0.60	c		0.42			0.38			0.43			0.33
Net realized and unrealized gains (losses)		0.45			0.75			4.92			2.15			(1.04	)		1.91
Total from investment operations		0.67			1.35			5.34			2.53			(0.61	)		2.24
Less distributions from:
Net investment income		—			(0.51	)		(0.52	)		(0.55	)		(0.46	)		(0.25	)
Net realized gains		—			(1.57	)		(2.15	)		(1.11	)		(0.43	)		—
Total distributions		—			(2.08	)		(2.67	)		(1.66	)		(0.89	)		(0.25	)
Net asset value, end of period		$22.78			$22.11			$22.84			$20.17			$19.30			$20.80
Total returnd		3.03%			5.71%			27.61%			13.36%			(2.96)%			11.96%
Ratios to average net assetse
Expensesf		1.26%	g,h		1.25%	g		1.22%	g		1.24%			1.22%	g		1.25%	g
Expenses incurred in connection with securities sold short		0.04%			0.03%			—%	i		—%	i		—%	i		0.02%
Net investment income		1.97%			2.60%	c		1.88%			1.87%			2.09%			1.68%
Supplemental data
Net assets, end of period (000’s)		$691,800			$685,711			$684,780			$660,465			$712,161			$1,351,223
Portfolio turnover rate		12.09%			22.18%			15.58%			25.63%			26.17%	j		49.31%

^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’s 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 $0.34 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 1.15%.

^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.

^fIncludes dividend 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(e).

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

^hBenefit of waiver and payments by affiliates 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, 2015 (unaudited)			Year Ended December 31,
				2014			2013			2012			2011			2010
Class 4
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$22.39			$23.10			$20.38			$19.50			$21.02			$19.02
Income from investment operationsa:
Net investment incomeb		0.21			0.61	c		0.40			0.36			0.40			0.31
Net realized and unrealized gains (losses)		0.46			0.73			4.97			2.19			(1.05	)		1.94
Total from investment operations		0.67			1.34			5.37			2.55			(0.65	)		2.25
Less distributions from:
Net investment income		—			(0.48	)		(0.50	)		(0.56	)		(0.44	)		(0.25	)
Net realized gains		—			(1.57	)		(2.15	)		(1.11	)		(0.43	)		—
Total distributions		—			(2.05	)		(2.65	)		(1.67	)		(0.87	)		(0.25	)
Net asset value, end of period		$23.06			$22.39			$23.10			$20.38			$19.50			$21.02
Total returnd		2.99%			5.60%			27.52%			13.27%			(3.08)%			11.87%
Ratios to average net assetse
Expensesf		1.36%	g,h		1.35%	g		1.32%	g		1.34%			1.32%	g		1.35%	g
Expenses incurred in connection with securities sold short		0.04%			0.03%			—%	i		—%	i		—%	i		0.02%
Net investment income		1.87%			2.50%	c		1.78%			1.77%			1.99%			1.58%
Supplemental data
Net assets, end of period (000’s)		$56,596			$59,961			$70,354			$62,346			$66,695			$70,613
Portfolio turnover rate		12.09%			22.18%			15.58%			25.63%			26.17%	j		49.31%

^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’s 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 investment income to average net assets would have been 1.05%.

^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.

^fIncludes dividend 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(e).

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

^hBenefit of waiver and payments by affiliates 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, 2015 (unaudited)

Franklin Mutual Global Discovery VIP Fund
		Country		Shares/Units		Value
	Common Stocks and Other Equity Interests 91.1%
	Aerospace & Defense 0.7%
	B/E Aerospace Inc.		United States		65,840	$	3,614,616
a	KLX Inc.		United States		32,920		1,452,760
							5,067,376
	Auto Components 0.9%
	Cie Generale des Etablissements Michelin, B		France		30,800		3,226,212
a,b	International Automotive Components Group Brazil LLC		Brazil		424,073		37,011
a,b,c	International Automotive Components Group North America LLC		United States		4,052,916		3,607,152
							6,870,375
	Automobiles 1.3%
	General Motors Co.		United States		214,110		7,136,286
	Hyundai Motor Co.		South Korea		20,953		2,545,111
							9,681,397
	Banks 17.9%
	Barclays PLC		United Kingdom		2,052,511		8,399,809
	BNP Paribas SA		France		117,870		7,113,156
a	Capital Bank Financial Corp., A		United States		78,494		2,281,821
a,d	Capital Bank Financial Corp., B, 144A, non-voting		United States		269,922		7,846,632
	CIT Group Inc.		United States		168,672		7,841,561
	Citigroup Inc.		United States		229,050		12,652,722
	Citizens Financial Group Inc.		United States		249,552		6,815,265
a	Commerzbank AG		Germany		655,995		8,381,759
	HSBC Holdings PLC		United Kingdom		586,355		5,251,555
	ING Groep NV, IDR		Netherlands		756,040		12,478,444
	JPMorgan Chase & Co.		United States		131,280		8,895,533
	KB Financial Group Inc.		South Korea		56,047		1,847,142
	PNC Financial Services Group Inc.		United States		112,821		10,791,329
a	Seacoast Banking Corp. of Florida		United States		398,000		6,288,400
	Societe Generale SA		France		118,614		5,534,769
	SunTrust Banks Inc.		United States		111,578		4,800,085
	Wells Fargo & Co.		United States		307,140		17,273,554
							134,493,536
	Beverages 1.1%
	PepsiCo Inc.		United States		90,367		8,434,856
	Capital Markets 1.1%
	Credit Suisse Group AG		Switzerland		128,334		3,527,092
	UBS Group AG		Switzerland		220,850		4,683,409
							8,210,501
	Communications Equipment 2.3%
	Cisco Systems Inc.		United States		359,180		9,863,083
	Nokia Corp., ADR		Finland		519,486		3,558,479
	Nokia OYJ, A		Finland		611,269		4,148,683
							17,570,245
	Construction Materials 0.7%
a	Holcim Ltd., B		Switzerland		74,930		5,529,002
	Consumer Finance 0.5%
a	Ally Financial Inc.		United States		151,600		3,400,388

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)
	Diversified Consumer Services 0.1%
	Cengage Learning Holdings II LP		United States		22,762	$	643,026
	Diversified Telecommunication Services 0.4%
	China Telecom Corp. Ltd., H		China		4,976,104		2,920,833
a,e,f	Global Crossing Holdings Ltd., Contingent Distribution		United States		2,236,777		—
							2,920,833
	Energy Equipment & Services 1.2%
	Baker Hughes Inc.		United States		145,092		8,952,176
	Food & Staples Retailing 3.4%
	CVS Health Corp.		United States		46,236		4,849,232
	Empire Co. Ltd., A		Canada		72,193		5,084,722
	Metro AG		Germany		226,924		7,151,883
	Walgreens Boots Alliance Inc.		United States		102,904		8,689,214
							25,775,051
	Health Care Equipment & Supplies 2.5%
	Medtronic PLC		United States		146,350		10,844,535
	Stryker Corp.		United States		83,662		7,995,577
							18,840,112
	Health Care Providers & Services 0.4%
	Cigna Corp.		United States		20,116		3,258,792
	Hotels, Restaurants & Leisure 1.9%
	Accor SA		France		233,913		11,801,180
	Sands China Ltd.		Hong Kong		648,800		2,180,341
							13,981,521
	Independent Power & Renewable Electricity Producers 0.9%
	NRG Energy Inc.		United States		299,277		6,847,458
	Industrial Conglomerates 2.2%
	Jardine Strategic Holdings Ltd.		Hong Kong		371,698		11,251,298
	Koninklijke Philips NV		Netherlands		192,174		4,887,321
							16,138,619
	Insurance 9.5%
	ACE Ltd.		United States		112,290		11,417,647
a	Alleghany Corp.		United States		2,730		1,279,715
	The Allstate Corp.		United States		116,387		7,550,025
	American International Group Inc.		United States		243,553		15,056,446
	China Pacific Insurance (Group) Co. Ltd., H		China		845,908		4,070,407
	E-L Financial Corp. Ltd.		Canada		5,378		2,823,149
	MetLife Inc.		United States		100,526		5,628,451
	NN Group NV		Netherlands		325,023		9,133,425
	PartnerRe Ltd.		United States		48,733		6,262,190
	PICC Property and Casualty Co. Ltd., H		China		180,838		411,523
	XL Group PLC		Ireland		216,870		8,067,564
							71,700,542
	IT Services 0.9%
	Xerox Corp.		United States		612,817		6,520,373

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)
	Machinery 0.5%
	Caterpillar Inc.		United States		43,225	$	3,666,344
	Marine 1.6%
	A.P. Moeller-Maersk AS, B		Denmark		6,595		11,940,575
	Media 5.8%
	CBS Corp., B		United States		91,632		5,085,576
a	DIRECTV		United States		129,180		11,986,612
	Reed Elsevier PLC		United Kingdom		213,615		3,473,348
	Time Warner Cable Inc.		United States		62,129		11,069,524
	Time Warner Inc.		United States		66,132		5,780,598
	Tribune Media Co., A		United States		4,449		237,532
	Tribune Publishing Co.		United States		7,747		120,389
	Twenty-First Century Fox Inc., B		United States		170,160		5,482,555
							43,236,134
	Metals & Mining 1.8%
	Anglo American PLC		United Kingdom		145,724		2,102,745
	Freeport-McMoRan Inc., B		United States		186,260		3,468,161
	ThyssenKrupp AG		Germany		295,953		7,696,462
							13,267,368
	Multiline Retail 0.5%
	Macy’s Inc.		United States		58,280		3,932,152
	Oil, Gas & Consumable Fuels 6.9%
	Anadarko Petroleum Corp.		United States		41,180		3,214,511
	Apache Corp.		United States		140,021		8,069,410
	BG Group PLC		United Kingdom		272,693		4,538,906
	BP PLC		United Kingdom		1,028,014		6,785,465
	China Shenhua Energy Co. Ltd., H		China		2,009,534		4,583,355
	CONSOL Energy Inc.		United States		114,311		2,485,121
	Marathon Oil Corp.		United States		178,885		4,747,608
	Repsol SA		Spain		104,221		1,829,348
	Royal Dutch Shell PLC, A		United Kingdom		435,012		12,299,354
a	Whiting Petroleum Corp.		United States		101,406		3,407,241
							51,960,319
	Paper & Forest Products 0.0%†
a	Verso Corp.		United States		36,624		24,172
	Personal Products 0.1%
	Avon Products Inc.		United States		174,524		1,092,520
	Pharmaceuticals 7.4%
	Eli Lilly & Co.		United States		140,630		11,741,199
a	Hospira Inc.		United States		44,053		3,907,941
	Merck & Co. Inc.		United States		346,558		19,729,547
	Novartis AG, ADR		Switzerland		76,830		7,555,462
	Teva Pharmaceutical Industries Ltd., ADR		Israel		210,898		12,464,072
							55,398,221
	Road & Rail 0.5%
a	CAR Inc.		China		1,623,080		3,446,479

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)
	Semiconductors & Semiconductor Equipment 0.3%
	SK Hynix Semiconductor Inc.		South Korea		53,632	$	2,026,217
	Software 5.1%
a	Check Point Software Technologies Ltd.		Israel		95,512		7,597,980
	Microsoft Corp.		United States		452,522		19,978,846
	Open Text Corp.		Canada		62,541		2,534,787
	Symantec Corp.		United States		364,800		8,481,600
							38,593,213
	Specialty Retail 1.0%
	Kingfisher PLC		United Kingdom		1,354,320		7,389,283
	Technology Hardware, Storage & Peripherals 3.6%
	Apple Inc.		United States		117,767		14,770,926
	EMC Corp.		United States		257,415		6,793,182
	Hewlett-Packard Co.		United States		190,760		5,724,707
							27,288,815
	Tobacco 4.4%
	Altria Group Inc.		United States		176,234		8,619,605
	British American Tobacco PLC		United Kingdom		220,778		11,844,663
	Philip Morris International Inc.		United States		75,124		6,022,691
	Reynolds American Inc.		United States		88,705		6,622,715
							33,109,674
	Wireless Telecommunication Services 1.7%
	Vodafone Group PLC		United Kingdom		3,618,505		13,066,218
	Total Common Stocks and Other Equity Interests (Cost $526,945,455)						684,273,883
	Preferred Stocks 1.7%
	Automobiles 0.8%
	Volkswagen AG, pfd.		Germany		26,396		6,118,741
	Diversified Financial Services 0.9%
a,b	Hightower Holding LLC, pfd., A, Series 2		United States		2,172,000		6,300,320
	Total Preferred Stocks (Cost $10,942,485)						12,419,061
				Principal Amount*
	Corporate Bonds, Notes and Senior Floating Rate Interests 2.5%
d	Avaya Inc., senior note, 144A, 10.50%, 3/01/21		United States		609,000		505,470
g,h	Cengage Learning Acquisitions Inc., Original Term Loans, 7.00%, 3/31/20		United States		142,374		142,907
	iHeartCommunications Inc.,
	senior secured note, first lien, 9.00%, 12/15/19		United States		5,184,000		4,959,792
	g,h Tranche D Term Loan, 6.937%, 1/30/19		United States		6,889,154		6,378,206
	g,h Tranche E Term Loan, 7.687%, 7/30/19		United States		2,213,881		2,079,664
g,h	JC Penney Corp. Inc., Term Loan, 6.00%, 5/22/18		United States		151,324		151,135
d,i	NGPL PipeCo LLC, senior secured note, 144A, 9.625%, 6/01/19		United States		2,369,000		2,410,457
	Verso Paper Holdings LLC/Inc., senior secured note, first lien, 11.75%, 1/15/19		United States		1,749,000		1,027,538

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 Bonds, Notes and Senior Floating Rate Interests (continued)
	Walter Energy Inc.,
	g,h B Term Loan, 7.25%, 4/01/18		United States		1,651,867	$	911,281
	d first lien, 144A, 9.50%, 10/15/19		United States		966,000		533,715
	d,j second lien, 144A, PIK, 11.50%, 4/01/20		United States		801,340		43,429
	Total Corporate Bonds, Notes and Senior Floating Rate Interests (Cost $21,207,664)						19,143,594
	Corporate Notes and Senior Floating Rate Interests in Reorganization 1.1%
b,k	Broadband Ventures III LLC, secured promissory note, 5.00%, 2/01/12		United States		595		—
g,h,k	Caesars Entertainment Operating Co. Inc., Term B-7 Loans, 1.50%, 3/01/17		United States		1,176,090		1,029,667
g,h,k	Texas Competitive Electric Holdings Co. LLC, Term Loans, 4.671%, 10/10/17		United States		5,912,264		3,417,105
d,k	Texas Competitive Electric Holdings Co. LLC/Texas Competitive Electric Holdings Finance Inc., senior secured note, first lien, 144A, 11.50%, 10/01/20		United States		5,895,000		3,610,687
	Total Corporate Notes and Senior Floating Rate Interests in Reorganization (Cost $11,703,517)						8,057,459
				Shares
	Companies in Liquidation 0.3%
a	Adelphia Recovery Trust		United States		5,379,562		10,759
a,e	Adelphia Recovery Trust, Arahova Contingent Value Vehicle, Contingent Distribution		United States		386,774		4,293
a,e,f	Century Communications Corp., Contingent Distribution		United States		1,074,000		—
a,b	FIM Coinvestor Holdings I, LLC		United States		2,077,368		—
a,l	Lehman Brothers Holdings Inc., Bankruptcy Claim		United States		17,348,669		2,298,699
a,f	NewPage Corp., Litigation Trust		United States		4,854,000		—
a,e,f	Tribune Media Litigation Trust, Contingent Distribution		United States		56,925		—
	Total Companies in Liquidation (Cost $3,555,246)						2,313,751
				Principal Amount*
	Municipal Bonds (Cost $2,112,494) 0.2%
	Puerto Rico Commonwealth GO, Refunding, Series A, 8.00%, 7/01/35		United States		2,261,000		1,531,828
	Total Investments before Short Term Investments (Cost $576,466,861)						727,739,576

MGD-16 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Mutual Global Discovery VIP Fund (continued)

		Country		Principal Amount*		Value
	Short Term Investments 1.7%
	U.S. Government and Agency Securities 1.6%
m	FHLB, 7/01/15		United States		2,500,000	$	2,500,000
m,n	U.S. Treasury Bills, 7/09/15 - 12/03/15		United States		10,000,000		9,999,423
	Total U.S. Government and Agency Securities (Cost $12,498,232)						12,499,423
	Total Investments before Repurchase Agreements (Cost $588,965,093)						740,238,999
o	Investments from Cash Collateral Received for Loaned Securities 0.1%
	Repurchase Agreements 0.1%
p	Joint Repurchase Agreement, 0.10%, 7/01/15 (Maturity Value $105,243)		United States		105,243		105,243
	HSBC Securities (USA) Inc.
	Collateralized by U.S. Government and Agency Securities, 0.000% - 5.375%, 2/22/17 - 7/15/32; and U.S. Government Agency Strips, 7/15/15 - 1/15/37 (valued at $107,348)
p	Joint Repurchase Agreement, 0.11%, 7/01/15 (Maturity Value $337,884)		United States		337,883		337,883
	RBS Securities Inc.
	Collateralized by U.S. Treasury Bonds, 3.625%, 2/15/44; and U.S. Treasury Notes, 1.00% - 3.625%, 9/30/15 - 2/15/44 (valued at $344,642)
	Total Investments from Cash Collateral Received for Loaned Securities (Cost $443,126)						443,126
	Total Investments (Cost $589,408,219) 98.6%						740,682,125
	Securities Sold Short (0.3)%						(2,367,202	)
	Other Assets, less Liabilities 1.7%						12,739,221
	Net Assets 100.0%					$	751,054,144
				Shares
q	Securities Sold Short (0.3)%
	Common Stocks (0.3)%
	Energy Equipment & Services (0.0)%†
	Halliburton Co.		United States		3,677	$	(158,368	)
	Software (0.3)%
	VMware Inc., A		United States		25,762		(2,208,834	)
	Total Securities Sold Short (Proceeds $2,302,315)					$	(2,367,202	)

Semiannual Report MGD-17

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Mutual Global Discovery VIP Fund (continued)

^†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, 2015, 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.

^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, 2015, the aggregate value of these securities was $14,950,390, representing 1.99% 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, 2015, the aggregate value of these securities was $—.

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

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

ⁱA portion or all of the security is on loan at June 30, 2015. See Note 1(f).

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

^kSee Note 7 regarding credit risk and defaulted securities.

^lBankruptcy 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.

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

ⁿSecurity or a portion of the security has been pledged as collateral for securities sold short and forward contracts. At June 30, 2015, the aggregate value of these securities and/or cash pledged as collateral was $6,257,613, representing 0.83% of net assets.

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

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

^qSee Note 1(e) regarding securities sold short.

At June 30, 2015, the Fund had the following futures contracts outstanding. See Note 1(d).

Futures Contracts
Description	Type		Number of Contracts		Notional Value		Expiration Date		Unrealized Appreciation		Unrealized Depreciation
Currency Contracts
CHF/USD		Short		2	$	268,050		9/14/15	$	1,955	$	—
EUR/USD		Short		246		34,304,700		9/14/15		422,449		—
GBP/USD		Short		219		21,523,594		9/14/15		—		(521,950	)
Totals					$	56,096,344			$	424,404	$	(521,950	)
Net unrealized appreciation (depreciation)											$	(97,546	)

At June 30, 2015, 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
OTC Forward Exchange Contracts
Euro		BOFA		Buy		289,021	$	324,130		7/20/15	$	—	$	(1,942	)
Euro		BOFA		Sell		1,669,478		1,926,799		7/20/15		65,737		—
Euro		BONY		Sell		69,136		80,304		7/20/15		3,234		—
Euro		BZWS		Sell		205,439		231,046		7/20/15		2,031		—
Euro		DBAB		Buy		309,252		346,685		7/20/15		47		(1,991	)
Euro		DBAB		Sell		2,069,221		2,396,675		7/20/15		89,997		—
Euro		FBCO		Buy		310,912		346,535		7/20/15		56		—
Euro		FBCO		Sell		1,810,153		2,083,407		7/20/15		65,527		—
Euro		HSBC		Buy		621,541		700,206		7/20/15		—		(7,339	)
Euro		HSBC		Sell		2,333,282		2,709,123		7/20/15		108,082		—
Euro		SSBT		Buy		1,345,455		1,504,128		7/20/15		—		(4,273	)
Euro		SSBT		Sell		1,935,624		2,260,496		7/20/15		102,746		—
British Pound		BOFA		Sell		2,804,423		4,239,264		7/21/15		—		(165,824	)

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
OTC Forward Exchange Contracts (continued)
British Pound		HSBC		Sell		2,629,277	$	3,981,081		7/21/15	$	—	$	(148,893	)
South Korean Won		BOFA		Buy		608,663,744		559,598		8/12/15		—		(16,551	)
South Korean Won		BOFA		Sell		3,122,744,550		2,821,142		8/12/15		36,286		(1,242	)
South Korean Won		FBCO		Buy		954,644,063		854,542		8/12/15		1,343		(4,156	)
South Korean Won		FBCO		Sell		2,822,102,507		2,538,864		8/12/15		20,997		—
South Korean Won		HSBC		Buy		1,296,493,481		1,185,982		8/12/15		—		(29,257	)
South Korean Won		HSBC		Sell		4,101,330,131		3,689,933		8/12/15		32,493		(1,747	)
Swiss Franc		BOFA		Buy		214,621		222,832		8/12/15		7,078		—
Swiss Franc		BOFA		Sell		85,880		92,109		8/12/15		111		—
Swiss Franc		DBAB		Buy		116,655		127,054		8/12/15		—		(2,089	)
Swiss Franc		DBAB		Sell		107,251		112,410		8/12/15		—		(2,481	)
Swiss Franc		FBCO		Buy		120,705		127,994		8/12/15		1,614		(304	)
Swiss Franc		FBCO		Sell		133,250		139,941		8/12/15		582		(3,384	)
Swiss Franc		HSBC		Sell		34,465		37,243		8/12/15		323		—
Swiss Franc		SSBT		Buy		60,535		65,274		8/12/15		36		(463	)
Swiss Franc		SSBT		Sell		2,204,962		2,385,950		8/12/15		33,465		(9,551	)
British Pound		BOFA		Buy		2,826,178		4,374,826		8/19/15		67,551		(4,061	)
British Pound		BOFA		Sell		2,074,710		3,173,591		8/19/15		—		(84,597	)
British Pound		BZWS		Sell		245,449		372,864		8/19/15		—		(12,596	)
British Pound		DBAB		Sell		176,767		271,023		8/19/15		—		(6,577	)
British Pound		FBCO		Buy		212,609		337,457		8/19/15		—		(3,570	)
British Pound		FBCO		Sell		1,578,762		2,414,971		8/19/15		—		(64,365	)
British Pound		HSBC		Sell		1,546,970		2,371,251		8/19/15		—		(58,157	)
British Pound		SSBT		Buy		621,978		980,668		8/19/15		1,715		(5,610	)
British Pound		SSBT		Sell		445,957		685,645		8/19/15		—		(14,700	)
Euro		BOFA		Sell		6,938,006		7,842,762		8/31/15		143,773		(39,890	)
Euro		DBAB		Sell		1,482,650		1,600,490		8/31/15		1,457		(54,764	)
Euro		FBCO		Sell		2,827,631		3,117,687		8/31/15		29,464		(65,809	)
Euro		HSBC		Sell		1,299,376		1,407,514		8/31/15		2,085		(43,937	)
Euro		SSBT		Sell		579,504		624,702		8/31/15		833		(22,530	)
Canadian Dollar		BONY		Buy		405,718		328,722		9/18/15		1,412		(5,652	)
Canadian Dollar		DBAB		Buy		181,168		149,565		9/18/15		—		(4,672	)
Canadian Dollar		DBAB		Sell		10,309,605		8,069,250		9/18/15		3,409		(179,482	)
Canadian Dollar		HSBC		Sell		148,443		120,263		9/18/15		1,543		—
Euro		BOFA		Sell		6,698,465		7,214,264		10/16/15		2,442		(265,564	)
Euro		DBAB		Sell		1,178,588		1,268,416		10/16/15		—		(47,222	)
Euro		FBCO		Sell		5,408,467		5,798,721		10/16/15		1,130		(239,792	)
Euro		HSBC		Sell		1,665,998		1,819,821		10/16/15		1,938		(41,843	)
Euro		SSBT		Sell		416,378		445,182		10/16/15		57		(19,671	)
British Pound		BOFA		Buy		192,738		302,862		10/22/15		—		(315	)
British Pound		BOFA		Sell		8,155,831		12,456,636		10/22/15		—		(345,795	)
British Pound		DBAB		Buy		361,273		561,278		10/22/15		6,034		(212	)
British Pound		FBCO		Sell		2,894,373		4,312,615		10/22/15		—		(230,761	)
British Pound		HSBC		Buy		174,957		274,745		10/22/15		—		(111	)
Euro		BOFA		Sell		7,590,359		8,610,628		11/18/15		141,785		(9,395	)
Euro		BONY		Sell		2,743,006		3,000,574		11/18/15		—		(63,295	)
Euro		DBAB		Sell		4,192,516		4,759,752		11/18/15		76,818		—
Euro		FBCO		Sell		456,607		512,659		11/18/15		2,640		—
Euro		HSBC		Sell		5,567,090		6,327,377		11/18/15		109,079		—
Euro		SSBT		Sell		2,731,871		3,076,916		11/18/15		26,465		(979	)
Totals Forward Exchange Contracts unrealized appreciation (depreciation)											$	1,193,415	$	(2,337,411	)
Net unrealized appreciation (depreciation)													$	(1,143,996	)

^aMay be comprised of multiple contracts with the same counterparty, currency and settlement date.

See Abbreviations on page MGD-35.

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

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Financial Statements

Statement of Assets and Liabilities

June 30, 2015 (unaudited)

	Franklin Mutual Global Discovery VIP Fund
Assets:
Investments in securities:
Cost - Unaffiliated issuers	$	588,965,093
Cost - Repurchase agreements		443,126
Total cost of investments	$	589,408,219
Value - Unaffiliated issuers	$	740,238,999
Value - Repurchase agreements		443,126
Total value of investments (includes securities loaned in the amount of $429,385)		740,682,125
Cash		1,675,457
Foreign currency, at value (cost $8,280,145)		8,276,099
Receivables:
Investment securities sold		586,761
Capital shares sold		346,561
Dividends and interest		2,277,706
Due from brokers		3,690,133
Variation margin		342,081
Unrealized appreciation on OTC forward exchange contracts		1,193,415
Other assets		116,105
Total assets		759,186,443
Liabilities:
Payables:
Investment securities purchased		1,170,809
Capital shares redeemed		775,843
Management fees		593,067
Distribution fees		333,888
Securities sold short, at value (proceeds $2,302,315)		2,367,202
Payable upon return of securities loaned		443,126
Unrealized depreciation on OTC forward exchange contracts		2,337,411
Accrued expenses and other liabilities		110,953
Total liabilities		8,132,299
Net assets, at value	$	751,054,144
Net assets consist of:
Paid-in capital	$	499,088,623
Undistributed net investment income		27,978,956
Net unrealized appreciation (depreciation)		149,960,317
Accumulated net realized gain (loss)		74,026,248
Net assets, at value	$	751,054,144

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, 2015 (unaudited)

	Franklin Mutual Global Discovery VIP Fund
Class 1:
Net assets, at value	$	2,658,043
Shares outstanding		113,940
Net asset value and maximum offering price per share	$	23.33
Class 2:
Net assets, at value	$	691,800,269
Shares outstanding		30,363,836
Net asset value and maximum offering price per share	$	22.78
Class 4:
Net assets, at value	$	56,595,832
Shares outstanding		2,454,689
Net asset value and maximum offering price per share	$	23.06

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, 2015 (unaudited)

	Franklin Mutual Global Discovery VIP Fund
Investment income:
Dividends (net of foreign taxes of $695,588)	$	10,966,688
Interest		1,221,161
Income from securities loaned		77,474
Total investment income		12,265,323
Expenses:
Management fees (Note 3a)		3,550,039
Distribution fees: (Note 3c)
Class 2		871,516
Class 4		103,085
Custodian fees (Note 4)		18,308
Reports to shareholders		63,350
Professional fees		50,542
Trustees’ fees and expenses		1,588
Dividends on securities sold short		149,955
Other		13,166
Total expenses		4,821,549
Expense reductions (Note 4)		(81	)
Expenses waived/paid by affiliates (Note 3e)		(321	)
Net expenses		4,821,147
Net investment income		7,444,176
Realized and unrealized gains (losses):
Net realized gain (loss) from:
Investments		29,728,921
Foreign currency transactions		8,949,437
Futures contracts		3,784,061
Securities sold short		(9,633	)
Net realized gain (loss)		42,452,786
Net change in unrealized appreciation (depreciation) on:
Investments		(20,359,226	)
Translation of other assets and liabilities denominated in foreign currencies		(5,760,740	)
Futures contracts		(1,112,771	)
Net change in unrealized appreciation (depreciation)		(27,232,737	)
Net realized and unrealized gain (loss)		15,220,049
Net increase (decrease) in net assets resulting from operations	$	22,664,225

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, 2015 (unaudited)			Year Ended December 31, 2014
Increase (decrease) in net assets:
Operations:
Net investment income	$	7,444,176		$	19,755,011
Net realized gain (loss)		42,452,786			33,134,405
Net change in unrealized appreciation (depreciation)		(27,232,737	)		(10,653,774	)
Net increase (decrease) in net assets resulting from operations		22,664,225			42,235,642
Distributions to shareholders from:
Net investment income:
Class 1		—			(43,196	)
Class 2		—			(14,775,740	)
Class 4		—			(1,243,714	)
Net realized gains:
Class 1		—			(119,891	)
Class 2		—			(45,727,518	)
Class 4		—			(4,102,276	)
Total distributions to shareholders		—			(66,012,335	)
Capital share transactions: (Note 2)
Class 1		272,389			(105,551	)
Class 2		(14,733,670	)		23,195,730
Class 4		(5,134,455	)		(8,926,689	)
Total capital share transactions		(19,595,736	)		14,163,490
Net increase (decrease) in net assets		3,068,489			(9,613,203	)
Net assets:
Beginning of period		747,985,655			757,598,858
End of period	$	751,054,144		$	747,985,655
Undistributed net investment income included in net assets:
End of period	$	27,978,956		$	20,534,780

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 (1940 Act) as an open-end management investment company, consisting of nineteen separate funds and applies the specialized accounting and reporting guidance in U.S. Generally Accepted Accounting Principles (U.S. GAAP). 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, 2015, 56.59% 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.

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.

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. Repurchase agreements are valued at cost, which approximates fair value.

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

MGD-24 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual Global Discovery VIP Fund (continued)

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.

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 in 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

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. Joint Repurchase Agreement (continued)

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, 2015.

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 in 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, 2015, the Fund had OTC derivatives in a net liability position of $1,231,536 and the aggregate value of collateral pledged for such contracts was $1,828,183.

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 in the Statement of Assets and Liabilities.

MGD-26 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual Global Discovery VIP Fund (continued)

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.

See Note 9 regarding other derivative information.

e. 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.

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.

f. Securities Lending

The Fund participates in an agency based securities lending program to earn additional income. 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 deposited into a joint cash account with other funds and is used to invest in a money market fund managed by Franklin Advisers, Inc., an affiliate of the Fund, and/or a joint repurchase agreement. The total cash collateral received at period end was $443,126. The Fund may receive income from the investment of cash collateral, in addition to lending fees and

rebates paid by the borrower. Income from securities loaned is reported separately in the Statement of Operations. 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. If the borrower defaults on its obligation to return the securities loaned, the Fund has the right to repurchase the securities in the open market using the collateral received. 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. As a result of several court cases, in certain countries across the European Union, the Fund has filed additional tax reclaims for previously withheld taxes on dividends earned in those countries. These additional filings are subject to various administrative proceedings by the local jurisdictions’ tax authorities within the European Union, as well as a number of related judicial proceedings. At this time, uncertainty

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. Income and Deferred Taxes (continued)

exists as to the ultimate resolution of these proceedings, the likelihood of receipt of these reclaims, and the potential timing of payment, and accordingly, no amounts are reflected in the financial statements.

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, 2015, 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’s 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. Dividend income and dividends declared on securities sold short are recorded on the ex-dividend date except for certain dividends from foreign securities where the dividend rate is not available. In such cases, the dividend is recorded as soon as the information is received by the Fund. 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 U.S. GAAP. 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.

MGD-28 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual Global Discovery VIP Fund (continued)

2. Shares of Beneficial Interest

At June 30, 2015, 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, 2015						Year Ended December 31, 2014
	Shares			Amount			Shares			Amount
Class 1 Shares:
Shares sold		17,767		$	417,021			31,917		$	725,026
Shares issued in reinvestment of distributions		—			—			7,051			163,086
Shares redeemed		(6,122	)		(144,632	)		(42,408	)		(993,663	)
Net increase (decrease)		11,645		$	272,389			(3,440	)	$	(105,551	)
Class 2 Shares:
Shares sold		1,667,604		$	38,187,668			4,023,757		$	92,853,300
Shares issued in reinvestment of distributions		—			—			2,672,405			60,503,258
Shares redeemed		(2,312,054	)		(52,921,338	)		(5,665,511	)		(130,160,828	)
Net increase (decrease)		(644,450	)	$	(14,733,670	)		1,030,651		$	23,195,730
Class 4 Shares:
Shares sold		50,867		$	1,177,675			84,657		$	1,961,531
Shares issued in reinvestment of distributions		—			—			233,144			5,345,990
Shares redeemed		(274,259	)		(6,312,130	)		(685,719	)		(16,234,210	)
Net increase (decrease)		(223,392	)	$	(5,134,455	)		(367,918	)	$	(8,926,689	)

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

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)

b. Administrative Fees

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.

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. Investments in Institutional Fiduciary Trust Money Market Portfolio

The Fund invests in 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, as noted in the Statement of Operations, in an amount not to exceed the management and administrative fees paid directly or indirectly by the Sweep Money 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, 2015, the custodian fees were reduced as noted in the Statement of Operations.

5. Income Taxes

At June 30, 2015, the cost of investments and net unrealized appreciation (depreciation) for income tax purposes were as follows:

Cost of investments	$	589,361,122
Unrealized appreciation	$	185,356,220
Unrealized depreciation		(34,035,217	)
Net unrealized appreciation (depreciation)	$	151,321,003

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, 2015, aggregated $87,961,711 and $92,054,020, 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, 2015, the aggregate long value of distressed company securities for which interest recognition has been discontinued was $8,057,459, representing 1.07% 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, 2015, 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/ Units	Issuer	Acquisition Dates		Cost		Value
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		6,300,320
424,073	International Automotive Components Group Brazil LLC		4/13/06 - 12/26/08		281,629		37,011
4,052,916	International Automotive Components Group North America LLC		1/12/06 - 3/18/13		3,247,714		3,607,152
	Total Restricted Securities (Value is 1.32% of Net Assets)			$	8,959,938	$	9,944,483

9. Other Derivative Information

At June 30, 2015, the Fund’s investments in derivative contracts are reflected in 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			Statement of Assets and Liabilities Location	Fair Value
Foreign exchange contracts	Variation margin	$	424,404	a	Variation margin	$	521,950	a
	Unrealized appreciation on OTC forward exchange contracts		1,193,415		Unrealized depreciation on OTC forward exchange contracts		2,337,411
Totals		$	1,617,819			$	2,859,361

^aThis amount reflects the cumulative appreciation (depreciation) of futures contracts as reported in the Statement of Investments. Only the variation margin receivable/payable at period end is separately reported within the Statement of Assets and Liabilities. Prior variation margin movements were recorded to cash upon receipt or payment.

Semiannual Report MGD-31

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual Global Discovery VIP Fund (continued)

9. Other Derivative Information (continued)

For the period ended June 30, 2015, the effect of derivative contracts in the Fund’s Statement of Operations was as follows:

Derivative Contracts Not Accounted for as Hedging Instruments	Statement of Operations Locations	Net Realized Gain (Loss) for the Period			Statement of Operations Locations	Net Change in Unrealized Appreciation (Depreciation) for the Period
	Net realized gain (loss) from:				Net change in unrealized appreciation (depreciation) on:
Foreign exchange contracts	Foreign currency transactions	$	9,013,685	a	Translation of other assets and liabilities denominated in foreign currencies	$	(5,760,455	)a
	Futures contracts		3,784,061		Futures contracts		(1,112,771	)
Totals		$	12,797,746			$	(6,873,226	)

^aForward exchange contracts are included in net realized gain (loss) from foreign currency transactions and net change in unrealized appreciation (depreciation) on translation of other assets and liabilities denominated in foreign currencies in the Statement of Operations.

For the period ended June 30, 2015, the average month end fair value of derivatives represented 0.99% of average month end net assets. The average month end number of open derivative contracts for the period was 236.

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 $2 billion (Global Credit Facility) which matures on February 12, 2016. 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 in the Statement of Operations. During the period ended June 30, 2015, 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.

MGD-32 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual Global Discovery 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, 2015, 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	$	3,226,212	$	—	$	3,644,163		$	6,870,375
Banks		126,646,904		7,846,632		—			134,493,536
Diversified Financial Services		—		—		6,300,320			6,300,320
All Other Equity Investmentsb		549,028,713		—		—	c		549,028,713
Corporate Bonds, Notes and Senior Floating Rate Interests		—		19,143,594		—			19,143,594
Corporate Notes and Senior Floating Rate Interests in Reorganization		—		8,057,459		—	c		8,057,459
Companies in Liquidation		—		2,313,751		—	c		2,313,751
Municipal Bonds		—		1,531,828		—			1,531,828
Short Term Investments		9,999,423		2,943,126		—			12,942,549
Total Investments in Securities	$	688,901,252	$	41,836,390	$	9,944,483		$	740,682,125
Other Financial Instruments
Futures Contracts	$	424,404	$	—	$	—		$	424,404
Forward Exchange Contracts		—		1,193,415		—			1,193,415
Total Other Financial Instruments	$	424,404	$	1,193,415	$	—		$	1,617,819
Liabilities:
Other Financial Instruments
Securities Sold Short	$	2,367,202	$	—	$	—		$	2,367,202
Futures Contracts		521,950		—		—			521,950
Forward Exchange Contracts		—		2,337,411		—			2,337,411
Total Other Financial Instruments	$	2,889,152	$	2,337,411	$	—		$	5,226,563

^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, 2015.

Semiannual Report MGD-33

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual Global Discovery VIP Fund (continued)

11. 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, 2015, 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 Appreciation (Depreciation)			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	$	3,108,896		$	—	$	—		$	—	$	—	$	—		$	535,267		$	3,644,163	$	535,267
Diversified Financial Services		5,052,941			—		—			—		—		—			1,247,379			6,300,320		1,247,379
Insurance		—	c		—		(834	)		—		—		(199,086	)		199,920			—		—
Real Estate Management & Development		4,108,670			—		(4,881,451	)		—		—		2,540,917			(1,768,136	)		—		—
Total Investments in Securities	$	12,270,507		$	—	$	(4,882,285	)	$	—	$	—	$	2,341,831		$	214,430		$	9,944,483	$	1,782,646

^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, 2015, 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	$	3,607,152	Market comparables	Discount for lack of marketability EV / EBITDA multiple		10% 4.1x		Decrease Increase	c  d
Diversified Financial Services		6,300,320	Discounted Cash Flow Model	Cost of equity Long-term revenue growth rate Adjusted EBITDA margin		15% 6.2% - 33.4% 7.0% - 20.1%		Decrease Increase Increase	d  d  c
All Other Investmentse		37,011
Total	$	9,944,483

^aRepresents the directional change in the fair value of the Level 3 financial instruments that would result from a significant and reasonable increase in the corresponding input. A significant and reasonable decrease in input would have the opposite effect. Significant impacts, if any, to fair value and/or net assets have been indicated.

^bIncludes common and 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 financial instruments developed using various valuation techniques and unobservable inputs. May also include financial instruments with values derived using prior transaction prices or third party pricing information without adjustment for which such inputs are also unobservable.

Abbreviations List

EBITDA	Earnings before interest, taxes, depreciation and amortization
EV	Enterprise value

MGD-34 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual Global Discovery VIP Fund (continued)

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 certain transactions accounted for as a sale for interim and annual reporting periods beginning after December 15, 2014, and transactions accounted for as secured borrowings for annual periods beginning after December 15, 2014, and for interim periods beginning after March 15, 2015. Management has reviewed the requirements and believes the adoption of this ASU will not have a material impact on the financial statements.

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.	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			PIK	Payment-In-Kind
HSBC	HSBC Bank USA, N.A.
SSBT	State Street Bank and Trust Co.

Semiannual Report MGD-35

Franklin Mutual Shares VIP Fund

We are pleased to bring you Franklin Mutual Shares VIP Fund’s semiannual report for the period ended June 30, 2015.

Class 2 Performance Summary as of June 30, 2015

The Fund’s Class 2 shares delivered a +2.08% total return* for the six-month period ended June 30, 2015.

*The Fund has a fee waiver associated with any investment 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 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. In comparison, the Fund’s benchmark, the Standard & Poor’s^® 500 Index (S&P 500^®), delivered a +1.23% total return for the period under review.¹

Economic and Market Overview

The global economy expanded moderately during the six months under review despite slowing growth in some countries. As measured by the MSCI World Index, stocks in global developed markets advanced overall during the six-month period amid a generally accommodative monetary policy environment and signs of economic improvement in Europe and Japan. Oil prices rebounded from earlier lows as demand picked up despite rising inventories and strong global supply, while gold prices declined marginally during the period under review.

U.S. economic growth was mixed during the six months under review. In 2015’s first quarter, U.S. dollar strength, low energy prices, and a labor dispute at West Coast ports led exports to decline. In the second quarter, business capital spending rebounded and manufacturing and non-manufacturing activities

increased, contributing to strong job gains. During the six-month period, the U.S. Federal Reserve Board (Fed) kept its target interest rate at 0%–0.25% while considering when an increase would be appropriate, based on labor market and inflation data.

Outside the U.S., the U.K. economy slowed in 2015’s first quarter as the mining and agriculture sectors contracted. In the eurozone, economic growth improved somewhat during the six-month period. The region avoided deflation as the annual inflation rate rose in May. The European Central Bank (ECB) maintained its benchmark interest rates during the period and also expanded its asset purchases to boost inflation and the economy. The region generally benefited from a weaker euro that helped exports, the ECB’s accommodative policy and an improved 2015 eurozone growth forecast, which helped limit fears about Greece’s debt situation.

The Japanese economy continued to grow in 2015’s first quarter after exiting recession in the previous quarter, driven by an increase in private demand as business investment and private consumption rose. The Bank of Japan maintained its monetary policy during the review period but lowered its economic growth and inflation forecasts at its April meeting.

In emerging markets, economic growth generally moderated. Greece’s credit default due to the lack of progress in negotiations weighed on emerging market stocks toward period-end. China’s government implemented market-friendly policies to support new economic drivers that could help steer the economy toward more sustainable growth. Lower interest rates there fueled massive stock market speculation and a 60% price gain up to mid-June 2015 for the domestic A-share market.² Concerned the market was overheated, the People’s Bank of China reduced liquidity, which led to a market panic in the last two weeks of June, exacerbated by certain government intervention measures. Central bank actions varied across emerging markets, as some banks raised interest rates in response to rising inflation and weakening currencies, while others lowered interest rates to promote economic growth. In the recent global environment, emerging market stocks, as measured by the MSCI Emerging Markets Index, rose for the six-month period.³

Investment Strategy

At Franklin Mutual Series, we are committed to our distinctive value approach to investing. Our major investment strategy is

1. Source: Morningstar.

2. Source: MSCI.

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. Please see Index Descriptions following the Fund Summaries.

MS-2 Semiannual Report

FRANKLIN MUTUAL SHARES VIP FUND

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.

Manager’s Discussion

During the six months ended June 30, 2015, European equities rebounded while overall global markets slowed after a three-year ascent. Globally, major central banks remained accommodative while fiscal authorities focused on budgetary discipline. Large companies also remained disciplined about operating costs, with margins at historically high levels in many industries and regions — Europe being an exception. To drive

further growth, companies started looking externally to mergers and acquisitions (M&A), taking advantage of low interest rates to finance deals. In this environment, we saw many opportunities.

Equity prices are typically forward looking, reflecting investors’ beliefs about how various factors and events will play out in the future. Global equity prices at period-end were not at distressed levels, but from our perspective, they reflected a consensus view of a modest global recovery and the persistence of historically high profit margins. Some countries, such as Greece and China, and sectors, such as energy, have been subject to significant market movements, but the global equity market as a whole has been relatively stable. Global quantitative easing has provided a supportive backdrop, and corporations, in general, have built strong balance sheets and focused intensely on improving efficiency.

The acceleration of M&A that we have been waiting for is now well under way, with announcements of mega mergers in health care, telecommunications and technology. At the same time, regulatory scrutiny increased, as happened with Comcast’s failed attempt to acquire Time Warner Cable. Environments like this — active M&A combined with regulatory uncertainty and market volatility — have historically been a good combination for us. As we discussed in the 2014 annual report, we seek to use a mixture of merger arbitrage positions — positions constructed solely to benefit from deal completion — and investments in one or both of the companies involved in a deal to benefit from a deal spread and from possible value creation once the deal is completed.

Top 10 Sectors/Industries
Based on Equity Securities
6/30/15
	% of Total Net Assets
Banks		10.8%
Insurance		9.3%
Media		8.5%
Pharmaceuticals		8.0%
Oil, Gas & Consumable Fuels		6.1%
Tobacco		4.9%
Software		4.7%
Technology Hardware, Storage & Peripherals		4.6%
Health Care Equipment & Supplies		3.8%
Food & Staples Retailing		3.1%

Semiannual Report MS-3

FRANKLIN MUTUAL SHARES VIP FUND

Distressed debt remained a difficult market for us to find compelling new opportunities in. Low interest rates have kept credit widely available, and we saw little real distress. The biggest exception continued to be energy, where lower commodity prices created strain for some issuers. However, the modest recovery in energy prices since the beginning of the year relieved some of the pressure, and in the past six months we found fewer new opportunities in this sector than we expected.

During the period under review, the Fund initiated positions in Macy’s and Holcim. Macy’s is a retailer that we believe to be well run and that owns valuable real estate and other potential sources of incremental value. Macy’s owns more than two-thirds of its stores and, in our view, could extract meaningful value without jeopardizing its retail franchise. Another possible source of value may be the company’s outsourced credit card operations. Macy’s management acknowledged that the financial markets seemed receptive to such transactions and the company indicated an increased willingness to explore these options.

Holcim is a Swiss manufacturer of cement, aggregates and other construction products. At period-end, the company was in the process of merging with France’s Lafarge, another major European cement maker, with the deal expected to close in July 2015. The merger would create a global company with a presence in over 90 countries that, in our view, would likely produce significant synergies, help to improve operating profitability and generate strong cash flows.

Turning to Fund performance, many Fund holdings increased in value during the six-month period. Top contributors included pharmaceutical companies Hospira and Eli Lilly & Co., and health care insurer Cigna.

Hospira is a global pharmaceutical and medical device company specializing in injectable generic drugs and biosimilars — drugs highly similar to medications licensed by other firms. Shares of Hospira benefited from an early February announcement that Pfizer reached an agreement to acquire Hospira. We believed the deal made sense as Hospira offered Pfizer a strong leadership position in injectables and an attractive high-growth market in the generic segment, and the deal positioned Pfizer as a top-tier biosimilars company with a strong pipeline. This acquisition news was in line with our views on industry consolidation and more specifically on Hospira as a highly attractive asset in the generics industry. Hospira also made substantial progress with its core business performance on an organic basis as demonstrated by its solid first-quarter results.

Shares of Cigna, a U.S.-based global health care insurer, jumped in mid-June after competitor Anthem announced it had made four bids to acquire the company, all of which Cigna had rejected. Prior to that news, Cigna had been the subject of increased investor speculation that it might seek to acquire a competitor or could itself be a potential takeover target, which had helped push the stock higher. Operationally, Cigna reported better-than-expected earnings results and raised its 2015 guidance in April, providing earnings support for its shares.

Eli Lilly, a U.S.-based pharmaceutical company, performed well during the period as Wall Street, in our view, gained more appreciation for the company’s research and development capabilities and deep pipeline. Eli Lilly has many attractive assets targeting end markets with high unmet medical needs that, in our assessment, position its business to generate strong revenues and free cash flows in the long term.

During the period under review, some of the Fund’s investments negatively affected performance. These included document technology and business process solutions company Xerox, global media company Twenty-First Century Fox and information technology products provider Hewlett-Packard (HP).

*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.

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Xerox lowered its 2015 earnings guidance in April and reported disappointing quarterly results as margins deteriorated in its services unit. Management attributed the margin decline to execution difficulties, particularly with its large health care-related projects. Xerox struggled with its biggest government health care contracts within its services unit for a considerable time, causing a series of cost-driven misses. Outside of services, the company’s document technology unit performed well and its capital management has been favorable as the company continued to repurchase shares.

Twenty-First Century Fox comprises the global television and entertainment assets that were part of News Corporation before the company’s mid-2013 split. In February, Twenty-First Century Fox lowered its 2015 earnings outlook due to a stronger U.S. dollar, worse-than-expected ratings at its broadcast network and lower-than-expected box office performance during the 2014 winter holiday season. The company maintained its earnings guidance in May but cautioned that currency could hinder its earnings growth outlook. In June, the company stated that Rupert Murdoch would hand over the role of chief executive officer to James Murdoch, his son, and remain executive co-chairman, effective July 1. Market reaction was slightly negative due to uncertainty over how James Murdoch may run the company, particularly regarding any changes in the capital structure or capital returns to shareholders.

HP reported a mixed set of quarterly results in February and lowered its 2015 full-year guidance due to a stronger U.S. dollar. HP also lowered its earnings outlook for 2015 and its full-year free cash flow estimate, a result of separation costs from its plan to break into two companies, higher working capital and lower earnings. Although the cost of splitting into two separate companies was viewed as expensive, we believed it would be a positive move with the potential to unlock some value.

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 positive impact on the Fund’s performance.

What is a currency forward contract?

A currency forward contract, or 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, or 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 underlying instrument or asset at a specific price on a future date.

Thank you for your continued 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, 2015, 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 10 Equity Holdings
6/30/15
Company Sector/Industry, Country	% of Total Net Assets
Merck & Co. Inc. Pharmaceuticals, U.S.		2.6%
Microsoft Corp. Software, U.S.		2.6%
Medtronic PLC Health Care Equipment & Supplies, U.S.		2.6%
Eli Lilly & Co. Pharmaceuticals, U.S.		2.2%
PNC Financial Services Group Inc. Banks, U.S.		2.0%
Time Warner Cable Inc. Media, U.S.		1.9%
American International Group Inc. Insurance, U.S.		1.9%
Apple Inc. Technology Hardware, Storage & Peripherals, U.S.		1.9%
Teva Pharmaceutical Industries Ltd., ADR Pharmaceuticals, Israel		1.8%
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.

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 1/1/15		Ending Account Value 6/30/15		Fund-Level Expenses Incurred During Period* 1/1/15–6/30/15
Actual		$1,000		$1,020.80		$5.01
Hypothetical (5% return before expenses)		$1,000		$1,019.84		$5.01

*Expenses are calculated using the most recent six-month annualized expense ratio, 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.

MS-6 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Financial Highlights

Franklin Mutual Shares VIP Fund

	Six Months Ended June 30, 2015 (unaudited)			Year Ended December 31,
				2014			2013			2012			2011			2010
Class 1
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$22.91			$21.92			$17.45			$15.57			$16.14			$14.75
Income from investment operationsa:
Net investment incomeb		0.26			0.62	c		0.42			0.35			0.38	d		0.40	e
Net realized and unrealized gains (losses)		0.24			1.01			4.52			1.92			(0.53	)		1.27
Total from investment operations		0.50			1.63			4.94			2.27			(0.15	)		1.67
Less distributions from:
Net investment income		—			(0.52	)		(0.47	)		(0.39	)		(0.42	)		(0.28	)
Net realized gains		—			(0.12	)		—			—			—			—
Total distributions		—			(0.64	)		(0.47	)		(0.39	)		(0.42	)		(0.28	)
Net asset value, end of period		$23.41			$22.91			$21.92			$17.45			$15.57			$16.14
Total returnf		2.18%			7.38%			28.53%			14.61%			(0.79)%			11.47%
Ratios to average net assetsg
Expensesh		0.75%	i,j		0.73%	i		0.71%	i		0.71%			0.73%	i		0.74%	i
Expenses incurred in connection with securities sold short		0.04%			0.03%			—%	k		—%	k		—%	k		0.02%
Net investment income		2.25%			2.83%	c		2.08%			2.06%			2.28%	d		2.66%	e
Supplemental data
Net assets, end of period (000’s)		$668,588			$656,463			$552,163			$449,343			$1,170,781			$1,301,520
Portfolio turnover rate		11.91%			21.33%			24.05%			34.07%	l		41.02%			32.05%

^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’s 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 1.79%.

^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 REIT conversion. Excluding this non-recurring amount, the ratio of the net investment income to average net assets would have been 1.93%.

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

^gRatios are annualized for periods less than one year.

^hIncludes dividend 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(f).

ⁱBenefit of expense reduction rounds to less than 0.01%.

^jBenefit of waiver and payments by affiliates 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-7

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL HIGHLIGHTS

Franklin Mutual Shares VIP Fund (continued)

	Six Months Ended June 30, 2015 (unaudited)			Year Ended December 31,
				2014			2013			2012			2011			2010
Class 2
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$22.60			$21.63			$17.23			$15.38			$15.95			$14.58
Income from investment operationsa:
Net investment incomeb		0.23			0.58c			0.36			0.30			0.32	d		0.36	e
Net realized and unrealized gains (losses)		0.24			0.97			4.46			1.90			(0.51	)		1.25
Total from investment operations		0.47			1.55			4.82			2.20			(0.19	)		1.61
Less distributions from:
Net investment income		—			(0.46	)		(0.42	)		(0.35	)		(0.38	)		(0.24	)
Net realized gains		—			(0.12	)		—			—			—			—
Total distributions		—			(0.58	)		(0.42	)		(0.35	)		(0.38	)		(0.24	)
Net asset value, end of period		$23.07			$22.60			$21.63			$17.23			$15.38			$15.95
Total returnf		2.08%			7.12%			28.26%			14.24%			(1.04)%			11.19%
Ratios to average net assetsg
Expensesh		1.00%	i,j		0.98%	i		0.96%	i		0.96%			0.98%	i		0.99%	i
Expenses incurred in connection with securities sold short		0.04%			0.03%			—%	k		—%	k		—%	k		0.02%
Net investment income		2.00%			2.58%	c		1.83%			1.81%			2.03%	d		2.41%	e
Supplemental data
Net assets, end of period (000’s)		$4,059,361			$4,218,342			$4,558,547			$4,069,803			$3,913,220			$4,188,821
Portfolio turnover rate		11.91%			21.33%			24.05%			34.07%	l		41.02%			32.05%

^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’s 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 1.54%.

^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%.

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

^gRatios are annualized for periods less than one year.

^hIncludes dividend 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(f).

ⁱBenefit of expense reduction rounds to less than 0.01%.

^jBenefit of waiver and payments by affiliates 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-8 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, 2015 (unaudited)			Year Ended December 31,
				2014			2013			2012			2011			2010
Class 4
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$22.72			$21.74			$17.31			$15.45			$16.03			$14.66
Income from investment operationsa:
Net investment incomeb		0.22			0.57	c		0.34			0.28			0.30	d		0.35	e
Net realized and unrealized gains (losses)		0.23			0.96			4.49			1.91			(0.51	)		1.26
Total from investment operations		0.45			1.53			4.83			2.19			(0.21	)		1.61
Less distributions from:
Net investment income		—			(0.43	)		(0.40	)		(0.33	)		(0.37	)		(0.24	)
Net realized gains		—			(0.12	)		—			—			—			—
Total distributions		—			(0.55	)		(0.40	)		(0.33	)		(0.37	)		(0.24	)
Net asset value, end of period		$23.17			$22.72			$21.74			$17.31			$15.45			$16.03
Total returnf		1.98%			7.04%			28.05%			14.20%			(1.12)%			11.06%
Ratios to average net assetsg
Expensesh		1.10%	i,j		1.08%	i		1.06%	i		1.06%			1.08%	i		1.09%	i
Expenses incurred in connection with securities sold short		0.04%			0.03%			—%	k		—%	k		—%	k		0.02%
Net investment income		1.90%			2.48%	c		1.73%			1.71%			1.93%	d		2.31%	e
Supplemental data
Net assets, end of period (000’s)		$150,345			$158,020			$188,153			$165,015			$162,049			$167,274
Portfolio turnover rate		11.91%			21.33%			24.05%			34.07%	l		41.02%			32.05%

^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’s 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 1.44%.

^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%.

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

^gRatios are annualized for periods less than one year.

^hIncludes dividend 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(f).

ⁱBenefit of expense reduction rounds to less than 0.01%.

^jBenefit of waiver and payments by affiliates 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

Statement of Investments, June 30, 2015 (unaudited)

Franklin Mutual Shares VIP Fund
		Country		Shares		Value
	Common Stocks and Other Equity Interests 86.5%
	Aerospace & Defense 1.5%
	B/E Aerospace Inc.		United States		449,172	$	24,659,543
	Huntington Ingalls Industries Inc.		United States		344,548		38,792,660
a	KLX Inc.		United States		224,586		9,910,980
							73,363,183
	Auto Components 0.3%
a,b	International Automotive Components Group Brazil LLC		Brazil		1,730,515		151,029
a,b,c	International Automotive Components Group North America LLC		United States		15,382,424		13,690,573
							13,841,602
	Automobiles 1.3%
	General Motors Co.		United States		1,871,900		62,390,427
	Banks 10.8%
	Barclays PLC		United Kingdom		11,077,220		45,333,027
	CIT Group Inc.		United States		1,035,952		48,161,409
	Citigroup Inc.		United States		1,021,609		56,433,681
	Citizens Financial Group Inc.		United States		1,660,202		45,340,117
	Columbia Banking System Inc.		United States		163,162		5,309,292
a	FCB Financial Holdings Inc., A		United States		493,723		15,700,391
	Guaranty Bancorp		United States		209,583		3,460,215
	ING Groep NV, IDR		Netherlands		1,593,846		26,306,436
	JPMorgan Chase & Co.		United States		1,079,000		73,113,040
	KB Financial Group Inc.		South Korea		447,452		14,746,685
	PNC Financial Services Group Inc.		United States		1,022,679		97,819,246
	Societe Generale SA		France		214,711		10,018,849
	State Bank Financial Corp.		United States		352,200		7,642,740
	SunTrust Banks Inc.		United States		929,422		39,983,735
	Wells Fargo & Co.		United States		655,860		36,885,566
							526,254,429
	Beverages 1.1%
	PepsiCo Inc.		United States		589,792		55,051,185
	Chemicals 0.0%
a,d,e	Dow Corning Corp., Contingent Distribution		United States		100,000		—
	Communications Equipment 2.4%
	Cisco Systems Inc.		United States		2,495,550		68,527,803
	Nokia Corp., ADR		Finland		3,299,845		22,603,938
	Nokia OYJ, A		Finland		4,118,438		27,951,841
							119,083,582
	Construction Materials 0.7%
a	Holcim Ltd., B		Switzerland		490,292		36,178,107
	Consumer Finance 0.5%
a	Ally Financial Inc.		United States		1,050,600		23,564,958
	Containers & Packaging 1.0%
	MeadWestvaco Corp.		United States		1,008,696		47,600,364
	Diversified Consumer Services 0.2%
	Cengage Learning Holdings II LP		United States		289,744		8,185,268

MS-10 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)
	Diversified Telecommunication Services 0.7%
a,d,e	Global Crossing Holdings Ltd., Contingent Distribution		United States		9,005,048	$	—
	Koninklijke KPN NV		Netherlands		9,037,680		34,547,106
							34,547,106
	Energy Equipment & Services 1.1%
	Baker Hughes Inc.		United States		870,800		53,728,360
	Food & Staples Retailing 3.1%
	CVS Health Corp.		United States		468,093		49,093,594
	The Kroger Co.		United States		627,420		45,494,224
	Walgreens Boots Alliance Inc.		United States		690,148		58,276,097
							152,863,915
	Health Care Equipment & Supplies 3.8%
	Medtronic PLC		United States		1,680,602		124,532,608
	Stryker Corp.		United States		625,571		59,785,821
							184,318,429
	Health Care Providers & Services 0.5%
	Cigna Corp.		United States		157,754		25,556,148
	Independent Power & Renewable Electricity Producers 0.6%
	NRG Energy Inc.		United States		1,304,154		29,839,044
	Insurance 9.3%
	ACE Ltd.		United States		585,315		59,514,829
a	Alleghany Corp.		United States		111,968		52,486,120
	The Allstate Corp.		United States		750,760		48,701,801
	American International Group Inc.		United States		1,528,976		94,521,296
	MetLife Inc.		United States		1,072,353		60,041,045
	White Mountains Insurance Group Ltd.		United States		114,635		75,079,047
	XL Group PLC		Ireland		1,711,000		63,649,200
							453,993,338
	IT Services 1.0%
	Xerox Corp.		United States		4,708,324		50,096,567
	Machinery 1.8%
	Caterpillar Inc.		United States		571,256		48,453,934
	CNH Industrial NV (EUR Traded)		United Kingdom		1,150,471		10,487,925
	CNH Industrial NV, special voting (EUR Traded)		United Kingdom		1,844,814		16,817,695
	Federal Signal Corp.		United States		757,221		11,290,165
							87,049,719
	Marine 1.2%
	A.P. Moeller-Maersk AS, B		Denmark		31,080		56,271,881
	Media 8.5%
	CBS Corp., B		United States		1,025,107		56,893,438
a	DIRECTV		United States		875,479		81,235,696
	Reed Elsevier PLC		United Kingdom		3,747,940		60,940,946
	Time Warner Cable Inc.		United States		532,856		94,938,954
	Time Warner Inc.		United States		426,778		37,304,665
	Tribune Media Co., A		United States		30,790		1,643,878
	Tribune Publishing Co.		United States		42,857		665,998

Semiannual Report MS-11

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)
	Twenty-First Century Fox Inc., B		United States		2,579,369	$	83,107,269
							416,730,844
	Metals & Mining 1.4%
	Freeport-McMoRan Inc., B		United States		1,867,696		34,776,499
	ThyssenKrupp AG		Germany		1,241,767		32,293,009
							67,069,508
	Multiline Retail 0.8%
	Macy’s Inc.		United States		561,205		37,864,501
	Oil, Gas & Consumable Fuels 6.1%
	Anadarko Petroleum Corp.		United States		279,670		21,831,040
	Apache Corp.		United States		793,090		45,705,777
	BG Group PLC		United Kingdom		1,977,986		32,923,075
	BP PLC		United Kingdom		4,717,802		31,140,120
	CONSOL Energy Inc.		United States		755,295		16,420,113
	Marathon Oil Corp.		United States		1,788,098		47,456,121
	Murphy Oil Corp.		United States		502,750		20,899,318
	Royal Dutch Shell PLC, A		United Kingdom		2,097,311		59,298,525
a	Whiting Petroleum Corp.		United States		671,647		22,567,339
							298,241,428
	Paper & Forest Products 1.2%
	International Paper Co.		United States		1,212,515		57,703,589
	Personal Products 0.7%
	Avon Products Inc.		United States		1,419,285		8,884,724
	Edgewell Personal Care Co.		United States		196,162		25,805,111
							34,689,835
	Pharmaceuticals 8.0%
	Eli Lilly & Co.		United States		1,274,615		106,417,607
a	Hospira Inc.		United States		787,789		69,884,762
	Merck & Co. Inc.		United States		2,219,988		126,383,917
	Teva Pharmaceutical Industries Ltd., ADR		Israel		1,506,201		89,016,479
							391,702,765
	Real Estate Investment Trusts (REITs) 0.3%
	Alexander’s Inc.		United States		40,126		16,451,660
	Real Estate Management & Development 0.1%
a	Forestar Group Inc.		United States		161,671		2,127,590
	Semiconductors & Semiconductor Equipment 0.4%
	Altera Corp.		United States		365,549		18,716,109
	Software 5.0%
	CA Inc.		United States		1,533,479		44,915,600
	Microsoft Corp.		United States		2,858,157		126,187,631
	Symantec Corp.		United States		3,067,415		71,317,399
							242,420,630
	Specialty Retail 0.3%
a	Office Depot Inc.		United States		1,755,259		15,200,543

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)
	Technology Hardware, Storage & Peripherals 4.6%
	Apple Inc.		United States		727,210	$	91,210,314
	EMC Corp.		United States		1,689,120		44,575,877
	Hewlett-Packard Co.		United States		1,516,627		45,513,976
	Samsung Electronics Co. Ltd.		South Korea		38,066		43,110,007
							224,410,174
	Tobacco 4.9%
	Altria Group Inc.		United States		965,268		47,211,258
	British American Tobacco PLC		United Kingdom		1,449,417		77,760,719
	Imperial Tobacco Group PLC		United Kingdom		1,096,837		52,848,429
	Philip Morris International Inc.		United States		282,010		22,608,742
	Reynolds American Inc.		United States		526,417		39,302,293
							239,731,441
	Wireless Telecommunication Services 1.3%
	Vodafone Group PLC		United Kingdom		17,442,704		62,984,622
	Total Common Stocks and Other Equity Interests (Cost $3,102,372,257)						4,219,822,851
	Preferred Stocks (Cost $35,233,301) 0.6%
	Automobiles 0.6%
	Volkswagen AG, pfd.		Germany		135,289		31,360,748
				Principal Amount*
	Corporate Bonds, Notes and Senior Floating Rate Interests 3.6%
	Avaya Inc.,
	f senior note, 144A, 10.50%, 3/01/21		United States		18,224,000		15,125,920
	f senior secured note, 144A, 7.00%, 4/01/19		United States		12,923,000		12,696,847
	g,h Term B-3 Loan, 4.687%, 10/26/17		United States		12,791,927		12,743,164
	g,h Term B-6 Loan, 6.50%, 3/31/18		United States		3,119,721		3,108,300
g,h	Cengage Learning Acquisitions Inc., Original Term Loans, 7.00%, 3/31/20		United States		1,769,087		1,775,721
	iHeartCommunications Inc.,
	senior secured note, first lien, 9.00%, 12/15/19		United States		26,449,000		25,305,081
	g,h Tranche D Term Loan, 6.937%, 1/30/19		United States		34,746,619		32,169,567
	g,h Tranche E Term Loan, 7.687%, 7/30/19		United States		11,168,253		10,491,178
g,h	JC Penney Corp. Inc., Term Loan, 6.00%, 5/22/18		United States		14,545,649		14,527,467
	NGPL PipeCo LLC,
	f,i senior secured note, 144A, 9.625%, 6/01/19		United States		14,481,000		14,734,417
	g,h Term Loan, 6.75%, 9/15/17		United States		759,247		728,497
	Samson Investment Co., senior note, 9.75%, 2/15/20		United States		16,690,000		1,043,125
g,h	Toys R Us-Delaware Inc.,
	FILO Loans, 8.25%, 10/24/19		United States		2,560,000		2,579,200
	Term B-4 Loan, 9.75%, 4/24/20		United States		21,566,968		20,391,568
	Walter Energy Inc.,
	g,h B Term Loan, 7.25%, 4/02/18		United States		11,218,193		6,188,707
	f first lien, 144A, 9.50%, 10/15/19		United States		6,301,000		3,481,303
	f,j second lien, 144A, PIK, 11.50%, 4/01/20		United States		5,419,860		293,735
	Total Corporate Bonds, Notes and Senior Floating Rate Interests (Cost $188,814,534)						177,383,797

Semiannual Report MS-13

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Mutual Shares VIP Fund (continued)

		Country		Principal Amount*		Value
	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	$	—
g,h,k	Caesars Entertainment Operating Co. Inc.,
	Term B-5-B Loans, 1.50%, 3/01/17		United States		3,251,752		2,893,028
	Term B-6-B Loans, 1.50%, 3/01/17		United States		15,503,483		13,925,445
	Term B-7 Loans, 1.50%, 3/01/17		United States		9,850,500		8,624,113
g,h,k	Texas Competitive Electric Holdings Co. LLC, Term Loans, 4.671%, 10/10/17		United States		90,618,405		52,374,629
f,k	Texas Competitive Electric Holdings Co. LLC/Texas Competitive Electric Holdings Finance Inc., senior secured note, first lien, 144A, 11.50%, 10/01/20		United States		39,308,000		24,076,150
	Total Corporate Notes and Senior Floating Rate Interests in Reorganization (Cost $143,163,473)						101,893,365
				Shares
	Companies in Liquidation 0.4%
a	Adelphia Recovery Trust		United States		29,283,354		58,567
a,d	Adelphia Recovery Trust, Arahova Contingent Value Vehicle, Contingent Distribution		United States		1,955,453		21,705
a,b,c,l	CB FIM Coinvestors LLC		United States		6,400,507		—
a,d,e	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		19,087,791
a,d,e	Tribune Media Litigation Trust, Contingent Distribution		United States		394,048		—
a,d,e	Tropicana Litigation Trust, Contingent Distribution		United States		18,305,000		—
	Total Companies in Liquidation (Cost $27,470,282)						19,168,063
				Principal Amount*
	Municipal Bonds (Cost $17,894,164) 0.3%
	Puerto Rico Commonwealth GO, Refunding, Series A, 8.00%, 7/01/35		United States		20,409,000		13,827,098
	Total Investments before Short Term Investments (Cost $3,514,948,011)						4,563,455,922
	Short Term Investments 7.0%
	U.S. Government and Agency Securities 7.0%
n	FHLB, 7/01/15		United States		10,500,000		10,500,000
n,o	U.S. Treasury Bills, 7/02/15 - 12/24/15		United States		333,280,000		333,267,570
	Total U.S. Government and Agency Securities (Cost $343,727,100)						343,767,570
	Total Investments before Money Market Funds and Joint Repurchase Agreements (Cost $3,858,675,111)						4,907,223,492

MS-14 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 0.1%
	Money Market Funds (Cost $250,000) 0.0%†
a,q	Institutional Fiduciary Trust Money Market Portfolio		United States		250,000	$	250,000
				Principal Amount*
	Repurchase Agreements 0.1%
r	Joint Repurchase Agreement, 0.12%, 7/01/15 (Maturity Value $1,000,003)		United States		1,000,000		1,000,000
	Barclays Capital Inc.
	Collateralized by U.S. Treasury Bonds, 4.75% - 7.625%, 11/15/16 - 5/15/37; U.S. Treasury Notes, 0.375% - 4.875%, 8/31/15 - 11/15/24; and U.S. Treasury Strips, 8/15/15 - 2/15/45 (valued at $1,020,000)
r	Joint Repurchase Agreement, 0.09%, 7/01/15 (Maturity Value $462,285)		United States		462,284		462,284
	BNP Paribas Securities Corp.
	Collateralized by U.S. Government and Agency Securities, 0.178% - 3.00%, 6/12/15 - 9/10/21; nU.S. Government and Agency Discount Notes, 5/01/15; U.S. Treasury Bonds, 5.25% - 6.50%, 11/15/16 - 11/15/28; U.S. Treasury Notes, 0.875% - 3.625%, 11/30/16 - 3/31/21; and U.S. Treasury Strips, 8/15/15 - 11/15/44 (valued at $471,530)
r	Joint Repurchase Agreement, 0.11%, 7/01/15 (Maturity Value $1,000,003)		United States		1,000,000		1,000,000
	RBS Securities Corp.
	Collateralized by U.S. Treasury Bonds, 3.625%, 2/15/44; and U.S. Treasury Notes, 1.00% - 3.625%, 9/30/15 - 2/15/24 (valued at $1,020,000)
	Total Joint Repurchase Agreements (Cost $2,462,284)						2,462,284
	Total Investments from Cash Collateral Received for Loaned Securities (Cost $2,712,284)						2,712,284
	Total Investments (Cost $3,861,387,395) 100.6%						4,909,935,776
	Securities Sold Short (0.3)%						(15,497,071	)
	Other Assets, less Liabilities (0.3)%						(16,144,995	)
	Net Assets 100.0%					$	4,878,293,710
				Shares
s	Securities Sold Short (0.3)%
	Common Stocks (0.3)%
	Energy Equipment & Services (0.0)%†
	Halliburton Co.		United States		23,554	$	(1,014,471	)
	Software (0.3)%
	VMware Inc., A		United States		168,913		(14,482,600	)
	Total Securities Sold Short (Proceeds $15,069,751)					$	(15,497,071	)

Semiannual Report MS-15

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Mutual Shares VIP Fund (continued)

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

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

^aNon-income producing.

^bSee Note 8 regarding restricted securities.

^cAt June 30, 2015, 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.

^dContingent 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.

^eSecurity has been deemed illiquid because it may not be able to be sold within seven days. At June 30, 2015, the aggregate value of these securities was $—.

^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, 2015, the aggregate value of these securities was $70,408,372, representing 1.44% of net assets.

^gSee Note 1(h) regarding senior floating rate interests.

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

ⁱA portion or all of the security is on loan at June 30, 2015. See Note 1(g).

^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 and open forward contracts. At June 30, 2015, the aggregate value of these securities and/or cash pledged as collateral was $33,680,635, representing 0.69% of net assets.

^pSee Note 1(g) regarding securities on loan.

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

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

^sSee Note 1(f) regarding securities sold short.

At June 30, 2015, the Fund had the following futures contracts outstanding. See Note 1(d).

Futures Contracts
Description	Type		Number of Contracts		Notional Value		Expiration Date		Unrealized Appreciation		Unrealized Depreciation
Currency Contracts
EUR/USD		Short		579	$	80,741,550		9/14/15	$	992,898	$	—
GBP/USD		Short		1,349		132,581,406		9/14/15		—		(3,216,656	)
Totals					$	213,322,956			$	992,898	$	(3,216,656	)
Net unrealized appreciation (depreciation)											$	(2,223,758	)

At June 30, 2015, 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
OTC Forward Exchange Contracts
Euro		BOFA		Buy		826,458	$	921,308		7/20/15	$	—	$	(9	)
Euro		BOFA		Sell		6,447,054		7,453,203		7/20/15		266,307		—
Euro		BONY		Sell		179,048		207,970		7/20/15		8,375		—
Euro		BZWS		Sell		489,735		551,378		7/20/15		5,443		—
Euro		DBAB		Buy		826,457		921,099		7/20/15		200		—
Euro		DBAB		Sell		7,142,343		8,305,410		7/20/15		343,435		—
Euro		FBCO		Buy		224,674		250,416		7/20/15		41		—
Euro		FBCO		Sell		5,734,336		6,662,646		7/20/15		270,257		—
Euro		HSBC		Sell		8,556,372		9,956,800		7/20/15		418,528		—
Euro		SSBT		Buy		7,666,257		8,600,625		7/20/15		—		(54,614	)
Euro		SSBT		Sell		6,709,599		7,830,938		7/20/15		351,368		—

MS-16 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
British Pound		BOFA		Sell		7,529,719	$	11,413,360		7/21/15	$	—	$	(414,052	)
British Pound		HSBC		Sell		16,370,375		24,817,123		7/21/15		—		(896,875	)
South Korean Won		BOFA		Buy		5,585,997,787		5,136,597		8/12/15		—		(152,797	)
South Korean Won		BOFA		Sell		19,303,548,983		17,370,052		8/12/15		156,929		(9,410	)
South Korean Won		FBCO		Buy		2,072,041,457		1,886,925		8/12/15		—		(38,260	)
South Korean Won		FBCO		Sell		22,034,462,403		19,812,252		8/12/15		157,932		(4,721	)
South Korean Won		HSBC		Buy		8,106,681,355		7,444,506		8/12/15		—		(211,765	)
South Korean Won		HSBC		Sell		38,226,485,775		34,315,467		8/12/15		225,534		(15,552	)
British Pound		BOFA		Buy		10,991,797		16,928,242		8/19/15		346,866		(13,257	)
British Pound		BOFA		Sell		16,898,157		25,721,605		8/19/15		—		(815,773	)
British Pound		BZWS		Sell		1,794,100		2,754,660		8/19/15		—		(62,849	)
British Pound		DBAB		Sell		1,386,268		2,128,277		8/19/15		—		(48,760	)
British Pound		FBCO		Buy		3,086,798		4,652,318		8/19/15		207,362		(12,079	)
British Pound		FBCO		Sell		10,410,658		15,937,224		8/19/15		—		(411,990	)
British Pound		HSBC		Sell		11,053,640		16,945,964		8/19/15		—		(413,007	)
British Pound		SSBT		Buy		2,163,158		3,416,487		8/19/15		—		(19,398	)
British Pound		SSBT		Sell		2,921,822		4,460,384		8/19/15		—		(128,134	)
Euro		BOFA		Sell		2,999,321		3,282,685		8/31/15		16,684		(79,542	)
Euro		DBAB		Sell		3,426,131		3,736,846		8/31/15		15,297		(100,070	)
Euro		FBCO		Sell		4,820,572		5,303,800		8/31/15		47,475		(120,699	)
Euro		HSBC		Sell		2,969,096		3,228,215		8/31/15		6,666		(90,278	)
Euro		SSBT		Sell		1,160,000		1,260,440		8/31/15		3,159		(36,622	)
Euro		BOFA		Sell		10,413,964		11,214,781		10/16/15		1,576		(411,732	)
Euro		BZWS		Sell		705,542		794,483		10/16/15		6,898		—
Euro		DBAB		Sell		6,613,061		7,134,224		10/16/15		—		(247,827	)
Euro		FBCO		Sell		8,259,032		8,904,630		10/16/15		6,806		(321,598	)
Euro		HSBC		Sell		9,171,359		10,003,706		10/16/15		12,615		(246,747	)
Euro		SSBT		Sell		5,610,671		6,080,844		10/16/15		11,688		(193,944	)
British Pound		BOFA		Buy		861,483		1,353,703		10/22/15		—		(1,410	)
British Pound		BOFA		Sell		46,350,988		70,659,666		10/22/15		—		(2,098,746	)
British Pound		BONY		Buy		7,860,451		12,120,926		10/22/15		217,839		—
British Pound		DBAB		Buy		1,706,683		2,649,714		10/22/15		30,258		(946	)
British Pound		FBCO		Buy		5,843,831		9,023,734		10/22/15		149,487		—
British Pound		FBCO		Sell		18,638,002		27,770,624		10/22/15		—		(1,485,958	)
British Pound		HSBC		Buy		782,005		1,228,029		10/22/15		—		(495	)
Euro		BOFA		Sell		27,865,190		31,730,360		11/18/15		605,648		—
Euro		DBAB		Sell		23,082,147		26,071,563		11/18/15		333,686		(44,298	)
Euro		FBCO		Sell		2,320,732		2,589,719		11/18/15		18,895		(21,375	)
Euro		HSBC		Sell		17,415,551		19,785,680		11/18/15		333,463		(513	)
Euro		SSBT		Sell		11,307,125		12,732,959		11/18/15		108,145		(4,959	)
Totals Forward Exchange Contracts unrealized appreciation (depreciation)											$	4,684,862	$	(9,231,061	)
Net unrealized appreciation (depreciation)													$	(4,546,199	)

^aMay be comprised of multiple contracts with the same counterparty, currency and settlement date.

See Abbreviations on page MS-32.

Semiannual Report MS-17

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Financial Statements

Statement of Assets and Liabilities

June 30, 2015 (unaudited)

	Franklin Mutual Shares VIP Fund
Assets:
Investments in securities:
Cost - Unaffiliated issuers	$	3,858,675,111
Cost - Sweep Money Fund (Note 3e)		250,000
Cost - Repurchase agreements		2,462,284
Total cost of investments	$	3,861,387,395
Value - Unaffiliated issuers	$	4,907,223,492
Value - Sweep Money Fund (Note 3e)		250,000
Value - Repurchase agreements		2,462,284
Total value of investments (includes securities loaned in the amount of $2,628,203)		4,909,935,776
Cash		7,533,017
Restricted cash (Note 1e)		130,000
Foreign currency, at value (cost $598,197)		594,369
Receivables:
Investment securities sold		672,450
Capital shares sold		1,079,524
Dividends and interest		11,027,891
Due from brokers		20,257,105
Variation margin		814,181
Unrealized appreciation on OTC forward exchange contracts		4,684,862
Other assets		2,055
Total assets		4,956,731,230
Liabilities:
Payables:
Investment securities purchased		42,193,312
Capital shares redeemed		3,258,358
Management fees		2,817,724
Distribution fees		1,846,698
Securities sold short, at value (proceeds $15,069,751)		15,497,071
Payable upon return of securities loaned		2,712,284
Due to brokers		130,000
Unrealized depreciation on OTC forward exchange contracts		9,231,061
Accrued expenses and other liabilities		751,012
Total liabilities		78,437,520
Net assets, at value	$	4,878,293,710
Net assets consist of:
Paid-in capital	$	3,142,757,402
Undistributed net investment income		185,952,900
Net unrealized appreciation (depreciation)		1,041,401,335
Accumulated net realized gain (loss)		508,182,073
Net assets, at value	$	4,878,293,710

MS-18 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, 2015 (unaudited)

	Franklin Mutual Shares VIP Fund
Class 1:
Net assets, at value	$	668,587,530
Shares outstanding		28,558,787
Net asset value and maximum offering price per share	$	23.41
Class 2:
Net assets, at value	$	4,059,360,703
Shares outstanding		175,991,641
Net asset value and maximum offering price per share	$	23.07
Class 4:
Net assets, at value	$	150,345,477
Shares outstanding		6,487,576
Net asset value and maximum offering price per share	$	23.17

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 Operations

for the six months ended June 30, 2015 (unaudited)

	Franklin Mutual Shares VIP Fund
Investment income:
Dividends	$	62,596,880
Interest		11,629,565
Income from securities loaned		531,005
Total investment income		74,757,450
Expenses:
Management fees (Note 3a)		17,129,669
Distribution fees: (Note 3c)
Class 2		5,212,377
Class 4		272,466
Custodian fees (Note 4)		67,706
Reports to shareholders		333,331
Professional fees		56,137
Trustees’ fees and expenses		10,927
Dividends on securities sold short		1,019,595
Other		42,098
Total expenses		24,144,306
Expense reductions (Note 4)		(347	)
Expenses waived/paid by affiliates (Note 3e)		(3,521	)
Net expenses		24,140,438
Net investment income		50,617,012
Realized and unrealized gains (losses):
Net realized gain (loss) from:
Investments		207,649,352
Foreign currency transactions		29,464,212
Futures contracts		8,043,133
Securities sold short		(50,921	)
Net realized gain (loss)		245,105,776
Net change in unrealized appreciation (depreciation) on:
Investments		(164,739,767	)
Translation of other assets and liabilities denominated in foreign currencies		(23,470,984	)
Futures contracts		(4,727,782	)
Net change in unrealized appreciation (depreciation)		(192,938,533	)
Net realized and unrealized gain (loss)		52,167,243
Net increase (decrease) in net assets resulting from operations	$	102,784,255

MS-20 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, 2015 (unaudited)			Year Ended December 31, 2014
Increase (decrease) in net assets:
Operations:
Net investment income	$	50,617,012		$	136,029,133
Net realized gain (loss)		245,105,776			280,369,418
Net change in unrealized appreciation (depreciation)		(192,938,533	)		(60,935,280	)
Net increase (decrease) in net assets resulting from operations		102,784,255			355,463,271
Distributions to shareholders from:
Net investment income:
Class 1		—			(14,458,134	)
Class 2		—			(87,785,708	)
Class 4		—			(3,061,827	)
Net realized gains:
Class 1		—			(3,341,870	)
Class 2		—			(22,825,048	)
Class 4		—			(853,086	)
Total distributions to shareholders		—			(132,325,673	)
Capital share transactions: (Note 2)
Class 1		(1,964,783	)		79,247,758
Class 2		(244,396,238	)		(529,398,101	)
Class 4		(10,954,251	)		(39,025,210	)
Total capital share transactions		(257,315,272	)		(489,175,553	)
Net increase (decrease) in net assets		(154,531,017	)		(266,037,955	)
Net assets:
Beginning of period		5,032,824,727			5,298,862,682
End of period	$	4,878,293,710		$	5,032,824,727
Undistributed net investment income included in net assets:
End of period	$	185,952,900		$	135,335,888

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

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 (1940 Act) as an open-end management investment company, consisting of nineteen separate funds and applies the specialized accounting and reporting guidance in U.S. Generally Accepted Accounting Principles (U.S. GAAP). 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.

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 open-end mutual funds are valued at the closing NAV.

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 agreement are valued at cost, which approximates fair value.

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

MS-22 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual Shares VIP Fund (continued)

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.

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 in 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

Semiannual Report MS-23

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. Joint Repurchase Agreement (continued)

MRAs contain various provisions, including but not limited to events of default and maintenance of collateral for repurchase 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, 2015.

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 in 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, 2015, the Fund had OTC derivatives in a net liability position of $5,090,077 and the aggregate value of collateral pledged for such contracts was $5,804,445.

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.

At June 30, 2015, the Fund received $229,767 in a U.S. Treasury Note as collateral for derivatives.

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 in the Statement of Assets and Liabilities.

The Fund entered into OTC forward exchange contracts primarily to manage exposure to certain foreign currencies. A forward

MS-24 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual Shares VIP Fund (continued)

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 9 regarding other derivative information.

e. Restricted Cash

At June 30, 2015, the Fund held 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. 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.

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.

g. Securities Lending

The Fund participates in an agency based securities lending program to earn additional income. 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 deposited into a joint cash account with other funds and is used to invest in a

money market fund managed by Franklin Advisers, Inc., an affiliate of the Fund, and/or a joint repurchase agreement. The total cash collateral received at period end was $2,712,284. The Fund may receive income from the investment of cash collateral, in addition to lending fees and rebates paid by the borrower. Income from securities loaned is reported separately in the Statement of Operations. 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. If the borrower defaults on its obligation to return the securities loaned, the Fund has the right to repurchase the securities in the open market using the collateral received. The securities lending agent has agreed to indemnify the Fund in the event of default by a third party borrower.

h. 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.

i. 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. As a result of several court cases, in certain countries across the European Union, the Fund has filed

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)

i. Income and Deferred Taxes (continued)

additional tax reclaims for previously withheld taxes on dividends earned in those countries. These additional filings are subject to various administrative proceedings by the local jurisdictions’ tax authorities within the European Union, as well as a number of related judicial proceedings. At this time, uncertainty exists as to the ultimate resolution of these proceedings, the likelihood of receipt of these reclaims, and the potential timing of payment, and accordingly, no amounts are reflected in the financial statements.

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, 2015, 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’s statute of limitation.

j. 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 for certain dividends from foreign securities where the dividend rate is not available. In such cases, the dividend is recorded as soon as the information is received by the Fund. 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 U.S. GAAP. 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.

k. 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.

l. 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.

MS-26 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual Shares VIP Fund (continued)

2. Shares Of Beneficial Interest

At June 30, 2015, 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, 2015						Year Ended December 31, 2014
	Shares			Amount			Shares			Amount
Class 1 Shares:
Shares sold		2,294,459		$	54,157,323			5,610,891		$	127,714,907
Shares issued in reinvestment of distributions		—			—			766,251			17,800,004
Shares redeemed		(2,385,553	)		(56,122,106	)		(2,917,184	)		(66,267,153	)
Net increase (decrease)		(91,094	)	$	(1,964,783	)		3,459,958		$	79,247,758
Class 2 Shares:
Shares sold		6,076,907		$	140,050,485			9,492,120		$	213,958,738
Shares issued in reinvestment of distributions		—			—			4,821,742			110,610,757
Shares redeemed		(16,709,700	)		(384,446,723	)		(38,420,623	)		(853,967,596	)
Net increase (decrease)		(10,632,793	)	$	(244,396,238	)		(24,106,761	)	$	(529,398,101	)
Class 4 Shares:
Shares sold		188,044		$	4,334,176			237,284		$	5,313,846
Shares issued in reinvestment of distributions		—			—			169,771			3,914,913
Shares redeemed		(655,237	)		(15,288,427	)		(2,108,780	)		(48,253,969	)
Net increase (decrease)		(467,193	)	$	(10,954,251	)		(1,701,725	)	$	(39,025,210	)

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

Semiannual Report MS-27

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual Shares VIP Fund (continued)

3. Transactions With Affiliates (continued)

b. Administrative Fees

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.

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. Investments in Institutional Fiduciary Trust Money Market Portfolio

The Fund invests in 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, as noted in the Statement of Operations, in an amount not to exceed the management and administrative fees paid directly or indirectly by the Sweep Money Fund.

f. Other Affiliated Transactions

At June 30, 2015, Franklin Templeton Variable Insurance Products Trust – Franklin Founding Funds Allocation VIP Fund owned 7.97% 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, 2015, the custodian fees were reduced as noted in the Statement of Operations.

5. Income Taxes

At June 30, 2015, the cost of investments and net unrealized appreciation (depreciation) for income tax purposes were as follows:

Cost of investments	$	3,884,788,754
Unrealized appreciation	$	1,255,955,954
Unrealized depreciation		(230,808,932	)
Net unrealized appreciation (depreciation)	$	1,025,147,022

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 bond discounts and premiums.

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FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS

Franklin Mutual Shares VIP Fund (continued)

6. Investment Transactions

Purchases and sales of investments (excluding short term securities and securities sold short) for the period ended June 30, 2015, aggregated $548,521,552 and $689,747,186, 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.

At June 30, 2015, the aggregate long value of distressed company securities for which interest recognition has been discontinued was $101,893,365, representing 2.09% 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, 2015, 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		151,029
15,382,424	International Automotive Components Group North America LLC		1/12/06 - 3/18/13		12,591,586		13,690,573
	Total Restricted Securities (Value is 0.28% of Net Assets)			$	13,742,581	$	13,841,602

9. Other Derivative Information

At June 30, 2015, the Fund’s investments in derivative contracts are reflected in 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			Statement of Assets and Liabilities Location	Fair Value
Foreign exchange contracts	Variation margin	$	992,898	a	Variation margin	$	3,216,656	a
	Unrealized appreciation on OTC forward exchange contracts		4,684,862		Unrealized depreciation on OTC forward exchange contracts		9,231,061
Totals		$	5,677,760			$	12,447,717

^aThis amount reflects the cumulative appreciation (depreciation) of futures contracts as reported in the Statement of Investments. Only the variation margin receivable/payable at period end is separately reported within the Statement of Assets and Liabilities. Prior variation margin movements were recorded to cash upon receipt or payment.

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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, 2015, the effect of derivative contracts in the Fund’s Statement of Operations was as follows:

Derivative Contracts Not Accounted for as Hedging Instruments	Statement of Operations Locations	Net Realized Gain (Loss) for the Period			Statement of Operations Locations	Net Change in Unrealized Appreciation (Depreciation) for the Period
	Net realized gain (loss) from:				Net change in unrealized appreciation (depreciation) on:
Foreign exchange contracts	Foreign currency transactions	$	29,991,112	a	Translation of other assets and liabilities denominated in foreign currencies	$	(23,514,040	)a
	Futures contracts		8,043,133		Futures contracts		(4,727,782	)
Totals		$	38,034,245			$	(28,241,822	)

^aForward exchange contracts are included in net realized gain (loss) from foreign currency transactions and net change in unrealized appreciation (depreciation) on translation of other assets and liabilities denominated in foreign currencies in the Statement of Operations.

For the period ended June 30, 2015, the average month end fair value of derivatives represented 0.51% of average month end net assets. The average month end number of open derivative contracts for the period was 215.

See Note 1(d) 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, 2015, 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 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 $2 billion (Global Credit Facility) which matures on February 12, 2016. 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 in the Statement of Operations. During the period ended June 30, 2015, 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 Mutual Shares VIP Fund (continued)

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.

A summary of inputs used as of June 30, 2015, 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 Invstments:a
Auto Components	$	—	$	—	$	13,841,602		$	13,841,602
Machinery		70,232,024		16,817,695		—			87,049,719
All Other Equity Investmentsb		4,150,292,278		—		—	c		4,150,292,278
Corporate Bonds, Notes and Senior Floating Rate Interests		—		177,383,797		—			177,383,797
Corporate Notes and Senior Floating Rate Interests in Reorganization		—		101,893,365		—	c		101,893,365
Companies in Liquidation		—		19,168,063		—	c		19,168,063
Municipal Bonds		—		13,827,098		—			13,827,098
Short Term Investments		333,517,570		12,962,284		—			346,479,854
Total Investments in Securities	$	4,554,041,872	$	342,052,302	$	13,841,602		$	4,909,935,776
Other Financial Instruments
Futures Contracts	$	992,898	$	—	$	—		$	992,898
Forward Exchange Contracts		—		4,684,862		—			4,684,862
Total Other Financial Instruments	$	992,898	$	4,684,862	$	—		$	5,677,760
Liabilities:
Other Financial Instruments
Securities Sold Short	$	15,497,071	$	—	$	—		$	15,497,071
Futures Contracts		3,216,656		—		—			3,216,656
Forward Exchange Contracts		—		9,231,061		—			9,231,061
Total Other Financial Instruments	$	18,713,727	$	9,231,061	$	—		$	27,944,788

^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, 2015.

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.

Semiannual Report MS-31

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual Shares VIP Fund (continued)

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 certain transactions accounted for as a sale for interim and annual reporting periods beginning after December 15, 2014, and transactions accounted for as secured borrowings for annual periods beginning after December 15, 2014, and for interim periods beginning after March 15, 2015. Management has reviewed the requirements and believes the adoption of this ASU will not have a material impact on the financial statements.

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	USD	United States Dollar	PIK	Payment-In-Kind
HSBC	HSBC Bank USA, N.A.
SSBT	State Street Bank and Trust Co.

MS-32 Semiannual Report

Franklin Rising Dividends VIP Fund

This semiannual report for Franklin Rising Dividends VIP Fund covers the period ended June 30, 2015.

Class 2 Performance Summary as of June 30, 2015

The Fund’s Class 2 shares had a -0.18% total return* for the six-month period ended June 30, 2015.

*The Fund has a fee waiver associated with any investment 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 1.23% 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

U.S. economic growth was mixed during the six months under review. In 2015’s first quarter, U.S. dollar strength, low energy prices, and a labor dispute at West Coast ports led exports to decline. Lower business investment and state and local government spending also weighed on the economy, while increases in consumer spending, residential investment and private inventory investment offered some support. In the second quarter, business capital spending rebounded and manufacturing and non-manufacturing activities increased, contributing to strong job gains that helped the unemployment rate decline from 5.6% in December 2014 to 5.3% in June 2015.² Housing market data were generally encouraging as home sales and prices rose. After a brief, winter slump, retail sales rebounded in the spring as strong employment gains led to

1. Source: 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.

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FRANKLIN RISING DIVIDENDS VIP FUND

broad-based improvement, especially for auto and gasoline sales. Inflation, as measured by the Consumer Price Index, rose during the six months amid generally higher energy prices bouncing from recent lows.

During the six-month period, the Federal Reserve Board (Fed) kept its target interest rate at 0%–0.25% while considering when an increase would be appropriate. The Fed anticipated raising its target rate when it saw further labor market progress and was reasonably confident that inflation would move back to 2% over the medium term. In its June meeting, the Fed lowered its 2015 economic growth forecast and raised unemployment estimates given the weak start to the year.

Investor confidence grew during the period as corporate profits remained healthy, the Fed showed caution about raising interest rates, economic data in Europe and Japan improved and China introduced more stimulus measures. However, the stock markets endured some sell-offs when many investors reacted to debt negotiations between Greece and its creditors, geopolitical tensions in certain regions, and less robust growth in China. For the six months under review, U.S. stocks, as measured by the S&P 500 and the Dow Jones Industrial Average, rose marginally after both reached all-time highs in May.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 period, three holdings that contributed to absolute performance were Roper Technologies, NIKE and West Pharmaceutical Services. Shares of Roper Technologies (formerly Roper Industries), a diversified industrial company, delivered strong results despite concerns that weakness in energy end markets, and the effects of this weakness in industrial markets, would present a significant headwind. Although Roper did report increasing headwinds in its energy

and industrial end markets, the company was able to mitigate the effects of these headwinds with very strong performance elsewhere. The company has 22 consecutive years of dividend increases. Shares of NIKE, a global athletic equipment and apparel maker, continued to rise in response to positive earnings reports in March and June. The company reported strong, constant currency growth and margin leverage, despite tough comparisons to the previous fiscal year when sales were elevated due to the FIFA World Cup. U.S. dollar strength reduced reported gross revenue growth, but investors appeared to look through this to the strong underlying fundamentals. NIKE continued to drive growth through innovation and progressive market segmentation. The company has raised its dividend for 13 consecutive years. Shares of West Pharmaceutical Services, a manufacturer of drug delivery systems and components, rose in response to two good earnings reports. In May, the company reported Food and Drug Administration approval of a customer’s drug that will be packaged using Resin CZ, an innovative material that was anticipated to hold the potential for high growth and margins. The company’s long-term growth drivers remained strong, in our view. The move from development to commercial use for some of its newer products such as

Top 10 Holdings
6/30/15
Company Sector/Industry	% of Total Net Assets
Roper Technologies Inc. Industrial Conglomerates		4.0%
Praxair Inc. Materials		3.6%
United Technologies Corp. Aerospace & Defense		3.6%
Dover Corp. Machinery		3.4%
Becton, Dickinson and Co. Health Care Equipment & Services		3.3%
Johnson & Johnson Pharmaceuticals, Biotechnology & Life Sciences		3.2%
West Pharmaceutical Services Inc. Health Care Equipment & Services		3.2%
Air Products and Chemicals Inc. Materials		3.0%
Stryker Corp. Health Care Equipment & Services		3.0%
Johnson Controls Inc. Automobiles & Components		3.0%

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

3. Please see Index Descriptions following the Fund Summaries.

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FRANKLIN RISING DIVIDENDS VIP FUND

Resin CZ has been slower than anticipated, although we believe the company’s long-term growth drivers remained strong. West has raised its dividend for 22 consecutive years.

Detractors from absolute performance included Wal-Mart Stores, The Procter & Gamble Co. and Chevron. Shares of Wal-Mart, a global discount retailer, dropped steadily from the beginning of the year as investors were concerned about margin compression from wage hikes and increased e-commerce investments, as well as a disappointing earnings report in May. Investors have had high expectations of improved operational performance, driven by recent changes in management leadership. We believe that the company’s investments in e-commerce and in its associates make long-term sense and that management has the potential to make steady incremental improvement in its core markets. However, we believe this transformation will take time. Wal-Mart has raised its dividend for the past 42 years. Shares of Procter & Gamble, a global consumer products company, continued to decline after a disappointing earnings report in April. The turnaround in the company’s business lines, particularly in the beauty segment, is proceeding slowly. We believe the company has outlined a sensible strategic plan and has taken appropriate action in problem areas such as pricing and in divesting low value-add brands. We continue to regard Procter & Gamble’s brand-building skills as a key competitive advantage and believe the turnaround will deliver value for shareholders. The company has raised its dividend for the past 59 years. Shares of Chevron, a major integrated oil and gas company, declined over the period, as lower oil and natural gas prices pressured company earnings and as uncertainty surrounding global growth prospects and surplus oil inventories weighed on the energy sector broadly. Although Chevron’s oil and gas upstream production businesses struggled in the recent, weak energy price environment, the integrated refining and marketing businesses benefited from lower energy input prices, partially offsetting the upstream earnings headwinds.

During the period, we initiated new positions in The Gap, a clothing retailer with nine years of dividend increases; Linear Technology, a manufacturer and distributor of analog integrated circuits (23 years); and Tiffany, a jewelry retailer (13 years). We added to our holdings in Texas Instruments, a semiconductor

designer and manufacturer (11 years); W.W. Grainger, a distributor of maintenance, repair and operating products (44 years); and Microsoft, a developer and manufacturer of system software (11 years); among others. Positions we liquidated included International Business Machines and California Resources, the latter of which we received as a spin-off of Occidental Petroleum. We reduced our positions in Teleflex, NIKE and Roper Technologies, among others.

Our 10 largest positions on June 30, 2015, represented 33.3% 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 30 years in a row and by 327% over the past 10 years. Their most recent year-over-year dividend increases averaged 11.4% with a yield of 1.9% on June 30, 2015, and a dividend payout ratio of 34.8%, based on estimates of calendar year 2015 operating earnings. The average price/earnings ratio was 19.8 times calendar year 2015 estimates versus 17.4 for that of the unmanaged S&P 500.

Thank you for your participation in Franklin Rising Dividends 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, 2015, 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 1/1/15		Ending Account Value 6/30/15		Fund-Level Expenses Incurred During Period* 1/1/15–6/30/15
Actual		$1,000		$   998.20		$4.31
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 expenses 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, 2015 (unaudited)			Year Ended December 31,
				2014			2013			2012			2011			2010
Class 1
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$29.63			$28.14			$22.03			$20.01			$19.15			$16.13
Income from investment operationsa:
Net investment incomeb		0.23			0.45			0.40			0.41			0.36			0.32
Net realized and unrealized gains (losses)		(0.24	)		2.03			6.16			2.00			0.83			3.01
Total from investment operations		(0.01	)		2.48			6.56			2.41			1.19			3.33
Less distributions from:
Net investment income		(0.48	)		(0.44	)		(0.45	)		(0.39	)		(0.33	)		(0.31	)
Net realized gains		(3.01	)		(0.55	)		—			—			—			—
Total distributions		(3.49	)		(0.99	)		(0.45	)		(0.39	)		(0.33	)		(0.31	)
Net asset value, end of period		$26.13			$29.63			$28.14			$22.03			$20.01			$19.15
Total returnc		(0.09)%			9.01%			30.05%			12.18%			6.29%			20.94%
Ratios to average net assetsd
Expenses		0.62%	e		0.62%	e		0.61%			0.63%			0.63%			0.64%
Net investment income		1.56%			1.58%			1.59%			1.96%			1.87%			1.88%
Supplemental data
Net assets, end of period (000’s)		$152,345			$160,480			$168,380			$141,455			$140,297			$148,544
Portfolio turnover rate		3.19%			8.61%			0.07%			11.19%			12.76%			8.97%

^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’s 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 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 waiver and payments by affiliates 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, 2015 (unaudited)			Year Ended December 31,
				2014			2013			2012			2011			2010
Class 2
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$29.06			$27.62			$21.64			$19.65			$18.82			$15.86
Income from investment operationsa:
Net investment incomeb		0.19			0.37			0.33			0.35			0.31			0.28
Net realized and unrealized gains (losses)		(0.22	)		1.99			6.04			1.98			0.81			2.95
Total from investment operations		(0.03	)		2.36			6.37			2.33			1.12			3.23
Less distributions from:
Net investment income		(0.41	)		(0.37	)		(0.39	)		(0.34	)		(0.29	)		(0.27	)
Net realized gains		(3.01	)		(0.55	)		—			—			—			—
Total distributions		(3.42	)		(0.92	)		(0.39	)		(0.34	)		(0.29	)		(0.27	)
Net asset value, end of period		$25.61			$29.06			$27.62			$21.64			$19.65			$18.82
Total returnc		(0.18)%			8.72%			29.69%			11.96%			6.00%			20.64%
Ratios to average net assetsd
Expenses		0.87%	e		0.87%	e		0.86%			0.88%			0.88%			0.89%
Net investment income		1.31%			1.33%			1.34%			1.71%			1.62%			1.63%
Supplemental data
Net assets, end of period (000’s)		$1,574,405			$1,667,816			$1,752,012			$1,550,084			$1,523,396			$1,572,732
Portfolio turnover rate		3.19%			8.61%			0.07%			11.19%			12.76%			8.97%

^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’s 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 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 waiver and payments by affiliates 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, 2015 (unaudited)			Year Ended December 31,
				2014			2013			2012			2011			2010
Class 4
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$29.19			$27.76			$21.78			$19.83			$19.04			$16.09
Income from investment operationsa:
Net investment incomeb		0.18			0.35			0.32			0.35			0.31			0.32
Net realized and unrealized gains (losses)		(0.24	)		2.00			6.07			1.96			0.80			2.94
Total from investment operations		(0.06	)		2.35			6.39			2.31			1.11			3.26
Less distributions from:
Net investment income		(0.41	)		(0.37	)		(0.41	)		(0.36	)		(0.32	)		(0.31	)
Net realized gains		(3.01	)		(0.55	)		—			—			—			—
Total distributions		(3.42	)		(0.92	)		(0.41	)		(0.36	)		(0.32	)		(0.31	)
Net asset value, end of period		$25.71			$29.19			$27.76			$21.78			$19.83			$19.04
Total returnc		(0.26)%			8.62%			29.57%			11.78%			5.89%			20.62%
Ratios to average net assetsd
Expenses		0.97%	e		0.97%	e		0.96%			0.98%			0.98%			0.99%
Net investment income		1.21%			1.23%			1.24%			1.61%			1.52%			1.53%
Supplemental data
Net assets, end of period (000’s)		$19,484			$15,503			$12,028			$6,432			$3,020			$1,007
Portfolio turnover rate		3.19%			8.61%			0.07%			11.19%			12.76%			8.97%

^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’s 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 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 waiver and payments by affiliates 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, 2015 (unaudited)

Franklin Rising Dividends VIP Fund
		Shares		Value
	Common Stocks 99.0%
	Aerospace & Defense 5.3%
	General Dynamics Corp.		73,500	$	10,414,215
	Honeywell International Inc.		180,100		18,364,797
	United Technologies Corp.		568,611		63,076,018
					91,855,030
	Automobiles & Components 2.9%
	Johnson Controls Inc.		1,040,500		51,535,965
	Commercial & Professional Services 3.9%
	ABM Industries Inc.		814,288		26,765,647
	Brady Corp., A		653,579		16,169,544
	Cintas Corp.		205,700		17,400,163
	Matthews International Corp., A		139,942		7,436,518
					67,771,872
	Consumer Durables & Apparel 3.2%
	Leggett & Platt Inc.		332,800		16,200,704
	NIKE Inc., B		360,000		38,887,200
					55,087,904
	Consumer Services 1.5%
	McDonald’s Corp.		254,345		24,180,579
	Yum! Brands Inc.		25,400		2,288,032
					26,468,611
	Diversified Financials 0.5%
	State Street Corp.		110,500		8,508,500
	Energy 8.0%
	Chevron Corp.		451,500		43,556,205
	EOG Resources Inc.		33,600		2,941,680
	Exxon Mobil Corp.		365,500		30,409,600
	Occidental Petroleum Corp.		370,790		28,836,338
	Schlumberger Ltd.		398,000		34,303,620
					140,047,443
	Food & Staples Retailing 5.1%
	CVS Health Corp.		71,600		7,509,408
	Wal-Mart Stores Inc.		634,800		45,026,364
	Walgreens Boots Alliance Inc.		437,100		36,908,724
					89,444,496
	Food, Beverage & Tobacco 6.1%
	Archer-Daniels-Midland Co.		713,000		34,380,860
	Bunge Ltd.		166,400		14,609,920
	McCormick & Co. Inc.		295,000		23,880,250
	PepsiCo Inc.		363,900		33,966,426
					106,837,456
	Health Care Equipment & Services 14.8%
	Abbott Laboratories		641,800		31,499,544
	Becton, Dickinson and Co.		408,543		57,870,116
	DENTSPLY International Inc.		4,000		206,200
	Medtronic PLC		667,500		49,461,750
	Stryker Corp.		542,100		51,808,497

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.		86,053	$	11,655,879
West Pharmaceutical Services Inc.		966,933		56,159,469
				258,661,455
Household & Personal Products 3.1%
Colgate-Palmolive Co.		191,000		12,493,310
The Procter & Gamble Co.		538,600		42,140,064
				54,633,374
Industrial Conglomerates 4.5%
Carlisle Cos. Inc.		96,261		9,637,651
Roper Technologies Inc.		404,650		69,785,939
				79,423,590
Insurance 6.3%
Aflac Inc.		276,200		17,179,640
Arthur J. Gallagher & Co.		704,000		33,299,200
The Chubb Corp.		45,000		4,281,300
Erie Indemnity Co., A		488,085		40,057,136
Old Republic International Corp.		635,708		9,936,116
RLI Corp.		103,142		5,300,468
				110,053,860
Machinery 8.8%
Donaldson Co. Inc.		350,068		12,532,434
Dover Corp.		839,376		58,907,408
Hillenbrand Inc.		1,027,300		31,538,110
Pentair PLC (United Kingdom)		738,800		50,792,500
				153,770,452
Materials 11.1%
Air Products and Chemicals Inc.		378,900		51,844,887
Albemarle Corp.		706,700		39,059,309
Bemis Co. Inc.		172,199		7,750,677
Ecolab Inc.		107,000		12,098,490
Nucor Corp.		447,055		19,701,714
Praxair Inc.		530,460		63,416,493
				193,871,570
Media 0.9%
John Wiley & Sons Inc., A		279,100		15,174,667
Pharmaceuticals, Biotechnology & Life Sciences 6.7%
AbbVie Inc.		300,800		20,210,752
Johnson & Johnson		580,000		56,526,800
Perrigo Co. PLC		1,500		277,245
Pfizer Inc.		1,193,100		40,004,643
Roche Holding AG, ADR (Switzerland)		25,000		876,750
				117,896,190
Retailing 1.5%
The Gap Inc.		345,800		13,199,186
Ross Stores Inc.		58,000		2,819,380
Target Corp.		85,800		7,003,854

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)
	Retailing (continued)
	Tiffany & Co.		26,600	$	2,441,880
					25,464,300
	Semiconductors & Semiconductor Equipment 1.3%
	Linear Technology Corp.		137,100		6,063,933
	Texas Instruments Inc.		315,800		16,266,858
					22,330,791
	Software & Services 2.2%
	Accenture PLC, A		158,500		15,339,630
	Microsoft Corp.		524,500		23,156,675
					38,496,305
	Technology Hardware & Equipment 0.7%
a	Knowles Corp.		285,500		5,167,550
	QUALCOMM Inc.		114,500		7,171,135
					12,338,685
	Trading Companies & Distributors 0.4%
	W.W. Grainger Inc.		26,100		6,176,565
	Transportation 0.2%
	United Parcel Service Inc., B		28,500		2,761,935
	Total Common Stocks (Cost $993,676,464)				1,728,611,016
	Short Term Investments (Cost $20,238,220) 1.1%
	Money Market Funds 1.1%
a,b	Institutional Fiduciary Trust Money Market Portfolio		20,238,220		20,238,220
	Total Investments (Cost $1,013,914,684) 100.1%				1,748,849,236
	Other Assets, less Liabilities (0.1)%				(2,614,292	)
	Net Assets 100.0%			$	1,746,234,944

See Abbreviations on page FRD-20.

^aNon-income producing.

^bSee Note 3(e) regarding investments in 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, 2015 (unaudited)

	Franklin Rising Dividends VIP Fund
Assets:
Investments in securities:
Cost - Unaffiliated issuers	$	993,676,464
Cost - Sweep Money Fund (Note 3e)		20,238,220
Total cost of investments	$	1,013,914,684
Value - Unaffiliated issuers	$	1,728,611,016
Value - Sweep Money Fund (Note 3e)		20,238,220
Total value of investments		1,748,849,236
Receivables:
Investment securities sold		3,059,461
Capital shares sold		532,865
Dividends		2,452,558
Other assets		745
Total assets		1,754,894,865
Liabilities:
Payables:
Investment securities purchased		5,887,222
Capital shares redeemed		1,000,283
Management fees		883,231
Distribution fees		684,271
Accrued expenses and other liabilities		204,914
Total liabilities		8,659,921
Net assets, at value	$	1,746,234,944
Net assets consist of:
Paid-in capital	$	900,760,238
Undistributed net investment income		11,882,123
Net unrealized appreciation (depreciation)		734,934,552
Accumulated net realized gain (loss)		98,658,031
Net assets, at value	$	1,746,234,944
Class 1:
Net assets, at value	$	152,345,146
Shares outstanding		5,830,029
Net asset value and maximum offering price per share	$	26.13
Class 2:
Net assets, at value	$	1,574,405,408
Shares outstanding		61,483,261
Net asset value and maximum offering price per share	$	25.61
Class 4:
Net assets, at value	$	19,484,390
Shares outstanding		757,728
Net asset value and maximum offering price per share	$	25.71

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 Operations

for the six months ended June 30, 2015 (unaudited)

	Franklin Rising Dividends VIP Fund
Investment income:
Dividends	$	19,481,743
Expenses:
Management fees (Note 3a)		5,404,973
Distribution fees: (Note 3c)
Class 2		2,016,389
Class 4		30,940
Custodian fees (Note 4)		8,288
Reports to shareholders		93,447
Professional fees		28,092
Trustees’ fees and expenses		3,856
Other		15,501
Total expenses		7,601,486
Expenses waived/paid by affiliates (Note 3e)		(8,719	)
Net expenses		7,592,767
Net investment income		11,888,976
Realized and unrealized gains (losses):
Net realized gain (loss) from:
Investments		98,785,977
Foreign currency transactions		(1,710	)
Net realized gain (loss)		98,784,267
Net change in unrealized appreciation (depreciation) on investments		(113,597,195	)
Net realized and unrealized gain (loss)		(14,812,928	)
Net increase (decrease) in net assets resulting from operations	$	(2,923,952	)

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

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL STATEMENTS

Statements of Changes in Net Assets

	Franklin Rising Dividends VIP Fund
	Six Months Ended June 30, 2015 (unaudited)			Year Ended December 31, 2014
Increase (decrease) in net assets:
Operations:
Net investment income	$	11,888,976		$	24,971,534
Net realized gain (loss)		98,784,267			183,292,710
Net change in unrealized appreciation (depreciation)		(113,597,195	)		(59,038,904	)
Net increase (decrease) in net assets resulting from operations		(2,923,952	)		149,225,340
Distributions to shareholders from:
Net investment income:
Class 1		(2,507,451	)		(2,478,710	)
Class 2		(22,189,853	)		(22,406,447	)
Class 4		(275,517	)		(165,391	)
Net realized gains:
Class 1		(15,606,236	)		(3,072,165	)
Class 2		(164,222,373	)		(32,971,551	)
Class 4		(2,002,122	)		(247,432	)
Total distributions to shareholders		(206,803,552	)		(61,341,696	)
Capital share transactions: (Note 2)
Class 1		10,034,631			(16,079,195	)
Class 2		95,813,532			(163,125,563	)
Class 4		6,315,156			2,701,123
Total capital share transactions		112,163,319			(176,503,635	)
Net increase (decrease) in net assets		(97,564,185	)		(88,619,991	)
Net assets:
Beginning of period		1,843,799,129			1,932,419,120
End of period	$	1,746,234,944		$	1,843,799,129
Undistributed net investment income included in net assets:
End of period	$	11,882,123		$	24,965,968

FRD-14 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 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 (1940 Act) as an open-end management investment company, consisting of nineteen separate funds and applies the specialized accounting and reporting guidance in U.S. Generally Accepted Accounting Principles (U.S. GAAP). 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. 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 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 NAV.

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

Semiannual Report FRD-15

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Rising Dividends VIP Fund (continued)

1. Organization and Significant Accounting Policies (continued)

a. Financial Instrument Valuation (continued)

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.

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 in 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. 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, 2015, 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’s 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. Estimated expenses are accrued daily. Dividend income is recorded on the ex-dividend date except for certain dividends from foreign securities where the dividend rate is not available. In such cases, the dividend is recorded as soon as the information is received by the Fund. Distributions to shareholders are recorded on the ex-dividend date and are determined according to income tax regulations (tax basis).

FRD-16 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Rising Dividends VIP Fund (continued)

Distributable earnings determined on a tax basis may differ from earnings recorded in accordance with U.S. GAAP. 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.

2. Shares of Beneficial Interest

At June 30, 2015, 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, 2015						Year Ended December 31, 2014
	Shares			Amount			Shares			Amount
Class 1 Shares:
Shares sold		95,922		$	2,785,337			159,314		$	4,468,085
Shares issued in reinvestment of distributions		689,257			18,113,687			197,681			5,550,875
Shares redeemed		(371,956	)		(10,864,393	)		(923,627	)		(26,098,155	)
Net increase (decrease)		413,223		$	10,034,631			(566,632	)	$	(16,079,195	)
Class 2 Shares:
Shares sold		1,777,662		$	51,433,885			5,801,510		$	162,781,330
Shares issued in reinvestment of distributions		7,239,310			186,412,226			2,007,904			55,377,998
Shares redeemed		(4,922,722	)		(142,032,579	)		(13,846,241	)		(381,284,891	)
Net increase (decrease)		4,094,250		$	95,813,532			(6,036,827	)	$	(163,125,563	)
Class 4 Shares:
Shares sold		174,737		$	5,085,967			178,786		$	4,991,418
Shares issued in reinvestment of distributions		88,076			2,277,639			14,893			412,823
Shares redeemed		(36,161	)		(1,048,450	)		(95,832	)		(2,703,118	)
Net increase (decrease)		226,652		$	6,315,156			97,847		$	2,701,123

Semiannual Report FRD-17

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Rising Dividends 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 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 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. Investments in Institutional Fiduciary Trust Money Market Portfolio

The Fund invests in 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, as noted in the Statement of Operations, in an amount not to exceed the management and administrative fees paid directly or indirectly by the Sweep Money Fund. 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, 2015, there were no credits earned.

FRD-18 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Rising Dividends VIP Fund (continued)

5. Income Taxes

At June 30, 2015, the cost of investments and net unrealized appreciation (depreciation) for income tax purposes were as follows:

Cost of investments	$	1,014,036,927
Unrealized appreciation	$	746,792,303
Unrealized depreciation		(11,979,994	)
Net unrealized appreciation (depreciation)	$	734,812,309

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, 2015, aggregated $56,587,960 and $127,912,009, 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 $2 billion (Global Credit Facility) which matures on February 12, 2016. 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 in the Statement of Operations. During the period ended June 30, 2015, 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, 2015, 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.

Semiannual Report FRD-19

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Rising Dividends VIP Fund (continued)

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.

Abbreviations

Selected Portfolio
ADR	American Depositary Receipt

FRD-20 Semiannual Report

Franklin Small Cap Value VIP Fund

This semiannual report for Franklin Small Cap Value VIP Fund covers the period ended June 30, 2015.

Class 2 Performance Summary as of June 30, 2015

The Fund’s Class 2 shares delivered a +1.47% total return* for the six-month period ended June 30, 2015.

*The Fund has a fee waiver associated with any investment 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 larger 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^™ Value Index, rose 1.71% 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

U.S. economic growth was mixed during the six months under review. In 2015’s first quarter, U.S. dollar strength, low energy prices, and a labor dispute at West Coast ports led exports to decline. Lower business investment and state and local government spending also weighed on the economy, while increases in consumer spending, residential investment and private inventory investment offered some support. In the second quarter, business capital spending rebounded and

manufacturing and non-manufacturing activities increased, contributing to strong job gains that helped the unemployment rate decline from 5.6% in December 2014 to 5.3% in June 2015.² Housing market data were generally encouraging as home sales and prices rose. After a brief, winter slump, retail sales rebounded in the spring as strong employment gains led to broad-based improvement, especially for auto and gasoline sales. Inflation, as measured by the Consumer Price Index, rose during the six months amid generally higher energy prices bouncing from recent lows.

During the six-month period, the Federal Reserve Board (Fed) kept its target interest rate at 0%–0.25% while considering when an increase would be appropriate. The Fed anticipated raising its target rate when it saw further labor market progress and was reasonably confident that inflation would move back to 2% over the medium term. In its June meeting, the Fed lowered its 2015 economic growth forecast and raised unemployment estimates given the weak start to the year.

Investor confidence grew during the period as corporate profits remained healthy, the Fed showed caution about raising interest rates, economic data in Europe and Japan improved and China introduced more stimulus measures. However, the stock markets endured some sell-offs when many investors reacted to debt negotiations between Greece and its creditors, geopolitical tensions in certain regions, and less robust growth in China. For the six months under review, U.S. stocks, as measured by the Standard & Poor’s^® 500 Index and the Dow Jones Industrial Average, rose marginally after both reached all-time highs in May.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

1. Source: 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.

FSV-2 Semiannual Report

FRANKLIN SMALL CAP VALUE VIP FUND

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 The Men’s Wearhouse, Sensient Technologies and HCC Insurance Holdings. Men’s Wearhouse, a clothing retailer, reported better-than-expected same store sales and earnings per share as well as a positive outlook regarding the integration of Jos. A. Bank. Sensient Technologies, a flavors and fragrances producer, reported weaker-than-expected 2015 guidance due to the impact of the strong U.S. dollar on its global markets. However, its business model’s relative resiliency and the ability to benefit from continued operational improvements appeared to have had a positive influence on the share price. HCC Insurance Holdings, a specialty insurance products underwriter, was the subject of an all-cash takeover offer from Tokio Marine Holdings at a 38% premium to HCC’s then share price.

Detractors from absolute Fund performance included Carpenter Technology, Helix Energy Solutions Group and Axiall. Carpenter Technology, a manufacturer of specialty metals primarily for the aerospace, energy and industrial sectors, was negatively impacted by internal production issues and weak sales to energy customers due to substantially lower oil prices during the period. Helix Energy Solutions Group, an offshore provider of well production services, was also hurt by lower oil prices, which increased the level of uncertainty regarding future business opportunities and profitability. Axiall, a chlor-alkali and building products manufacturer, was negatively affected by weaker-than-expected end-market pricing arising from industry-wide chlor-alkali capacity expansions and weak demand.

During the period, we initiated new positions in LTC Properties, a health care real estate investment trust; The Laclede Group, a natural gas utility; BRP, a designer, manufacturer and marketer of recreational powersport products; Crocs, a designer, manufacturer and distributor of footwear, apparel and accessories; MKS Instruments, a provider of advanced semiconductor manufacturing equipment; Invacare, a manufacturer and distributor of health care products; and Griffon, a manufacturer of building products, defense equipment and plastics. We added to our holdings in Everbank Financial, a bank holding company; Gerresheimer, a manufacturer of glass and plastic products for the health care industry; and the aforementioned Axiall; among others.

Semiannual Report FSV-3

FRANKLIN SMALL CAP VALUE VIP FUND

We eliminated positions in SkyWest, Steel Dynamics and Applied Industrial Technologies, among others. Positions we reduced included Thor Industries, Cabot and Apogee Enterprises, among others.

Finally, in addition to HCC’s takeover offer there were two additional offers during the period. Montpelier Re Holdings was the subject of a stock and cash deal from Endurance Specialty Holdings at a 7% premium to its prior-day’s closing price, and Excel Trust received a cash takeover offer from Blackstone at a 14% premium to its prior-day’s closing price.

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, 2015, 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 10 Holdings
6/30/15
Company Sector/Industry	% of Total Net Assets
Axiall Corp. Materials		2.5%
Maple Leaf Foods Inc. (Canada) Food, Beverage & Tobacco		2.4%
StanCorp Financial Group Inc. Insurance		2.4%
Carlisle Cos. Inc. Industrial Conglomerates		2.1%
AAR Corp. Aerospace & Defense		2.1%
Sensient Technologies Corp. Materials		2.0%
Regal Beloit Corp. Electrical Equipment		2.0%
A. Schulman Inc. Materials		2.0%
Teleflex Inc. Health Care Equipment & Services		2.0%
H.B. Fuller Co. Materials		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.

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 1/1/15		Ending Account Value 6/30/15		Fund-Level Expenses Incurred During Period* 1/1/15–6/30/15
Actual		$1,000		$1,014.70		$4.45
Hypothetical (5% return before expenses)		$1,000		$1,020.38		$4.46

*Expenses are calculated using the most recent six-month annualized expense ratio, net of expenses waivers, for the Fund’s Class 2 shares (0.89%), 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

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Financial Highlights

Franklin Small Cap Value VIP Fund

	Six Months Ended June 30, 2015 (unaudited)			Year Ended December 31,
				2014			2013			2012			2011			2010
Class 1
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$22.81			$24.54			$18.58			$15.82			$16.55			$13.00
Income from investment operationsa:
Net investment incomeb		0.10			0.19			0.19			0.29	c		0.16			0.14
Net realized and unrealized gains (losses)		0.29			0.06			6.45			2.64			(0.74	)		3.54
Total from investment operations		0.39			0.25			6.64			2.93			(0.58	)		3.68
Less distributions from:
Net investment income		(0.20	)		(0.20	)		(0.32	)		(0.17	)		(0.15	)		(0.13	)
Net realized gains		(3.17	)		(1.78	)		(0.36	)		—			—			—
Total distributions		(3.37	)		(1.98	)		(0.68	)		(0.17	)		(0.15	)		(0.13	)
Net asset value, end of period		$19.83			$22.81			$24.54			$18.58			$15.82			$16.55
Total returnd		1.58%			0.88%			36.50%			18.75%			(3.53)%			28.49%
Ratios to average net assetse
Expenses		0.64%	f		0.63%	f,g		0.63%			0.67%			0.66%			0.67%
Net investment income		0.89%			0.82%			0.90%			1.70%	c		1.02%			0.98%
Supplemental data
Net assets, end of period (000’s)		$53,657			$57,843			$62,408			$40,133			$39,374			$47,300
Portfolio turnover rate		12.42%			19.45%			10.44%			5.84%			14.39%			15.92%

^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’s 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 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 payments by affiliates rounds to less than 0.01%.

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

FSV-6 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, 2015 (unaudited)			Year Ended December 31,
				2014			2013			2012			2011			2010
Class 2
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$22.32			$24.07			$18.23			$15.53			$16.25			$12.77
Income from investment operationsa:
Net investment incomeb		0.07			0.13			0.14			0.24	c		0.12			0.10
Net realized and unrealized gains (losses)		0.29			0.05			6.34			2.59			(0.73	)		3.48
Total from investment operations		0.36			0.18			6.48			2.83			(0.61	)		3.58
Less distributions from:
Net investment income		(0.14	)		(0.15	)		(0.28	)		(0.13	)		(0.11	)		(0.10	)
Net realized gains		(3.17	)		(1.78	)		(0.36	)		—			—			—
Total distributions		(3.31	)		(1.93	)		(0.64	)		(0.13	)		(0.11	)		(0.10	)
Net asset value, end of period		$19.37			$22.32			$24.07			$18.23			$15.53			$16.25
Total returnd		1.47%			0.57%			36.24%			18.39%			(3.76)%			28.22%
Ratios to average net assetse
Expenses		0.89%	f		0.88%	f,g		0.88%			0.92%			0.91%			0.92%
Net investment income		0.64%			0.57%			0.65%			1.45%	c		0.77%			0.73%
Supplemental data
Net assets, end of period (000’s)		$1,370,966			$1,445,325			$1,606,802			$1,286,573			$1,211,168			$1,362,292
Portfolio turnover rate		12.42%			19.45%			10.44%			5.84%			14.39%			15.92%

^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’s 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 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 payments by affiliates 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 FSV-7

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL HIGHLIGHTS

Franklin Small Cap Value VIP Fund (continued)

	Six Months Ended June 30, 2015 (unaudited)			Year Ended December 31,
				2014			2013			2012			2011			2010
Class 4
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$22.63			$24.37			$18.44			$15.71			$16.44			$12.92
Income from investment operationsa:
Net investment incomeb		0.06			0.11			0.12			0.22	c		0.11			0.09
Net realized and unrealized gains (losses)		0.30			0.05			6.42			2.63			(0.75	)		3.53
Total from investment operations		0.36			0.16			6.54			2.85			(0.64	)		3.62
Less distributions from:
Net investment income		(0.12	)		(0.12	)		(0.25	)		(0.12	)		(0.09	)		(0.10	)
Net realized gains		(3.17	)		(1.78	)		(0.36	)		—			—			—
Total distributions		(3.29	)		(1.90	)		(0.61	)		(0.12	)		(0.09	)		(0.10	)
Net asset value, end of period		$19.70			$22.63			$24.37			$18.44			$15.71			$16.44
Total returnd		1.44%			0.48%			36.12%			18.27%			(3.87)%			28.14%
Ratios to average net assetse
Expenses		0.99%	f		0.98%	f,g		0.98%			1.02%			1.01%			1.02%
Net investment income		0.54%			0.47%			0.55%			1.35%	c		0.67%			0.63%
Supplemental data
Net assets, end of period (000’s)		$30,652			$30,452			$35,936			$32,424			$34,284			$39,075
Portfolio turnover rate		12.42%			19.45%			10.44%			5.84%			14.39%			15.92%

^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’s 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 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 payments by affiliates rounds to less than 0.01%.

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

FSV-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, 2015 (unaudited)

Franklin Small Cap Value VIP Fund
		Shares		Value
	Common Stocks 94.4%
	Aerospace & Defense 2.1%
	AAR Corp.		950,100	$	30,279,687
	Automobiles & Components 4.1%
	Drew Industries Inc.		245,200		14,226,504
	Gentex Corp.		1,174,600		19,286,932
	Thor Industries Inc.		317,800		17,885,784
	Winnebago Industries Inc.		331,200		7,813,008
					59,212,228
	Banks 4.0%
	Chemical Financial Corp.		412,554		13,639,035
	EverBank Financial Corp.		1,227,600		24,122,340
	OFG Bancorp. (Puerto Rico)		572,000		6,103,240
	Peoples Bancorp Inc.		241,900		5,645,946
	TrustCo Bank Corp. NY		1,203,800		8,462,714
					57,973,275
	Building Products 4.4%
	Apogee Enterprises Inc.		85,300		4,490,192
a	Gibraltar Industries Inc.		842,300		17,157,651
	Griffon Corp.		98,000		1,560,160
	Simpson Manufacturing Co. Inc.		433,400		14,735,600
	Universal Forest Products Inc.		504,700		26,259,541
					64,203,144
	Commercial & Professional Services 2.0%
	McGrath RentCorp		399,318		12,151,247
	MSA Safety Inc.		357,113		17,323,551
					29,474,798
	Construction & Engineering 3.3%
	EMCOR Group Inc.		550,100		26,278,277
	Granite Construction Inc.		611,800		21,725,018
					48,003,295
	Consumer Durables & Apparel 6.3%
a	BRP Inc. (Canada)		824,200		19,262,128
	Brunswick Corp.		205,700		10,461,902
a	Crocs Inc.		944,700		13,896,537
a	Helen of Troy Ltd.		21,800		2,125,282
	Hooker Furniture Corp.		445,000		11,173,950
	La-Z-Boy Inc.		926,200		24,396,108
a	M/I Homes Inc.		435,900		10,753,653
					92,069,560
	Electrical Equipment 4.2%
	EnerSys		254,210		17,868,421
	Franklin Electric Co. Inc.		348,798		11,276,639
	Powell Industries Inc.		100,900		3,548,653
	Regal Beloit Corp.		397,000		28,818,230
					61,511,943
	Energy 6.1%
	Bristow Group Inc.		246,600		13,143,780
	Energen Corp.		220,000		15,026,000

Semiannual Report FSV-9

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Small Cap Value VIP Fund (continued)

		Shares		Value
	Common Stocks (continued)
	Energy (continued)
a	Helix Energy Solutions Group Inc.		495,600	$	6,259,428
	Hunting PLC (United Kingdom)		1,201,900		11,517,929
a	Oil States International Inc.		299,900		11,165,277
	Rowan Cos. PLC		759,300		16,028,823
a	Unit Corp.		577,900		15,672,648
					88,813,885
	Food, Beverage & Tobacco 3.2%
	GrainCorp Ltd. (Australia)		1,725,000		11,362,406
	Maple Leaf Foods Inc. (Canada)		1,861,000		35,297,910
					46,660,316
	Health Care Equipment & Services 5.7%
	Hill-Rom Holdings Inc.		344,000		18,689,520
	Invacare Corp.		379,600		8,210,748
	STERIS Corp.		410,900		26,478,396
	Teleflex Inc.		211,800		28,688,310
					82,066,974
	Industrial Conglomerates 2.1%
	Carlisle Cos. Inc.		308,900		30,927,068
	Insurance 10.2%
	Arthur J. Gallagher & Co.		168,200		7,955,860
	Aspen Insurance Holdings Ltd.		538,700		25,803,730
	The Hanover Insurance Group Inc.		345,000		25,540,350
	HCC Insurance Holdings Inc.		188,200		14,461,288
	Montpelier Re Holdings Ltd.		246,400		9,732,800
	Old Republic International Corp.		1,075,900		16,816,317
	StanCorp Financial Group Inc.		454,600		34,372,306
	Validus Holdings Ltd.		317,800		13,980,022
					148,662,673
	Machinery 7.7%
	Astec Industries Inc.		523,800		21,905,316
	EnPro Industries Inc.		120,500		6,895,010
	Hillenbrand Inc.		365,500		11,220,850
	Kennametal Inc.		228,500		7,796,420
	Lincoln Electric Holdings Inc.		112,800		6,868,392
b	Lindsay Corp.		132,800		11,674,448
	Mueller Industries Inc.		712,200		24,727,584
a	Wabash National Corp.		1,384,500		17,361,630
	Watts Water Technologies Inc., A		55,000		2,851,750
					111,301,400
	Materials 14.3%
	A. Schulman Inc.		657,066		28,726,926
	Allegheny Technologies Inc.		243,900		7,365,780
	AptarGroup Inc.		65,000		4,145,050
	Axiall Corp.		992,200		35,768,810
	Cabot Corp.		47,400		1,767,546
	Carpenter Technology Corp.		497,900		19,258,772
	H.B. Fuller Co.		679,500		27,601,290

FSV-10 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Small Cap Value VIP Fund (continued)

		Shares		Value
	Common Stocks (continued)
	Materials (continued)
	Minerals Technologies Inc.		316,200	$	21,542,706
	RPM International Inc.		362,600		17,756,522
	Sensient Technologies Corp.		436,000		29,796,240
	Stepan Co.		274,800		14,869,428
					208,599,070
	Pharmaceuticals, Biotechnology & Life Sciences 1.4%
	Gerresheimer AG (Germany)		336,000		20,935,790
	Real Estate 1.8%
	Excel Trust Inc.		505,600		7,973,312
	LTC Properties Inc.		433,500		18,033,600
					26,006,912
	Retailing 6.9%
	Caleres Inc.		378,500		12,028,730
	The Cato Corp., A		362,900		14,066,004
a	Genesco Inc.		163,308		10,783,227
	Group 1 Automotive Inc.		184,200		16,730,886
	The Men’s Wearhouse Inc.		385,600		24,705,392
a	The Pep Boys - Manny, Moe & Jack		1,359,100		16,676,157
a	West Marine Inc.		610,700		5,887,148
					100,877,544
	Semiconductors & Semiconductor Equipment 1.5%
	Cohu Inc.		736,000		9,737,280
	MKS Instruments Inc.		311,800		11,829,692
					21,566,972
	Technology Hardware & Equipment 1.6%
a	Ingram Micro Inc., A		507,100		12,692,713
a	Rofin-Sinar Technologies Inc.		388,900		10,733,640
					23,426,353
	Transportation 0.3%
a	Genesee & Wyoming Inc.		53,200		4,052,776
	Utilities 1.2%
	The Laclede Group Inc.		327,000		17,023,620
	Total Common Stocks (Cost $960,025,911)				1,373,649,283
		Principal Amount
	Corporate Bonds (Cost $7,686,695) 0.5%
	Energy 0.5%
	Unit Corp., senior sub. note, 6.625%, 5/15/21	$	7,944,000		7,745,400
	Total Investments before Short Term Investments (Cost $967,712,606)				1,381,394,683

Semiannual Report FSV-11

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Small Cap Value VIP Fund (continued)

		Shares		Value
	Short Term Investments 5.8%
	Money Market Funds (Cost $71,812,977) 5.0%
a,c	Institutional Fiduciary Trust Money Market Portfolio		71,812,977	$	71,812,977
d	Investments from Cash Collateral Received for Loaned Securities 0.8%
	Money Market Funds (Cost $5,500,000) 0.4%
a,c	Institutional Fiduciary Trust Money Market Portfolio		5,500,000		5,500,000
		Principal Amount
	Repurchase Agreements 0.4%
e	Joint Repurchase Agreement, 0.11%, 7/01/15 (Maturity Value $2,791,387)	$	2,791,378		2,791,378
	RBS Securities Inc.,
	Collateralized by U.S. Treasury Bonds, 3.625%, 2/15/44; and U.S. Treasury Notes, 1.00% - 3.625%, 9/30/15 - 2/15/24 (valued at $2,847,213)
e	Joint Repurchase Agreement, 0.12%, 7/01/15 (Maturity Value $2,791,387)		2,791,378		2,791,378
	Barclays Capital Inc.,
	Collateralized by U.S. Treasury Bonds, 4.75% - 7.625%, 11/15/16 - 5/15/37; U.S. Treasury Notes, 0.375% - 4.875%, 8/31/15 - 11/15/24; and U.S. Treasury Strips, 8/15/15 - 2/15/45 (valued at $2,847,207)
e	Joint Repurchase Agreement, 0.14%, 7/01/15 (Maturity Value $670,402)		670,399		670,399
	SG Americas Securities LLC,
	Collateralized by U.S. Treasury Bonds, 2.875% - 10.625%, 8/15/15 - 11/15/44; U.S. Treasury Bonds, Index Linked, 0.375% - 2.375%, 7/15/23 - 2/15/43; U.S. Treasury Notes, 1.25% - 3.625%, 2/29/16 - 8/15/24; and U.S. Treasury Notes, Index Linked, 0.625% - 2.375%, 1/15/17 - 7/15/21 (valued at $683,807)
	Total Repurchase Agreements (Cost $6,253,155)				6,253,155
	Total Investments from Cash Collateral Received for Loaned Securities (Cost $11,753,155)				11,753,155
	Total Investments (Cost $1,051,278,738) 100.7%				1,464,960,815
	Other Assets, less Liabilities (0.7)%				(9,686,006	)
	Net Assets 100.0%			$	1,455,274,809

^aNon-income producing.

^bA portion or all of the security is on loan at June 30, 2015. See Note 1(d).

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

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

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

FSV-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, 2015 (unaudited)

	Franklin Small Cap Value VIP Fund
Assets:
Investments in securities:
Cost - Unaffiliated issuers	$	967,712,606
Cost - Sweep Money Fund (Note 3e)		77,312,977
Cost - Repurchase agreements		6,253,155
Total cost of investments	$	1,051,278,738
Value - Unaffiliated issuers	$	1,381,394,683
Value - Sweep Money Fund (Note 3e)		77,312,977
Value - Repurchase agreements		6,253,155
Total value of investments (includes securities loaned in the amount of $11,674,448)		1,464,960,815
Receivables:
Investment securities sold		10,028,009
Capital shares sold		223,218
Dividends and interest		1,097,313
Other assets		607
Total assets		1,476,309,962
Liabilities:
Payables:
Investment securities purchased		6,817,976
Capital shares redeemed		792,943
Management fees		740,462
Distribution fees		600,172
Payable upon return of securities loaned		11,753,155
Accrued expenses and other liabilities		330,445
Total liabilities		21,035,153
Net assets, at value	$	1,455,274,809
Net assets consist of:
Paid-in capital	$	927,406,103
Undistributed net investment income		4,170,181
Net unrealized appreciation (depreciation)		413,681,869
Accumulated net realized gain (loss)		110,016,656
Net assets, at value	$	1,455,274,809
Class 1:
Net assets, at value	$	53,657,393
Shares outstanding		2,705,950
Net asset value and maximum offering price per share	$	19.83
Class 2:
Net assets, at value	$	1,370,965,515
Shares outstanding		70,768,625
Net asset value and maximum offering price per share	$	19.37
Class 4:
Net assets, at value	$	30,651,901
Shares outstanding		1,556,138
Net asset value and maximum offering price per share	$	19.70

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

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL STATEMENTS

Statement of Operations

for the six months ended June 30, 2015 (unaudited)

	Franklin Small Cap Value VIP Fund
Investment income:
Dividends	$	10,436,416
Interest		280,380
Income from securities loaned		502,862
Total investment income		11,219,658
Expenses:
Management fees (Note 3a)		4,525,038
Distribution fees: (Note 3c)
Class 2		1,729,509
Class 4		51,706
Custodian fees (Note 4)		8,969
Reports to shareholders		164,943
Professional fees		24,735
Trustees’ fees and expenses		3,365
Other		12,544
Total expenses		6,520,809
Expenses waived/paid by affiliates (Note 3e)		(35,124	)
Net expenses		6,485,685
Net investment income		4,733,973
Realized and unrealized gains (losses):
Net realized gain (loss) from:
Investments		110,077,069
Foreign currency transactions		29,745
Net realized gain (loss)		110,106,814
Net change in unrealized appreciation (depreciation) on:
Investments		(94,022,100	)
Translation of other assets and liabilities denominated in foreign currencies		(208	)
Net change in unrealized appreciation (depreciation)		(94,022,308	)
Net realized and unrealized gain (loss)		16,084,506
Net increase (decrease) in net assets resulting from operations	$	20,818,479

FSV-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 Small Cap Value VIP Fund
	Six Months Ended June 30, 2015 (unaudited)			Year Ended December 31, 2014
Increase (decrease) in net assets:
Operations:
Net investment income	$	4,733,973		$	9,166,921
Net realized gain (loss)		110,106,814			204,970,194
Net change in unrealized appreciation (depreciation)		(94,022,308	)		(206,772,254	)
Net increase (decrease) in net assets resulting from operations		20,818,479			7,364,861
Distributions to shareholders from:
Net investment income:
Class 1		(483,179	)		(493,372	)
Class 2		(8,399,662	)		(9,349,846	)
Class 4		(155,331	)		(160,210	)
Net realized gains:
Class 1		(7,665,840	)		(4,292,308	)
Class 2		(193,180,034	)		(112,743,662	)
Class 4		(4,250,502	)		(2,435,910	)
Total distributions to shareholders		(214,134,548	)		(129,475,308	)
Capital share transactions: (Note 2)
Class 1		3,052,483			(206,770	)
Class 2		107,684,628			(46,032,420	)
Class 4		4,233,755			(3,176,134	)
Total capital share transactions		114,970,866			(49,415,324	)
Net increase (decrease) in net assets		(78,345,203	)		(171,525,771	)
Net assets:
Beginning of period		1,533,620,012			1,705,145,783
End of period	$	1,455,274,809		$	1,533,620,012
Undistributed net investment income included in net assets:
End of period	$	4,170,181		$	8,474,380

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

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 (1940 Act) as an open-end management investment company, consisting of nineteen separate funds and applies the specialized accounting and reporting guidance in U.S. Generally Accepted Accounting Principles (U.S. GAAP). 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.

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 NAV.

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. 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.

FSV-16 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Small Cap Value VIP Fund (continued)

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.

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 in 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

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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)

c. Joint Repurchase Agreement (continued)

by the Fund at period end, as indicated in the Statement of Investments, had been entered into on June 30, 2015.

d. Securities Lending

The Fund participates in an agency based securities lending program to earn additional income. 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 deposited into a joint cash account with other funds and is used to invest in a money market fund managed by Franklin Advisers, Inc., an affiliate of the Fund, and/or a joint repurchase agreement as indicated in the Statement of Investments. The total cash collateral received at period end was $11,753,155. The Fund may receive income from the investment of cash collateral, in addition to lending fees and rebates paid by the borrower. Income from securities loaned is reported separately in the Statement of Operations. 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. If the borrower defaults on its obligation to return the securities loaned, the Fund has the right to repurchase the securities in the open market using the collateral received. 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, 2015, 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’s 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. 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 recorded on the ex-dividend date except for certain dividends from foreign securities where the dividend rate is not available. In such cases, the dividend is recorded as soon as the information is received by the Fund. 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 U.S. GAAP. 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.

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NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Small Cap Value VIP Fund (continued)

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.

2. Shares of Beneficial Interest

At June 30, 2015, 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, 2015						Year Ended December 31, 2014
	Shares			Amount			Shares			Amount
Class 1 Shares:
Shares sold		48,157		$	1,087,666			175,851		$	4,068,553
Shares issued in reinvestment of distributions		407,044			8,149,019			206,102			4,785,680
Shares redeemed		(285,461	)		(6,184,202	)		(388,575	)		(9,061,003	)
Net increase (decrease)		169,740		$	3,052,483			(6,622	)	$	(206,770	)
Class 2 Shares:
Shares sold		1,853,789		$	41,013,490			5,020,152		$	113,569,546
Shares issued in reinvestment of distributions		10,305,710			201,579,696			5,364,390			122,093,507
Shares redeemed		(6,133,706	)		(134,908,558	)		(12,408,353	)		(281,695,473	)
Net increase (decrease)		6,025,793		$	107,684,628			(2,023,811	)	$	(46,032,420	)
Class 4 Shares:
Shares sold		118,874		$	2,673,514			176,245		$	3,946,345
Shares issued in reinvestment of distributions		221,510			4,405,833			112,435			2,596,120
Shares redeemed		(129,615	)		(2,845,592	)		(418,040	)		(9,718,599	)
Net increase (decrease)		210,769		$	4,233,755			(129,360	)	$	(3,176,134	)

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

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NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Small Cap Value VIP Fund (continued)

3. Transactions With Affiliates (continued)

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

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 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. Investments in Institutional Fiduciary Trust Money Market Portfolio

The Fund invests in 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, as noted in the Statement of Operations, in an amount not to exceed the management and administrative fees paid directly or indirectly by the Sweep Money Fund. 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, 2015, there were no credits earned.

5. Income Taxes

At June 30, 2015, the cost of investments and net unrealized appreciation (depreciation) for income tax purposes were as follows:

Cost of investments	$	1,051,923,748
Unrealized appreciation	$	453,091,229
Unrealized depreciation		(40,054,162	)
Net unrealized appreciation (depreciation)	$	413,037,067

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NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Small Cap Value VIP Fund (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 passive foreign investment company shares.

6. Investment Transactions

Purchases and sales of investments (excluding short term securities) for the period ended June 30, 2015, aggregated $176,034,150 and $300,394,786, 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 $2 billion (Global Credit Facility) which matures on February 12, 2016. 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 in the Statement of Operations. During the period ended June 30, 2015, 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, 2015, 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	$	1,373,649,283	$	—	$	—	$	1,373,649,283
Corporate Bonds		—		7,745,400		—		7,745,400
Short Term Investments		77,312,977		6,253,155		—		83,566,132
Total Investments in Securities	$	1,450,962,260	$	13,998,555	$	—	$	1,464,960,815

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

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NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Small Cap Value VIP Fund (continued)

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 certain transactions accounted for as a sale for interim and annual reporting periods beginning after December 15, 2014, and transactions accounted for as secured borrowings for annual periods beginning after December 15, 2014, and for interim periods beginning after March 15, 2015. Management has reviewed the requirements and believes the adoption of this ASU will not have a material impact on the financial statements.

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.

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Franklin Small-Mid Cap Growth VIP Fund

We are pleased to bring you Franklin Small-Mid Cap Growth VIP Fund’s semiannual report for the period ended June 30, 2015.

Class 2 Performance Summary as of June 30, 2015

The Fund’s Class 2 shares delivered a +7.30% total return* for the six-month period ended June 30, 2015.

*The Fund has a fee waiver associated with any investment 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

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^™ 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 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 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. 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 +4.18% total return, and its broad benchmark, the Standard & Poor’s^® 500 Index (S&P 500^®), produced a +1.23% total return for the same period.²

Economic and Market Overview

U.S. economic growth was mixed during the six months under review. In 2015’s first quarter, U.S. dollar strength, low energy

prices, and a labor dispute at West Coast ports led exports to decline. Lower business investment and state and local government spending also weighed on the economy, while increases in consumer spending, residential investment and private inventory investment offered some support. In the second quarter, business capital spending rebounded and manufacturing and non-manufacturing activities increased, contributing to strong job gains that helped the unemployment rate decline from 5.6% in December 2014 to 5.3% in June 2015.³ Housing market data were generally encouraging as home sales and prices rose. After a brief, winter slump, retail sales rebounded in the spring as strong employment gains led to broad-based improvement, especially for auto and gasoline sales. Inflation, as measured by the Consumer Price Index, rose during the six months amid generally higher energy prices bouncing from recent lows.

During the six-month period, the Federal Reserve Board (Fed) kept its target interest rate at 0%–0.25% while considering when an increase would be appropriate. The Fed anticipated

1. Please see Index Descriptions following the Fund Summaries.

2. Source: 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

raising its target rate when it saw further labor market progress and was reasonably confident that inflation would move back to 2% over the medium term. In its June meeting, the Fed lowered its 2015 economic growth forecast and raised unemployment estimates given the weak start to the year.

Investor confidence grew during the period as corporate profits remained healthy, the Fed showed caution about raising interest rates, economic data in Europe and Japan improved and China introduced more stimulus measures. However, the stock markets endured some sell-offs when many investors reacted to debt negotiations between Greece and its creditors, geopolitical tensions in certain regions, and less robust growth in China. For the six months under review, U.S. stocks, as measured by the S&P 500 and the Dow Jones Industrial Average, rose marginally after both reached all-time highs in May.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 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

Nearly all sectors represented in the Fund’s portfolio delivered positive returns and contributed to absolute performance during the six months under review. Relative to the Russell Midcap Growth^® Index, key contributors included stock selection in industrials and consumer discretionary and an overweighting in health care.

The Fund’s overall industrials holdings outperformed those of the benchmark index, although the sector was impacted by slower emerging market economic growth, commodity price declines and the negative effects of foreign currency exchange. Many of the Fund’s industrials holdings performed

well, however, particularly our off-benchmark investment in Allegiant Travel. The leisure travel company benefited from capacity reduction at smaller airports as the biggest U.S. airlines focused on large airports. This trend resulted in new opportunities for Allegiant to expand its business faster than many investors anticipated. Furthermore, the company’s profit margins grew, as reduced competition at smaller airports helped its airfares hold up better than airfares at large airports, where competition intensified in 2015.

The Fund’s consumer discretionary holdings performed well overall, as strength in many industries, notably athletic apparel, media, Internet retail and specialty retail more than offset weakness in hotels, restaurants and leisure. Positions in several strongly performing companies, notably Netflix, helped relative results. The video streaming and DVD subscription service company maintained robust domestic subscriber growth while accelerating the pace of international subscriber expansion. Netflix demonstrated operating leverage in its domestic business as it approached its long-term target model. As a result, many investors were willing to overlook near-term losses in the company’s international business. Accelerating subscriber growth led many analysts to raise their forecasts of the company’s long-term subscriber growth and longer term profitability.

Top 10 Holdings
6/30/15
Company Sector/Industry	% of Total Net Assets
NXP Semiconductors NV (Netherlands) Information Technology		1.7%
AMETEK Inc. Industrials		1.5%
Perrigo Co. PLC Health Care		1.4%
Electronic Arts Inc. Information Technology		1.4%
Impax Laboratories Inc. Health Care		1.4%
Affiliated Managers Group Inc. Financials		1.4%
Signature Bank Financials		1.4%
Axalta Coating Systems Ltd. Materials		1.3%
Intercontinental Exchange Inc. Financials		1.3%
Quintiles Transnational Holdings Inc. Health Care		1.3%

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

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FRANKLIN SMALL-MID CAP GROWTH VIP FUND

Health care was one of the period’s best-performing sectors, driven largely by the biotechnology and pharmaceuticals industries, as many companies received positive responses from the Food and Drug Administration (FDA), maintained pricing flexibility and generated solid earnings growth. Further benefiting the sector were many companies’ limited exposure to emerging markets, including Greece and China, and consolidation in several industries. Top contributors to Fund performance included our off-benchmark investment in Impax Laboratories. The company confirmed its full-year 2015 guidance, as it overcame first-quarter 2015 challenges, including delays with the acquisition of privately held pharmaceutical holding company Tower Holdings, the launch of a first-to-file generic drug and the accounting for revenue of its new Parkinson’s disease treatment Rytary. In our view, the company was executing the specialty pharmaceutical model efficiently by making synergistic acquisitions and building a brand franchise.

Other notable contributors included our off-benchmark investment in NXP Semiconductors and a position in Electronic Arts. NXP is a leading supplier of highly secure communication and microcontroller products. The company benefited from its leading intellectual properties in the fields of cryptography and near field communications. NXP products enable secure passports, toll passes and emerging wireless payments via smartphones and chip-based credit cards. The company will merge with Freescale Semiconductor, which will create one of the largest mixed-signal semiconductor companies in the world. Electronic Arts performed well during the period under the new leadership of chief executive officer Andrew Wilson and chief financial officer Blake Jorgenson. The video game developer benefited from three factors: the new generation of video game consoles, the proliferation of mobile gaming on smartphones and the margin-enhancing shift to digital game downloads.

In contrast, key detractors from the Fund’s relative performance included stock selection in the consumer staples sector, particularly in the beverages and food retail industries. Our off-benchmark investment in Boston Beer was a major detractor, as the craft brewer’s share price declined after the company missed market expectations for fourth-quarter 2014 revenue and earnings growth and full-year 2015 guidance. First-quarter 2015 earnings exceeded expectations, however, aided by product price increases, lower sales costs and a smooth transition between seasonal products. We continued to be highly selective in consumer staples, given the potential negative effects of foreign currency exchange rates on companies with significant global exposure and some instances of valuations we considered to be elevated amid challenging growth prospects.

Although the Fund’s overall information technology holdings performed well and contributed to absolute returns, stock selection detracted from relative performance, particularly with Stratasys⁴ and Yelp. Shares of Stratasys, the world’s leading additive manufacturing (3D printing) original equipment manufacturer, weakened after company management announced a two-year investment plan focused on industry-specific solutions, specifically in aerospace, medical and automotive. Furthermore, the 3D printing industry’s slower growth in the first quarter led Stratasys and many of its peers to lower full-year 2015 guidance. Consumer review website operator Yelp’s sales reorganization contributed to lower-than-expected first-quarter 2015 revenue, an issue corrected by quarter-end with a return to typical sales force productivity levels. Overall website traffic was mixed, with mobile web and application usage growth offset by slowing desktop traffic, and the company added fewer local accounts year-over-year. In our view, the company’s transition to a more transparent cost-per-click advertising unit could potentially have a positive long-term effect, despite some near-term challenges. Yelp maintained an advantage in consumer reviews and unique content, and valuation levels appeared compelling to us at period-end.

Key individual detractors included oncology drug developer Puma Biotechnology and casino operator MGM Resorts International. Puma Biotechnology has been focused on clinical trials for Neratinib, developed to treat breast cancer and other tumors. Puma’s shares declined due to several factors, including uncertainty ahead of a phase III Neratinib data presentation, the departure of a senior vice president and lawsuits filed against the company. Potential acquirers were granted access to Neratinib’s phase III data, but we think strategic investors may wait for the data to be presented publicly. At period-end, we continued to be optimistic about the drug’s potential FDA approval, given that the consensus opinion of doctors involved has so far been positive, noting that all patient subsets in the phase III trial population had been achieving a clinically meaningful benefit.

MGM was hurt by weakness in Macau, which accounted for a significant part of its consolidated earnings and long-term growth potential. Gaming revenue in Macau fell due to various factors, including China’s anti-graft campaign and visa restrictions that limited visitation from mainland China. Additionally, first-quarter 2015 revenue in Las Vegas missed expectations due to comparison with 2014’s first quarter, which had a strong convention calendar.

4. Not held at period-end.

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FRANKLIN SMALL-MID CAP GROWTH VIP FUND

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, 2015, 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 1/1/15		Ending Account Value 6/30/15		Fund-Level Expenses Incurred During Period* 1/1/15–6/30/15
Actual		$1,000		$1,073.00		$5.40
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.

FSC-6 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Financial Highlights

Franklin Small-Mid Cap Growth VIP Fund

	Six Months Ended June 30, 2015 (unaudited)			Year Ended December 31,
				2014			2013			2012			2011			2010
Class 1
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$24.95			$28.38			$21.87			$21.19			$22.21			$17.36
Income from investment operationsa:
Net investment income (loss)b		(0.02	)		(0.07	)		(0.09	)		(0.01	)c		(0.05	)		(0.01	)
Net realized and unrealized gains (losses)		1.92			2.04			8.19			2.27			(0.97	)		4.86
Total from investment operations		1.90			1.97			8.10			2.26			(1.02	)		4.85
Less distributions from net realized gains		(5.83	)		(5.40	)		(1.59	)		(1.58	)		—			—
Net asset value, end of period		$21.02			$24.95			$28.38			$21.87			$21.19			$22.21
Total returnd		7.42%			7.78%			38.50%			11.12%			(4.59)%			27.94%
Ratios to average net assetse
Expenses		0.80%	f		0.80%	f		0.80%	g		0.80%			0.79%			0.79%
Net investment income (loss)		(0.13)%			(0.29)%			(0.35)%			(0.03)%	c		(0.21)%			(0.07)%
Supplemental data
Net assets, end of period (000’s)		$103,200			$99,803			$98,020			$75,977			$76,384			$89,826
Portfolio turnover rate		16.96%			48.73%			42.77%			41.44%			45.00%			46.69%

^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’s 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)%.

^dTotal return does not include fees, charges or expenses imposed by the variable annuity and life insurance contracts for which 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 payments by affiliates 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 FSC-7

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL HIGHLIGHTS

Franklin Small-Mid Cap Growth VIP Fund (continued)

	Six Months Ended June 30, 2015 (unaudited)			Year Ended December 31,
				2014			2013			2012			2011			2010
Class 2
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$23.56			$27.16			$21.04			$20.49			$21.54			$16.87
Income from investment operationsa:
Net investment income (loss)b		(0.05	)		(0.13	)		(0.14	)		(0.06	)c		(0.10	)		(0.06	)
Net realized and unrealized gains (losses)		1.82			1.93			7.85			2.19			(0.95	)		4.73
Total from investment operations		1.77			1.80			7.71			2.13			(1.05	)		4.67
Less distributions from net realized gains		(5.83	)		(5.40	)		(1.59	)		(1.58	)		—			—
Net asset value, end of period		$19.50			$23.56			$27.16			$21.04			$20.49			$21.54
Total returnd		7.30%			7.47%			38.15%			10.85%			(4.87)%			27.68%
Ratios to average net assetse
Expenses		1.05%	f		1.05%	f		1.05%	g		1.05%			1.04%			1.04%
Net investment income (loss)		(0.38)%			(0.54)%			(0.60)%			(0.28)%	c		(0.46)%			(0.32)%
Supplemental data
Net assets, end of period (000’s)		$584,764			$582,772			$660,806			$670,193			$717,086			$939,481
Portfolio turnover rate		16.96%			48.73%			42.77%			41.44%			45.00%			46.69%

^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’s 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)%.

^dTotal return does not include fees, charges or expenses imposed by the variable annuity and life insurance contracts for which 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 payments by affiliates rounds to less than 0.01%.

^gBenefit 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

FINANCIAL HIGHLIGHTS

Franklin Small-Mid Cap Growth VIP Fund (continued)

	Six Months Ended June 30, 2015 (unaudited)			Year Ended December 31,
				2014			2013			2012			2011			2010
Class 4
Per share operating performance
(for a share outstanding throughout the period)
Net asset value, beginning of period		$24.14			$27.72			$21.47			$20.90			$21.98			$17.24
Income from investment operationsa:
Net investment income (loss)b		(0.06	)		(0.16	)		(0.17	)		(0.09	)c		(0.12	)		(0.07	)
Net realized and unrealized gains (losses)		1.85			1.98			8.01			2.24			(0.96	)		4.81
Total from investment operations		1.79			1.82			7.84			2.15			(1.08	)		4.74
Less distributions from net realized gains		(5.83	)		(5.40	)		(1.59	)		(1.58	)		—			—
Net asset value, end of period		$20.10			$24.14			$27.72			$21.47			$20.90			$21.98
Total returnd		7.20%			7.39%			37.99%			10.79%			(4.91)%			27.49%
Ratios to average net assetse
Expenses		1.15%	f		1.15%	f		1.15%	g		1.15%			1.14%			1.14%
Net investment income (loss)		(0.48)%			(0.64)%			(0.70)%			(0.38)%	c		(0.56)%			(0.42)%
Supplemental data
Net assets, end of period (000’s)		$17,893			$16,384			$19,132			$12,000			$12,664			$15,413
Portfolio turnover rate		16.96%			48.73%			42.77%			41.44%			45.00%			46.69%

^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’s 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)%.

^dTotal return does not include fees, charges or expenses imposed by the variable annuity and life insurance contracts for which 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 payments by affiliates 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 FSC-9

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Statement of Investments, June 30, 2015 (unaudited)

Franklin Small-Mid Cap Growth VIP Fund
		Shares		Value
	Common Stocks 98.7%
	Consumer Discretionary 20.7%
a	2U Inc.		36,049	$	1,160,417
	Advance Auto Parts Inc.		18,700		2,978,723
	BorgWarner Inc.		97,300		5,530,532
a	Buffalo Wild Wings Inc.		27,900		4,371,651
a,b	Charter Communications Inc., A		30,800		5,274,500
a	Chipotle Mexican Grill Inc.		13,800		8,348,862
	Dick’s Sporting Goods Inc.		125,600		6,502,312
a	Dollar Tree Inc.		74,800		5,908,452
a,b	Global Eagle Entertainment Inc.		254,000		3,307,080
a	Grand Canyon Education Inc.		113,700		4,820,880
	Hanesbrands Inc.		150,200		5,004,664
	Harman International Industries Inc.		50,700		6,030,258
a	IMAX Corp. (Canada)		103,200		4,155,864
a	Jarden Corp.		174,650		9,038,138
b	KB Home		365,400		6,065,640
	L Brands Inc.		81,000		6,944,130
	Marriott International Inc., A		109,900		8,175,461
a	MGM Resorts International		177,991		3,248,336
a	Netflix Inc.		11,900		7,817,586
	Nordstrom Inc.		84,500		6,295,250
	Polaris Industries Inc.		27,200		4,028,592
a	Tenneco Inc.		123,400		7,088,096
	Tiffany & Co.		42,100		3,864,780
	Tractor Supply Co.		71,400		6,421,716
a	Under Armour Inc., A		67,476		5,630,197
	Wolverine World Wide Inc.		126,800		3,611,264
a,b	Zoe’s Kitchen Inc.		108,300		4,433,802
					146,057,183
	Consumer Staples 5.1%
a	Boston Beer Inc., A		22,800		5,289,372
	Constellation Brands Inc., A		73,300		8,504,266
a,b	Freshpet Inc.		196,800		3,660,480
a	Monster Beverage Corp.		68,000		9,113,360
a	TreeHouse Foods Inc.		67,400		5,461,422
	Whole Foods Market Inc.		99,600		3,928,224
					35,957,124
	Energy 3.9%
	Cabot Oil & Gas Corp., A		227,200		7,165,888
a	Concho Resources Inc.		64,000		7,287,040
a	Diamondback Energy Inc.		77,100		5,811,798
	EQT Corp.		71,700		5,832,078
	Oceaneering International Inc.		39,900		1,858,941
					27,955,745
	Financials 6.7%
a	Affiliated Managers Group Inc.		44,000		9,618,400
	Arthur J. Gallagher & Co.		91,400		4,323,220
	Intercontinental Exchange Inc.		41,608		9,303,965
	Jones Lang LaSalle Inc.		18,700		3,197,700
	Lazard Ltd., A		126,500		7,114,360
a	Signature Bank		65,100		9,529,989

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)
	Financials (continued)
	T. Rowe Price Group Inc.		52,300	$	4,065,279
					47,152,913
	Health Care 20.7%
a,b	Aduro Biotech Inc.		34,900		1,058,517
a,b	Axovant Sciences Ltd.		71,600		1,459,208
a	BioMarin Pharmaceutical Inc.		29,000		3,966,620
a	Bluebird Bio Inc.		8,553		1,440,069
a	Celldex Therapeutics Inc.		140,700		3,548,454
a	Cerner Corp.		97,600		6,740,256
	The Cooper Cos. Inc.		40,600		7,225,582
a	DaVita HealthCare Partners Inc.		81,700		6,492,699
	DENTSPLY International Inc.		77,200		3,979,660
a	DexCom Inc.		51,600		4,126,968
a	Edwards Lifesciences Corp.		44,000		6,266,920
a	Envision Healthcare Holdings Inc.		186,700		7,370,916
a	HCA Holdings Inc.		79,759		7,235,736
a	HeartWare International Inc.		21,506		1,563,271
a	Heron Therapeutics Inc.		86,042		2,681,069
a	HMS Holdings Corp.		140,913		2,419,476
a	Hologic Inc.		184,600		7,025,876
a	Illumina Inc.		26,800		5,852,048
a	Impax Laboratories Inc.		214,200		9,836,064
a	Incyte Corp.		36,700		3,824,507
a	Inovalon Holdings Inc., A		91,092		2,541,467
a	Insulet Corp.		62,785		1,945,393
a	Karyopharm Therapeutics Inc.		42,613		1,159,500
a,b	Keryx Biopharmaceuticals Inc.		68,900		687,622
a	Mettler-Toledo International Inc.		19,100		6,521,886
a	Nevro Corp.		29,600		1,591,000
	Perrigo Co. PLC		54,985		10,162,877
a	Pfenex Inc.		113,500		2,201,900
a	Puma Biotechnology Inc.		15,125		1,765,844
a	Quintiles Transnational Holdings Inc.		127,700		9,272,297
a,b	Revance Therapeutics Inc.		112,300		3,591,354
	St. Jude Medical Inc.		78,300		5,721,381
a	Tandem Diabetes Care Inc.		147,600		1,599,984
a	Vertex Pharmaceuticals Inc.		24,800		3,062,304
					145,938,725
	Industrials 15.3%
	Acuity Brands Inc.		24,100		4,337,518
a	The Advisory Board Co.		90,800		4,964,036
	Allegiant Travel Co.		30,292		5,388,341
	AMETEK Inc.		191,200		10,473,936
	B/E Aerospace Inc.		108,300		5,945,670
a	DigitalGlobe Inc.		152,100		4,226,859
	Flowserve Corp.		99,300		5,229,138
a	Genesee & Wyoming Inc.		53,800		4,098,484
a	HD Supply Holdings Inc.		165,700		5,829,326
	Hexcel Corp.		136,800		6,804,432
a	IHS Inc., A		70,200		9,029,826

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)
	Industrials (continued)
	J.B. Hunt Transport Services Inc.		47,300	$	3,882,857
	Kansas City Southern		44,400		4,049,280
	Robert Half International Inc.		141,900		7,875,450
	Roper Technologies Inc.		47,670		8,221,168
a	Spirit Airlines Inc.		91,100		5,657,310
	Towers Watson & Co.		33,600		4,226,880
a	WABCO Holdings Inc.		64,000		7,918,080
					108,158,591
	Information Technology 22.4%
a	Alliance Data Systems Corp.		10,200		2,977,788
a	ANSYS Inc.		42,500		3,877,700
	Applied Materials Inc.		293,100		5,633,382
	Avago Technologies Ltd. (Singapore)		68,000		9,039,240
a	Bottomline Technologies Inc.		106,800		2,970,108
	Cognex Corp.		133,400		6,416,540
a	CoStar Group Inc.		26,800		5,393,768
a	Demandware Inc.		49,900		3,546,892
a	Electronic Arts Inc.		150,100		9,981,650
	Equinix Inc.		24,283		6,167,882
	Fidelity National Information Services Inc.		50,772		3,137,710
a	FleetCor Technologies Inc.		44,600		6,960,276
a	Fortinet Inc.		59,100		2,442,603
a	Freescale Semiconductor Ltd.		131,300		5,248,061
a	GoDaddy Inc., A		17,700		498,963
a	HomeAway Inc.		145,000		4,512,400
	Intersil Corp., A		394,800		4,938,948
a	JDS Uniphase Corp.		355,900		4,121,322
	Lam Research Corp.		42,500		3,457,375
a	LinkedIn Corp., A		31,000		6,405,530
a	NetSuite Inc.		31,700		2,908,475
a	NXP Semiconductors NV (Netherlands)		125,200		12,294,640
a	Palo Alto Networks Inc.		12,100		2,113,870
a	Pandora Media Inc.		212,100		3,296,034
a	Red Hat Inc.		80,900		6,142,737
a	ServiceNow Inc.		67,300		5,001,063
a	Twitter Inc.		148,700		5,385,914
a	Vantiv Inc., A		120,700		4,609,533
a	VeriFone Systems Inc.		150,500		5,110,980
a	ViaSat Inc.		106,600		6,423,716
a	Workday Inc.		35,000		2,673,650
a	Yelp Inc.		99,500		4,281,485
					157,970,235
	Materials 3.9%
a	Axalta Coating Systems Ltd.		284,400		9,407,952
	Cytec Industries Inc.		129,600		7,844,688
	H.B. Fuller Co.		90,913		3,692,886
	Martin Marietta Materials Inc.		45,800		6,481,158
					27,426,684
	Total Common Stocks (Cost $458,523,459)				696,617,200

FSC-12 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Small-Mid Cap Growth VIP Fund (continued)

		Shares		Value
	Short Term Investments 4.6%
	Money Market Funds (Cost $13,283,487) 1.9%
a,c	Institutional Fiduciary Trust Money Market Portfolio		13,283,487	$	13,283,487
d	Investments from Cash Collateral Received for Loaned Securities (Cost $19,269,775) 2.7%
	Money Market Funds 2.7%
a,c	Institutional Fiduciary Trust Money Market Portfolio		19,269,775		19,269,775
	Total Investments (Cost $491,076,721) 103.3%				729,170,462
	Other Assets, less Liabilities (3.3)%				(23,313,388	)
	Net Assets 100.0%			$	705,857,074

^aNon-income producing.

^bA portion or all of the security is on loan at June 30, 2015. See Note 1(c).

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

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

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

June 30, 2015 (unaudited)

	Franklin Small-Mid Cap Growth VIP Fund
Assets:
Investments in securities:
Cost - Unaffiliated issuers	$	458,523,459
Cost - Sweep Money Fund (Note 3e)		32,553,262
Total cost of investments	$	491,076,721
Value - Unaffiliated issuers	$	696,617,200
Value - Sweep Money Fund (Note 3e)		32,553,262
Total value of investments (includes securities loaned in the amount of $19,030,441)		729,170,462
Receivables:
Capital shares sold		101,787
Dividends and interest		182,803
Due from custodian		67,725
Other assets		289
Total assets		729,523,066
Liabilities:
Payables:
Investment securities purchased		2,719,691
Capital shares redeemed		727,890
Management fees		450,583
Distribution fees		257,589
Payable upon return of securities loaned		19,337,500
Accrued expenses and other liabilities		172,739
Total liabilities		23,665,992
Net assets, at value	$	705,857,074
Net assets consist of:
Paid-in capital	$	445,577,837
Undistributed net investment income (loss)		(1,233,685	)
Net unrealized appreciation (depreciation)		238,093,741
Accumulated net realized gain (loss)		23,419,181
Net assets, at value	$	705,857,074
Class 1:
Net assets, at value	$	103,200,093
Shares outstanding		4,909,779
Net asset value and maximum offering price per share	$	21.02
Class 2:
Net assets, at value	$	584,763,773
Shares outstanding		29,987,796
Net asset value and maximum offering price per share	$	19.50
Class 4:
Net assets, at value	$	17,893,208
Shares outstanding		890,035
Net asset value and maximum offering price per share	$	20.10

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, 2015 (unaudited)

	Franklin Small-Mid Cap Growth VIP Fund
Investment income:
Dividends	$	1,998,765
Income from securities loaned		371,987
Total investment income		2,370,752
Expenses:
Management fees (Note 3a)		2,730,937
Distribution fees: (Note 3c)
Class 2		735,031
Class 4		30,028
Custodian fees (Note 4)		3,647
Reports to shareholders		86,210
Professional fees		23,177
Trustees’ fees and expenses		1,528
Other		6,652
Total expenses		3,617,210
Expenses waived/paid by affiliates (Note 3e)		(8,781	)
Net expenses		3,608,429
Net investment income (loss)		(1,237,677	)
Realized and unrealized gains (losses):
Net realized gain (loss) from investments		24,444,619
Net change in unrealized appreciation (depreciation) on investments		27,015,060
Net realized and unrealized gain (loss)		51,459,679
Net increase (decrease) in net assets resulting from operations	$	50,222,002

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, 2015 (unaudited)			Year Ended December 31, 2014
Increase (decrease) in net assets:
Operations:
Net investment income (loss)	$	(1,237,677	)	$	(3,724,526	)
Net realized gain (loss)		24,444,619			165,568,522
Net change in unrealized appreciation (depreciation)		27,015,060			(110,422,791	)
Net increase (decrease) in net assets resulting from operations		50,222,002			51,421,205
Distributions to shareholders from:
Net realized gains:
Class 1		(22,509,343	)		(18,164,400	)
Class 2		(135,758,632	)		(120,447,127	)
Class 4		(4,098,814	)		(3,536,394	)
Total distributions to shareholders		(162,366,789	)		(142,147,921	)
Capital share transactions: (Note 2)
Class 1		18,544,086			12,658,981
Class 2		96,062,460			(469,072	)
Class 4		4,436,402			(462,764	)
Total capital share transactions		119,042,948			11,727,145
Net increase (decrease) in net assets		6,898,161			(78,999,571	)
Net assets:
Beginning of period		698,958,913			777,958,484
End of period	$	705,857,074		$	698,958,913
Undistributed net investment income (loss) included in net assets:
End of period	$	(1,233,685	)	$	3,992

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 (1940 Act) as an open-end management investment company, consisting of nineteen separate funds and applies the specialized accounting and reporting guidance in U.S. Generally Accepted Accounting Principles (U.S. GAAP). 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, 2015, 40.79% 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.

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 NAV.

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

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)

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.

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 in 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 to earn additional income. 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 deposited into a joint cash account with other funds and is used to invest in a money market fund managed by Franklin Advisers, Inc., an affiliate of the Fund. The total cash collateral received at period end was $19,337,500, of which $67,725 was uninvested cash included in due from custodian in the Statement of Assets and Liabilities. The Fund may receive income from the investment of cash collateral, in addition to lending fees and rebates paid by the borrower. Income from securities loaned is reported separately in the Statement of Operations. 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. If the borrower defaults on its obligation to return the securities loaned, the Fund has the right to repurchase the securities in the open market using the collateral received. 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.

FSC-18 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Small-Mid Cap Growth VIP Fund (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, 2015, 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’s 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 for certain dividends from foreign securities where the dividend rate is not available. In such cases, the dividend is recorded as soon as the information is received by the Fund. 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 U.S. GAAP. 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, 2015, 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, 2015						Year Ended December 31, 2014
	Shares			Amount			Shares			Amount
Class 1 Shares:
Shares sold		112,358		$	2,922,114			274,487		$	7,229,775
Shares issued in reinvestment of distributions		1,062,262			22,509,342			759,699			18,164,400
Shares redeemed		(265,033	)		(6,887,370	)		(487,310	)		(12,735,194	)
Net increase (decrease)		909,587		$	18,544,086			546,876		$	12,658,981
Class 2 Shares:
Shares sold		657,872		$	16,268,128			897,666		$	22,309,519
Shares issued in reinvestment of distributions		6,905,322			135,758,633			5,327,162			120,447,127
Shares redeemed		(2,308,725	)		(55,964,301	)		(5,821,755	)		(143,225,718	)
Net increase (decrease)		5,254,469		$	96,062,460			403,073		$	(469,072	)
Class 4 Shares:
Shares sold		101,415		$	2,581,270			67,020		$	1,726,663
Shares issued in reinvestment of distributions		202,211			4,098,814			152,628			3,536,394
Shares redeemed		(92,389	)		(2,243,682	)		(231,062	)		(5,725,821	)
Net increase (decrease)		211,237		$	4,436,402			(11,414	)	$	(462,764	)

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
0.800%	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

FSC-20 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS

Franklin Small-Mid Cap Growth VIP Fund (continued)

Annualized Fee Rate	Net Assets
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. Investments in Institutional Fiduciary Trust Money Market Portfolio

The Fund invests in 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, as noted in the Statement of Operations, in an amount not to exceed the management and administrative fees paid directly or indirectly by the Sweep Money Fund. 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, 2015, there were no credits earned.

5. Income Taxes

At June 30, 2015, the cost of investments and net unrealized appreciation (depreciation) for income tax purposes were as follows:

Cost of investments	$	492,054,230
Unrealized appreciation	$	247,005,899
Unrealized depreciation		(9,889,667	)
Net unrealized appreciation (depreciation)	$	237,116,232

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, 2015, aggregated $118,691,233 and $162,095,021, respectively.

Semiannual Report FSC-21

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Small-Mid 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 $2 billion (Global Credit Facility) which matures on February 12, 2016. 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 in the Statement of Operations. During the period ended June 30, 2015, 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, 2015, 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	$	696,617,200	$	—	$	—	$	696,617,200
Short Term Investments		32,553,262		—		—		32,553,262
Total Investments in Securities	$	729,170,462	$	—	$	—	$	729,170,462

^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-tomaturity and similar transactions. The ASU is effective for certain transactions accounted for as a sale for interim and annual reporting periods beginning after December 15, 2014, and transactions accounted for as secured borrowings for annual periods beginning after December 15, 2014, and for interim periods beginning after March 15, 2015. Management has reviewed the requirements and believes the adoption of this ASU will not have a material impact on the financial statements.

FSC-22 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Small-Mid 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 FSC-23

Franklin Strategic Income VIP Fund

This semiannual report for Franklin Strategic Income VIP Fund covers the period ended June 30, 2015.

Class 2 Performance Summary as of June 30, 2015

The Fund’s Class 2 shares delivered a +0.46% total return* for the six-month period ended June 30, 2015.

*The Fund has a fee waiver associated with any investment 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 Bond Index, had a -0.10% 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 +1.04% return.²

Economic and Market Overview

U.S. economic growth was mixed during the six-months under review. In 2015’s first quarter, U.S. dollar strength, low energy prices and a labor dispute at West Coast ports led exports to

decline. Lower business investment and state and local government spending also weighed on the economy, while increases in consumer spending, residential investment and private inventory investment offered some support. In the second quarter, business capital spending rebounded and manufacturing and non-manufacturing activities increased, contributing to strong job gains that helped the unemployment rate decline from 5.6% in December 2014 to 5.3% in June 2015.³ Housing market data were generally encouraging as home sales and prices rose. After a brief, winter slump, retail sales rebounded in the spring as strong employment gains led to broad-based improvement, especially for auto and gasoline sales. Inflation, as measured by the Consumer Price Index, rose during the six months amid generally higher energy prices bouncing from recent lows.

During the six-month period, the Federal Reserve Board (Fed) kept its target interest rate at 0%–0.25% while considering when an increase might be appropriate. The Fed anticipated raising its target rate when it saw further labor market progress and was reasonably confident that inflation would move back to 2% over the medium term. In its June meeting, the Fed lowered its 2015 economic growth forecast and raised unemployment estimates given the weak start to the year.

The 10-year Treasury yield, which moves inversely to price, declined from 2.17% at the start of the period to a six-month low of 1.68% in early February as investors sought less risky assets given concerns about soft domestic data, Greece’s debt negotiations, less robust growth in China and the Fed’s cautious tone on raising interest rates. At period-end, the yield rose to 2.35% based partly on upbeat domestic and eurozone economic data and expectations of an agreement between Greece and its international creditors.

Yields generally increased across much of Europe, Asia and the Americas, though select markets experienced a decline in yields. The U.S. dollar broadly strengthened against most

developed and emerging market currencies over the period. The European Central Bank’s asset purchases could keep interest rates low and put further downward pressure on the euro, which depreciated against the U.S. dollar during the period. Japan remained heavily indebted and has become reliant on its central bank as the buyer of last resort for its debt financing. Although Japan’s quantitative easing measures have been positive for global risk assets, we think they are likely to contribute to further yen depreciation.

1. Source: 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.

FSI-2 Semiannual Report

FRANKLIN STRATEGIC INCOME VIP FUND

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.

Manager’s Discussion

During the first half of 2015, the global fixed income markets were impacted by two broad themes: Treasury yield volatility and a strengthening U.S. dollar. A combination of relatively tepid global economic growth combined with quantitative easing (QE) measures implemented in the eurozone and Japan caused longer term interest rates in many developed markets to decline at the start of the period. However, although Europe and Japan engaged in forms of QE, the U.S. discontinued incremental QE and guided the market toward an expectation of likely increases in the short-term federal funds target rate. As a result, the U.S. dollar experienced broad strengthening over the past six months. Moreover, with some early signs of growth in the European economy combined with the expectation for short-term rate increases in the U.S. by year-end, government yield curves rose during the second half of the period. Overall for the six-month period, the 10-year U.S. Treasury yield climbed from 2.17% to 2.35%. By way of comparison, after falling below 0.2% in April, the 10-year German government bond yield jumped to 0.8% by the end of June. Although concerns regarding Greece’s fate in the eurozone and the outlook for Chinese economic growth negatively impacted financial markets toward period-end, equity markets were still able to generate a positive total return over the past six months, with the Standard & Poor’s^® 500 Index rising 1.23%.¹

The Fund posted a slightly positive total return for the review period. Fund returns outperformed the Barclays U.S. Aggregate Bond Index, as the Aggregate Index’s longer rate duration caused that benchmark to generate a negative total return as U.S. interest rates rose. Conversely, the Fund’s exposure to global non-dollar bonds detracted from returns given U.S. dollar strength, even as the Fund’s short positions in the euro and yen, achieved through currency forwards, added to returns, as both

*Figures reflect certain derivatives held in the portfolio (or their underlying reference assets) and may not total 100% or may be negative 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.

currencies weakened compared to the U.S. dollar. Also, the Fund’s municipal bond position suffered from a longer maturity profile in a period of rising rates, as well as from holdings in Puerto Rico. Finally, within the Fund’s high yield exposure, select holdings in the energy and mining sectors also declined as a result of a weak commodity price environment. Overall, the Fund lagged the performance of the Lipper Multi-Sector Income Funds peer group during the six-month period.

Semiannual Report FSI-3

FRANKLIN STRATEGIC INCOME VIP FUND

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.

What is a currency forward contract?

A currency forward contract, or 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.

In the corporate sectors, U.S. dollar strength along with a significant decline in energy-related profitability due to lower commodity prices negatively impacted first-quarter 2015 earnings generally. Investors also seemed to expect commodity prices to similarly constrain second-quarter operating results. However, default rates in the high yield market remained below historical averages, and corporate liquidity was generally still robust given refinancing activity over the past several years, which lowered interest costs and, in many cases, boosted cash balances. Although many senior management teams remained focused on shareholder-friendly activities such as stock buybacks, dividends and mergers and acquisitions, following the financial crisis we believe there continued to be a greater focus on prudent balance sheet management. Overall, the high yield market’s lesser sensitivity to interest rates allowed it to post a positive return during the period, although prices for certain commodity-related issues were still under pressure. We slightly reduced the Fund’s exposure to high yield in favor of leveraged bank loans, given favorable credit fundamentals for loans as well as the senior secured nature of loans and their ultimate floating rate characteristics. We also increased exposure to investment-grade corporate bonds, considering their higher quality and what we deemed more attractive yields due to the rise in the U.S. Treasury yield curve and an increase in spreads over U.S. Treasuries for that sector.

What is the yield curve?

The yield curve is a line that plots the interest rates, at a set point in time, of bonds having equal credit quality but differing maturity rates. The most frequently reported yield curve compares three-month, two-year and 30-year U.S. Treasury debt.

Outside the U.S., the strong U.S. dollar negatively impacted non-dollar global bond positions. The Fund further reduced its exposure to global government bonds during the period, but it was still hampered by its remaining non-dollar holdings. Conversely, the Fund’s net short positions in the yen and the euro, achieved through currency forwards, helped support performance given the decline in those currencies over the past

six months. The Fund maintained a fairly modest exposure to hard currency emerging market bonds.

With the rise in longer term U.S. interest rates, the more rate-sensitive fixed income sectors, such as Treasuries, agencies and mortgage-backed securities, generally posted flat total returns during the period. The Fund maintained a lower exposure to these sectors, preferring higher income opportunities in the corporate credit markets.

Higher longer term U.S. interest rates negatively impacted the generally longer duration municipal bond sector. In addition, concerns regarding Puerto Rico’s debt burden as well as the U.S. commonwealth’s prospective treatment of certain municipal obligations in a restructuring scenario pressured select issues. The Fund held a somewhat modest exposure to municipal bonds at period-end but would look for additional investment opportunities if price volatility continues.

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 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 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, 2015, 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.

FSI-4 Semiannual Report

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 1/1/15		Ending Account Value 6/30/15		Fund-Level Expenses Incurred During Period* 1/1/15–6/30/15
Actual		$1,000		$1,004.60		$4.32
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 FSI-5

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Financial Highlights

Franklin Strategic Income VIP Fund

	Six Months Ended June 30, 2015 (unaudited)			Year Ended December 31,
				2014			2013			2012			2011			2010
Class 1
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$11.90			$12.64			$13.17			$12.55			$12.99			$12.28
Income from investment operationsa:
Net investment incomeb		0.27			0.54			0.59			0.65			0.69			0.72
Net realized and unrealized gains (losses)		(0.19	)		(0.25	)		(0.15	)		0.92			(0.32	)		0.61
Total from investment operations		0.08			0.29			0.44			1.57			0.37			1.33
Less distributions from:
Net investment income and net foreign currency gains		(0.77	)		(0.78	)		(0.80	)		(0.93	)		(0.81	)		(0.62	)
Net realized gains		(0.20	)		(0.25	)		(0.17	)		(0.02	)		—			—
Total distributions		(0.97	)		(1.03	)		(0.97	)		(0.95	)		(0.81	)		(0.62	)
Net asset value, end of period		$11.01			$11.90			$12.64			$13.17			$12.55			$12.99
Total returnc		0.58%			2.12%			3.52%			13.12%			2.78%			11.21%
Ratios to average net assetsd
Expenses before waiver and payments by affiliates		0.63%			0.63%			0.60%			0.58%			0.60%			0.59%
Expenses net of waiver and payments by affiliates		0.62%	e		0.62%	e		0.60%	e		0.58%			0.60%	e		0.59%	e
Net investment income		4.59%			4.34%			4.58%			5.04%			5.36%			5.71%
Supplemental data
Net assets, end of period (000’s)		$513,236			$574,850			$705,493			$1,019,537			$1,043,690			$1,195,149
Portfolio turnover rate		52.59%			55.64%			48.06%			49.98%			55.65%			56.46%
Portfolio turnover rate excluding mortgage dollar rollsf		30.93%			48.86%			47.01%			48.75%			55.65%			56.46%

^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’s 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 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(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, 2015 (unaudited)			Year Ended December 31,
				2014			2013			2012			2011			2010
Class 2
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$11.55			$12.30			$12.84			$12.27			$12.72			$12.05
Income from investment operationsa:
Net investment incomeb		0.25			0.49			0.54			0.60			0.64			0.68
Net realized and unrealized gains (losses)		(0.19	)		(0.24	)		(0.13	)		0.89			(0.30	)		0.59
Total from investment operations		0.06			0.25			0.41			1.49			0.34			1.27
Less distributions from:
Net investment income and net foreign currency gains		(0.74	)		(0.75	)		(0.78	)		(0.90	)		(0.79	)		(0.60	)
Net realized gains		(0.20	)		(0.25	)		(0.17	)		(0.02	)		—			—
Total distributions		(0.94	)		(1.00	)		(0.95	)		(0.92	)		(0.79	)		(0.60	)
Net asset value, end of period		$10.67			$11.55			$12.30			$12.84			$12.27			$12.72
Total returnc		0.46%			1.86%			3.32%			12.75%			2.57%			10.91%
Ratios to average net assetsd
Expenses before waiver and payments by affiliates		0.88%			0.88%			0.85%			0.83%			0.85%			0.84%
Expenses net of waiver and payments by affiliates		0.87%	e		0.87%	e		0.85%	e		0.83%			0.85%	e		0.84%	e
Net investment income		4.34%			4.09%			4.33%			4.79%			5.11%			5.46%
Supplemental data
Net assets, end of period (000’s)		$214,326			$206,571			$175,307			$158,451			$123,749			$101,347
Portfolio turnover rate		52.59%			55.64%			48.06%			49.98%			55.65%			56.46%
Portfolio turnover rate excluding mortgage dollar rollsf		30.93%			48.86%			47.01%			48.75%			55.65%			56.46%

^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’s 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 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(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, 2015 (unaudited)			Year Ended December 31,
				2014			2013			2012			2011			2010
Class 4
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$11.78			$12.51			$13.04			$12.44			$12.88			$12.20
Income from investment operationsa:
Net investment incomeb		0.25			0.49			0.54			0.60			0.64			0.67
Net realized and unrealized gains (losses)		(0.19	)		(0.25	)		(0.14	)		0.91			(0.31	)		0.60
Total from investment operations		0.06			0.24			0.40			1.51			0.33			1.27
Less distributions from:
Net investment income and net foreign currency gains		(0.72	)		(0.72	)		(0.76	)		(0.89	)		(0.77	)		(0.59	)
Net realized gains		(0.20	)		(0.25	)		(0.17	)		(0.02	)		—			—
Total distributions		(0.92	)		(0.97	)		(0.93	)		(0.91	)		(0.77	)		(0.59	)
Net asset value, end of period		$10.92			$11.78			$12.51			$13.04			$12.44			$12.88
Total returnc		0.44%			1.75%			3.17%			12.67%			2.46%			10.88%
Ratios to average net assetsd
Expenses before waiver and payments by affiliates		0.98%			0.98%			0.95%			0.93%			0.95%			0.94%
Expenses net of waiver and payments by affiliates		0.97%	e		0.97%	e		0.95%	e		0.93%			0.95%	e		0.94%	e
Net investment income		4.24%			3.99%			4.23%			4.69%			5.01%			5.36%
Supplemental data
Net assets, end of period (000’s)		$110,238			$113,986			$134,970			$196,479			$188,786			$188,178
Portfolio turnover rate		52.59%			55.64%			48.06%			49.98%			55.65%			56.46%
Portfolio turnover rate excluding mortgage dollar rollsf		30.93%			48.86%			47.01%			48.75%			55.65%			56.46%

^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’s 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 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(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, 2015 (unaudited)

Franklin Strategic Income VIP Fund
		Country		Shares			Value
	Common Stocks 0.5%
	Consumer Services 0.5%
a,b,c	Turtle Bay Resort		United States		1,901,449		$	3,788,636
	Materials 0.0%†
a	Verso Corp.		United States		9,431			6,225
	Transportation 0.0%†
a	CEVA Holdings LLC		United Kingdom		224			165,967
	Total Common Stocks (Cost $2,532,467)							3,960,828
	Convertible Preferred Stocks 0.0%†
	Transportation 0.0%†
a	CEVA Holdings LLC, cvt. pfd., A-1		United Kingdom		6			6,000
a	CEVA Holdings LLC, cvt. pfd., A-2		United Kingdom		486			359,277
	Total Convertible Preferred Stocks (Cost $731,856)							365,277
				Principal Amount*
	Corporate Bonds 38.5%
	Automobiles & Components 0.8%
d	Avis Budget Finance PLC, senior note, 144A, 6.00%, 3/01/21		United States		1,000,000	EUR		1,174,352
d	Fiat Chrysler Automobiles NV, senior note, 144A, 5.25%, 4/15/23		United Kingdom		3,500,000			3,434,375
	The Goodyear Tire & Rubber Co., senior note, 6.50%, 3/01/21		United States		2,000,000			2,125,000
								6,733,727
	Banks 3.2%
	Bank of America Corp.,
	e junior sub. bond, AA, 6.10% to 3/17/25, FRN thereafter, Perpetual		United States		800,000			795,000
	e junior sub. bond, M, 8.125% to 5/15/18, FRN thereafter, Perpetual		United States		2,000,000			2,125,000
	senior note, 5.65%, 5/01/18		United States		1,500,000			1,648,032
	CIT Group Inc., senior note,
	5.375%, 5/15/20		United States		1,000,000			1,045,000
	5.00%, 8/15/22		United States		2,500,000			2,481,250
	Citigroup Inc.,
	e junior sub. bond, M, 6.30% to 5/15/24, FRN thereafter, Perpetual		United States		700,000			684,250
	e junior sub. bond, O, 5.875% to 3/27/20, FRN thereafter, Perpetual		United States		1,000,000			1,003,450
	senior note, 3.875%, 10/25/23		United States		3,000,000			3,062,877
	sub. bond, 5.50%, 9/13/25		United States		500,000			540,658
	sub. note, 4.05%, 7/30/22		United States		300,000			307,308
	JPMorgan Chase & Co.,
	e junior sub. bond, R, 6.00% to 8/01/23, FRN thereafter, Perpetual		United States		1,500,000			1,492,500
	e junior sub. bond, V, 5.00% to 7/30/19, FRN thereafter, Perpetual		United States		200,000			196,000
	e junior sub. note, X, 6.10% to 10/01/24, FRN thereafter, Perpetual		United States		500,000			502,375
	senior note, 4.25%, 10/15/20		United States		1,000,000			1,069,029
	sub. note, 3.375%, 5/01/23		United States		1,000,000			971,421
	sub. note, 3.875%, 9/10/24		United States		1,000,000			982,110
	Royal Bank of Scotland Group PLC, sub. note, 6.125%, 12/15/22		United Kingdom		1,000,000			1,073,750
	The Royal Bank of Scotland PLC, sub. note, 6.934%, 4/09/18		United Kingdom		1,500,000	EUR		1,875,410
e	Wells Fargo & Co., junior sub. bond,
	5.875% to 6/15/25, FRN thereafter, Perpetual		United States		2,500,000			2,562,500
	S, 5.90% to 6/15/24, FRN thereafter, Perpetual		United States		2,500,000			2,512,500
								26,930,420

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 1.1%
d	Abengoa Finance SAU, senior note, 144A, 8.875%, 11/01/17		Spain		1,300,000		$	1,356,062
d	Bombardier Inc., senior bond, 144A, 7.50%, 3/15/25		Canada		3,400,000			3,102,500
d	KM Germany Holdings GmbH, senior secured note, first lien, 144A, 8.75%, 12/15/20		Germany		900,000	EUR		1,077,604
	Navistar International Corp., senior note, 8.25%, 11/01/21		United States		1,500,000			1,432,500
	Terex Corp., senior note, 6.00%, 5/15/21		United States		1,000,000			1,010,000
	TransDigm Inc.,
	senior sub. bond, 6.50%, 7/15/24		United States		500,000			496,250
	d senior sub. bond, 144A, 6.50%, 5/15/25		United States		200,000			198,750
	senior sub. note, 6.00%, 7/15/22		United States		400,000			397,000
								9,070,666
	Consumer Durables & Apparel 0.6%
	KB Home, senior note,
	4.75%, 5/15/19		United States		1,000,000			997,500
	7.00%, 12/15/21		United States		1,200,000			1,245,000
	M/I Homes Inc., senior note, 8.625%, 11/15/18		United States		300,000			311,250
	Toll Brothers Finance Corp., senior bond, 5.625%, 1/15/24		United States		1,100,000			1,163,250
	Visant Corp., senior note, 10.00%, 10/01/17		United States		1,400,000			1,135,750
								4,852,750
	Consumer Services 1.6%
d	1011778 BC ULC/New Red Finance Inc.,
	secured note, second lien, 144A, 6.00%, 4/01/22		Canada		2,000,000			2,060,000
	senior secured note, first lien, 144A, 4.625%, 1/15/22		Canada		1,100,000			1,086,250
f	Caesars Entertainment Operating Co. Inc., senior secured note, first lien, 11.25%, 6/01/17		United States		2,500,000			1,975,000
d,g	Financiere Quick SAS, 144A, FRN, 7.511%, 10/15/19		France		1,500,000	EUR		1,292,405
d,f	Fontainebleau Las Vegas, senior secured note, first lien, 144A, 11.00%, 6/15/15		United States		2,500,000			12,625
d	International Game Technology PLC, senior secured bond, 144A, 6.50%, 2/15/25		United States		3,500,000			3,257,188
	MGM Resorts International, senior note,
	6.625%, 7/15/15		United States		2,500,000			2,502,750
	6.75%, 10/01/20		United States		200,000			212,460
	6.625%, 12/15/21		United States		500,000			525,000
d	Wynn Macau Ltd., senior note, 144A, 5.25%, 10/15/21		Macau		1,000,000			949,375
								13,873,053
	Diversified Financials 2.2%
	AerCap Ireland Capital Ltd./AerCap Global Aviation Trust, senior note,
	4.25%, 7/01/20		Netherlands		1,300,000			1,301,625
	d 144A, 5.00%, 10/01/21		Netherlands		1,100,000			1,133,000
	Deutsche Bank AG, sub. bond, 4.296% to 5/24/23, FRN thereafter, 5/24/28		Germany		3,500,000			3,311,525
	E*TRADE Financial Corp., senior note,
	5.375%, 11/15/22		United States		700,000			719,250
	4.625%, 9/15/23		United States		800,000			788,000
e	The Goldman Sachs Group Inc., junior sub. bond, M, 5.375% to 5/10/20, FRN thereafter, Perpetual		United States		3,000,000			2,970,000

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)
	Morgan Stanley,
	e junior sub. bond, 5.55% to 7/15/20, FRN thereafter, Perpetual		United States		2,500,000	$	2,485,000
	sub. bond, 3.95%, 4/23/27		United States		1,000,000		943,420
	Navient Corp., senior note,
	8.45%, 6/15/18		United States		1,000,000		1,113,800
	5.50%, 1/15/19		United States		1,500,000		1,533,180
	5.875%, 3/25/21		United States		700,000		701,309
	6.125%, 3/25/24		United States		500,000		480,000
d	Neuberger Berman Group LLC/Finance Corp., senior note, 144A, 5.875%, 3/15/22		United States		1,000,000		1,072,500
							18,552,609
	Energy 6.8%
	Access Midstream Partner LP/ACMP Finance Corp., senior note, 6.125%, 7/15/22		United States		600,000		634,730
	BreitBurn Energy Partners LP/BreitBurn Finance Corp., senior bond, 7.875%, 4/15/22		United States		2,300,000		1,932,000
	California Resources Corp.,
	senior bond, 6.00%, 11/15/24		United States		1,500,000		1,295,625
	senior note, 5.50%, 9/15/21		United States		800,000		697,000
	CGG SA, senior note,
	7.75%, 5/15/17		France		159,000		155,025
	6.50%, 6/01/21		France		1,800,000		1,503,000
	6.875%, 1/15/22		France		200,000		167,625
	CHC Helicopter SA,
	senior note, 9.375%, 6/01/21		Canada		260,000		156,000
	senior secured note, first lien, 9.25%, 10/15/20		Canada		2,205,000		1,608,272
	Chesapeake Energy Corp., senior note,
	6.625%, 8/15/20		United States		200,000		196,000
	6.125%, 2/15/21		United States		1,500,000		1,413,750
	5.75%, 3/15/23		United States		1,000,000		910,000
	Clayton Williams Energy Inc., senior note, 7.75%, 4/01/19		United States		1,800,000		1,719,000
	CONSOL Energy Inc., senior note,
	5.875%, 4/15/22		United States		2,500,000		2,135,300
	d 144A, 8.00%, 4/01/23		United States		500,000		476,250
	Energy Transfer Equity LP, senior note, first lien, 7.50%, 10/15/20		United States		2,500,000		2,831,250
	Energy Transfer Partners LP, senior note, 5.20%, 2/01/22		United States		1,000,000		1,047,369
	Energy XXI Gulf Coast Inc.,
	senior note, 9.25%, 12/15/17		United States		1,500,000		798,750
	senior note, 6.875%, 3/15/24		United States		1,000,000		330,000
	d senior secured note, second lien, 144A, 11.00%, 3/15/20		United States		700,000		617,750
d	EnQuest PLC, senior note, 144A, 7.00%, 4/15/22		United Kingdom		1,500,000		1,208,438
	Freeport-McMoRan Oil & Gas LLC/FCX Oil & Gas Inc., senior note, 6.875%, 2/15/23		United States		672,000		722,400
d,h	Gaz Capital SA (OJSC Gazprom), loan participation,
	senior bond, 144A, 6.51%, 3/07/22		Russia		500,000		503,250
	senior note, 144A, 5.092%, 11/29/15		Russia		1,500,000		1,516,875
	senior note, 144A, 3.85%, 2/06/20		Russia		1,500,000		1,385,625
	Halcon Resources Corp., senior note,
	8.875%, 5/15/21		United States		2,000,000		1,325,000
	9.25%, 2/15/22		United States		800,000		522,000

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)
d	Kinder Morgan Finance Co. LLC, senior secured note, 144A, 6.00%, 1/15/18		United States		2,000,000	$	2,167,188
	Kinder Morgan Inc., senior note, 6.50%, 9/15/20		United States		1,500,000		1,715,673
	Linn Energy LLC/Finance Corp., senior note,
	8.625%, 4/15/20		United States		2,000,000		1,650,420
	7.75%, 2/01/21		United States		1,200,000		939,000
	6.50%, 9/15/21		United States		200,000		150,000
d	LUKOIL International Finance BV, senior note, 144A, 4.563%, 4/24/23		Russia		3,500,000		3,125,937
	Martin Midstream Partners LP/Martin Midstream Finance Corp., senior note, 7.25%, 2/15/21		United States		2,000,000		1,975,000
	Midstates Petroleum Co. Inc./LLC, senior note, 9.25%, 6/01/21		United States		1,500,000		630,000
	Oasis Petroleum Inc., senior note, 6.875%, 3/15/22		United States		1,300,000		1,326,000
	Offshore Group Investment Ltd.,
	senior bond, first lien, 7.125%, 4/01/23		United States		700,000		430,500
	senior secured note, first lien, 7.50%, 11/01/19		United States		1,800,000		1,112,625
	PBF Holding Co. LLC, first lien, 8.25%, 2/15/20		United States		1,000,000		1,061,500
	Peabody Energy Corp., senior note,
	6.50%, 9/15/20		United States		2,500,000		862,500
	6.25%, 11/15/21		United States		1,500,000		487,500
	Penn Virginia Corp., senior note, 8.50%, 5/01/20		United States		1,500,000		1,353,750
	Penn Virginia Resource Partners LP/Penn Virginia Resource Finance Corp., senior note,
	8.375%, 6/01/20		United States		500,000		543,125
	6.50%, 5/15/21		United States		400,000		423,500
d,f,g	Quicksilver Resources Inc., secured note, second lien, 144A, FRN, 7.00%, 6/21/19		United States		900,000		551,250
	Regency Energy Partners LP/Regency Energy Finance Corp., senior note,
	5.875%, 3/01/22		United States		200,000		212,972
	5.00%, 10/01/22		United States		500,000		508,080
	Sabine Pass Liquefaction LLC,
	first lien, 5.625%, 2/01/21		United States		2,000,000		2,050,000
	first lien, 5.625%, 4/15/23		United States		900,000		901,404
	senior secured note, first lien, 5.75%, 5/15/24		United States		300,000		300,375
	Sanchez Energy Corp., senior note,
	7.75%, 6/15/21		United States		1,700,000		1,700,000
	6.125%, 1/15/23		United States		600,000		540,000
	W&T Offshore Inc., senior note, 8.50%, 6/15/19		United States		2,000,000		1,397,500
	Williams Partners LP, senior bond, 4.00%, 9/15/25		United States		1,500,000		1,405,751
							57,329,834
	Food & Staples Retailing 0.4%
d	Cencosud SA, senior note, 144A,
	4.875%, 1/20/23		Chile		1,500,000		1,508,738
	5.15%, 2/12/25		Chile		1,500,000		1,514,565
							3,023,303
	Food, Beverage & Tobacco 0.9%
	Constellation Brands Inc., senior note, 4.25%, 5/01/23		United States		1,000,000		987,500

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)
	Food, Beverage & Tobacco (continued)
d	JBS USA LLC/Finance Inc., senior note, 144A,
	8.25%, 2/01/20		United States		2,500,000	$	2,662,500
	7.25%, 6/01/21		United States		300,000		317,625
	5.75%, 6/15/25		United States		500,000		496,250
d	Post Holdings Inc., senior note, 144A,
	6.75%, 12/01/21		United States		1,700,000		1,704,250
	6.00%, 12/15/22		United States		500,000		483,125
d	Smithfield Foods Inc., senior note, 144A, 5.875%, 8/01/21		United States		600,000		622,500
							7,273,750
	Health Care Equipment & Services 1.9%
	Alere Inc., senior sub. note, 6.50%, 6/15/20		United States		800,000		832,000
	AmSurg Corp., senior note, 5.625%, 7/15/22		United States		400,000		402,500
	CHS/Community Health Systems Inc.,
	senior note, 8.00%, 11/15/19		United States		1,500,000		1,584,375
	senior note, 6.875%, 2/01/22		United States		400,000		423,500
	senior secured note, first lien, 5.125%, 8/15/18		United States		600,000		616,800
	DaVita HealthCare Partners Inc.,
	senior bond, 5.125%, 7/15/24		United States		500,000		492,500
	senior bond, 5.00%, 5/01/25		United States		900,000		868,500
	senior note, 5.75%, 8/15/22		United States		1,500,000		1,595,625
	HCA Inc.,
	senior note, 7.50%, 2/15/22		United States		1,000,000		1,150,000
	senior note, 5.875%, 5/01/23		United States		1,500,000		1,597,500
	senior secured bond, first lien, 5.875%, 3/15/22		United States		1,000,000		1,090,000
	senior secured bond, first lien, 5.25%, 4/15/25		United States		600,000		623,625
d,i	Hologic Inc., senior note, 144A, 5.25%, 7/15/22		United States		1,000,000		1,023,750
	Omnicare Inc., senior note, 4.75%, 12/01/22		United States		700,000		745,500
	Tenet Healthcare Corp., senior note,
	8.125%, 4/01/22		United States		1,200,000		1,317,000
	d 144A, 5.00%, 3/01/19		United States		500,000		501,875
	d 144A, 5.50%, 3/01/19		United States		1,200,000		1,215,000
d	Tenet Healthcare Corp. II, senior note, 144A, 6.75%, 6/15/23		United States		300,000		306,562
							16,386,612
	Insurance 0.8%
	MetLife Inc., junior sub. note,
	e 5.25% to 6/15/20, FRN thereafter, Perpetual		United States		1,200,000		1,192,500
	6.40% to 12/15/36, FRN thereafter, 12/15/66		United States		1,500,000		1,650,000
d	Nippon Life Insurance Co., sub. bond, 144A, 5.10% to 10/16/24, FRN thereafter, 10/16/44		Japan		3,500,000		3,652,215
							6,494,715
	Materials 4.9%
	ArcelorMittal, senior note,
	6.25%, 3/01/21		Luxembourg		3,000,000		3,164,835
	6.125%, 6/01/25		Luxembourg		300,000		300,375
d	Ardagh Packaging Finance PLC/Ardagh MP Holdings USA Inc., senior note, 144A,
	7.00%, 11/15/20		Luxembourg		105,882		108,331
	6.75%, 1/31/21		Luxembourg		200,000		205,500
	6.00%, 6/30/21		Luxembourg		1,300,000		1,309,750

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	Barminco Finance Pty. Ltd., senior note, 144A, 9.00%, 6/01/18		Australia		1,500,000		$	1,425,938
d	Cemex Finance LLC, senior secured note, first lien, 144A, 6.00%, 4/01/24		Mexico		1,000,000			991,250
d	Cemex SAB de CV,
	first lien, 144A, 5.70%, 1/11/25		Mexico		1,500,000			1,431,562
	secured note, 144A, 5.875%, 3/25/19		Mexico		1,000,000			1,026,250
d	Ceramtec Group GmbH, senior note, 144A, 8.25%, 8/15/21		Germany		1,400,000	EUR		1,709,427
d	The Chemours Co.,
	senior bond, 144A, 7.00%, 5/15/25		United States		500,000			486,250
	senior note, 144A, 6.625%, 5/15/23		United States		1,800,000			1,748,250
d	First Quantum Minerals Ltd., senior note, 144A,
	6.75%, 2/15/20		Canada		1,400,000			1,361,500
	7.00%, 2/15/21		Canada		1,725,000			1,658,156
d	FMG Resources (August 2006) Pty. Ltd., senior secured note, 144A, 9.75%, 3/01/22		Australia		3,200,000			3,302,000
	Freeport-McMoRan Inc., senior note, 4.55%, 11/14/24		United States		2,500,000			2,330,487
d	Glencore Finance Canada Ltd., senior bond, 144A, 4.95%, 11/15/21		Switzerland		1,500,000			1,575,687
d	Glencore Funding LLC, senior note, 144A,
	4.125%, 5/30/23		Switzerland		1,000,000			967,806
	4.625%, 4/29/24		Switzerland		500,000			496,752
d	INVISTA Finance LLC, senior secured note, 144A, 4.25%, 10/15/19		United States		2,800,000			2,772,000
	Novelis Inc., senior note, 8.75%, 12/15/20		Canada		1,600,000			1,696,000
d	Owens-Brockway Glass Container Inc., senior note, 144A, 5.00%, 1/15/22		United States		1,400,000			1,387,750
	Reynolds Group Issuer Inc./LLC/SA,
	first lien, 5.75%, 10/15/20		United States		700,000			719,250
	senior note, 8.50%, 5/15/18		United States		1,000,000			1,021,250
	senior note, 8.25%, 2/15/21		United States		1,000,000			1,042,500
	senior secured note, first lien, 7.125%, 4/15/19		United States		800,000			825,000
d	Sealed Air Corp.,
	senior bond, 144A, 5.125%, 12/01/24		United States		1,000,000			990,000
	senior bond, 144A, 5.50%, 9/15/25		United States		400,000			404,000
	senior note, 144A, 4.875%, 12/01/22		United States		1,000,000			988,750
	Steel Dynamics Inc.,
	senior bond, 5.50%, 10/01/24		United States		1,000,000			1,002,500
	senior note, 5.125%, 10/01/21		United States		1,000,000			1,007,000
d	U.S. Coatings Acquisition Inc./Flash Dutch 2 BV, 144A, 5.75%, 2/01/21		United States		1,000,000	EUR		1,175,048
	Verso Paper Holdings LLC/Inc., senior secured note, first lien, 11.75%, 1/15/19		United States		451,000			264,963
								40,896,117
	Media 3.8%
	CCO Holdings LLC/CCO Holdings Capital Corp., senior bond,
	5.25%, 9/30/22		United States		2,700,000			2,666,250
	d 144A, 5.375%, 5/01/25		United States		900,000			878,625
	Clear Channel Worldwide Holdings Inc.,
	senior note, 6.50%, 11/15/22		United States		1,000,000			1,045,000
	senior sub. note, 7.625%, 3/15/20		United States		200,000			207,250
	senior sub. note, 7.625%, 3/15/20		United States		500,000			523,125

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)
	Media (continued)
	CSC Holdings LLC, senior note,
	6.75%, 11/15/21		United States		2,500,000		$	2,643,750
	5.25%, 6/01/24		United States		200,000			193,000
	DISH DBS Corp., senior note,
	7.125%, 2/01/16		United States		2,000,000			2,055,000
	6.75%, 6/01/21		United States		500,000			522,500
	5.875%, 7/15/22		United States		500,000			491,250
	5.875%, 11/15/24		United States		500,000			481,563
	Gannett Co. Inc.,
	senior bond, 6.375%, 10/15/23		United States		1,000,000			1,045,000
	d senior bond, 144A, 5.50%, 9/15/24		United States		300,000			297,750
	senior note, 5.125%, 7/15/20		United States		1,000,000			1,028,750
	iHeartCommunications Inc.,
	senior secured bond, first lien, 9.00%, 3/01/21		United States		2,400,000			2,196,000
	senior secured note, first lien, 9.00%, 9/15/22		United States		700,000			637,000
d	Nielsen Finance LLC/Co., senior note, 144A, 5.00%, 4/15/22		United States		300,000			294,563
d	Sirius XM Radio Inc., senior bond, 144A,
	6.00%, 7/15/24		United States		1,700,000			1,721,250
	5.375%, 4/15/25		United States		800,000			776,000
	Time Warner Cable Inc., senior note, 4.00%, 9/01/21		United States		2,500,000			2,567,315
d	Unitymedia Hessen GmbH & Co. KG/Unitymedia NRW GmbH, senior secured note, first lien, 144A, 5.625%, 4/15/23		Germany		720,000	EUR		866,596
d	Unitymedia KabelBW GmbH, senior bond, 144A, 6.125%, 1/15/25		Germany		1,700,000			1,776,500
d	Univision Communications Inc., senior secured note, first lien, 144A, 5.125%, 2/15/25		United States		3,000,000			2,895,000
d	Videotron Ltd., senior bond, 144A, 5.375%, 6/15/24		Canada		800,000			802,000
d	Virgin Media Finance PLC, senior bond, 144A, 6.375%, 10/15/24		United Kingdom		900,000	GBP		1,476,642
d	Virgin Media Secured Finance PLC, senior secured bond, first lien, 144A, 5.50%, 1/15/25		United Kingdom		1,900,000			1,910,687
								31,998,366
	Pharmaceuticals, Biotechnology & Life Sciences 2.0%
	AbbVie Inc., senior note, 3.60%, 5/14/25		United States		1,500,000			1,483,335
	Actavis Funding SCS, senior bond, 3.80%, 3/15/25		United States		1,500,000			1,474,203
d	Baxalta Inc., senior note, 144A, 4.00%, 6/23/25		United States		2,100,000			2,090,519
d	Endo Finance LLC/Endo Ltd./Endo Finco Inc.,
	senior bond, 144A, 6.00%, 2/01/25		United States		1,200,000			1,225,500
	i senior note, 144A, 6.00%, 7/15/23		United States		700,000			717,500
	Grifols Worldwide Operations Ltd., senior note, 5.25%, 4/01/22		United States		700,000			703,500
d,j	Jaguar Holding Co. I, senior note, 144A, PIK, 9.375%, 10/15/17		United States		2,500,000			2,559,375
d	Valeant Pharmaceuticals International Inc.,
	senior bond, 144A, 6.125%, 4/15/25		United States		300,000			309,750
	senior note, 144A, 7.50%, 7/15/21		United States		600,000			650,250
	senior note, 144A, 5.50%, 3/01/23		United States		400,000			405,000
d	VPI Escrow Corp., senior note, 144A, 6.375%, 10/15/20		United States		2,400,000			2,533,500
	Zoetis Inc., senior bond, 3.25%, 2/01/23		United States		2,500,000			2,422,997
								16,575,429
	Real Estate 0.1%
	Crown Castle International Corp., senior bond, 5.25%, 1/15/23		United States		500,000			505,500

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)
	Retailing 0.7%
d	Argos Merger Sub Inc., senior note, 144A, 7.125%, 3/15/23		United States		700,000		$	735,000
d	Edcon Ltd., secured note, 144A, 9.50%, 3/01/18		South Africa		1,800,000	EUR		1,589,763
d	Family Tree Escrow LLC, senior note, 144A, 5.75%, 3/01/23		United States		900,000			945,000
d	Netflix Inc., senior bond, 144A, 5.875%, 2/15/25		United States		2,300,000			2,392,253
								5,662,016
	Software & Services 1.1%
d	BMC Software Finance Inc., senior note, 144A, 8.125%, 7/15/21		United States		2,500,000			2,034,375
	Equinix Inc., senior bond, 5.375%, 4/01/23		United States		2,500,000			2,512,500
	First Data Corp.,
	senior bond, 12.625%, 1/15/21		United States		300,000			347,250
	d senior secured bond, second lien, 144A, 8.25%, 1/15/21		United States		3,000,000			3,172,500
	Sterling International Inc., senior note, 11.00%, 10/01/19		United States		1,100,000			1,171,500
								9,238,125
	Technology Hardware & Equipment 0.3%
d	Alcatel-Lucent USA Inc., senior note, 144A, 6.75%, 11/15/20		France		1,500,000			1,591,875
d,j	CommScope Holdings Co. Inc., senior note, 144A, PIK, 6.625%, 6/01/20		United States		200,000			208,250
d	CommScope Technologies Finance LLC, senior bond, 144A, 6.00%, 6/15/25		United States		900,000			898,875
								2,699,000
	Telecommunication Services 3.3%
	AT&T Inc., senior bond, 3.40%, 5/15/25		United States		1,900,000			1,807,728
	CenturyLink Inc.,
	senior bond, 6.75%, 12/01/23		United States		200,000			201,375
	d senior bond, 144A, 5.625%, 4/01/25		United States		900,000			815,625
	senior note, 6.00%, 4/01/17		United States		500,000			523,125
	senior note, 6.45%, 6/15/21		United States		500,000			506,250
d	Digicel Group Ltd., senior note, 144A, 8.25%, 9/30/20		Bermuda		1,500,000			1,507,500
d	Digicel Ltd., senior note, 144A,
	6.00%, 4/15/21		Bermuda		1,000,000			967,500
	6.75%, 3/01/23		Bermuda		300,000			293,827
	Frontier Communications Corp.,
	senior bond, 7.625%, 4/15/24		United States		300,000			266,250
	senior note, 8.50%, 4/15/20		United States		100,000			104,800
	senior note, 8.75%, 4/15/22		United States		200,000			199,000
	senior note, 7.875%, 1/15/27		United States		400,000			372,000
	Intelsat Jackson Holdings SA,
	senior bond, 6.625%, 12/15/22		Luxembourg		1,600,000			1,474,000
	senior note, 7.25%, 10/15/20		Luxembourg		1,000,000			992,500
	senior note, 7.50%, 4/01/21		Luxembourg		1,000,000			992,500
d	Millicom International Cellular SA, senior note, 144A, 6.625%, 10/15/21		Luxembourg		2,000,000			2,068,750
d	Play Finance 2 SA, senior secured note, 144A, 5.25%, 2/01/19		Poland		800,000	EUR		919,118
	Sprint Communications Inc., senior note,
	8.375%, 8/15/17		United States		1,200,000			1,302,000
	6.00%, 11/15/22		United States		500,000			458,125
	d 144A, 9.00%, 11/15/18		United States		1,500,000			1,697,640
	d 144A, 7.00%, 3/01/20		United States		800,000			872,160
	Sprint Corp., senior bond, 7.875%, 9/15/23		United States		500,000			488,750

FSI-16 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)
	Telecommunication Services (continued)
	T-Mobile USA Inc.,
	senior bond, 6.50%, 1/15/24		United States		300,000		$	310,500
	senior bond, 6.375%, 3/01/25		United States		1,300,000			1,337,375
	senior note, 6.542%, 4/28/20		United States		1,400,000			1,469,286
	senior note, 6.125%, 1/15/22		United States		200,000			207,000
	Verizon Communications Inc., senior note, 5.15%, 9/15/23		United States		2,000,000			2,195,012
d	Wind Acquisition Finance SA, senior secured note, 144A,
	4.00%, 7/15/20		Italy		1,200,000	EUR		1,343,191
	7.00%, 4/23/21		Italy		1,500,000	EUR		1,735,266
								27,428,153
	Transportation 0.7%
d	Florida East Coast Holdings Corp.,
	secured note, first lien, 144A, 6.75%, 5/01/19		United States		900,000			904,500
	senior note, 144A, 9.75%, 5/01/20		United States		400,000			381,000
	Hertz Corp., senior note,
	6.75%, 4/15/19		United States		1,000,000			1,034,400
	6.25%, 10/15/22		United States		1,500,000			1,530,000
d	Stena AB, senior bond, 144A, 7.00%, 2/01/24		Sweden		900,000			873,000
d	Stena International SA, secured bond, 144A, 5.75%, 3/01/24		Sweden		1,100,000			1,053,239
								5,776,139
	Utilities 1.3%
	Calpine Corp.,
	senior bond, 5.75%, 1/15/25		United States		1,200,000			1,171,500
	senior note, 5.375%, 1/15/23		United States		1,300,000			1,283,750
d,e	EDF SA, sub. note, 144A, 5.25% to 1/29/23, FRN thereafter, Perpetual		France		3,000,000			3,015,000
	Exelon Corp., senior bond, 3.95%, 6/15/25		United States		1,800,000			1,811,502
d	InterGen NV, secured bond, 144A, 7.00%, 6/30/23		Netherlands		2,500,000			2,237,500
d,f	Texas Competitive Electric Holdings Co. LLC/Texas Competitive Electric Holdings Finance Inc., senior secured note, first lien, 144A, 11.50%, 10/01/20		United States		3,000,000			1,837,500
								11,356,752
	Total Corporate Bonds (Cost $336,299,717)							322,657,036
g,k	Senior Floating Rate Interests 20.8%
	Automobiles & Components 0.9%
	Crowne Group LLC, Term Loan, 6.00%, 9/30/20		United States		1,117,056			1,117,056
	FRAM Group Holdings Inc. (Autoparts Holdings),
	Second Lien Term Loan, 11.00%, 1/29/18		United States		1,458,729			1,363,912
	Term Loan, 7.00%, 7/29/17		United States		3,111,198			2,986,751
i	The Goodyear Tire & Rubber Co., Second Lien Loans, 5.25%, 4/30/19		United States		358,614			359,734
	Henniges Automotive Holdings Inc., Term Loans, 5.50%, 6/12/21		United States		806,589			808,605
i	TI Group Automotive Systems LLC, Term Loan B, 5.75%, 6/30/22		United States		230,658			231,090
	UCI International Inc., Term Loan, 5.50%, 7/26/17		United States		576,748			573,864
								7,441,012

Semiannual Report FSI-17

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Strategic Income VIP Fund (continued)

		Country		Principal Amount*		Value
g,k	Senior Floating Rate Interests (continued)
	Capital Goods 1.1%
	Alfred Fueling Systems Inc. (Wayne Fueling),
	First Lien Initial Term Loan, 4.75%, 6/18/21		United States		489,413	$	494,307
	Second Lien Initial Term Loan, 8.50%, 6/20/22		United States		845,106		842,993
	Doncasters U.S. Finance LLC, Second Lien Term Loan, 9.50%, 10/09/20		United States		125,226		125,539
l	Erickson Inc., Purchase Price Notes, 6.00%, 11/02/20		United States		179,526		154,500
	LCS Deco LLC, Term B Loans, 5.50%, 5/21/22		United States		61,664		62,358
	Onsite Rental Group Operations Pty. Ltd., Term B Loan, 5.50%, 7/30/21		United States		2,422,669		2,362,102
	Sensus USA Inc.,
	First Lien Term Loan, 4.50%, 5/09/17		United States		1,314,688		1,308,936
	Second Lien Term Loan, 8.50%, 5/09/18		United States		3,032,186		3,017,025
	TransDigm Inc.,
	Tranche C Term Loan, 3.75%, 2/28/20		United States		91,027		90,503
	Tranche D Term Loan, 3.75%, 6/04/21		United States		291,258		289,370
i	WireCo Worldgroup Inc., Term Loan, 6.00%, 2/15/17		United States		359,972		360,646
							9,108,279
	Commercial & Professional Services 0.6%
	AlixPartners LLP, Second Lien 2013 Recapitalization Term Loan, 9.00%, 7/10/21		United States		2,678,927		2,710,739
	Interactive Data Corp., Term Loan, 4.75%, 5/02/21		United States		2,238,602		2,247,930
							4,958,669
	Consumer Services 3.3%
	24 Hour Fitness Worldwide Inc., Term Loan, 4.75%, 5/28/21		United States		945,498		902,656
	Boyd Gaming Corp., Term A Loan, 3.146%, 8/14/18		United States		54,575		54,609
	Caesars Entertainment Resort Properties LLC, Term B Loans, 7.00%, 10/11/20		United States		4,050,250		3,713,573
	Cannery Casino Resorts LLC,
	Second Lien Term Loan, 10.00%, 10/02/19		United States		780,000		713,700
	Term Loan, 6.00%, 10/02/18		United States		2,930,099		2,906,902
	Fitness International LLC, Term B Loan, 5.50%, 7/01/20		United States		4,258,984		4,111,253
	Hilton Worldwide Finance LLC, Initial Term Loan, 3.50%, 10/26/20		United States		1,053,531		1,054,702
	ROC Finance LLC, Funded Term B Loans, 5.00%, 6/20/19		United States		2,246,088		2,205,378
	Seaworld Parks and Entertainment Inc., Term B-2 Loan, 3.00%, 5/14/20		United States		1,538,046		1,487,338
	TGI Friday’s Inc., First Lien Initial Term Loan, 5.25%, 7/15/20		United States		467,979		470,904
i	Town Sports International LLC, Initial Term Loan, 4.50%, 11/15/20		United States		1,366,654		1,091,045
	Travelport Finance Luxembourg S.A.R.L., Initial Term Loan, 5.75%, 9/02/21		Luxembourg		2,347,674		2,358,433
c,j	Turtle Bay Holdings LLC, Term Loan B, PIK, 3.00%, 6/30/16		United States		6,490,742		6,506,969
							27,577,462
	Diversified Financials 0.6%
	Guggenheim Partners Investment Management Holdings LLC, Initial Term Loan, 4.25%, 7/22/20		United States		927,314		931,951
	Trans Union LLC, 2015 Term B-2 Loans, 3.75%, 4/09/21		United States		3,988,167		3,960,748
							4,892,699

FSI-18 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Strategic Income VIP Fund (continued)

		Country		Principal Amount*		Value
g,k	Senior Floating Rate Interests (continued)
	Energy 2.1%
	Bowie Resource Holdings LLC,
	i First Lien Initial Term Loan, 6.75%, 8/16/20		United States		2,724,383	$	2,594,975
	Second Lien Initial Term Loan, 11.75%, 2/16/21		United States		480,257		457,445
	Citgo Petroleum Corp., Term B Loan, 4.50%, 7/29/21		United States		222,890		223,215
i	Drillships Ocean Ventures Inc. and Drillships Ventures Projects Inc., Term Loan, 5.50%, 7/25/21		Marshall Islands		2,099,047		1,796,784
	Fieldwood Energy LLC,
	i Loans, 3.875%, 10/01/18		United States		2,930,400		2,796,334
	Second Lien Loans, 8.375%, 9/30/20		United States		468,000		359,190
i	Foresight Energy LLC, Term Loans, 5.50%, 8/21/20		United States		1,372,000		1,361,710
	OSG Bulk Ships Inc., Initial Term Loan, 5.25%, 8/05/19		United States		1,239,185		1,240,734
	OSG International Inc. (OIN), Initial Term Loan, 5.75%, 8/05/19		United States		2,012,176		2,022,237
i	Peabody Energy Corp., Term Loan, 4.25%, 9/24/20		United States		1,781,863		1,506,152
i	UTEX Industries Inc., First Lien Initial Term Loan, 5.00%, 5/21/21		United States		3,111,139		2,888,824
	Westmoreland Coal Co., Term Loan, 7.50%, 12/16/20		United States		661,307		644,774
							17,892,374
	Food, Beverage & Tobacco 0.4%
	AdvancePierre Foods Inc., Second Lien Term Loan, 9.50%, 10/10/17		United States		1,805,558		1,837,155
i	CSM Bakery Supplies LLC (U.S. Acquisition), Second Lien Term Loan, 8.75%, 7/03/21		United States		296,913		282,810
i	Post Holdings Inc., Series A Incremental Term Loan, 3.75%, 6/02/21		United States		1,067,625		1,064,480
							3,184,445
	Health Care Equipment & Services 1.3%
	Carestream Health Inc., Second Lien Loan, 9.50%, 12/07/19		United States		662,437		660,119
	Community Health Systems Inc., 2018 Term F Loans, 3.534%, 12/31/18		United States		986,859		987,211
	Connolly LLC,
	i Initial Term Loan, 4.50%, 5/14/21		United States		2,676,482		2,676,482
	Second Lien Initial Term Loan, 8.00%, 5/13/22		United States		253,793		255,697
	Dialysis Newco Inc., Second Lien Term Loan B, 7.75%, 10/22/21		United States		267,300		269,973
	Kinetic Concepts Inc., Dollar Term E-1 Loan, 4.50%, 5/04/18		United States		1,006,689		1,011,879
	Millennium Health LLC, Tranche B Term Loan, 5.25%, 4/16/21		United States		2,350,675		984,345
	Surgery Centers Holdings Inc., Second Lien Term Loan, 8.50%, 11/03/21		United States		269,467		269,467
	Truven Health Analytics Inc., New Tranche B Term Loan, 4.50%, 6/06/19		United States		1,730,880		1,729,258
	U.S. Renal Care Inc., Tranche B-2 Term Loan, 4.25%, 7/03/19		United States		1,716,635		1,717,172
							10,561,603
	Household & Personal Products 0.9%
	FGI Operating Co. LLC (Freedom Group), Term B Loans, 5.50%, 4/19/19		United States		4,641,758		4,421,275
	Revlon Consumer Products Corp., Replacement Term Loan, 3.25%, 11/19/17		United States		459,530		459,721
i	Spectrum Brands Inc., Term Loan B, 5.25%, 6/23/22		United States		980,983		984,457
	Sun Products Corp., Tranche B Term Loan, 5.50%, 3/23/20		United States		2,170,122		2,110,444
							7,975,897

Semiannual Report FSI-19

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Strategic Income VIP Fund (continued)

		Country		Principal Amount*		Value
g,k	Senior Floating Rate Interests (continued)
	Materials 2.9%
i	Appvion Inc., Term Loan, 5.75% - 6.75%, 6/28/19		United States		2,949,330	$	2,761,923
	Atkore International Inc., Second Lien Initial Term Loan, 7.75%, 10/09/21		United States		219,800		206,795
	Caraustar Industries Inc.,
	Term Loan B, 8.00%, 5/01/19		United States		1,662,052		1,670,349
	Term Loan C, 8.00%, 5/01/19		United States		2,726,300		2,739,910
	CD&R Millennium U.S. Acquico LLC, Second Lien Initial Term Loan, 8.75%, 7/31/22		United States		585,000		579,881
	The Chemours Co. LLC, Tranche B Term Loan, 3.75%, 5/12/22		United States		750,232		748,670
	Coveris Holdings SA, Term B-1 Loan, 4.50%, 5/08/19		Luxembourg		2,966,959		2,978,703
	Cyanco Intermediate Corp., Initial Term Loan, 5.50%, 5/01/20		United States		3,296,453		3,296,453
	FMG America Finance Inc. (Fortescue Metals Group), Loans, 3.75%, 6/30/19		Australia		2,118,932		1,886,513
	HII Holding Corp. (Houghton International), Second Lien Term Loan, 9.50%, 12/21/20		United States		575,175		577,332
	Huntsman International LLC, Extended Term B Dollar Loan, 2.731%, 4/19/17		United States		378,485		378,719
	Ineos U.S. Finance LLC, Dollar Term Loan, 4.25%, 3/31/22		United States		408,802		409,185
	Nexeo Solutions LLC,
	Term B-1 Loan, 5.00%, 9/08/17		United States		110,369		109,035
	Term B-3 Loan, 5.00%, 9/08/17		United States		107,871		106,568
	Novelis Inc., Initial Term Loan, 4.00%, 6/02/22		Canada		802,059		799,052
	OCI Beaumont LLC, Term B-3 Loan, 5.50%, 8/20/19		United States		1,758,812		1,785,195
	Oxbow Carbon LLC,
	First Lien Tranche B Term Loan, 4.25%, 7/19/19		United States		328,724		328,107
	Second Lien Initial Term Loan, 8.00%, 1/17/20		United States		311,538		295,183
	OXEA GmbH, Second Lien Term Loan, 8.25%, 7/15/20		Luxembourg		891,600		845,627
	Solenis International LP and Solenis Holdings, Second Lien Term Loan, 7.75%, 7/31/22		United States		174,800		169,611
	Tronox Pigments (Netherlands) BV, Term Loan, 4.25%, 3/19/20		Netherlands		264,410		264,938
	Walter Energy Inc., B Term Loan, 7.25%, 4/02/18		United States		3,083,004		1,700,792
							24,638,541
	Media 2.2%
i	AMC Entertainment Inc., Initial Term Loan, 5.00%, 4/30/20		United States		344,420		344,375
	Cengage Learning Acquisitions Inc., Original Term Loans, 7.00%, 3/31/20		United States		2,661,763		2,671,745
i	Charter Communications Operating LLC, Term E Loan, (CCO Safari), 3.00%, 7/01/20		United States		1,403,177		1,387,742
	Cumulus Media Holdings Inc., Term Loans, 4.25%, 12/23/20		United States		459,266		437,164
	MediArena Acquisition BV, Second Lien Dollar Term B Loan, 10.00%, 8/13/22		Netherlands		430,000		416,025
	Radio One Inc., Term Loan B, 4.78%, 12/31/18		United States		6,867,843		7,003,771
	UPC Financing Partnership (UPC Broadband Holdings BV), Term Loan AH, 3.25%, 6/30/21		Netherlands		1,231,045		1,215,657
	Virgin Media Bristol LLC, F Facility, 3.50%, 6/30/23		United States		571,213		566,394
	William Morris Endeavor Entertainment LLC, Term Loans Second Lien, 8.25%, 5/06/22		United States		4,466,536		4,360,456
							18,403,329

FSI-20 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Strategic Income VIP Fund (continued)

		Country		Principal Amount*		Value
g,k	Senior Floating Rate Interests (continued)
	Pharmaceuticals, Biotechnology & Life Sciences 1.1%
i	Endo Luxembourg Finance Co. and Endo LLC, Term Loan B, 3.25%, 7/01/22		United States		1,526,156	$	1,531,879
	Grifols Worldwide Operations USA Inc., US Tranche B Term Loan, 3.187%, 2/27/21		United States		2,766,840		2,770,443
	Horizon Pharma Inc., 2015 Term Loan, 4.50%, 5/07/21		United States		54,713		54,970
	Valeant Pharmaceuticals International Inc.,
	i Series D-2 Tranche B Term Loan, 5.00%, 2/13/19		United States		1,340,000		1,338,827
	Series F-1 New Term Loan, 4.00%, 4/01/22		United States		3,472,725		3,475,094
							9,171,213
	Real Estate 0.0%†
	Capital Automotive LP, Second Lien Term Loan, 6.00%, 4/30/20		United States		182,500		185,846
	Retailing 0.9%
	BJ’s Wholesale Club Inc.,
	2013 (Nov) Replacement Loans, 4.50%, 9/26/19		United States		1,755,822		1,759,246
	Second Lien 2013 (Nov) Replacement Loans, 8.50%, 3/26/20		United States		1,915,908		1,934,668
i	Dollar Tree Inc., Term B-1 Loans, 3.50%, 3/09/22		United States		293,851		294,340
i	Evergreen AcqCo. 1 LP (Savers), Term Loan, 5.00%, 7/09/19		United States		3,158,333		2,956,989
	The Men’s Wearhouse Inc., Tranche B Term Loan, 4.50%, 6/18/21		United States		747,063		750,331
							7,695,574
	Semiconductors & Semiconductor Equipment 0.1%
	M/A-COM Technology Solutions Holdings Inc., Initial Term Loan, 4.50%, 5/07/21		United States		518,364		519,660
	Software & Services 1.6%
	BMC Software Finance Inc., Initial U.S. Term Loans, 5.00%, 9/10/20		United States		4,804,119		4,534,555
	MoneyGram International Inc., Term Loan, 4.25%, 3/27/20		United States		5,139,994		4,889,419
	Sungard Availability Services Capital Inc., Tranche B Term Loan, 6.00%, 3/29/19		United States		2,887,509		2,656,509
	Vertafore Inc., Second Lien Term Loan, 9.75%, 10/27/17		United States		1,173,616		1,189,753
							13,270,236
	Technology Hardware & Equipment 0.1%
	CIENA Corp., Term Loan, 3.75%, 7/15/19		United States		228,679		229,536
i	CommScope Inc., Tranche 5 Term Loan, 5.25%, 12/29/22		United States		389,022		389,205
i	Dell International LLC, Term B-2 Loan, 5.50%, 4/29/20		United States		296,201		296,492
							915,233
	Telecommunication Services 0.2%
	Intelsat Jackson Holdings SA, Tranche B-2 Term Loan, 3.75%, 6/30/19		Luxembourg		1,328,748		1,320,997
	Transportation 0.3%
	American Airlines Inc., 2015 Term Loans, 3.50%, 6/27/20		United States		1,170,000		1,161,225
i	Navios Maritime Midstream Partners LP, Term Loan B, 6.75%, 6/18/20		Marshall Islands		1,305,136		1,301,873
							2,463,098
	Utilities 0.2%
	Calpine Construction Finance Co. LP,
	Term B-1 Loan, 3.00%, 5/03/20		United States		1,189,486		1,170,652
	Term B-2 Loan, 3.25%, 1/31/22		United States		296,533		292,919

Semiannual Report FSI-21

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Strategic Income VIP Fund (continued)

		Country		Principal Amount*			Value
g,k	Senior Floating Rate Interests (continued)
	Utilities (continued)
	Calpine Corp., Term Loan (B5), 3.50%, 5/27/22		United States		492,357		$	488,703
								1,952,274
	Total Senior Floating Rate Interests (Cost $178,340,231)							174,128,441
	Foreign Government and Agency Securities 16.1%
	Government of Hungary,
	5.50%, 2/12/16		Hungary		1,454,700,000	HUF		5,284,057
	5.50%, 12/22/16		Hungary		46,690,000	HUF		175,880
	6.50%, 6/24/19		Hungary		206,000,000	HUF		835,261
	7.50%, 11/12/20		Hungary		313,570,000	HUF		1,350,995
	A, 6.75%, 11/24/17		Hungary		104,470,000	HUF		414,462
	A, 5.50%, 12/20/18		Hungary		34,100,000	HUF		133,553
	A, 7.00%, 6/24/22		Hungary		930,000	HUF		3,962
	A, 6.00%, 11/24/23		Hungary		1,270,000	HUF		5,192
	senior note, 6.25%, 1/29/20		Hungary		3,000,000			3,365,145
	senior note, 6.375%, 3/29/21		Hungary		1,000,000			1,138,785
	Government of Indonesia, FR34, 12.80%, 6/15/21		Indonesia		17,235,000,000	IDR		1,562,746
	Government of Malaysia,
	3.835%, 8/12/15		Malaysia		7,475,000	MYR		1,981,751
	4.72%, 9/30/15		Malaysia		10,268,000	MYR		2,731,035
	3.197%, 10/15/15		Malaysia		13,330,000	MYR		3,532,741
	senior bond, 3.814%, 2/15/17		Malaysia		2,500,000	MYR		669,342
	senior bond, 4.24%, 2/07/18		Malaysia		600,000	MYR		162,783
	senior note, 3.172%, 7/15/16		Malaysia		32,500,000	MYR		8,619,322
	Government of Mexico,
	8.00%, 12/17/15		Mexico		753,560	m MXN		4,899,563
	6.25%, 6/16/16		Mexico		1,524,310	m MXN		9,947,454
	7.25%, 12/15/16		Mexico		930,330	m MXN		6,203,946
	Government of Poland,
	6.25%, 10/24/15		Poland		9,134,000	PLN		2,462,542
	4.75%, 10/25/16		Poland		31,000,000	PLN		8,552,467
	Strip, 7/25/15		Poland		2,052,000	PLN		544,878
	Strip, 1/25/16		Poland		1,066,000	PLN		280,797
d	Government of Portugal, 144A, 5.125%, 10/15/24		Portugal		5,000,000			5,150,775
d	Government of Serbia, senior note, 144A,
	4.875%, 2/25/20		Serbia		4,410,000			4,469,513
	7.25%, 9/28/21		Serbia		1,000,000			1,123,795
	Government of Singapore, senior note, 1.125%, 4/01/16		Singapore		7,350,000	SGD		5,466,798
	Government of Sri Lanka,
	A, 6.50%, 7/15/15		Sri Lanka		28,980,000	LKR		216,467
	A, 6.40%, 8/01/16		Sri Lanka		19,500,000	LKR		145,405
	B, 6.40%, 10/01/16		Sri Lanka		16,000,000	LKR		119,022
	B, 8.50%, 7/15/18		Sri Lanka		15,280,000	LKR		116,459
	C, 8.50%, 4/01/18		Sri Lanka		8,070,000	LKR		61,667
	D, 8.50%, 6/01/18		Sri Lanka		54,050,000	LKR		412,456
	Government of the Philippines,
	senior bond, 7.00%, 1/27/16		Philippines		80,000,000	PHP		1,811,808
	senior note, 1.625%, 4/25/16		Philippines		155,000,000	PHP		3,417,660

FSI-22 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)
d	Government of Ukraine,
	144A, 7.75%, 9/23/20		Ukraine		3,850,000		$	1,901,457
	senior bond, 144A, 7.80%, 11/28/22		Ukraine		2,790,000			1,468,237
	senior note, 144A, 7.95%, 2/23/21		Ukraine		2,120,000			1,119,625
	senior note, 144A, 7.50%, 4/17/23		Ukraine		1,000,000			525,625
n	Government of Uruguay, senior bond, Index Linked, 4.375%, 12/15/28		Uruguay		174,338,838	UYU		6,203,396
	Korea Monetary Stabilization Bond, senior note,
	2.80%, 8/02/15		South Korea		1,324,510,000	KRW		1,184,295
	2.81%, 10/02/15		South Korea		6,000,000,000	KRW		5,376,025
	2.07%, 12/02/16		South Korea		3,750,000,000	KRW		3,368,985
	Korea Treasury Bond, senior note,
	2.75%, 12/10/15		South Korea		5,847,900,000	KRW		5,250,454
	3.00%, 12/10/16		South Korea		5,500,000,000	KRW		5,006,083
	Nota Do Tesouro Nacional,
	10.00%, 1/01/17		Brazil		7,500	o BRL		2,291,035
	10.00%, 1/01/23		Brazil		4,000	o BRL		1,134,117
	p Index Linked, 6.00%, 8/15/16		Brazil		1,604	o BRL		1,356,529
	p Index Linked, 6.00%, 8/15/18		Brazil		5,525	o BRL		4,648,173
	p Index Linked, 6.00%, 5/15/23		Brazil		2,250	o BRL		1,875,427
	Uruguay Notas del Tesoro,
	10.25%, 8/22/15		Uruguay		59,720,000	UYU		2,207,981
	9.50%, 1/27/16		Uruguay		9,220,000	UYU		341,379
	n 18, Index Linked, 2.25%, 8/23/17		Uruguay		27,357,989	UYU		959,404
	Uruguay Treasury Bill, Strip,
	7/02/15		Uruguay		510,000	UYU		18,876
	8/20/15		Uruguay		35,364,000	UYU		1,287,839
	Total Foreign Government and Agency Securities (Cost $158,093,283)							134,895,426
	U.S. Government and Agency Securities 3.1%
	U.S. Treasury Bond,
	7.875%, 2/15/21		United States		900,000			1,194,047
	6.50%, 11/15/26		United States		2,400,000			3,371,439
	U.S. Treasury Note,
	4.625%, 2/15/17		United States		600,000			639,422
	3.75%, 11/15/18		United States		7,000,000			7,598,829
	2.75%, 2/15/24		United States		4,000,000			4,147,812
	2.50%, 5/15/24		United States		6,000,000			6,095,154
	n Index Linked, 2.125%, 1/15/19		United States		771,348			839,081
	n Index Linked, 0.625%, 7/15/21		United States		1,679,503			1,732,906
	Total U.S. Government and Agency Securities (Cost $25,634,949)							25,618,690
	Asset-Backed Securities and Commercial Mortgage-Backed Securities 6.5%
	Banks 3.6%
	Banc of America Commercial Mortgage Trust, 2006-4, AJ, 5.695%, 7/10/46		United States		1,807,000			1,854,000
g	Bear Stearns Adjustable Rate Mortgage Trust, 2004-4, A6, FRN, 2.68%, 6/25/34		United States		2,018,905			2,038,781

Semiannual Report FSI-23

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)
	Bear Stearns Commercial Mortgage Securities Inc.,
	g 2006-PW11, AJ, FRN, 5.597%, 3/11/39		United States		1,000,000	$	1,018,520
	g 2006-PW12, AJ, FRN, 5.94%, 9/11/38		United States		1,440,000		1,470,541
	2006-PW13, AJ, 5.611%, 9/11/41		United States		5,100,000		5,185,514
	Citigroup Commercial Mortgage Trust,
	2006-C5, AJ, 5.482%, 10/15/49		United States		1,882,000		1,879,062
	g 2007-C6, AM, FRN, 5.899%, 6/10/17		United States		2,500,000		2,650,806
	2015-GC27, A5, 3.137%, 2/10/48		United States		610,000		600,580
g	Citigroup/Deutsche Bank Commercial Mortgage Trust, 2006-CD3, AJ, FRN, 5.688%, 10/15/48		United States		2,700,000		2,617,299
	Countrywide Asset-Backed Certificates, 2005-11, AF4, 5.21%, 3/25/34		United States		1,275,000		1,245,843
	CSAIL Commercial Mortgage Trust, 2015-C1, A4, 3.505%, 4/15/50		United States		550,000		562,236
	Greenwich Capital Commercial Funding Corp.,
	g 2006-GG7, AJ, FRN, 6.013%, 7/10/38		United States		2,560,000		2,595,539
	2007-GG9, AM, 5.475%, 3/10/39		United States		1,030,000		1,076,726
	JPMBB Commercial Mortgage Securities Trust, 2015-C28, A4, 3.227%, 10/15/48		United States		550,000		543,918
	JP Morgan Chase Commercial Mortgage Securities Trust,
	2006-CB17, AM, 5.464%, 12/12/43		United States		760,000		782,504
	g 2006-LDP7, AJ, FRN, 6.10%, 4/15/45		United States		1,680,000		1,680,400
g	Merrill Lynch Mortgage Investors Trust, 2005-A6, 2A3, FRN, 0.567%, 8/25/35		United States		345,285		313,865
g	Morgan Stanley Capital I Trust, 2006-HQ8, AJ, FRN, 5.681%, 3/12/44		United States		200,000		202,999
	Wells Fargo Commercial Mortgage Trust, 2014-LC16, A4, 3.548%, 8/15/50		United States		220,000		226,612
	Wells Fargo Mortgage Backed Securities Trust,
	g 2004-W, A9, FRN, 2.614%, 11/25/34		United States		1,063,415		1,082,083
	2007-3, 3A1, 5.50%, 4/25/37		United States		300,815		311,032
							29,938,860
	Diversified Financials 2.9%
d,g	ARES CLO XII Ltd., 2007-12A, B, 144A, FRN, 1.282%, 11/25/20		United States		1,380,000		1,363,399
d,g	Atrium CDO Corp., 10A, C, 144A, FRN, 2.876%, 7/16/25		United States		1,400,000		1,389,962
d,g	Atrium XI, 11A, C, 144A, FRN, 3.477%, 10/23/25		Cayman Islands		1,820,000		1,828,026
d,g	BCAP LLC Trust, 2009-RR1, 2A2, 144A, FRN, 2.644%, 5/26/35		United States		440,000		419,984
d,g	Catamaran CLO Ltd., 2013-1A, C, 144A, FRN, 2.877%, 1/27/25		Cayman Islands		1,130,000		1,106,677
d,g	Cent CDO Ltd., 2007-15A, A2B, 144A, FRN, 0.626%, 3/11/21		United States		1,251,000		1,190,464
d,g	Cent CLO LP, 2013-17A, D, 144A, FRN, 3.278%, 1/30/25		Cayman Islands		784,314		786,314
d,g	CIFC Funding Ltd., 2007-3A, A1J, 144A, FRN, 0.677%, 7/26/21		United States		960,000		941,779
d,g	ColumbusNova CLO Ltd., 2007-2A, A2, 144A, FRN, 1.275%, 10/15/21		United States		860,000		844,159
d,g	CT CDO IV Ltd., 2006-4A, A1, 144A, FRN, 0.497%, 10/20/43		United States		1,258,983		1,256,623
d,g	Eaton Vance CDO Ltd., 2014-1A,
	B, 144A, FRN, 2.325%, 7/15/26		United States		426,000		428,313
	C, 144A, FRN, 3.275%, 7/15/26		United States		167,100		167,414
g	FHLMC Structured Agency Credit Risk Debt Notes,
	2014-DN1, M2, FRN, 2.387%, 2/25/24		United States		1,500,000		1,502,966
	2014-HQ2, M2, FRN, 2.387%, 9/25/24		United States		1,000,000		993,866

FSI-24 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)
	Diversified Financials (continued)
g	FHLMC Structured Agency Credit Risk Debt Notes, (continued)
	2015-HQ1, M2, FRN, 2.387%, 3/25/25		United States		1,000,000		$	993,760
d	G-Force LLC, 2005-RRA, C, 144A, 5.20%, 8/22/36		United States		2,000,000			1,949,480
g	Impac Secured Assets Trust, 2007-2, FRN, 0.437%, 4/25/37		United States		317,866			294,716
d,g	ING Investment Management CLO Ltd.,
	2013-1A, B, 144A, FRN, 3.175%, 4/15/24		Cayman Islands		270,000			270,680
	2013-1A, C, 144A, FRN, 3.775%, 4/15/24		Cayman Islands		440,000			433,594
	2013-2A, B, 144A, FRN, 2.957%, 4/25/25		United States		1,080,000			1,075,604
d,g	Invitation Homes Trust, 2015-SFR1, A, 144A, FRN, 1.635%, 3/17/32		United States		1,471,496			1,478,737
g	MortgageIT Trust, 2004-1, A2, FRN, 1.087%, 11/25/34		United States		377,914			363,108
d,g	Newcastle CDO Ltd., 2004-5A, 1, 144A, FRN, 0.622%, 12/24/39		United States		202,010			199,796
g	Opteum Mortgage Acceptance Corp. Trust, 2005-4, 1APT, FRN, 0.497%, 11/25/35		United States		647,731			612,717
	Residential Asset Securities Corp., 2004-KS1, AI4, 4.213%, 4/25/32		United States		20,066			20,058
g	Structured Asset Securities Corp., 2005-2XS, 2A2, FRN, 1.684%, 2/25/35		United States		350,471			339,015
g,q	Talisman 6 Finance, Reg S, FRN, 0.191%, 10/22/16		Germany		1,394,253	EUR		1,536,143
g	Thornburg Mortgage Securities Trust, 2005-1, A3, FRN, 2.23%, 4/25/45		United States		335,921			338,328
								24,125,682
	Total Asset-Backed Securities and Commercial Mortgage-Backed Securities (Cost $51,927,722)							54,064,542
	Mortgage-Backed Securities 2.4%
g	Federal Home Loan Mortgage Corp. (FHLMC) Adjustable Rate 0.0%†
	FHLMC, 2.348%, 1/01/33		United States		54,231			56,856
	Federal Home Loan Mortgage Corp. (FHLMC) Fixed Rate 0.4%
	FHLMC Gold 15 Year, 5.50%, 7/01/17 - 7/01/19		United States		73,071			77,013
	FHLMC Gold 15 Year, 6.00%, 5/01/17		United States		2,874			2,956
	FHLMC Gold 15 Year, 6.50%, 5/01/16		United States		176			178
i	FHLMC Gold 30 Year, 3.50%, 7/01/45		United States		1,648,000			1,692,063
	FHLMC Gold 30 Year, 5.00%, 4/01/34 - 8/01/35		United States		367,109			405,946
	FHLMC Gold 30 Year, 5.50%, 3/01/33 - 1/01/35		United States		320,851			360,226
	FHLMC Gold 30 Year, 6.00%, 4/01/33 - 2/01/36		United States		286,146			326,168
	FHLMC Gold 30 Year, 6.50%, 12/01/23 - 6/01/36		United States		67,833			78,205
	FHLMC Gold 30 Year, 7.00%, 9/01/21 - 4/01/30		United States		29,550			33,533
	FHLMC Gold 30 Year, 7.50%, 8/01/30 - 7/01/31		United States		1,183			1,273
								2,977,561
g	Federal National Mortgage Association (FNMA) Adjustable Rate 0.0%†
	FNMA, 2.31% - 2.42%, 4/01/20 - 12/01/34		United States		199.351			211,468
	Federal National Mortgage Association (FNMA) Fixed Rate 1.7%
i	FNMA 15 Year, 2.50%, 7/01/22 - 7/01/30		United States		3,423,933			3,464,640
	FNMA 15 Year, 4.50%, 6/01/19 - 3/01/20		United States		108,732			113,392
	FNMA 15 Year, 5.00%, 10/01/17 - 6/01/18		United States		76,178			79,786
	FNMA 15 Year, 5.50%, 3/01/16 - 11/01/18		United States		412,157			428,087
	FNMA 15 Year, 6.00%, 4/01/16 - 7/01/16		United States		567			568
i	FNMA 30 Year, 3.00%, 7/01/45		United States		4,578,000			4,550,460
i	FNMA 30 Year, 3.50%, 7/01/45		United States		4,887,000			5,027,024

Semiannual Report FSI-25

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 National Mortgage Association (FNMA) Fixed Rate (continued)
	FNMA 30 Year, 5.00%, 4/01/30		United States		116,006	$	128,100
	FNMA 30 Year, 6.50%, 6/01/28 - 10/01/37		United States		314,447		361,507
							14,153,564
	Government National Mortgage Association (GNMA) Fixed Rate 0.3%
	GNMA I SF 30 Year, 5.00%, 11/15/33 - 7/15/34		United States		402,588		450,175
	GNMA I SF 30 Year, 6.50%, 2/15/32		United States		2,126		2,427
	GNMA I SF 30 Year, 7.00%, 10/15/28 - 6/15/32		United States		19,585		20,033
	GNMA I SF 30 Year, 7.50%, 9/15/30		United States		1,497		1,788
i	GNMA II SF 30 Year, 3.00%, 7/01/45		United States		100,000		100,768
i	GNMA II SF 30 Year, 3.50%, 7/01/45		United States		1,920,000		1,989,075
	GNMA II SF 30 Year, 5.00%, 9/20/33 - 11/20/33		United States		118,817		132,979
	GNMA II SF 30 Year, 6.00%, 11/20/34		United States		136,718		159,736
	GNMA II SF 30 Year, 6.50%, 4/20/31 - 2/20/34		United States		62,981		73,798
	GNMA II SF 30 Year, 7.50%, 1/20/28 - 4/20/32		United States		16,496		19,396
							2,950,175
	Total Mortgage-Backed Securities (Cost $20,052,123)						20,349,624
	Municipal Bonds 4.3%
	Arkansas State GO, Four-Lane Highway Construction and Improvement Bonds, 3.25%, 6/15/22		United States		400,000		428,340
	California State GO, Various Purpose,
	5.25%, 11/01/40		United States		560,000		643,462
	Refunding, 5.25%, 3/01/38		United States		1,500,000		1,633,845
	Refunding, 5.00%, 4/01/38		United States		2,000,000		2,162,260
	Refunding, NATL Insured, 4.50%, 12/01/32		United States		300,000		313,299
	Series 1, AGMC Insured, Pre-Refunded, 4.75%, 9/01/31		United States		290,000		298,526
	Chicago GO,
	Build America Bonds, Direct Payment, Taxable Project, Series B, 7.517%, 1/01/40		United States		355,000		362,242
	Taxable Project, Series B, 6.034%, 1/01/42		United States		500,000		422,460
	Colorado State ISD, GO, Mitchell and Scurry Counties, School Building, PSF Guarantee, 5.00%, 8/15/43		United States		300,000		331,518
	Evansville Local Public Improvement Bond Bank Revenue, Sewage Works Project, Series A, 5.00%, 7/01/36		United States		675,000		739,949
	Florida Hurricane Catastrophe Fund Finance Corp. Revenue, Series A, 2.995%, 7/01/20		United States		3,000,000		3,060,300
	Illinois State GO,
	5.877%, 3/01/19		United States		2,000,000		2,163,720
	Build America Bonds, 7.35%, 7/01/35		United States		1,000,000		1,107,930
	Massachusetts State GO, Consolidated Loan of 2014, Series A, 4.50%, 12/01/43		United States		2,300,000		2,414,678
	Minnesota State GO, Various Purpose, Refunding, Series F, 4.00%, 10/01/24		United States		2,650,000		2,990,419
	Nassau County GO, General Improvement Bonds, Series B, 5.00%,
	4/01/39		United States		1,500,000		1,624,815
	4/01/43		United States		1,600,000		1,709,856
	New Jersey EDA Revenue, School Facilities Construction, Refunding, Series NN, 5.00%, 3/01/30		United States		700,000		719,215

FSI-26 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)
	New York City HDC Revenue, Series B1, 5.00%, 7/01/33		United States		500,000		$	558,875
	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			2,656,112
	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			1,712,385
	Port Authority of New York and New Jersey Revenue, Consolidated, One Hundred Ninety-First Series A, 4.823%, 6/01/45		United States		3,500,000			3,470,810
	Puerto Rico Electric Power Authority Power Revenue,
	Series A, 6.75%, 7/01/36		United States		3,465,000			1,879,971
	Series XX, 5.25%, 7/01/40		United States		165,000			89,522
	Puerto Rico Sales Tax FICO Revenue, Capital Appreciation, Refunding, Series A, zero cpn., 8/01/26		United States		275,000			76,447
	Puerto Rico Sales Tax FICO Sales Tax Revenue,
	Capital Appreciation, Series A, zero cpn., 8/01/25		United States		320,000			99,654
	first subordinate, Series A, 5.75%, 8/01/37		United States		500,000			276,250
	first subordinate, Series A, 6.50%, 8/01/44		United States		2,500,000			1,393,750
	South Carolina State Public Service Authority Revenue, Refunding, Series B, 5.00%, 12/01/38		United States		1,000,000			1,090,850
	Total Municipal Bonds (Cost $36,882,968)							36,431,460
				Shares
	Escrows and Litigation Trusts 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 $810,495,316)							772,471,324
				Principal Amount*
	Short Term Investments 9.0%
	Foreign Government and Agency Securities (Cost $3,976,926) 0.5%
	Korea Monetary Stabilization Bond, senior note, 2.79%, 6/02/16		South Korea		4,400,000,000	KRW		3,972,635
	Total Investments before Money Market Funds (Cost $814,472,242)							776,443,959
				Shares
	Money Market Funds (Cost $70,999,990) 8.5%
a,r	Institutional Fiduciary Trust Money Market Portfolio		United States		70,999,990			70,999,990
	Total Investments (Cost $885,472,232) 101.2%							847,443,949
	Other Assets, less Liabilities (1.2)%							(9,644,312	)
	Net Assets 100.0%						$	837,799,637

Semiannual Report FSI-27

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Strategic Income VIP Fund (continued)

^†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, 2015, 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.

^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, 2015, the aggregate value of these securities was $169,457,707, representing 20.23% of net assets.

^ePerpetual security with no stated maturity date.

^fSee Note 7 regarding defaulted securities.

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

^hSee Note 1(f) regarding loan participation notes.

ⁱA portion or all of the security purchased on a when-issued, delayed delivery, or to-be-announced (TBA) basis. See Note 1(c).

^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, 2015, the aggregate value of these securities was $154,500, 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, 2015, the value of this security was $1,536,143, representing 0.18% of net assets.

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

At June 30, 2015, 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
OTC Forward Exchange Contracts
Chilean Peso		BZWS		Buy		477,650,000	$	764,240		7/23/15	$	—	$	(18,711	)
Chilean Peso		DBAB		Buy		140,000,000		223,642		7/23/15		—		(5,126	)
Euro		BZWS		Sell		167,374		199,799		7/23/15		13,210		—
Euro		DBAB		Buy		1,333,927		1,500,268		7/23/15		—		(13,202	)
Euro		DBAB		Sell		1,404,872		1,677,880		7/23/15		111,726		—
Euro		JPHQ		Sell		4,984,544		5,954,900		7/23/15		398,117		—
Indian Rupee		CITI		Buy		4,537,000		71,562		7/23/15		—		(444	)
Indian Rupee		DBAB		Buy		307,316,000		4,692,564		7/23/15		124,614		—
Indian Rupee		HSBC		Buy		144,338,000		2,201,953		7/23/15		60,545		—
Indian Rupee		JPHQ		Buy		23,701,000		361,682		7/23/15		9,831		—
Japanese Yen		BZWS		Sell		136,513,000		1,151,736		7/23/15		36,018		—
Japanese Yen		CITI		Sell		127,820,000		1,076,841		7/23/15		32,171		—
Japanese Yen		DBAB		Buy		246,700,000		2,001,948		7/23/15		14,327		—
Japanese Yen		DBAB		Sell		607,629,000		5,116,962		7/23/15		150,821		—
Japanese Yen		GSCO		Sell		42,760,000		361,378		7/23/15		11,901		—
Japanese Yen		HSBC		Sell		247,910,000		2,094,586		7/23/15		68,422		—
Japanese Yen		JPHQ		Sell		149,719,000		1,264,812		7/23/15		41,162		—
Singapore Dollar		DBAB		Buy		2,636,400		1,965,451		7/23/15		1,542		(10,361	)
Singapore Dollar		DBAB		Sell		1,332,800		997,904		7/23/15		8,752		—
Singapore Dollar		JPHQ		Buy		694,000		513,960		7/23/15		1,100		—
Euro		DBAB		Sell		2,242,876		2,547,795		8/27/15		46,167		—
Euro		JPHQ		Sell		1,788,861		2,047,826		8/27/15		52,590		—
Japanese Yen		DBAB		Sell		257,790,000		2,201,076		8/27/15		93,336		—
Japanese Yen		HSBC		Sell		85,800,000		733,102		8/27/15		31,584		—
Japanese Yen		JPHQ		Sell		181,500,000		1,550,801		8/27/15		66,822		—

FSI-28 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Strategic Income VIP Fund (continued)

Forward Exchange Contracts
Currency	Counterpartya		Type		Quantity		Contract Amount		Settlement Date		Unrealized Appreciation		Unrealized Depreciation
OTC Forward Exchange Contracts (continued)
British Pound		DBAB		Sell		380,363	$	587,280		9/17/15	$	—	$	(9,924	)
Chilean Peso		DBAB		Buy		314,000,000		496,051		9/17/15		—		(8,554	)
Chilean Peso		JPHQ		Buy		234,301,000		372,054		9/17/15		—		(8,293	)
Chilean Peso		MSCO		Buy		220,380,000		349,449		9/17/15		—		(7,301	)
Euro		BZWS		Sell		132,570		150,743		9/17/15		2,832		—
Euro		DBAB		Sell		4,905,869		5,295,003		9/17/15		2,666		(181,243	)
Euro		HSBC		Sell		142,717		162,336		9/17/15		3,104		—
Euro		JPHQ		Sell		2,118,679		2,409,747		9/17/15		45,893		—
Japanese Yen		DBAB		Sell		1,020,022,000		8,584,415		9/17/15		241,238		—
Japanese Yen		HSBC		Sell		80,270,000		677,184		9/17/15		20,623		—
Japanese Yen		JPHQ		Sell		235,580,000		1,986,825		9/17/15		59,920		—
Singapore Dollar		DBAB		Buy		4,665,140		3,434,290		9/17/15		25,380		—
Singapore Dollar		HSBC		Buy		837,000		616,597		9/17/15		4,122		—
Singapore Dollar		JPHQ		Buy		4,945,200		3,649,325		9/17/15		18,038		—
British Pound		DBAB		Sell		1,350,860		2,050,200		10/22/15		—		(70,282	)
Chilean Peso		CITI		Buy		377,668,000		606,452		10/22/15		—		(21,956	)
Chilean Peso		JPHQ		Buy		1,598,650,000		2,566,051		10/22/15		—		(91,909	)
Euro		BZWS		Sell		4,318,741		4,849,082		10/22/15		27,600		—
Euro		CITI		Sell		1,058,200		1,187,025		10/22/15		5,641		—
Euro		DBAB		Sell		4,582,808		5,133,799		10/22/15		17,510		—
Euro		GSCO		Sell		369,000		413,856		10/22/15		1,901		—
Euro		JPHQ		Sell		6,561,135		7,358,117		10/22/15		33,205		—
Indian Rupee		DBAB		Sell		31,625,000		478,804		10/22/15		—		(8,964	)
Japanese Yen		BZWS		Sell		60,047,000		502,532		10/22/15		11,014		—
Japanese Yen		CITI		Sell		31,757,000		265,057		10/22/15		5,109		—
Japanese Yen		DBAB		Sell		27,184,000		227,025		10/22/15		4,509		—
Japanese Yen		HSBC		Sell		147,626,000		1,232,219		10/22/15		23,820		—
Japanese Yen		JPHQ		Sell		366,653,000		3,062,294		10/22/15		61,040		—
Singapore Dollar		DBAB		Sell		1,249,000		934,461		10/22/15		8,617		—
Euro		BZWS		Sell		529,706		601,328		12/17/15		9,337		—
Euro		CITI		Sell		3,868,000		4,391,770		12/17/15		68,960		—
Euro		DBAB		Sell		4,942,326		5,611,616		12/17/15		88,158		—
Euro		JPHQ		Sell		2,176,103		2,470,312		12/17/15		38,337		—
Indian Rupee		DBAB		Buy		128,000,000		1,942,042		12/17/15		11,911		—
Japanese Yen		DBAB		Sell		1,175,702,500		9,608,121		12/17/15		—		(27,656	)
Japanese Yen		JPHQ		Sell		548,120,000		4,476,569		12/17/15		—		(15,692	)
Japanese Yen		MSCO		Sell		12,500,000		102,110		12/17/15		—		(337	)
Totals Forward Exchange Contracts unrealized appreciation (depreciation)												2,215,243		(499,955	)
Net unrealized appreciation (depreciation)											$	1,715,288

^aMay be comprised of multiple contracts with the same counterparty, currency and settlement date.

At June 30, 2015, the Fund had the following credit default swap contracts outstanding. See Note 1(d).

Credit Default Swap Contracts

Description	Periodic Payment Rate			Counterparty / Exchange		Notional Amounta		Expiration Date		Upfront Premiums Paid (Received)		Unrealized Appreciation		Unrealized Depreciation			Value		Ratingb
OTC Swaps Contracts
Contracts to Sell Protectionc
Traded Index
MCDX.NA.24		1.00	%		CITI		7,000,000		6/20/20	$	6,659	$	—	$	(1,981	)	$	4,678	Non Investment Grade
MCDX.NA.24		1.00	%		GSCO		3,000,000		6/20/20		15,538		—		(4,624	)		10,914	Non Investment Grade
Net unrealized appreciation (depreciation)														$	(6,605	)

Semiannual Report FSI-29

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Strategic Income VIP Fund (continued)

^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 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 failure to pay or bankruptcy of the underlying securities for traded index swaps.

See Note 8 regarding other derivative information.

See Abbreviations on page FSI-46.

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, 2015 (unaudited)

	Franklin Strategic Income VIP Fund
Assets:
Investments in securities:
Cost - Unaffiliated issuers	$	814,472,242
Cost - Sweep Money Fund (Note 3e)		70,999,990
Total cost of investments	$	885,472,232
Value - Unaffiliated issuers	$	776,443,959
Value - Sweep Money Fund (Note 3e)		70,999,990
Total value of investments		847,443,949
Cash		698,667
Restricted Cash (Note 1e)		916,000
Foreign currency, at value (cost $3,793,637)		3,788,578
Receivables:
Investment securities sold		8,594,544
Capital shares sold		206,350
Interest		8,819,040
OTC swap contracts (premiums paid $23,212)		22,197
Unrealized appreciation on OTC forward exchange contracts		2,215,243
Other assets		378
Total assets		872,704,946
Liabilities:
Payables:
Investment securities purchased		31,897,244
Capital shares redeemed		633,985
Management fees		400,741
Distribution fees		156,099
Due to brokers		916,000
Unrealized depreciation on OTC forward exchange contracts		499,955
Unrealized depreciation on OTC swap contracts		6,605
Deferred tax		8,456
Accrued expenses and other liabilities		386,224
Total liabilities		34,905,309
Net assets, at value	$	837,799,637
Net assets consist of:
Paid-in capital	$	858,077,749
Undistributed net investment income		5,033,856
Net unrealized appreciation (depreciation)		(36,433,718	)
Accumulated net realized gain (loss)		11,121,750
Net assets, at value	$	837,799,637

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, 2015 (unaudited)

	Franklin Strategic Income VIP Fund
Class 1:
Net assets, at value	$	513,236,092
Shares outstanding		46,608,936
Net asset value and maximum offering price per share	$	11.01
Class 2:
Net assets, at value	$	214,326,030
Shares outstanding		20,087,337
Net asset value and maximum offering price per share	$	10.67
Class 4:
Net assets, at value	$	110,237,515
Shares outstanding		10,094,792
Net asset value and maximum offering price per share	$	10.92

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, 2015 (unaudited)

	Franklin Strategic Income VIP Fund
Investment income:
Dividends	$	83,389
Interest		22,596,173
Total investment income		22,679,562
Expenses:
Management fees (Note 3a)		2,533,315
Distribution fees: (note 3c)
Class 2		266,238
Class 4		197,804
Custodian fees (Note 4)		57,120
Reports to shareholders		89,511
Professional fees		45,071
Trustees’ fees and expenses		1,998
Other		37,409
Total expenses		3,228,466
Expense reductions (Note 4)		(392	)
Expenses waived/paid by affiliates (Note 3e)		(47,844	)
Net expenses		3,180,230
Net investment income		19,499,332
Realized and unrealized gains (losses):
Net realized gain (loss) from:
Investments		(5,596,265	)
Foreign currency transactions		14,640,910
Swap contracts		126,596
Net realized gain (loss)		9,171,241
Net change in unrealized appreciation (depreciation) on:
Investments		(14,100,002	)
Translation of other assets and liabilities denominated in foreign currencies		(9,062,515	)
Swap contracts		(182,222	)
Change in deferred taxes on unrealized appreciation		2,643
Net change in unrealized appreciation (depreciation)		(23,342,096	)
Net realized and unrealized gain (loss)		(14,170,855	)
Net increase (decrease) in net assets resulting from operations	$	5,328,477

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, 2015 (unaudited)			Year Ended December 31, 2014
Increase (decrease) in net assets:
Operations:
Net investment income	$	19,499,332		$	41,174,450
Net realized gain (loss)		9,171,241			21,895,839
Net change in unrealized appreciation (depreciation)		(23,342,096	)		(41,564,436	)
Net increase (decrease) in net assets resulting from operations		5,328,477			21,505,853
Distributions to shareholders from:
Net investment income and net foreign currency gains:
Class 1		(33,228,366	)		(39,220,893	)
Class 2		(13,693,486	)		(11,269,863	)
Class 4		(6,782,412	)		(7,512,342	)
Net realized gains:
Class 1		(8,524,986	)		(12,517,628	)
Class 2		(3,636,551	)		(3,732,579	)
Class 4		(1,855,841	)		(2,588,163	)
Total distributions to shareholders		(67,721,642	)		(76,841,468	)
Capital share transactions: (Note 2)
Class 1		(23,652,255	)		(94,647,397	)
Class 2		24,072,010			43,236,033
Class 4		4,365,706			(13,615,799	)
Total capital share transactions		4,785,461			(65,027,163	)
Net increase (decrease) in net assets		(57,607,704	)		(120,362,778	)
Net assets:
Beginning of period		895,407,341			1,015,770,119
End of period	$	837,799,637		$	895,407,341
Undistributed net investment income included in net assets:
End of period	$	5,033,856		$	39,238,788

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 (1940 Act) as an open-end management investment company, consisting of nineteen separate funds and applies the specialized accounting and reporting guidance in U.S. Generally Accepted Accounting Principles (U.S. GAAP). 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, 2015, 75.26% 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.

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 NAV.

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

Semiannual Report FSI-35

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)

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.

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 in 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, Delayed Delivery, and TBA Basis

The Fund purchases securities on a when-issued, delayed delivery and to-be-announced (TBA) 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

FSI-36 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Strategic Income VIP Fund (continued)

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 in 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 in 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 as an unrealized appreciation or depreciation until the payments

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)

are made, at which time they are realized. Payments received or paid to initiate a credit default swap contract are reflected in 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 in the Statement of Operations.

See Note 8 regarding other derivative information.

e. Restricted Cash

At June 30, 2015, the Fund held 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. Investments in FT Holdings Corporation III (FT Subsidiary)

The Fund invests in certain financial instruments through its investment in the FT Subsidiary. 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, 2015, 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 FT Subsidiary. All intercompany transactions and balances have been eliminated.

h. 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.

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 tax

FSI-38 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Strategic Income VIP Fund (continued)

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, 2015, 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’s 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. Paydown gains and losses are recorded as an adjustment to 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 U.S. GAAP. 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 in 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.

Semiannual Report FSI-39

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, 2015, 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, 2015						Year Ended December 31, 2014
	Shares			Amount			Shares			Amount
Class 1 Shares:
Shares sold		216,677		$	2,593,431			702,662		$	8,745,867
Shares issued in reinvestment of distributions		3,778,584			41,753,352			4,268,855			51,738,520
Shares redeemed		(5,694,368	)		(67,999,038	)		(12,467,167	)		(155,131,784	)
Net increase (decrease)		(1,699,107	)	$	(23,652,255	)		(7,495,650	)	$	(94,647,397	)
Class 2 Shares:
Shares sold		2,509,062		$	28,992,544			6,058,039		$	72,800,016
Shares issued in reinvestment of distributions		1,618,117			17,330,037			1,273,552			15,002,442
Shares redeemed		(1,927,657	)		(22,250,571	)		(3,696,063	)		(44,566,425	)
Net increase (decrease)		2,199,522		$	24,072,010			3,635,528		$	43,236,033
Class 4 Shares:
Shares sold		451,552		$	5,350,839			732,854		$	9,004,820
Shares issued in reinvestment of distributions		788,162			8,638,254			839,610			10,100,506
Shares redeemed		(819,468	)		(9,623,387	)		(2,683,922	)		(32,721,125	)
Net increase (decrease)		420,246		$	4,365,706			(1,111,458	)	$	(13,615,799	)

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 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
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

FSI-40 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Strategic 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 0.25%, 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. Investments in Institutional Fiduciary Trust Money Market Portfolio

The Fund invests in 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, as noted in the Statement of Operations, in an amount not to exceed the management and administrative fees paid directly or indirectly by the Sweep Money Fund. 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, 2015, the custodian fees were reduced as noted in the Statement of Operations.

5. Income Taxes

At June 30, 2015, the cost of investments and net unrealized appreciation (depreciation) for income tax purposes were as follows:

Cost of investments	$	887,769,495
Unrealized appreciation	$	16,490,160
Unrealized depreciation		(56,815,706	)
Net unrealized appreciation (depreciation)	$	(40,325,546	)

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 bond discounts and premiums.

6. Investment Transactions

Purchases and sales of investments (excluding short term securities) for the period ended June 30, 2015, aggregated $417,602,224 and $417,822,487, respectively.

Semiannual Report FSI-41

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Strategic Income VIP Fund (continued)

7. Credit Risk And Defaulted Securities

At June 30, 2015, the Fund had 58.32% 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, 2015, the aggregate value of these securities was $4,376,375, representing 0.52% 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 in the accompanying Statement of Investments.

8. Other Derivative Information

At June 30, 2015, the Fund’s investments in derivative contracts are reflected in 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		Statement of Assets and Liabilities Location	Fair Value
Foreign exchange contracts	Unrealized appreciation on OTC forward exchange contracts	$	2,215,243	Unrealized depreciation on OTC forward exchange contracts	$	499,955
Credit contracts	OTC swap contracts (premium paid)		22,197	OTC swap contracts (premium received)		—
	Unrealized appreciation on OTC swap contracts		—	Unrealized depreciation on OTC swap contracts		6,605
Totals		$	2,237,440		$	506,560

For the period ended June 30, 2015, the effect of derivative contracts in the Fund’s Statement of Operations was as follows:

Derivative Contracts Not Accounted for as Hedging Instruments	Statement of Operations Locations	Net Realized Gain (Loss) for the Period			Statement of Operations Locations	Net Change in Unrealized Appreciation (Depreciation) for the Period
	Net realized gain (loss) from:				Net change in unrealized appreciation (depreciation) on:
Foreign exchange contracts	Foreign currency transactions	$	15,020,616	a	Translation of other assets and liabilities denominated in foreign currencies	$	(9,130,400	)a
Credit contracts	Swap contracts		126,596		Swap contracts		(182,222	)
Totals		$	15,147,212			$	(9,312,622	)

^aForward exchange contracts are included in net realized gain (loss) from foreign currency transactions and net change in unrealized appreciation (depreciation) on translation of other assets and liabilities denominated in foreign currencies in the Statement of Operations.

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FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Strategic Income VIP Fund (continued)

At June 30, 2015, 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	$	2,215,243	$	499,955
Swap Contracts		22,197		6,605
Total	$	2,237,440	$	506,560

^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, 2015, 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 and Liabilities
	Gross and Net Amounts of Assets Presented in the Statement of Assets and Liabilities		Financial Instruments Available for Offset			Financial Instruments Collateral Receiveda			Cash Collateral Receivedb			Net Amount (Not less than zero)
Counterparty
BZWS	$	100,011	$	(18,711	)	$	—		$	—		$	81,300
CITI		118,540		(24,381	)		—			—			94,159
DBAB		951,274		(335,312	)		—			(615,962	)		—
GSCO		29,340		(4,624	)		—			—			24,716
HSBC		212,220		—			(64,105	)		—			148,115
JPHQ		826,055		(115,894	)		(474,003	)		—			236,158
MSCO		—		—			—			—			—
Total	$	2,237,440	$	(498,922	)	$	(538,108	)	$	(615,962	)	$	584,448

^aAt June 30, 2015, the Fund received U.S. Government Agency Securities 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 amounts disclosed herein.

Semiannual Report FSI-43

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Strategic Income VIP Fund (continued)

8. Other Derivative Information (continued)

At June 30, 2015, 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 and Liabilities
	Gross and Net Amounts of Liabilities Presented in the Statement of Assets and Liabilities		Financial Instruments Available for Offset			Financial Instruments Collateral Pledged		Cash Collateral Pledged		Net Amount (Not less than zero)
Counterparty
BZWS	$	18,711	$	(18,711	)	$	—	$	—	$	—
CITI		24,381		(24,381	)		—		—		—
DBAB		335,312		(335,312	)		—		—		—
GSCO		4,624		(4,624	)		—		—		—
HSBC		—		—			—		—		—
JPHQ		115,894		(115,894	)		—		—		—
MSCO		7,638		—			—		—		7,638
Total	$	506,560	$	(498,922	)	$	—	$	—	$	7,638

For the period ended June 30, 2015, the average month end fair value of derivatives represented 1.33% of average month end net assets. The average month end number of open derivative contracts for the period was 126.

See Note 1(d) 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 $2 billion (Global Credit Facility) which matures on February 12, 2016. 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 in the Statement of Operations. During the period ended June 30, 2015, 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)

FSI-44 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Strategic 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, 2015, 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	$	—	$	—	$	3,788,636		$	3,788,636
Transportation		—		531,244		—			531,244
All other Equity Investmentsb		6,225		—		—			6,225
Corporate Bonds		—		322,488,411		168,625			322,657,036
Senior Floating Rate Interests		—		173,973,941		154,500			174,128,441
Foreign Government and Agency Securities		—		134,895,426		—			134,895,426
U.S. Government and Agency Securities		—		25,618,690		—			25,618,690
Asset-Backed Securities and Commercial Mortgage-Backed Securities		—		54,064,542		—			54,064,542
Mortgage-Backed Securities		—		20,349,624		—			20,349,624
Municipal Bonds		—		36,431,460		—			36,431,460
Escrows and Litigation Trusts		—		—		—	c		—
Short Term Investments		70,999,990		3,972,635		—			74,972,625
Total Investments in Securities	$	71,006,215	$	772,325,973	$	4,111,761		$	847,443,949
Other Financial Instruments
Forward Exchange Contracts	$	—	$	2,215,243	$	—		$	2,215,243
Liabilities:
Other Financial Instruments
Forward Exchange Contracts	$	—	$	499,955	$	—		$	499,955
Swap Contracts		—		6,605		—			6,605
Total Other Financial Instruments	$	—	$	506,560	$	—		$	506,560

^aIncludes common and convertible preferred stocks.

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

^cIncludes securities determined to have no value at June 30, 2015.

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. 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 FSI-45

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.	EUR	Euro	CDO	Collateralized Debt Obligation
DBAB	Deutsche Bank AG	GBP	British Pound	CLO	Collateralized Loan Obligation
GSCO	The Goldman Sachs Group, Inc.	HUF	Hungarian Forint	EDA	Economic Development Authority
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
		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	PIK	Payment-In-Kind
		SGD	Singapore Dollar	PSF	Permanent School Fund
		UYU	Uruguayan Peso

FSI-46 Semiannual Report

Franklin U.S. Government Securities VIP Fund

This semiannual report for Franklin U.S. Government Securities VIP Fund covers the period ended June 30, 2015.

Class 2 Performance Summary as of June 30, 2015

The Fund’s Class 2 shares delivered a +0.07% total return* for the six-month period ended June 30, 2015.

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 +0.82% total return.¹ The Fund’s secondary benchmark, the Lipper VIP General U.S. Government Funds Classification Average, had a -0.50% 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

U.S. economic growth was mixed during the six months under review. In 2015’s first quarter, U.S. dollar strength, low energy prices, and a labor dispute at West Coast ports led exports to decline. Lower business investment and state and local government spending also weighed on the economy, while increases in consumer spending, residential investment and private inventory investment offered some support. In the second quarter, business capital spending rebounded and manufacturing and non-manufacturing activities increased, contributing to strong job gains that helped the unemployment rate decline from 5.6% in December 2014 to 5.3% in June 2015.³ Housing market data were generally encouraging as

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

home sales and prices rose. After a brief, winter slump, retail sales rebounded in the spring as strong employment gains led to broad-based improvement, especially for auto and gasoline sales. Inflation, as measured by the Consumer Price Index, rose during the six months amid generally higher energy prices bouncing from recent lows.

During the six-month period, the Federal Reserve Board (Fed) kept its target interest rate at 0%–0.25% while considering when an increase might be appropriate. The Fed anticipated raising its target rate when it saw further labor market progress and was reasonably confident that inflation would move back to 2% over the medium term. In its June meeting, the Fed lowered its 2015 economic growth forecast and raised unemployment estimates given the weak start to the year.

The 10-year Treasury yield, which moves inversely to price, declined from 2.17% at the start of the period to a six-month low of 1.68% in early February as investors sought less risky assets given concerns about soft domestic data, Greece’s debt negotiations, less robust growth in China and the Fed’s cautious tone on raising interest rates. At period-end, the yield rose to 2.35% based partly on upbeat domestic and eurozone economic data and expectations of an agreement between Greece and its international creditors.

1. Source: 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

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.

Manager’s Discussion

The overall mortgage market outpaced Treasuries during the period, and Government National Mortgage Association mortgage-backed securities (MBS) also outperformed Treasuries but lagged their conventional agency mortgage counterparts. During the period, mortgage rates rose and the Fed announced it anticipated raising its target rate if labor market and inflation data met its goals. We believed the Fed’s reinvestment of mortgage repayments could end within a few quarters after the first rate increase, and questions remained about the demand source for agency MBS after the Fed’s buying ends.

The Fund maintains a consistent and disciplined approach to our investment strategy. The Fund’s investment process and strategy have not changed, and the team continues to look for strong cash flow fundamentals and valuations seeking to uncover opportunities across the agency mortgage and agency debenture universe. The Fund emphasizes agency pass-throughs and invests in other agency securities for diversification purposes.

During the period, we were more weighted toward GNMA IIs (pools of mortgages from multiple issuers) than GNMA Is (pools of mortgages from single issuers). Over the period, we increased exposure to GNMA II 3.5% coupons while reducing the allocations to 4.0%, 4.5% and 5.0% coupons. At year-end, our heaviest allocations were in 3.5% and 4.0% coupons. The Fund’s allocation to higher coupon securities was additive to relative performance, while our overweighted position in lower coupon securities compared with the benchmark index detracted from relative performance.

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, 2015, 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 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 1/1/15		Ending Account Value 6/30/15		Fund-Level Expenses Incurred During Period* 1/1/15–6/30/15
Actual		$1,000		$1,000.70		$3.67
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

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Financial Highlights

Franklin U.S. Government Securities VIP Fund

	Six Months Ended June 30, 2015 (unaudited)			Year Ended December 31,
				2014			2013			2012			2011			2010
Class 1
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$13.00			$12.91			$13.57			$13.67			$13.34			$13.08
Income from investment operationsa:
Net investment incomeb		0.10			0.24			0.24			0.32			0.42			0.47
Net realized and unrealized gains (losses)		(0.07	)		0.22			(0.51	)		(0.03	)		0.36			0.25
Total from investment operations		0.03			0.46			(0.27	)		0.29			0.78			0.72
Less distributions from net investment income		(0.35	)		(0.37	)		(0.39	)		(0.39	)		(0.45	)		(0.46	)
Net asset value, end of period		$12.68			$13.00			$12.91			$13.57			$13.67			$13.34
Total returnc		0.24%			3.64%			(1.99)%			2.12%			5.96%			5.56%
Ratios to average net assetsd
Expenses		0.49%			0.49%	e		0.49%	e		0.50%			0.51%			0.52%
Net investment income		1.58%			1.84%			1.84%			2.36%			3.11%			3.51%
Supplemental data
Net assets, end of period (000’s)		$85,248			$90,656			$99,947			$126,536			$136,628			$157,551
Portfolio turnover rate		32.51%			42.88%			69.47%			45.89%			37.89%			51.04%
Portfolio turnover rate excluding mortgage dollar rollsf		32.51%			42.88%			67.80%			45.89%			37.89%			51.04%

^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’s 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 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-5

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL HIGHLIGHTS

Franklin U.S. Government Securities VIP Fund (continued)

	Six Months Ended June 30, 2015 (unaudited)			Year Ended December 31,
				2014			2013			2012			2011			2010
Class 2
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$12.73			$12.65			$13.31			$13.42			$13.11			$12.87
Income from investment operationsa:
Net investment incomeb		0.08			0.20			0.21			0.28			0.38			0.43
Net realized and unrealized gains (losses)		(0.07	)		0.22			(0.50	)		(0.03	)		0.35			0.24
Total from investment operations		0.01			0.42			(0.29	)		0.25			0.73			0.67
Less distributions from net investment income		(0.32	)		(0.34	)		(0.37	)		(0.36	)		(0.42	)		(0.43	)
Net asset value, end of period		$12.42			$12.73			$12.65			$13.31			$13.42			$13.11
Total returnc		0.07%			3.38%			(2.24)%			1.89%			5.68%			5.28%
Ratios to average net assetsd
Expenses		0.74%			0.74%	e		0.74%	e		0.75%			0.76%			0.77%
Net investment income		1.33%			1.59%			1.59%			2.11%			2.86%			3.26%
Supplemental data
Net assets, end of period (000’s)		$1,343,349			$1,369,037			$1,267,994			$1,206,089			$894,699			$703,997
Portfolio turnover rate		32.51%			42.88%			69.47%			45.89%			37.89%			51.04%
Portfolio turnover rate excluding mortgage dollar rollsf		32.51%			42.88%			67.80%			45.89%			37.89%			51.04%

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

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Statement of Investments, June 30, 2015 (unaudited)

Franklin U.S. Government Securities VIP Fund
		Principal Amount*		Value
	Corporate Bonds 1.2%
	New Valley Generation IV, secured bond, 4.687%, 1/15/22		2,616,461	$	2,856,959
	Private Export Funding Corp.,
	2.30%, 9/15/20		3,500,000		3,518,609
	secured bond, 2.80%, 5/15/22		9,000,000		9,138,897
	secured note, LL, 2.25%, 3/15/20		1,700,000		1,722,964
	Total Corporate Bonds (Cost $17,447,539)				17,237,429
	Foreign Government and Agency Securities 0.3%
a	International Bank for Reconstruction and Development,
	2, zero cpn., 2/15/16 (Supranational)		1,868,000		1,862,441
	Principal Strip, 7/15/17 (Supranational)		1,761,000		1,717,072
	Total Foreign Government and Agency Securities (Cost $3,578,792)				3,579,513
	Mortgage-Backed Securities 77.1%
b	Federal Home Loan Mortgage Corp. (FHLMC) Adjustable Rate 6.3%
	FHLMC, 1.607% - 2.275%, 12/01/16 - 6/01/42		5,429,449		5,700,965
	FHLMC, 2.278% - 2.285%, 9/01/32 - 9/01/37		10,922,810		11,603,426
	FHLMC, 2.287% - 2.348%, 10/01/22 - 7/01/41		13,093,079		13,951,111
	FHLMC, 2.348% - 2.42%, 10/01/22 - 2/01/40		12,790,970		13,631,870
	FHLMC, 2.422% - 2.434%, 11/01/25 - 9/01/38		6,304,424		6,706,195
	FHLMC, 2.436% - 2.482%, 2/01/19 - 8/01/37		12,475,636		13,262,861
	FHLMC, 2.485% - 2.508%, 6/01/24 - 11/01/37		2,445,653		2,604,139
	FHLMC, 2.509% - 2.515%, 9/01/30 - 4/01/40		13,337,965		14,277,406
	FHLMC, 2.515% - 6.094%, 12/01/18 - 8/01/41		7,465,972		7,911,865
					89,649,838
	Federal Home Loan Mortgage Corp. (FHLMC) Fixed Rate 3.1%
	FHLMC Gold 15 Year, 4.50%, 3/01/25 - 4/01/25		2,460,812		2,588,341
	FHLMC Gold 30 Year, 3.00%, 5/01/43		638,696		635,493
	FHLMC Gold 30 Year, 3.50%, 3/01/32 - 5/01/43		7,104,447		7,401,450
	FHLMC Gold 30 Year, 4.00%, 9/01/40 - 12/01/41		11,941,326		12,652,165
	FHLMC Gold 30 Year, 4.50%, 5/01/40 - 7/01/41		5,122,924		5,541,540
	FHLMC Gold 30 Year, 5.00%, 9/01/33 - 4/01/40		7,450,908		8,251,119
	FHLMC Gold 30 Year, 5.50%, 7/01/33 - 5/01/38		2,571,536		2,890,934
	FHLMC Gold 30 Year, 6.00%, 1/01/24 - 8/01/35		1,688,850		1,920,562
	FHLMC Gold 30 Year, 6.50%, 12/01/23 - 5/01/35		737,848		845,683
	FHLMC Gold 30 Year, 7.00%, 4/01/24 - 6/01/32		293,072		333,201
	FHLMC Gold 30 Year, 7.50%, 12/01/22 - 5/01/24		5,407		5,744
	FHLMC Gold 30 Year, 8.00%, 9/01/21 - 5/01/22		6,154		6,977
	FHLMC Gold 30 Year, 8.50%, 10/01/21 - 7/01/31		519,846		627,682
	FHLMC PC 30 Year, 8.00%, 1/01/17 - 5/01/17		2,007		2,012
	FHLMC PC 30 Year, 8.50%, 9/01/20		355		366
					43,703,269
b	Federal National Mortgage Association (FNMA) Adjustable Rate 7.9%
	FNMA, 1.356% - 2.089%, 4/01/16 - 10/01/44		10,459,566		11,056,322
	FNMA, 2.10% - 2.235%, 11/01/17 - 7/01/37		9,924,445		10,501,366
	FNMA, 2.239% - 2.24%, 8/01/36 - 8/01/37		11,748,069		12,499,152
	FNMA, 2.241% - 2.281%, 1/01/17 - 9/01/39		12,964,012		13,778,581
	FNMA, 2.285% - 2.364%, 10/01/19 - 4/01/40		12,408,600		13,241,890
	FNMA, 2.366% - 2.446%, 1/01/19 - 12/01/40		13,495,594		14,278,678
	FNMA, 2.447% - 2.505%, 6/01/21 - 3/01/47		759,360		795,100

Semiannual Report FUS-7

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)
b	Federal National Mortgage Association (FNMA) Adjustable Rate (continued)
	FNMA, 2.509%, 9/01/37		32,112,924	$	34,401,021
	FNMA, 2.515% - 6.084%, 8/01/18 - 4/01/41		2,408,079		2,499,038
					113,051,148
	Federal National Mortgage Association (FNMA) Fixed Rate 7.6%
	FNMA 15 Year, 5.50%, 6/01/16 - 1/01/25		2,688,302		2,951,424
	FNMA 15 Year, 6.00%, 8/01/17 - 9/01/17		97,617		100,622
	FNMA 30 Year, 3.00%, 12/01/42		306,389		305,007
c	FNMA 30 Year, 3.50%, 7/01/45		50,000,000		51,432,616
	FNMA 30 Year, 4.00%, 1/01/41 - 6/01/41		9,052,454		9,600,959
	FNMA 30 Year, 4.00%, 8/01/41		5,134,170		5,465,279
	FNMA 30 Year, 4.50%, 8/01/40 - 12/01/40		8,881,726		9,617,524
	FNMA 30 Year, 4.50%, 4/01/41 - 6/01/41		5,188,881		5,623,006
	FNMA 30 Year, 5.00%, 3/01/34 - 7/01/41		10,252,113		11,341,055
	FNMA 30 Year, 5.50%, 12/01/32 - 8/01/35		3,315,042		3,730,325
	FNMA 30 Year, 6.00%, 1/01/24 - 8/01/38		4,899,975		5,585,021
	FNMA 30 Year, 6.50%, 1/01/24 - 9/01/36		803,907		923,866
	FNMA 30 Year, 7.50%, 4/01/23 - 8/01/25		30,268		32,142
	FNMA 30 Year, 8.00%, 3/01/22 - 2/01/25		120,888		127,021
	FNMA 30 Year, 8.50%, 3/01/20 - 6/01/21		956		1,026
	FNMA 30 Year, 9.00%, 10/01/26		110,134		127,757
	FNMA GL 30 Year, 8.00%, 8/01/19		12,810		12,969
	FNMA PL 30 Year, 5.50%, 4/01/34		1,670,061		1,857,741
					108,835,360
	Government National Mortgage Association (GNMA) Fixed Rate 52.2%
	GNMA I SF 30 Year, 3.00%, 7/15/42		719,240		730,408
	GNMA I SF 30 Year, 4.50%, 1/15/39 - 11/15/39		12,700,090		13,857,555
	GNMA I SF 30 Year, 4.50%, 2/15/40 - 6/15/40		11,207,066		12,200,799
	GNMA I SF 30 Year, 4.50%, 7/15/40 - 6/15/41		8,894,272		9,727,467
	GNMA I SF 30 Year, 5.00%, 6/15/30 - 2/15/39		8,527,608		9,524,431
	GNMA I SF 30 Year, 5.00%, 4/15/39 - 10/15/39		10,615,397		11,827,369
	GNMA I SF 30 Year, 5.00%, 10/15/39 - 1/15/40		8,446,481		9,504,553
	GNMA I SF 30 Year, 5.00%, 2/15/40 - 4/15/40		12,662,052		14,251,163
	GNMA I SF 30 Year, 5.00%, 4/15/40 - 9/15/40		4,569,249		5,118,797
	GNMA I SF 30 Year, 5.50%, 12/15/28 - 10/15/39		10,492,964		11,971,376
	GNMA I SF 30 Year, 6.00%, 11/15/23 - 11/15/38		5,547,941		6,394,484
	GNMA I SF 30 Year, 6.50%, 5/15/23 - 9/15/38		2,797,285		3,215,938
	GNMA I SF 30 Year, 7.00%, 9/15/22 - 1/15/32		810,055		864,715
	GNMA I SF 30 Year, 7.50%, 2/15/17 - 8/15/33		771,501		899,528
	GNMA I SF 30 Year, 8.00%, 3/15/17 - 5/15/24		214,298		224,613
	GNMA I SF 30 Year, 8.50%, 6/15/22 - 12/15/24		84,374		88,947
	GNMA I SF 30 Year, 9.00%, 6/15/16 - 5/15/20		15,348		15,429
	GNMA I SF 30 Year, 9.50%, 7/15/16 - 12/15/20		59,523		61,509
	GNMA I SF 30 Year, 10.00%, 11/15/17 - 8/15/21		31,517		33,006
	GNMA II SF 30 Year, 3.00%, 12/20/42 - 2/20/45		4,501,951		4,546,687
	GNMA II SF 30 Year, 3.50%, 12/20/40 - 7/20/42		4,408,658		4,581,036
	GNMA II SF 30 Year, 3.50%, 8/20/42		13,518,712		14,047,562
	GNMA II SF 30 Year, 3.50%, 9/20/42		38,188,031		39,683,917
	GNMA II SF 30 Year, 3.50%, 10/20/42		11,671,245		12,129,031
	GNMA II SF 30 Year, 3.50%, 11/20/42		23,002,614		23,904,855
	GNMA II SF 30 Year, 3.50%, 12/20/42		17,021,927		17,690,468

FUS-8 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, 3.50%, 1/20/43		28,630,980	$	29,755,471
	GNMA II SF 30 Year, 3.50%, 3/20/43		10,834,702		11,260,805
	GNMA II SF 30 Year, 3.50%, 4/20/43		13,728,926		14,268,860
	GNMA II SF 30 Year, 3.50%, 5/20/43		24,118,095		25,066,619
	GNMA II SF 30 Year, 3.50%, 6/20/43 - 8/20/43		11,569,892		12,024,921
	GNMA II SF 30 Year, 3.50%, 4/20/45		30,903,828		32,189,219
	GNMA II SF 30 Year, 3.50%, 5/20/45		10,978,208		11,392,706
c	GNMA II SF 30 Year, 3.50%, 6/20/45		91,045,000		94,831,933
	GNMA II SF 30 Year, 4.00%, 11/20/39 - 12/20/40		10,356,881		11,088,663
	GNMA II SF 30 Year, 4.00%, 1/20/41 - 7/20/41		13,302,238		14,228,197
	GNMA II SF 30 Year, 4.00%, 9/20/41		1,892,096		2,024,297
	GNMA II SF 30 Year, 4.00%, 11/20/41		14,124,480		15,109,905
	GNMA II SF 30 Year, 4.00%, 12/20/41 - 2/20/44		5,499,274		5,913,406
	GNMA II SF 30 Year, 4.00%, 11/20/44		27,357,180		28,978,968
	GNMA II SF 30 Year, 4.00%, 12/20/44		67,635,068		71,644,608
	GNMA II SF 30 Year, 4.00%, 2/20/45		17,114,310		18,128,880
	GNMA II SF 30 Year, 4.50%, 10/20/39 - 4/20/41		11,108,587		12,128,796
	GNMA II SF 30 Year, 4.50%, 5/20/41 - 6/20/41		12,633,811		13,789,648
	GNMA II SF 30 Year, 4.50%, 7/20/41		7,700,912		8,405,456
	GNMA II SF 30 Year, 4.50%, 9/20/41		11,712,298		12,809,133
	GNMA II SF 30 Year, 4.50%, 10/20/41 - 3/20/42		9,652,149		10,550,566
	GNMA II SF 30 Year, 4.50%, 2/20/44		5,807,527		6,267,314
	GNMA II SF 30 Year, 4.50%, 10/20/44		8,495,919		9,169,486
	GNMA II SF 30 Year, 5.00%, 9/20/33 - 6/20/40		11,683,516		13,030,171
	GNMA II SF 30 Year, 5.00%, 8/20/41 - 10/20/42		8,104,505		9,031,541
	GNMA II SF 30 Year, 5.00%, 6/20/44		7,702,503		8,404,677
	GNMA II SF 30 Year, 5.50%, 5/20/34 - 6/20/38		9,085,767		10,356,242
	GNMA II SF 30 Year, 6.00%, 11/20/23 - 7/20/39		5,577,456		6,408,421
	GNMA II SF 30 Year, 6.50%, 12/20/27 - 4/20/34		771,323		898,470
	GNMA II SF 30 Year, 7.00%, 5/20/32		13,429		16,450
	GNMA II SF 30 Year, 7.50%, 11/20/17 - 5/20/33		152,596		173,480
	GNMA II SF 30 Year, 8.00%, 9/20/16 - 8/20/26		9,024		10,998
	GNMA II SF 30 Year, 9.50%, 4/20/25		2,541		2,555
					746,456,505
	Total Mortgage-Backed Securities (Cost $1,093,710,399)				1,101,696,120
	U.S. Government and Agency Securities 19.6%
	Federal Agricultural Mortgage Corp.,
	1.41%, 3/06/20		10,000,000		9,832,850
	2.66%, 4/12/22		7,000,000		7,187,992
	4.30%, 5/13/19		1,010,000		1,113,195
d	Federal Agricultural Mortgage Corp. Guaranteed Trust 07-1, 144A, 5.125%, 4/19/17		13,000,000		13,986,674
	FFCB, 1.50%, 11/16/15		10,000,000		10,047,360
	FHLB,
	4.75%, 12/16/16		17,000,000		18,012,690
	5.25%, 6/05/17		9,000,000		9,782,244
	FICO,
	1P, Strip, 5/11/18		10,000,000		9,649,840
	12, Strip, 6/06/18		4,627,000		4,438,584
	13P, Strip, 12/27/18		2,500,000		2,382,490

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
	U.S. Government and Agency Securities (continued)
	15, Strip, 3/07/16	15,000,000		$	14,953,620
	15P, Strip, 3/07/19	1,798,000			1,692,765
	16, Strip, 4/05/17	12,367,000			12,185,873
	A-P, Strip, 2/08/18	1,000,000			972,900
	B-P, Strip, 4/06/18	1,405,000			1,361,680
	D-P, Strip, 9/26/19	7,605,000			7,051,265
	E-P, Strip, 11/02/18	8,896,000			8,477,470
	FNMA, senior note, 5.375%, 6/12/17	17,800,000			19,390,003
	Israel Government Agency for International Development Bond,
	5.50%, 9/18/23	12,000,000			14,460,534
	7-Z, U.S. Government Guaranteed, Strip, 8/15/22	5,619,000			4,655,409
	U.S. Government Guaranteed, Strip, 5/01/17	5,000,000			4,916,355
	Overseas Private Investment Corp., A, zero cpn.,
	2/19/18	682,174			706,196
	11/15/20	2,575,000			2,961,822
	SBA,
	b FRN, 3.125%, 3/25/18	208,888			209,348
	PC, 1995-20L, 1, 6.45%, 12/01/15	19,655			19,983
	PC, 1996-20L, 1, 6.70%, 12/01/16	62,041			63,905
	PC, 1997-20G, 1, 6.85%, 7/01/17	89,743			92,663
	PC, 1998-20I, 1, 6.00%, 9/01/18	323,620			342,894
	Tunisia Government Agency for International Development Bond, 1.686%, 7/16/19	7,000,000			7,039,200
	TVA,
	1.875%, 8/15/22	6,000,000			5,788,122
	5.88%, 4/01/36	5,000,000			6,482,477
	Strip, 11/01/18	2,644,000			2,512,152
	Strip, 6/15/19	5,973,000			5,540,614
	Strip, 6/15/20	6,138,000			5,549,267
e	U.S. Treasury Bond, Index Linked, 2.00%, 1/15/26	13,111,884			15,025,406
	U.S. Treasury Note,
	0.875%, 11/30/16	2,500,000			2,513,867
	1.25%, 1/31/19	10,000,000			9,997,660
	1.75%, 10/31/18	3,000,000			3,059,532
	4.25%, 8/15/15	20,000,000			20,107,040
	e Index Linked, 0.125%, 4/15/19	10,096,592			10,218,851
	Ukraine Government Agency for International Development Bonds, 1.844%, 5/16/19	5,000,000			5,018,785
	Total U.S. Government and Agency Securities (Cost $276,768,695)				279,801,577
	Total Investments before Short Term Investments (Cost $1,391,505,425)				1,402,314,639

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
	Short Term Investments (Cost $72,716,421) 5.1%
	Repurchase Agreements 5.1%
f	Joint Repurchase Agreement, 0.095%, 7/01/15 (Maturity Value $72,716,613)		72,716,421	$	72,716,421
	BNP Paribas Securities Corp. (Maturity Value $17,844,657) HSBC Securities (USA) Inc. (Maturity Value $37,473,779) Merrill Lynch, Pierce, Fenner & Smith Inc. (Maturity Value $17,398,177)
	Collateralized by U.S. Government Agency Securities, 0.000%  - 5.50%, 12/01/15 - 6/12/20; U.S. Government Agency Securities, Strips, 6/01/17; gU.S. Treasury Bills, 3/31/16; U.S. Treasury Bonds, 3.125%, 8/15/44; and U.S. Treasury Notes, 1.25% - 1.75%, 1/31/19 - 9/30/19 (valued at $74,185,630)
	Total Investments (Cost $1,464,221,846) 103.3%				1,475,031,060
	Other Assets, less Liabilities (3.3)%				(46,433,711	)
	Net Assets 100.0%			$	1,428,597,349

See Abbreviations on page FUS-20.

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

^aA supranational organization is an entity formed by two or more central governments through international treaties.

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

^cA portion or all of the security purchased on a delayed delivery or to-be-announced (TBA) basis. See Note 1(c).

^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. This security has been deemed liquid under guidelines approved by the Trust’s Board of Trustees. At June 30, 2015, the value of this security was $13,986,674, representing 0.98% of net assets.

^ePrincipal amount of security is adjusted for inflation. See Note 1(f).

^fSee Note 1(b) regarding joint repurchase agreement.

^gThe 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 FUS-11

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Financial Statements

Statement of Assets and Liabilities

June 30, 2015 (unaudited)

	Franklin U.S. Government Securities VIP Fund
Assets:
Investments in securities:
Cost - Unaffiliated issuers	$	1,391,505,425
Cost - Repurchase agreements		72,716,421
Total cost of investments	$	1,464,221,846
Value - Unaffiliated issuers	$	1,402,314,639
Value - Repurchase agreements		72,716,421
Total value of investments		1,475,031,060
Receivables:
Investment securities sold		65,015,442
Capital shares sold		536,119
Interest		4,557,768
Due from brokers		455,000
Other assets		622
Total assets		1,545,596,011
Liabilities:
Payables:
Investment securities purchased		114,942,812
Capital shares redeemed		760,890
Management fees		548,775
Distribution fees		562,402
Accrued expenses and other liabilities		183,783
Total liabilities		116,998,662
Net assets, at value	$	1,428,597,349
Net assets consist of:
Paid-in capital	$	1,453,750,077
Undistributed net investment income		3,109,325
Net unrealized appreciation (depreciation)		10,809,214
Accumulated net realized gain (loss)		(39,071,267	)
Net assets, at value	$	1,428,597,349
Class 1:
Net assets, at value	$	85,248,231
Shares outstanding		6,725,033
Net asset value and maximum offering price per share	$	12.68
Class 2:
Net assets, at value	$	1,343,349,118
Shares outstanding		108,154,105
Net asset value and maximum offering price per share	$	12.42

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 Operations

for the six months ended June 30, 2015 (unaudited)

	Franklin U.S. Government Securities VIP Fund
Investment income:
Interest	$	21,631,533
Paydown gain (loss)		(6,764,367	)
Total investment income		14,867,166
Expenses:
Management fees (Note 3a)		3,342,751
Distribution fees - Class 2 (Note 3c)		1,678,879
Custodian fees (Note 4)		6,458
Reports to shareholders		106,917
Professional fees		25,003
Trustees’ fees and expenses		2,931
Other		47,101
Total expenses		5,210,040
Net investment income		9,657,126
Realized and unrealized gains (losses):
Net realized gain (loss) from investments		18,719
Net change in unrealized appreciation (depreciation) on investments		(8,630,516	)
Net realized and unrealized gain (loss)		(8,611,797	)
Net increase (decrease) in net assets resulting from operations	$	1,045,329

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

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, 2015 (unaudited)			Year Ended December 31, 2014
Increase (decrease) in net assets:
Operations:
Net investment income	$	9,657,126		$	22,886,524
Net realized gain (loss)		18,719			423,321
Net change in unrealized appreciation (depreciation)		(8,630,516	)		24,473,688
Net increase (decrease) in net assets resulting from operations		1,045,329			47,783,533
Distributions to shareholders from:
Net investment income:
Class 1		(2,296,272	)		(2,743,382	)
Class 2		(33,598,882	)		(35,038,168	)
Total distributions to shareholders		(35,895,154	)		(37,781,550	)
Capital share transactions: (Note 2)
Class 1		(3,290,820	)		(10,061,210	)
Class 2		7,044,746			91,810,860
Total capital share transactions		3,753,926			81,749,650
Net increase (decrease) in net assets		(31,095,899	)		91,751,633
Net assets:
Beginning of period		1,459,693,248			1,367,941,615
End of period	$	1,428,597,349		$	1,459,693,248
Undistributed net investment income included in net assets:
End of period	$	3,109,325		$	29,347,353

FUS-14 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 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 (1940 Act) as an open-end management investment company, consisting of nineteen separate funds and applies the specialized accounting and reporting guidance in U.S. Generally Accepted Accounting Principles (U.S. GAAP). 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, 2015, 43.50% 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

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 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 securities which are delivered to the Fund’s custodian. The fair value, including accrued interest, of the initial collateralization

Semiannual Report FUS-15

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)

b. Joint Repurchase Agreement (continued)

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, 2015.

c. Securities Purchased on a Delayed Delivery and TBA Basis

The Fund purchases securities on a delayed delivery and to-be-announced (TBA) 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.

d. 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.

e. 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, 2015, 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’s 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. 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 in 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 U.S. GAAP. 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.

FUS-16 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin U.S. Government Securities VIP Fund (continued)

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 in the Statement of Operations.

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.

2. Shares of Beneficial Interest

At June 30, 2015, 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, 2015						Year Ended December 31, 2014
	Shares			Amount			Shares			Amount
Class 1 Shares:
Shares sold		88,029		$	1,147,002			242,868		$	3,161,287
Shares issued in reinvestment of distributions		181,380			2,296,272			214,159			2,743,382
Shares redeemed		(516,496	)		(6,734,094	)		(1,229,027	)		(15,965,879	)
Net increase (decrease)		(247,087	)	$	(3,290,820	)		(772,000	)	$	(10,061,210	)
Class 2 Shares:
Shares sold		4,559,390		$	58,189,126			13,830,012		$	175,846,470
Shares issued in reinvestment of distributions		2,709,587			33,598,882			2,789,663			35,038,168
Shares redeemed		(6,641,145	)		(84,743,262	)		(9,358,233	)		(119,073,778	)
Net increase (decrease)		627,832		$	7,044,746			7,261,442		$	91,810,860

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

Semiannual Report FUS-17

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin U.S. Government Securities VIP Fund (continued)

3. Transactions With Affiliates (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, 2015, 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, 2014, capital loss carryforwards were as follows:

Capital loss carryforwards subject to expiration:
2015	$	2,329,071
2016		841,479
2017		401,851
2018		426,637
Capital loss carryforwards not subject to expiration:
Short term		17,923,545
Long term		16,965,019
Total capital loss carryforwards	$	38,887,602

FUS-18 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin U.S. Government Securities VIP Fund (continued)

At June 30, 2015, the cost of investments and net unrealized appreciation (depreciation) for income tax purposes were as follows:

Cost of investments	$	1,472,278,291
Unrealized appreciation	$	20,771,255
Unrealized depreciation		(18,018,486	)
Net unrealized appreciation (depreciation)	$	2,752,769

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, 2015, aggregated $458,922,948 and $472,703,677, 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 $2 billion (Global Credit Facility) which matures on February 12, 2016. 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 in the Statement of Operations. During the period ended June 30, 2015, 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, 2015, all of the Fund’s investments in financial instruments carried at fair value were valued using Level 2 inputs.

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FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin U.S. Government Securities VIP Fund (continued)

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.

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

FUS-20 Semiannual Report

Franklin VolSmart Allocation VIP Fund

(Formerly, Franklin Managed Volatility Global Allocation VIP Fund)

We are pleased to bring you Franklin VolSmart Allocation VIP Fund’s semiannual report for the period ended June 30, 2015.

Class 2 Performance Summary as of June 30, 2015

The Fund’s Class 2 shares delivered a +1.57% total return* for the six-month period ended June 30, 2015.

*Prior to 5/1/15, the Fund followed different investment strategies, had different subadvisory arrangements, allocated its core portfolio differently, had a different current target volatility goal and made different use of derivative instruments. As a result, the Fund generally held different investments and had a different investment profile. The Fund has an expense reduction contractually guaranteed through at least 4/30/16, and a fee waiver associated with any investment in a Franklin Templeton money fund, contractually guaranteed through at least its current fiscal year-end and, prior to 5/1/15, the Fund had a fee waiver related to the management fee paid by a Fund subsidiary. Fund investment results reflect the expense reduction and fee waivers, 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 VOLSMART ALLOCATION VIP FUND

Fund Goals and Main Investments

Franklin VolSmart 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 stay within its target volatility. Also, the managed volatility and tail risk protection strategies 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. Derivatives 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.

Performance Overview

You can find the Fund’s six-month total return in the Performance Summary. For comparison, the Fund’s benchmarks, the Standard & Poor’s^® 500 Index (S&P 500^®) returned +1.23%, and the Barclays U.S. Aggregate Bond Index had a -0.10% total return for the period under review.¹ The Fund’s blended benchmark, a combination of leading stock and bond indexes that better reflects the asset allocation of the Fund’s portfolio, returned +0.81% for the same period.² Prior to May 1, 2015, the Fund followed different investment strategies, had different subadvisory arrangements, allocated its core portfolio differently, had a different current target volatility goal and made different

use of derivative instruments. As a result, the Fund generally

held different investments and had a different investment profile.

Economic and Market Overview

U.S. economic growth was mixed during the six months under review. In 2015’s first quarter, U.S. dollar strength, low energy prices, and a labor dispute at West Coast ports led exports to decline. Lower business investment and state and local government spending also weighed on the economy, while increases in consumer spending, residential investment and private inventory investment offered some support. In the second quarter, business capital spending rebounded and manufacturing and non-manufacturing activities increased, contributing to strong job gains that helped the unemployment rate decline from 5.6% in December 2014 to 5.3% in June 2015.³ Housing market data were generally encouraging as home sales and prices rose. After a brief, winter slump, retail sales rebounded in the spring as strong employment gains led to broad-based improvement, especially for auto and gasoline sales. Inflation, as measured by the Consumer Price Index, rose during the six months amid generally higher energy prices bouncing from recent lows.

During the six-month period, the Federal Reserve Board (Fed) kept its target interest rate at 0%–0.25% while considering when an increase would be appropriate. The Fed anticipated raising its target rate when it saw further labor market progress and was reasonably confident that inflation would move back to 2% over the medium term. In its June meeting, the Fed lowered its 2015 economic growth forecast and raised unemployment estimates given the weak start to the year.

Investor confidence grew during the period as corporate profits remained healthy, the Fed showed caution about raising interest rates, economic data in Europe and Japan improved and China introduced more stimulus measures. However, the stock markets endured some sell-offs when many investors reacted to debt negotiations between Greece and its creditors, geopolitical tensions in certain regions, and less robust growth in China. For the six months under review, U.S. stocks, as measured by the S&P 500 and the Dow Jones Industrial Average, rose marginally after both reached all-time highs in May.⁴

1. Source: Morningstar.

2. The Fund’s blended benchmark was calculated internally and rebalanced monthly and was composed of 60% S&P 500, 30% Barclays U.S. Aggregate Bond Index and 10% Barclays 1-3 Month U.S. Treasury Bill Index.

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. Bureau of Labor Statistics.

4. Please see Index Descriptions following the Fund Summaries.

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FRANKLIN VOLSMART ALLOCATION VIP FUND

The 10-year Treasury yield, which moves inversely to price, declined from 2.17% at the start of the period to a six-month low of 1.68% in early February as investors sought less risky assets given concerns about soft domestic data, Greece’s debt negotiations, less robust growth in China and the Fed’s cautious tone on raising interest rates. At period-end, the yield rose to 2.35% based partly on upbeat domestic and eurozone economic data and expectations of an agreement between Greece and its international creditors.

Investment Strategy

Under normal market conditions, the Fund seeks to achieve its investment goal by allocating its assets across certain asset classes, sectors and strategies in an attempt to produce a diversified portfolio that will generate returns while minimizing the expected volatility of the Fund’s returns so that volatility does not exceed a target of 10% per year. (Volatility within the 10% target is referred to as “Target Volatility.”) The Fund’s assets are primarily invested in its “core portfolio,” which is principally composed of various U.S. equity and fixed income investments and strategies.

In addition, the Fund employs a volatility management strategy, which is designed to manage the expected volatility of the Fund’s returns so that volatility remains within the Fund’s Target Volatility. Thus, the Fund may utilize certain derivative instruments (such as futures contracts on indexes) to adjust the Fund’s expected volatility to within the Target Volatility. There is no guarantee that the Fund will stay within its Target Volatility. The Fund also employs a “tail risk protection strategy,” designed to protect the Fund from risks related to extreme short-term market downturns (tail risk). Thus, the Fund may utilize certain derivatives (such as total return swap agreements) to hedge the tail risk of the Fund. There is no guarantee that the Fund’s volatility management or tail risk protection strategies will be successful.

What is a futures contract?

A futures contract is an agreement between the Fund and a counterparty made through a U.S. or foreign futures exchange to buy or sell an underlying instrument or asset at a specific price on a future date.

What is a total return swap agreement?

A swap agreement, such as an equity total return swap, is a contract between the Fund and a counterparty to exchange on a future date the returns, or differentials in rates of return, that would have been earned or realized if a notional amount were invested in specific instruments.

Portfolio Breakdown*
6/30/15
	% of Total Net Assets
Stocks		49.8%
Capital Goods		9.5%
Health Care Equipment & Services		5.4%
Materials		5.3%
Energy		4.1%
Food, Beverage & Tobacco		4.0%
Pharmaceuticals, Biotechnology & Life Sciences		2.9%
Retailing		2.7%
Food & Staples Retailing		2.7%
Software & Services		2.3%
Household & Personal Products		1.8%
Other		9.1%
Underlying Funds		43.1%
Domestic Fixed Income		23.1%
Domestic Equity		10.2%
Domestic Hybrid		9.8%
Hedge Strategy		4.8%
Short-Term Investments & Other Net Assets		2.3%

*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. The breakdown may not match the Statement of Investments (SOI).

Manager’s Discussion

From January 1, 2015, through April 30, 2015, the Fund followed its original investment strategies, seeking to diversify the portfolio across global asset classes, regions and sectors while seeking to limit volatility of the Fund’s returns. For this period, the Fund’s benchmark was a combination of the MSCI All Country World Index, the Citigroup World Government Bond Index and the Bloomberg Commodity Index (combined index).⁴ Performance for these four months are discussed in the following five paragraphs.

Tactical Hedging

For the first four months of the reporting period, volatility remained subdued, and our forward-looking risk estimates of expected volatility remained within our tolerance. Thus, we did not implement tactical hedging during this period.

Developed Low Volatility Equities

The Fund’s exposure to low volatility strategies, achieved through exchange-traded funds, effectively reduced Fund

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FRANKLIN VOLSMART ALLOCATION VIP FUND

volatility, as evidenced by a lower standard deviation of daily returns, a measure of volatility. Our low volatility strategies outperformed the broad equity market, and our outperformance of European markets offset our underperformance of the U.S. market. Please keep in mind that although the Fund had a passive exposure to certain low-volatility stocks through the Fund’s allocation process, stock investments were employed to gain country or sector exposure and were based on expectations of low volatility, not capital appreciation.

Emerging Equities

Relative to the combined index, we maintained an underweighting in emerging market equities, as we sought to limit what we viewed as a potential source of volatility. Although this decision detracted as emerging market stocks performed well, the decline was somewhat offset by gains from stock selection within these markets. Selections in China contributed, while selections in India and Egypt detracted. Overweightings in China and Thailand added to returns, as did underweightings in Brazil and Columbia. Conversely, an underweighted allocation in Russia, which was a particularly strong performer, detracted.

Fixed Income

Country selection detracted from results, led by overweighted positions in Europe as well as positions in several emerging debt markets, including Poland and Malaysia. However, the decision to hedge out a significant portion of the currency exposure in several of these issues, most notably to the euro, contributed as the U.S. dollar strengthened relative to these currencies. However, an underweighting to U.S. Treasuries, which performed well, limited gains.

Commodities

We maintained a small underweighting in commodities relative to the combined index primarily due to our outlook for slower global growth and expectations for a stronger U.S. dollar. This strategy contributed to results as commodity prices weakened over the period.

Because of its change in investment strategy, the Fund generally held different investments and had a different investment profile starting on May 1, 2015.

At the asset allocation level, the strategy held roughly 66% in equities and 27% in fixed income and maintained a hedge of slightly less than 5% at period-end. In terms of underlying equity sector exposures, relative to the blended benchmark we held our most significant overweightings in health care and industrials, while we underweighted financials and information

Portfolio Strategy Holdings*
6/30/15
	% of Total Net Assets
Franklin Rising Dividends Strategy		49.8%
Franklin Low Duration Total Return Fund		13.1%
Franklin DynaTech Fund		10.2%
Franklin Strategic Income Fund		10.0%
Franklin Income Fund		9.8%
Hedge Strategy		4.8%
Short-Term Investments & Other Net Assets		2.3%

*The breakdown may not match the SOI.

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

technology. The Fund’s equity sector positioning is in line with the new strategy’s objective of capital appreciation and is designed to have less volatility than the overall equity market. Within fixed income, the Fund overweighted spread sectors, namely through high yield credit and securitized debt, and underweighted U.S. Treasuries, as we sought to avoid U.S. duration risk.

The new strategy slightly underperformed its blended benchmark during the two-month time period of May and June as we sought to invest assets.

Thank you for your participation in Franklin VolSmart 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, 2015, 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 VOLSMART 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 1/1/15		Ending Account Value 6/30/15		Fund-Level Expenses Incurred During Period* 1/1/15–6/30/15		Fund-Level Expenses Incurred During Period** 1/1/15–6/30/15
Actual		$1,000		$1,015.70		$5.10		$5.70
Hypothetical (5% return before expenses)		$1,000		$1,019.74		$5.11		$5.71

*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 (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.

**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 (1.14%), 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 VolSmart Allocation VIP Fund

	Six Months Ended June 30, 2015 (unaudited)			Year Ended December 31,
				2014			2013a
Class 2
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$10.20			$10.07			$10.00
Income from investment operationsb:
Net investment incomec,d		0.02			0.11			0.09
Net realized and unrealized gains (losses)		0.14			0.25			0.17
Total from investment operations		0.16			0.36			0.26
Less distributions from:
Net investment income and net foreign currency gains		(0.03	)		(0.23	)		(0.19	)
Net realized gains		—			(—	)e		—
Total distributions		(0.03	)		(0.23	)		(0.19	)
Net asset value, end of period		$10.33			$10.20			$10.07
Total returnf		1.57%			3.60%			2.56%
Ratios to average net assetsg
Expenses before waiver and payments by affiliatesh		1.87%			1.97%			2.97%
Expenses net of waiver and payments by affiliatesh		1.02%			1.08%	i		1.08%	i
Net investment incomed		0.40%			1.07%			1.21%
Supplemental data
Net assets, end of period (000’s)		$10,327			$10,201			$10,065
Portfolio turnover rate		125.82%			22.04%			8.12%

^a For the period April 1, 2013 (commencement of operations) to December 31, 2013.

^b The 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’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.

^c Based on average daily shares outstanding.

^d Recognition of net investment income by the Fund is affected by the timing of declaration of dividends by the Underlying Funds and exchange traded funds in which the Fund invests.

^e Amount rounds to less than $0.01 per share.

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

^g Ratios are annualized for periods less than one year.

^h Does not include expenses of the Underlying Funds and exchange traded funds in which the Fund invests. The weighted average indirect expenses of the Underlying Funds and exchange traded funds was 0.12% for the period ended June 30, 2015.

ⁱ Benefit of expense reduction rounds to less than 0.01%.

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

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL HIGHLIGHTS

Franklin VolSmart Allocation VIP Fund (continued)

	Six Months Ended June 30, 2015 (unaudited)			Year Ended December 31,
				2014			2013a
Class 5
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$10.20			$10.07			$10.00
Income from investment operationsb:
Net investment incomec,d		0.03			0.13			0.10
Net realized and unrealized gains (losses)		0.13			0.25			0.17
Total from investment operations		0.16			0.38			0.27
Less distributions from:
Net investment income and net foreign currency gains		(0.03	)		(0.25	)		(0.20	)
Net realized gains		—			(—	)e		—
Total distributions		(0.03	)		(0.25	)		(0.20	)
Net asset value, end of period		$10.33			$10.20			$10.07
Total returnf		1.57%			3.75%			2.68%
Ratios to average net assetsg
Expenses before waiver and payments by affiliatesh		1.74%			1.82%			2.82%
Expenses net of waiver and payments by affiliatesh		0.89%			0.93%	i		0.93%	i
Net investment incomed		0.53%			1.22%			1.36%
Supplemental data
Net assets, end of period (000’s)		$11,383			$10,201			$10,065
Portfolio turnover rate		125.82%			22.04%			8.12%

^a For the period April 1, 2013 (commencement of operations) to December 31, 2013.

^b The 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’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.

^c Based on average daily shares outstanding.

^d Recognition of net investment income by the Fund is affected by the timing of declaration of dividends by the Underlying Funds and exchange traded funds in which the Fund invests.

^e Amount rounds to less than $0.01 per share.

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

^g Ratios are annualized for periods less than one year.

^h Does not include expenses of the Underlying Funds and exchange traded funds in which the Fund invests. The weighted average indirect expenses of the Underlying Funds and exchange traded funds was 0.12% for the period ended June 30, 2015.

ⁱ Benefit of expense reduction rounds to less than 0.01%.

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

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Statement of Investments, June 30, 2015 (unaudited)

Franklin VolSmart Allocation VIP Fund
		Shares		Value
	Common Stocks 49.8%
	Automobiles & Components 1.4%
	Johnson Controls Inc.		5,900	$	292,227
	Capital Goods 9.5%
	Carlisle Cos. Inc.		1,200		120,144
	Donaldson Co. Inc.		2,100		75,180
	Dover Corp.		3,400		238,612
	General Dynamics Corp.		1,400		198,366
	Honeywell International Inc.		2,900		295,713
	Pentair PLC (United Kingdom)		4,600		316,250
	Roper Technologies Inc.		2,300		396,658
	United Technologies Corp.		3,000		332,790
	W.W. Grainger Inc.		400		94,660
					2,068,373
	Commercial & Professional Services 0.8%
	Cintas Corp.		1,000		84,590
	Matthews International Corp., A		1,800		95,652
					180,242
	Consumer Durables & Apparel 0.9%
	Leggett & Platt Inc.		1,200		58,416
	NIKE Inc., B		1,300		140,426
					198,842
	Consumer Services 1.3%
	McDonald’s Corp.		2,000		190,140
	Yum! Brands Inc.		1,000		90,080
					280,220
	Diversified Financials 0.4%
	State Street Corp.		1,100		84,700
	Energy 4.1%
	Chevron Corp.		2,300		221,881
	EOG Resources Inc.		600		52,530
	Exxon Mobil Corp.		2,100		174,720
	Occidental Petroleum Corp.		2,300		178,871
	Schlumberger Ltd.		3,100		267,189
					895,191
	Food & Staples Retailing 2.7%
	CVS Health Corp.		1,700		178,296
	Wal-Mart Stores Inc.		2,800		198,604
	Walgreens Boots Alliance Inc.		2,500		211,100
					588,000
	Food, Beverage & Tobacco 4.0%
	Archer-Daniels-Midland Co.		5,200		250,744
	Bunge Ltd.		3,100		272,180
	McCormick & Co. Inc.		1,400		113,330
	PepsiCo Inc.		2,400		224,016
					860,270

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FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin VolSmart Allocation VIP Fund (continued)

	Shares		Value
Common Stocks (continued)
Health Care Equipment & Services 5.4%
Abbott Laboratories		2,700	$	132,516
Becton, Dickinson and Co.		2,000		283,300
DENTSPLY International Inc.		1,100		56,705
Medtronic PLC		4,100		303,810
Stryker Corp.		3,000		286,710
West Pharmaceutical Services Inc.		2,000		116,160
				1,179,201
Household & Personal Products 1.8%
Colgate-Palmolive Co.		2,500		163,525
The Procter & Gamble Co.		3,000		234,720
				398,245
Insurance 1.1%
Aflac Inc.		1,100		68,420
The Chubb Corp.		600		57,084
Erie Indemnity Co., A		1,300		106,691
				232,195
Materials 5.3%
Air Products and Chemicals Inc.		2,300		314,709
Albemarle Corp.		4,400		243,188
Bemis Co. Inc.		1,200		54,012
Ecolab Inc.		1,100		124,377
Nucor Corp.		1,400		61,698
Praxair Inc.		2,900		346,695
				1,144,679
Media 0.7%
John Wiley & Sons Inc., A		2,700		146,799
Pharmaceuticals, Biotechnology & Life Sciences 2.9%
AbbVie Inc.		1,600		107,504
Johnson & Johnson		3,400		331,364
Perrigo Co. PLC		400		73,932
Pfizer Inc.		2,200		73,766
Roche Holding AG, ADR (Switzerland)		1,500		52,605
				639,171
Retailing 2.7%
The Gap Inc.		2,900		110,693
Ross Stores Inc.		3,500		170,135
Target Corp.		2,800		228,564
Tiffany & Co.		900		82,620
				592,012
Semiconductors & Semiconductor Equipment 1.3%
Linear Technology Corp.		2,300		101,729
Texas Instruments Inc.		3,300		169,983
				271,712
Software & Services 2.3%
Accenture PLC, A		2,450		237,111
Microsoft Corp.		6,000		264,901
				502,012

Semiannual Report FVA-9

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin VolSmart Allocation VIP Fund (continued)

		Shares		Value
	Common Stocks (continued)
	Technology Hardware & Equipment 0.4%
	QUALCOMM Inc.		1,500	$	93,945
	Transportation 0.8%
	United Parcel Service Inc., B		1,700		164,747
	Total Common Stocks (Cost $11,063,854)				10,812,783
	Investments in Underlying Funds 43.1%
	Domestic Equity 10.2%
a,b	Franklin DynaTech Fund, Class R6		43,529		2,204,292
	Domestic Fixed Income 23.1%
b	Franklin Low Duration Total Return Fund, Class R6		282,878		2,834,434
b	Franklin Strategic Income Fund, Class R6		221,768		2,182,196
					5,016,630
	Domestic Hybrid 9.8%
b	Franklin Income Fund, Class R6		924,473		2,135,533
	Total Investments in Underlying Funds (Cost $9,499,170)				9,356,455
	Total Investments before Short Term Investments (Cost $20,563,024)				20,169,238
	Short Term Investments (Cost $1,504,707) 6.9%
	Money Market Funds 6.9%
a,b	Institutional Fiduciary Trust Money Market Portfolio		1,504,707		1,504,707
	Total Investments (Cost $22,067,731) 99.8%				21,673,945
	Other Assets, less Liabilities 0.2%				36,385
	Net Assets 100.0%			$	21,710,330

^aNon-income producing.

^bSee Note 3(e) regarding investments in Underlying Funds.

FVA-10 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin VolSmart Allocation VIP Fund (continued)

At June 30, 2015, the Fund had the following total return swap contracts outstanding. See Note 1(c).

Total Return Swap Contracts

Underlying Instrument	Financing Rate			Counterparty		Notional Value		Expiration Date		Unrealized Appreciation		Unrealized Depreciation
Dynamic VIX Backwardationa		0.25	%		BZWS	$	4,200,000		5/12/16	$	—	$	(798	)

^aRepresents a custom index comprised of a basket of underlying instruments. Additional information regarding the custom basket’s underlying instruments and their respective values and fees are as follows:

Underlying Instruments	Notional Valueb		Unrealized Appreciation		Unrealized Depreciation
CBOE VIX Future Oct15	$	612,500	$	—	$	(115	)
CBOE VIX Future Nov15		1,050,000		—		(200	)
CBOE VIX Future Dec15		1,050,000		—		(200	)
CBOE VIX Future Jan16		437,500		—		(83	)
Uninvested Notional		1,050,000		—		(200	)
Total	$	4,200,000	$	—	$	(798	)

^bNotional value represents the market value of each underlying instrument which is calculated based on the custom swap contract’s original notional value of $4,200,000, allocated to each underlying instrument on a pro-rata basis.

See Abbreviations on page FVA-22.

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

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Financial Statements

Statement of Assets and Liabilities

June 30, 2015 (unaudited)

	Franklin VolSmart Allocation VIP Fund
Assets:
Investments in securities:
Cost - Unaffiliated issuers	$	11,063,854
Cost - Underlying Funds (Note 3e)		11,003,877
Total cost of investments	$	22,067,731
Value - Unaffiliated issuers	$	10,812,783
Value - Underlying Funds (Note 3e)		10,861,162
Total value of investments		21,673,945
Receivables:
Investment securities sold		6,414
Capital shares sold		51,829
Dividends		14,424
Affiliates		13,897
Other assets		8
Total assets		21,760,517
Liabilities:
Payables:
Investment securities purchased		10,046
Capital shares redeemed		134
Distribution fees		7,130
Professional fees		32,079
Unrealized depreciation on OTC swap contracts		798
Total liabilities		50,187
Net assets, at value	$	21,710,330
Net assets consist of:
Paid-in capital	$	20,888,034
Distributions in excess of net investment income		(84,462	)
Net unrealized appreciation (depreciation)		(394,584	)
Accumulated net realized gain (loss)		1,301,342
Net assets, at value	$	21,710,330
Class 2:
Net assets, at value	$	10,327,493
Shares outstanding		1,000,000
Net asset value and maximum offering price per share	$	10.33
Class 5:
Net assets, at value	$	11,382,837
Shares outstanding		1,101,446
Net asset value and maximum offering price per share	$	10.33

FVA-12 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, 2015 (unaudited)

	Franklin VolSmart Allocation VIP Fund
Investment income:
Dividends:
Unaffiliated issuers	$	75,385
Underlying Funds (Note 3e)		38,511
Interest		33,118
Total investment income		147,014
Expenses:
Management fees (Note 3a)		96,624
Distribution fees: (Note 3c)
Class 2		12,894
Class 5		6,135
Custodian fees (Note 4)		765
Reports to shareholders		2,392
Registration and filing fees		390
Professional fees		64,994
Other		2,505
Total expenses		186,699
Expenses waived/paid by affiliates (Note 3e and 3f)		(87,972	)
Net expenses		98,727
Net investment income		48,287
Realized and unrealized gains (losses):
Net realized gain (loss) from:
Investments		1,159,565
Foreign currency transactions		188,524
Swap contracts		(805	)
Net realized gain (loss)		1,347,284
Net change in unrealized appreciation (depreciation) on:
Investments		(1,089,732	)
Translation of other assets and liabilities denominated in foreign currencies		2,610
Swap contracts		(798	)
Net change in unrealized appreciation (depreciation)		(1,087,920	)
Net realized and unrealized gain (loss)		259,364
Net increase (decrease) in net assets resulting from operations	$	307,651

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

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL STATEMENTS

Statements of Changes in Net Assets

	Franklin VolSmart Allocation VIP Fund
	Six Months Ended June 30, 2015 (unaudited)			Year Ended December 31, 2014
Increase (decrease) in net assets:
Operations:
Net investment income	$	48,287		$	236,957
Net realized gain (loss)		1,347,284			223,319
Net change in unrealized appreciation (depreciation)		(1,087,920	)		293,294
Net increase (decrease) in net assets resulting from operations		307,651			753,570
Distributions to shareholders from:
Net investment income and net foreign currency gains:
Class 2		(30,800	)		(230,300	)
Class 5		(32,799	)		(245,900	)
Net realized gains:
Class 2		—			(3,400	)
Class 5		—			(3,400	)
Total distributions to shareholders		(63,599	)		(483,000	)
Capital share transactions: (Note 2)
Class 5		1,064,949			—
Net increase (decrease) in net assets		1,309,001			270,570
Net assets:
Beginning of period		20,401,329			20,130,759
End of period	$	21,710,330		$	20,401,329
Distributions in excess of net investment income included in net assets:
End of period	$	(84,462	)	$	(69,150	)

FVA-14 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 VolSmart 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 (1940 Act) as an open-end management investment company, consisting of nineteen separate funds and applies the specialized accounting and reporting guidance in U.S. Generally Accepted Accounting Principles (U.S. GAAP). The Franklin VolSmart 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 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, 2015, Franklin Managed Volatility Global Allocation VIP Fund was renamed Franklin VolSmart Allocation VIP Fund and implemented changes to the investment strategies.

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 NAV each trading day.

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.

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

Semiannual Report FVA-15

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin VolSmart Allocation VIP Fund (continued)

1. Organization and Significant Accounting Policies (continued)

a. Financial Instrument Valuation (continued)

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.

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 in 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 in 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

FVA-16 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin VolSmart Allocation VIP Fund (continued)

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 Consolidated 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, 2015, the Fund had OTC derivatives in a net liability position for such contracts of $798.

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 OTC total return swap contracts primarily to manage exposure to the equity price risk of an underlying instrument such as a stock, bond, index or basket of securities or

indices. A total return swap is an agreement between the Fund and a counterparty to exchange a return linked to an underlying instrument for a floating or fixed rate payment, both based upon a notional amount. Over the term of the contract, contractually required payments to be paid or received are accrued daily and recorded as unrealized appreciation or depreciation until the payments are made, at which time they are recognized as realized gain or loss.

See Note 7 regarding other derivative information.

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, 2015, 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’s 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

Semiannual Report FVA-17

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin VolSmart Allocation VIP Fund (continued)

1. Organization and Significant Accounting Policies (continued)

e. Security Transactions, Investment Income, Expenses and Distributions (continued)

income. Dividend income and realized gain distributions by Underlying Funds and exchange traded funds are recorded on the ex-dividend date except for certain foreign securities where the dividend rate is not available. In such cases, the dividend is recorded as soon as the information is received by the Fund. 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 U.S. GAAP. 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 Underlying Funds and exchange traded funds. Since the Underlying Funds and exchange traded funds have varied expense levels and the Fund may own different proportions of

the Underlying Funds and exchange traded 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.

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, 2015, 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, 2015a						Year Ended December 31, 2014a
	Shares			Amount			Shares		Amount
Class 5 Shares:
Shares sold		109,596		$	1,150,742			—	$	—
Shares issued in reinvestment of distributions		192			1,999			—		—
Shares redeemed		(8,342	)		(87,792	)		—		—
Net increase (decrease)		101,446		$	1,064,949			—	$	—

^aDuring the period Class 2 did not report any share transactions.

FVA-18 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin VolSmart 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 trustees of the following subsidiaries:

Subsidiary	Affiliation
Franklin Advisers, Inc. (Advisers)	Investment manager
Franklin Advisory Services, LLC (Advisory Services)	Investment manager
K2/D&S Management Co., L.L.C. (K2 Advisors)	Investment manager
Franklin Alternative Strategies Advisers, LLC (FASA)	Investment manager
Franklin Templeton Investment Management Ltd. (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 May 1, 2015, the Fund’s investment manager is Advisers. Prior to May 1, 2015, FASA was the Fund’s investment manager.

a. Management Fees

The Fund pays an investment management fee to Advisers of 0.80% per year of the average daily net assets of the Fund.

Prior to May 1, 2015, the Fund paid fees to FASA based on the average daily net assets of the Fund 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

Effective May 1, 2015, under a subadvisory agreement, Advisory Services and K2 Advisors, affiliates of Advisers, provide subadvisory services to the Fund. The subadvisory fee is paid by Advisers based on the Fund’s average daily net assets, and is not an additional expense of the Fund. Prior to May 1, 2015, FTIML and TAML provided subadvisory services to the Fund.

b. Administrative Fees

Effective May 1, 2015, 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. Prior to May 1, 2015, the fees were paid by FASA.

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 0.15% 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. Prior to May 1, 2015, the rate for Class 5 shares was 0.10%.

Semiannual Report FVA-19

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin VolSmart Allocation VIP Fund (continued)

3. Transactions With Affiliates (continued)

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. Investments in Underlying Funds

The Fund invests in the Underlying Funds which are managed by Advisers or an affiliate of Advisers. The Fund does not invest in the Underlying Funds for the purpose of exercising a controlling influence over the management or policies. Management fees paid by the Fund are waived on assets invested in the Underlying Funds, as noted on the Statement of Operations, in an amount not to exceed the management or administrative fees paid directly or indirectly by the Underlying Funds.

Investments in Underlying Funds for the period ended June 30, 2015, 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 Gain (Loss)		% of Underlying Fund Shares Outstanding Held at End of Period
Franklin DynaTech Fund, Class R6		—		43,529		—			43,529	$	2,204,292	$	—	$	—		0.08%
Franklin Income Fund, Class R6		—		924,473		—			924,473		2,135,533		9,223		—		—	a
Franklin Low Duration Total Return Fund, Class R6		—		282,878		—			282,878		2,834,434		12,105		—		0.11%
Franklin Strategic Income Fund, Class R6		—		221,768		—			221,768		2,182,196		17,183		—		0.03%
Institutional Fiduciary Trust Money Market Portfolio		74,160		22,380,634		(20,950,087	)		1,504,707		1,504,707		—		—		0.01%
Total										$	10,861,162	$	38,511	$	—

^a Rounds to less than 0.01%.

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 each class of the Fund do not exceed 0.65%, 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, 2016. Prior to May 1, 2015, the Fund’s contractual cap, for each class of the Fund, was 0.83%.

g. Other Affiliated Transactions

At June 30, 2015, Advisers owned 95.17% 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 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, 2015, there were no credits earned.

5. Income Taxes

For tax purposes, the Fund may elect to defer any portion of a post-October capital loss to the first day of the following fiscal year. At December 31, 2014, the Fund deferred post-October capital losses of $45,942.

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FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin VolSmart Allocation VIP Fund (continued)

At June 30, 2015, the cost of investments and net unrealized appreciation (depreciation) for income tax purposes were as follows:

Cost of investments	$	22,067,731
Unrealized appreciation	$	109,964
Unrealized depreciation		(503,750	)
Net unrealized appreciation (depreciation)	$	(393,786	)

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 bond discounts and premiums.

6. Investment Transactions

Purchases and sales of investments (excluding short term securities) for the period ended June 30, 2015, aggregated $21,266,919 and $21,448,662, respectively.

7. Other Derivative Information

At June 30, 2015, the Fund’s investments in derivative contracts are reflected in 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		Statement of Assets and Liabilities Location	Fair Value
Equity contracts	Unrealized appreciation on OTC swap contracts	$	—	Unrealized depreciation on OTC swap contracts	$	798
Totals		$	—		$	798

For the period ended June 30, 2015, the effect of derivative contracts in the Fund’s Statement of Operations was as follows:

Derivative Contracts Not Accounted for as Hedging Instruments	Statement of Operations Locations	Net Realized Gain (Loss) for the Period			Statement of Operations Locations	Net Change in Unrealized Appreciation (Depreciation) for the Period
	Net realized gain (loss) from:				Net change in unrealized appreciation (depreciation) on:
Foreign exchange contracts	Foreign currency transactions	$	181,984	a	Translation of other assets and liabilities denominated in foreign currencies	$	(36,425	)a
Equity contracts	Swap contracts		(805	)	Swap contracts		(798	)
Totals		$	181,179			$	(37,223	)

^aForward exchange contracts are included in net realized gain (loss) from foreign currency transactions and net change in unrealized appreciation (depreciation) on translation of other assets and liabilities denominated in foreign currencies in the Statement of Operations.

For the period ended June 30, 2015, the average month end fair value of derivatives represented 0.25% of average month end net assets. The average month end number of open derivative contracts for the period was 4.

See Note 1(c) regarding derivative financial instruments.

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FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin VolSmart Allocation 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 $2 billion (Global Credit Facility) which matures on February 12, 2016. 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 in the Statement of Operations. During the period ended June 30, 2015, 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, 2015, 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 Investmentsa	$	10,812,783	$	—	$	—	$	10,812,783
Investments in Underlying Fundsa		9,356,455		—		—		9,356,455
Short Term Investments		1,504,707		—		—		1,504,707
Total Investments in Securities	$	21,673,945	$	—	$	—	$	21,673,945
Liabilities:
Other Financial Instruments
Swap Contracts	$	—	$	798	$	—	$	798

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

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

Counterparty		Selected Portfolio
BZWS	Barclays Bank PLC	ADR	American Depositary Receipt

FVA-22 Semiannual Report

Templeton Developing Markets VIP Fund

This semiannual report for Templeton Developing Markets VIP Fund covers the period ended June 30, 2015.

Class 2 Performance Summary as of June 30, 2015

The Fund’s Class 2 shares had a -2.17% total return* for the six-month period ended June 30, 2015.

*The Fund has a fee waiver associated with any investment 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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TEMPLETON DEVELOPING MARKETS VIP FUND

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 +3.12% total return, and the Standard & Poor’s^®/International Finance Corporation Investable Composite Index produced a +4.03% 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 global economy expanded moderately during the six months under review. Although several emerging market countries faced headwinds such as soft domestic demand, weak exports and geopolitical crises, emerging market economies overall continued to grow faster than developed market economies. China’s economy grew at a less robust pace in 2015’s first half, amid relatively steady consumption and industrial production but weaker fixed-asset investment growth. Domestic demand continued to account for a greater portion of gross

domestic product, as per-capita income grew and the government’s market-friendly policies supported new economic drivers that could help make economic expansion more sustainable. Many emerging market countries showed signs of economic improvement, including India, South Africa and the Czech Republic, while others, such as Thailand and South Korea, showed signs of moderation. In the first quarter, Brazil’s economy contracted and Russia’s economy contracted for the third consecutive quarter. Many emerging market central banks, including those of Russia, India and China, lowered interest rates to promote lending and economic growth. In contrast, Brazil’s central bank raised interest rates in an effort to control inflation and support the country’s currency.

Emerging market stocks experienced volatility during the period amid concerns about global economic growth, the future course of U.S. monetary policy, the devaluation of many currencies against the U.S. dollar and Greece’s debt negotiations. Nonetheless, China’s monetary stimulus measures, the Bank of Japan’s and the European Central Bank’s monetary easing, and the U.S. Federal Reserve’s accommodative policy provided investors with some optimism. Early in the period, a temporary solution to Greece’s dispute with the country’s international creditors and a Russia-Ukraine ceasefire agreement bolstered emerging market stocks. However, near period-end, investors grew concerned about Greece’s possible exit from the eurozone as debt negotiations deteriorated. The Greek government subsequently imposed capital controls, defaulted on scheduled payments to the International Monetary Fund and announced a referendum on the terms of a potential bailout

1. Source: 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 DEVELOPING MARKETS VIP FUND

deal. Although oil prices began to improve during the period, the effects of 2014’s sharp decline on several oil-producing countries’ economies, financial positions and currencies continued to weigh on investor sentiment.

For the six months ended June 30, 2015, emerging market stocks, as measured by the MSCI EM Index, rose 5.80% in local currency terms, as many investors seemed to focus on the relatively attractive valuations of many emerging market stocks.¹ However, relatively weak local currencies resulted in a +3.12% total return in U.S. dollar terms.¹ European and Asian emerging markets overall performed well for the period, which helped offset declines in Latin America.

The Chinese government’s market-friendly policies, stimulus measures and commitment to stable growth supported China equity markets overall, particularly the domestic A-share market.² As measured by the MSCI China A Index, the domestic A-share market began to rise in late 2014 after the People’s Bank of China’s (PBOC’s) surprise interest rate cut in November and the effective easing of loan and deposit regulations to boost the economy. Also supporting A shares was the Shanghai-Hong Kong Stock Connect program, which opened China’s domestic A-share market to certain qualified foreign investors. Domestic retail investor market speculation led the MSCI China A Index to generate total returns of +112.27% for the 12 months and +33.92% for the six months ended June 30, 2015.³ In contrast, Chinese stocks aimed at foreign investors, as measured by the MSCI China Index, produced more modest +24.95% and +14.84% total returns for the same respective periods, as foreign investors seemed more focused on economic growth and market fundamentals.³

After peaking on June 12, China’s domestic market began to correct, resulting initially from tight liquidity conditions and uncertainties about the PBOC’s monetary policy, with a 17.33% decline for the MSCI China A Index from June 12 to June 30.³ Following the domestic market’s nearly 8% plunge on June 26, the PBOC lowered its benchmark interest rate and announced targeted reserve requirement ratio cuts for certain banks.³ In an effort to prevent a market collapse, the government imposed

other measures that restricted trading. However, certain government intervention measures were not well received and further contributed to investor concerns.

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, the Fund remained diversified among different emerging market countries. We invested in China through B, China H, Red Chip and P Chip shares,² as well as single-listed American Depositary Receipts (ADRs of companies whose underlying shares are not listed in home markets),⁴ with no holdings in China’s domestic A-share

Top 10 Countries
6/30/15
	% of Total Net Assets
China		22.8%
South Africa		10.6%
Brazil		9.9%
India		9.5%
Thailand		6.8%
South Korea		5.6%
Belgium		4.2%
Taiwan		4.2%
Indonesia		4.1%
U.K.		4.0%

2. China equity markets consist of A, B, China H, Red Chip and P Chip shares. “A” denotes shares of companies incorporated in China that are listed on the Shanghai and Shenzhen Stock Exchanges, are quoted in the Chinese renminbi and entail foreign investment regulations. “B” denotes shares of companies incorporated in China that are listed on the Shanghai and Shenzhen Stock Exchanges, are quoted in foreign currencies (U.S. dollar for Shanghai and Hong Kong dollar for Shenzhen) and are open to foreign investors. “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. “P Chip” denotes shares of Hong Kong Stock Exchange-listed companies controlled by Chinese mainland individuals and incorporated outside of China, with a majority of their business in China.

3. Source: MSCI.

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.

4. A single-listed ADR is a negotiable U.S. security issued by a U.S. bank, referred to as a “depositary bank,” that typically represents a non-U.S. company’s equity, is publicly available to U.S. investors on a national stock exchange (NYSE or NASDAQ) or on the over-the-counter market, and has underlying shares that are not publicly traded in the issuer’s home market.

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TEMPLETON DEVELOPING MARKETS VIP FUND

market. Consistent with our long-term investment strategy, we viewed China’s recent market correction in the context of a long-term uptrend. We continued to monitor China’s economic and market developments while seeking to minimize risk and to establish long-term positions in quality companies at share prices we considered more attractive.

Key contributors to the Fund’s absolute performance during the reporting period included Naspers, Hyundai Development and SK Innovation.

Naspers is a South Africa-based media conglomerate with a portfolio of emerging market assets focused on Internet services and online advertising, which continued to experience rapid growth and increasingly effective advertising revenue generation. Solid corporate results, driven by strong growth in its pay television and Internet platforms, also bolstered the company’s share price. A key asset in Naspers’s business portfolio is an investment in China’s largest and most widely used Internet services platform, Tencent Holdings, another Fund holding that performed well during the reporting period. Further supporting investor sentiment was Naspers’s agreements with other companies to develop joint online classified advertising businesses in Brazil, Indonesia, Thailand and Bangladesh.

Hyundai Development is one of South Korea’s leading residential property developers. We believed that with its strong IPARK brand name, the company could potentially have the largest market share in the country’s residential construction business. The South Korean government’s measures to stimulate the housing market and the central bank’s rate cuts resulting in record-low interest rates aided investor sentiment during the reporting period. After posting losses in 2012 and 2013, the company reported profits in 2014, as it benefited from South Korea’s strong residential demand growth.

SK Innovation is a South Korean energy conglomerate with interests in oil refining, petrochemicals, lubricants and exploration and production. The company also has expertise in lithium-polymer battery production. Its shares rose during the period as a strong turnaround in its core refining and petrochemicals businesses helped the company return to profit in 2015’s first quarter, following a loss in 2014’s fourth quarter. The company’s efforts to streamline its businesses and improve its financial position were also well received by investors.

In contrast, key detractors from the Fund’s absolute performance included Tata Motors, Avon Products and Itau Unibanco Holding.

Top 10 Holdings
6/30/15
Company Sector/Industry, Country	% of Total Net Assets
Naspers Ltd., N Media, South Africa		5.3%
Anheuser-Busch InBev NV Beverages, Belgium		4.3%
TSMC (Taiwan Semiconductor Manufacturing Co.) Ltd. Semiconductors & Semiconductor Equipment, Taiwan		4.2%
Itau Unibanco Holding SA, ADR, pfd. Banks, Brazil		4.2%
Unilever PLC Personal Products, U.K.		4.0%
Brilliance China Automotive Holdings Ltd. Automobiles, China		3.5%
Tata Consultancy Services Ltd. IT Services, India		3.2%
China Life Insurance Co. Ltd., H Insurance, China		2.9%
Remgro Ltd. Diversified Financial Services, South Africa		2.8%
PetroChina Co. Ltd., H Oil, Gas & Consumable Fuels, China		2.7%

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

Tata Motors, India’s largest automobile company, produces a wide range of cars and commercial vehicles in its home market, while its wholly owned subsidiary manufactures British luxury car brands Jaguar and Land Rover. Tata Motors’ shares declined as the luxury car subsidiary experienced weak demand in a number of key markets, including China, Brazil and Europe. In addition, vehicle production by a joint venture in China progressed more slowly than anticipated, leading to weaker-than-expected earnings in 2015’s first quarter.

Avon Products is a U.S.-based global cosmetics business with substantial operations in various emerging markets, most notably Brazil. Brazil’s weak economy hurt the company’s corporate results. Concerns about Avon’s ability to pay its substantial debts in a weak market environment led to credit rating downgrades. However, the firm is in the process of selling certain assets and using the proceeds to reduce its debt. Further hurting Avon’s shares were the economic and currency crises in Russia, another substantial market.

Itau Unibanco, one of Brazil’s largest financial conglomerates, provides a full range of banking and financial services. It continued to produce strong operating performance despite Brazil’s difficult economic environment. The company’s shares

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TEMPLETON DEVELOPING MARKETS VIP FUND

strengthened through April, but profit taking and the Brazilian real’s weakness against the U.S. dollar, as well as political protests and sluggish economic growth that worried investors, pressured stock performance.

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, 2015, the U.S. dollar rose in value relative to most currencies. As a result, the Fund’s performance was negatively affected by the portfolio’s investment predominantly in securities with non-U.S. currency exposure.

In the past six months, we increased the Fund’s holdings in several countries, including Brazil, South Korea, Indonesia and Taiwan, as we continued to invest in opportunities we considered more attractive. We also initiated exposure to certain countries, notably Russia and Cambodia, and made select purchases in China through single-listed ADRs and B, China H and Red Chip shares. In sector terms, we increased investments largely in consumer discretionary, health care and information technology.⁵ Key purchases included a new position in Baidu, China’s leading Internet search engine, and additional shares of TSMC (Taiwan Semiconductor Manufacturing Co.), the world’s largest independent integrated circuit foundry, and Dr. Reddy’s Laboratories, one of India’s major pharmaceutical companies.

Conversely, we reduced the Fund’s investments in several countries, including Thailand, South Africa and India, and eliminated exposure to certain countries, notably Turkey and Qatar, as we received share redemptions and as we focused on stocks we considered to be more attractively valued within our investment universe. In sector terms, we reduced holdings largely in financials and sold some positions in industrials and consumer staples.⁶ Key sales included reductions in Siam Commercial Bank, a financial products and services provider in Thailand and internationally; Remgro, a South African conglomerate with businesses in finance, health care, food and industrials; and China Construction Bank, a Chinese commercial bank.

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, 2015, 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 discretionary sector comprises auto components; automobiles; distributors; diversified consumer services; hotels, restaurants and leisure; Internet and catalog retail; media; multiline retail; specialty retail; and textiles, apparel and luxury goods in the SOI. The health care sector comprises biotechnology and pharmaceuticals in the SOI. The information technology sector comprises Internet software and services; IT services; semiconductors and semiconductor equipment; and technology hardware, storage and peripherals in the SOI.

6. The financials sector comprises banks, diversified financial services, insurance, and real estate management and development in the SOI. The industrials sector comprises airlines, construction and engineering, machinery and marine in the SOI. The consumer staples sector comprises beverages, food and staples retailing, food products and personal products 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 1/1/15		Ending Account Value 6/30/15		Fund-Level Expenses Incurred During Period* 1/1/15–6/30/15
Actual		$1,000		$   978.30		$7.90
Hypothetical (5% return before expenses)		$1,000		$1,016.81		$8.05

*Expenses are calculated using the most recent six-month annualized expense ratio, net of expense waivers, for the Fund’s Class 2 shares (1.61%), 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

Templeton Developing Markets VIP Fund

	Six Months Ended June 30, 2015 (unaudited)			Year Ended December 31,
				2014			2013			2012			2011			2010
Class 1
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$9.27			$10.26			$10.58			$9.50			$11.40			$9.86
Income from investment operationsa:
Net investment incomeb		0.05			0.15	c		0.13			0.19			0.17			0.09
Net realized and unrealized gains (losses)		(0.24	)		(0.97	)		(0.22	)		1.06			(1.94	)		1.63
Total from investment operations		(0.19	)		(0.82	)		(0.09	)		1.25			(1.77	)		1.72
Less distributions from:
Net investment income		(0.20	)		(0.17	)		(0.23	)		(0.17	)		(0.13	)		(0.18	)
Net realized gains		(1.13	)		—			—			—			—			—
Total distributions		(1.33	)		(0.17	)		(0.23	)		(0.17	)		(0.13	)		(0.18	)
Redemption fees		—			—	d		—	d		—	d		—	d		—	d
Net asset value, end of period		$7.75			$9.27			$10.26			$10.58			$9.50			$11.40
Total returne		(1.97)%			(8.09)%			(0.73)%			13.40%			(15.67)%			17.83%
Ratios to average net assetsf
Expenses		1.36%	g		1.36%	g		1.35%			1.35%			1.40%			1.49%	h
Net investment income		1.20%			1.51%	c		1.25%			1.93%			1.57%			0.87%
Supplemental data
Net assets, end of period (000’s)		$99,951			$114,487			$145,707			$203,568			$232,544			$347,242
Portfolio turnover rate		27.00%			82.87%			44.59%			24.45%			14.90%			24.41%

^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’s 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 $0.04 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 1.11%.

^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 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 payments by affiliates 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 TD-7

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL HIGHLIGHTS

Templeton Developing Markets VIP Fund (continued)

	Six Months Ended June 30, 2015 (unaudited)			Year Ended December 31,
				2014			2013			2012			2011			2010
Class 2
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$9.20			$10.19			$10.50			$9.42			$11.30			$9.78
Income from investment operationsa:
Net investment incomeb		0.04			0.12	c		0.10			0.17			0.14			0.06
Net realized and unrealized gains (losses)		(0.24	)		(0.96	)		(0.21	)		1.05			(1.92	)		1.62
Total from investment operations		(0.20	)		(0.84	)		(0.11	)		1.22			(1.78	)		1.68
Less distributions from:
Net investment income		(0.18	)		(0.15	)		(0.20	)		(0.14	)		(0.10	)		(0.16	)
Net realized gains		(1.13	)		—			—			—			—			—
Total distributions		(1.31	)		(0.15	)		(0.20	)		(0.14	)		(0.10	)		(0.16	)
Redemption fees		—			—	d		—	d		—	d		—	d		—	d
Net asset value, end of period		$7.69			$9.20			$10.19			$10.50			$9.42			$11.30
Total returne		(2.17)%			(8.39)%			(0.92)%			13.16%			(15.86)%			17.58%
Ratios to average net assetsf
Expenses		1.61%	g		1.61%	g		1.60%			1.60%			1.65%			1.74%	h
Net investment income		0.95%			1.26%	c		1.00%			1.68%			1.32%			0.62%
Supplemental data
Net assets, end of period (000’s)		$233,398			$250,813			$274,683			$291,638			$295,223			$392,546
Portfolio turnover rate		27.00%			82.87%			44.59%			24.45%			14.90%			24.41%

^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’s 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 $0.04 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 0.86%.

^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 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 payments by affiliates rounds to less than 0.01%.

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

TD-8 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, 2015 (unaudited)			Year Ended December 31,
				2014			2013			2012			2011			2010
Class 4
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$9.22			$10.20			$10.50			$9.42			$11.30			$9.80
Income from investment operationsa:
Net investment incomeb		0.04			0.12	c		0.10			0.16			0.13			0.05
Net realized and unrealized gains (losses)		(0.25	)		(0.97	)		(0.21	)		1.04			(1.91	)		1.61
Total from investment operations		(0.21	)		(0.85	)		(0.11	)		1.20			(1.78	)		1.66
Less distributions from:
Net investment income		(0.16	)		(0.13	)		(0.19	)		(0.12	)		(0.10	)		(0.16	)
Net realized gains		(1.13	)		—			—			—			—			—
Total distributions		(1.29	)		(0.13	)		(0.19	)		(0.12	)		(0.10	)		(0.16	)
Redemption fees		—			—	d		—	d		—	d		—	d		—	d
Net asset value, end of period		$7.72			$9.22			$10.20			$10.50			$9.42			$11.30
Total returne		(2.22)%			(8.48)%			(1.07)%			13.06%			(15.88)%			17.41%
Ratios to average net assetsf
Expenses		1.71%	g		1.71%	g		1.70%			1.70%			1.75%			1.84%	h
Net investment income		0.85%			1.16%	c		0.90%			1.58%			1.22%			0.52%
Supplemental data
Net assets, end of period (000’s)		$9,311			$11,106			$15,225			$23,341			$24,380			$37,198
Portfolio turnover rate		27.00%			82.87%			44.59%			24.45%			14.90%			24.41%

^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’s 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 $0.04 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 0.76%.

^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 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 payments by affiliates 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 TD-9

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Statement of Investments, June 30, 2015 (unaudited)

Templeton Developing Markets VIP Fund
		Industry		Shares		Value
	Common Stocks 83.6%
	Argentina 0.6%
a	Grupo Clarin SA, B, GDR, Reg S		Media		18,505	$	240,565
	YPF Sociedad Anonima, D, ADR		Oil, Gas & Consumable Fuels		64,500		1,769,235
							2,009,800
	Belgium 4.2%
	Anheuser-Busch InBev NV		Beverages		120,577		14,445,532
	Brazil 2.6%
	Cia Hering		Specialty Retail		276,200		1,078,941
	Estacio Participacoes SA		Diversified Consumer Services		297,700		1,722,856
	Kroton Educacional SA		Diversified Consumer Services		1,011,300		3,865,980
	M Dias Branco SA		Food Products		82,100		2,164,486
							8,832,263
	Cambodia 0.3%
	NagaCorp Ltd.		Hotels, Restaurants & Leisure		1,582,000		1,171,451
	China 22.8%
b	Alibaba Group Holding Ltd., ADR		Internet Software & Services		34,320		2,823,506
b	Aluminum Corp. of China Ltd., H		Metals & Mining		2,799,400		1,415,653
b	Baidu Inc., ADR		Internet Software & Services		32,500		6,470,100
	Brilliance China Automotive Holdings Ltd.		Automobiles		7,713,700		12,040,762
	China Construction Bank Corp., H		Banks		3,769,300		3,447,567
	China Life Insurance Co. Ltd., H		Insurance		2,276,000		9,865,461
	China Mobile Ltd.		Wireless Telecommunication Services		440,000		5,642,154
	China Petroleum and Chemical Corp., H		Oil, Gas & Consumable Fuels		8,628,000		7,435,196
	China Shipping Development Co. Ltd., H		Marine		5,560,300		4,210,582
	Dah Chong Hong Holdings Ltd.		Distributors		2,853,900		1,483,712
	Fuyao Group Glass Industries Co. Ltd., H		Auto Components		730,000		1,787,413
	Guangzhou Automobile Group Co. Ltd., H		Automobiles		1,972,000		1,826,574
	Industrial and Commercial Bank of China Ltd., H		Banks		3,145,300		2,495,416
c	Inner Mongolia Yitai Coal Co. Ltd., B		Oil, Gas & Consumable Fuels		243,400		347,819
	NetEase Inc., ADR		Internet Software & Services		12,903		1,869,193
	PetroChina Co. Ltd., H		Oil, Gas & Consumable Fuels		8,244,600		9,178,807
	Poly Culture Group Corp. Ltd., H		Media		262,300		1,043,901
	Tencent Holdings Ltd.		Internet Software & Services		231,300		4,619,048
							78,002,864
	Greece 1.2%
b	Alpha Bank A E		Banks		10,386,182		3,132,268
b	National Bank of Greece SA		Banks		964,992		1,061,972
							4,194,240
	Hong Kong 0.7%
	Dairy Farm International Holdings Ltd.		Food & Staples Retailing		187,433		1,623,170
	MGM China Holdings Ltd.		Hotels, Restaurants & Leisure		429,200		702,077
							2,325,247
	India 9.5%
	Biocon Ltd.		Biotechnology		545,046		3,954,182
	Dr. Reddy’s Laboratories Ltd.		Pharmaceuticals		132,420		7,415,917
	Infosys Ltd.		IT Services		124,678		1,930,936
	Oil & Natural Gas Corp. Ltd.		Oil, Gas & Consumable Fuels		297,100		1,447,212
	Reliance Industries Ltd.		Oil, Gas & Consumable Fuels		138,200		2,174,602

TD-10 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Templeton Developing Markets VIP Fund (continued)

		Industry		Shares		Value
	Common Stocks (continued)
	India (continued)
	Tata Consultancy Services Ltd.		IT Services		266,840	$	10,709,798
	Tata Motors Ltd.		Automobiles		511,667		3,495,068
	Tata Motors Ltd., A		Automobiles		352,469		1,445,741
							32,573,456
	Indonesia 4.1%
	Astra International Tbk PT		Automobiles		14,567,700		7,730,469
	Bank Danamon Indonesia Tbk PT		Banks		6,199,400		1,999,432
	Semen Indonesia (Persero) Tbk PT		Construction Materials		4,895,500		4,406,225
							14,136,126
	Pakistan 0.9%
	Habib Bank Ltd.		Banks		1,550,000		3,264,359
	Oil & Gas Development Co. Ltd.		Oil, Gas & Consumable Fuels		5,600		9,856
							3,274,215
	Panama 0.5%
	Copa Holdings SA		Airlines		21,922		1,810,538
	Peru 0.5%
	Compania de Minas Buenaventura SA, ADR		Metals & Mining		153,850		1,596,963
	Philippines 0.9%
	Bloomberry Resorts Corp.		Hotels, Restaurants & Leisure		13,485,300		2,573,839
b	Melco Crown Philippines Resorts Corp.		Hotels, Restaurants & Leisure		4,316,800		489,947
							3,063,786
	Russia 0.9%
	Mining and Metallurgical Co. Norilsk Nickel OJSC, ADR		Metals & Mining		179,200		3,023,104
	South Africa 10.6%
b	Impala Platinum Holdings Ltd.		Metals & Mining		352,750		1,574,414
	Kumba Iron Ore Ltd.		Metals & Mining		56,434		700,253
	MTN Group Ltd.		Wireless Telecommunication Services		303,331		5,703,351
	Naspers Ltd., N		Media		116,330		18,119,789
	Remgro Ltd.		Diversified Financial Services		443,443		9,328,851
	Truworths International Ltd.		Specialty Retail		139,837		985,043
							36,411,701
	South Korea 5.6%
	Bukwang Pharmaceutical Co. Ltd.		Pharmaceuticals		34,677		1,043,742
	Fila Korea Ltd.		Textiles, Apparel & Luxury Goods		6,910		685,050
	Hyundai Development Co.		Construction & Engineering		72,470		4,284,872
b	Interpark Corp.		Internet & Catalog Retail		20,300		169,342
	KT Skylife Co. Ltd.		Media		31,000		560,671
	Lotte Shopping Co. Ltd.		Multiline Retail		8,082		1,692,713
	Samsung Electronics Co. Ltd.		Technology Hardware, Storage & Peripherals		3,498		3,961,509
	Samsung Heavy Industries Co. Ltd.		Machinery		104,120		1,585,551
b	SK Innovation Co. Ltd.		Oil, Gas & Consumable Fuels		46,511		5,068,006
							19,051,456
	Switzerland 1.2%
	Compagnie Financiere Richemont SA		Textiles, Apparel & Luxury Goods		28,178		2,291,666
b	Oriflame Holding AG		Personal Products		104,570		1,689,796
							3,981,462

Semiannual Report TD-11

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Templeton Developing Markets VIP Fund (continued)

		Industry		Shares		Value
	Common Stocks (continued)
	Taiwan 4.2%
	Taiwan Semiconductor Manufacturing Co. Ltd.		Semiconductors & Semiconductor Equipment		3,143,000	$	14,291,450
	Thailand 6.8%
	Kasikornbank PCL, fgn.		Banks		268,500		1,500,932
	Land and Houses PCL, fgn.		Real Estate Management & Development		8,858,800		2,358,154
	Land and Houses PCL, NVDR		Real Estate Management & Development		4,347,600		1,138,014
	PTT Exploration and Production PCL, fgn.		Oil, Gas & Consumable Fuels		785,300		2,531,727
	PTT PCL, fgn.		Oil, Gas & Consumable Fuels		361,500		3,838,465
	Siam Commercial Bank PCL, fgn.		Banks		770,100		3,541,868
	Thai Beverage PCL, fgn.		Beverages		14,863,200		8,441,866
							23,351,026
	United Kingdom 4.0%
	Unilever PLC		Personal Products		318,597		13,664,084
	United States 1.5%
	Avon Products Inc.		Personal Products		821,469		5,142,396
	Total Common Stocks (Cost $266,107,643)						286,353,160
d	Participatory Notes 1.0%
	Saudi Arabia 1.0%
e	Deutsche Bank AG/London,
	Etihad Etisalat Co., 144A, 9/27/16		Wireless Telecommunication Services		66,819		600,400
	Samba Financial Group, 144A, 9/27/16		Banks		257,955		1,795,127
e	HSBC Bank PLC, Etihad Etisalat Co., 144A, 11/20/17		Wireless Telecommunication Services		102,495		920,966
	Total Participatory Notes (Cost $4,159,691)						3,316,493
	Preferred Stocks 7.7%
	Brazil 7.3%
	Banco Bradesco SA, ADR, pfd.		Banks		273,280		2,503,245
	Itau Unibanco Holding SA, ADR, pfd.		Banks		1,289,010		14,114,659
b	Petroleo Brasileiro SA, ADR, pfd.		Oil, Gas & Consumable Fuels		572,800		4,674,048
	Vale SA, ADR, pfd., A		Metals & Mining		747,400		3,774,370
							25,066,322
	Chile 0.4%
	Sociedad Quimica y Minera de Chile SA, ADR, pfd., B		Chemicals		94,287		1,510,478
	Total Preferred Stocks (Cost $42,462,553)						26,576,800
	Total Investments before Short Term Investments (Cost $312,729,887)						316,246,453

TD-12 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Templeton Developing Markets VIP Fund (continued)

		Shares		Value
	Short Term Investments (Cost $22,975,019) 6.7%
	Money Market Funds 6.7%
	United States 6.7%
b,f	Institutional Fiduciary Trust Money Market Portfolio		22,975,019	$	22,975,019
	Total Investments (Cost $335,704,906) 99.0%				339,221,472
	Other Assets, less Liabilities 1.0%				3,438,828
	Net Assets 100.0%			$	342,660,300

See Abbreviations on page TD-24.

^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. This security has been deemed liquid under guidelines approved by the Trust’s Board of Trustees. At June 30, 2015, the value of this security was $240,565 representing 0.07% of net assets.

^bNon-income producing.

^cAt June 30, 2015, 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.

^dSee Note 1(c) regarding Participatory Notes.

^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, 2015, the aggregate value of these securities was $3,316,493, representing 0.97% of net assets.

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

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

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Financial Statements

Statement of Assets and Liabilities

June 30, 2015 (unaudited)

	Templeton Developing Markets VIP Fund
Assets:
Investments in securities:
Cost - Unaffiliated issuers	$	312,729,887
Cost - Sweep Money Fund (Note 3e)		22,975,019
Total cost of investments	$	335,704,906
Value - Unaffiliated issuers	$	316,246,453
Value - Sweep Money Fund (Note 3e)		22,975,019
Total value of investments		339,221,472
Cash		139,707
Foreign currency, at value (cost $141,634)		130,099
Receivables:
Investment securities sold		3,537,530
Capital shares sold		204,229
Dividends		1,415,724
Foreign tax		24,154
Other assets		161
Total assets		344,673,076
Liabilities:
Payables:
Investment securities purchased		330,127
Capital shares redeemed		819,233
Management fees		354,002
Distribution fees		107,039
Reports to shareholders		183,946
Deferred tax		134,531
Accrued expenses and other liabilities		83,898
Total liabilities		2,012,776
Net assets, at value	$	342,660,300
Net assets consist of:
Paid-in capital	$	334,675,283
Distributions in excess of net investment income		(5,699,346	)
Net unrealized appreciation (depreciation)		3,335,127
Accumulated net realized gain (loss)		10,349,236
Net assets, at value	$	342,660,300

TD-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 (continued)

June 30, 2015 (unaudited)

	Templeton Developing Markets VIP Fund
Class 1:
Net assets, at value	$	99,951,190
Shares outstanding		12,904,441
Net asset value and maximum offering price per share	$	7.75
Class 2:
Net assets, at value	$	233,398,446
Shares outstanding		30,343,732
Net asset value and maximum offering price per share	$	7.69
Class 4:
Net assets, at value	$	9,310,664
Shares outstanding		1,205,734
Net asset value and maximum offering price per share	$	7.72

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 Operations

for the six months ended June 30, 2015 (unaudited)

	Templeton Developing Markets VIP Fund
Investment income:
Dividends (net of foreign taxes of $594,327)	$	4,737,502
Income from securities loaned		32
Total investment income		4,737,534
Expenses:
Management fees (Note 3a)		2,308,702
Distribution fees: (Note 3c)
Class 2		309,414
Class 4		18,426
Custodian fees (Note 4)		75,651
Reports to shareholders		92,519
Professional fees		33,618
Trustees’ fees and expenses		898
Other		12,235
Total expenses		2,851,463
Expenses waived/paid by affiliates (Note 3e)		(11,026	)
Net expenses		2,840,437
Net investment income		1,897,097
Realized and unrealized gains (losses):
Net realized gain (loss) from:
Investments		15,108,207
Foreign currency transactions		(376,081	)
Net realized gain (loss)		14,732,126
Net change in unrealized appreciation (depreciation) on:
Investments		(23,722,225	)
Translation of other assets and liabilities denominated in foreign currencies		(11,609	)
Change in deferred taxes on unrealized appreciation		(105,129	)
Net change in unrealized appreciation (depreciation)		(23,838,963	)
Net realized and unrealized gain (loss)		(9,106,837	)
Net increase (decrease) in net assets resulting from operations	$	(7,209,740	)

TD-16 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, 2015 (unaudited)			Year Ended December 31, 2014
Increase (decrease) in net assets:
Operations:
Net investment income	$	1,897,097		$	5,767,995
Net realized gain (loss)		14,732,126			66,732,640
Net change in unrealized appreciation (depreciation)		(23,838,963	)		(106,645,647	)
Net increase (decrease) in net assets resulting from operations		(7,209,740	)		(34,145,012	)
Distributions to shareholders from:
Net investment income:
Class 1		(2,280,023	)		(2,319,775	)
Class 2		(4,605,588	)		(4,358,800	)
Class 4		(178,865	)		(173,399	)
Net realized gains:
Class 1		(12,555,712	)		—
Class 2		(29,329,089	)		—
Class 4		(1,242,906	)		—
Total distributions to shareholders		(50,192,183	)		(6,851,974	)
Capital share transactions: (Note 2)
Class 1		2,320,716			(18,560,195	)
Class 2		21,510,897			2,280,393
Class 3		—			(33,674,042	)
Class 4		(174,999	)		(2,909,339	)
Total capital share transactions		23,656,614			(52,863,183	)
Redemption fees		—			68
Net increase (decrease) in net assets		(33,745,309	)		(93,860,101	)
Net assets:
Beginning of period		376,405,609			470,265,710
End of period	$	342,660,300		$	376,405,609
Distributions in excess of net investment income, end of period	$	(5,699,346	)	$	(531,967	)

The accompanying notes are an integral part of these financial statements.    |   Semiannual Report TD-17

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 (1940 Act) as an open-end management investment company, consisting of nineteen separate funds and applies the specialized accounting and reporting guidance in U.S. Generally Accepted Accounting Principles (U.S. GAAP). 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.

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 NAV.

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

TD-18 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Templeton Developing Markets VIP Fund (continued)

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. At June 30, 2015, a market event occurred resulting in a portion of the securities held by the Fund being valued using fair value procedures.

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 in 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 to earn additional income. 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 deposited into a joint cash account with other funds and is used to invest in a money market fund managed by Franklin Advisers, Inc., an affiliate of the Fund. The Fund may receive income from the investment of cash collateral, in addition to lending fees and rebates paid by the borrower. Income from securities loaned is reported separately in the Statement of Operations. 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. If the borrower defaults on its obligation to return the securities loaned, the Fund has the right to repurchase the securities in the open market using the collateral received. The securities lending agent has agreed to indemnify the Fund in the event of default by a third party borrower. At June 30, 2015, the Fund had no securities on loan.

Semiannual Report TD-19

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, 2015, 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’s 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 for certain dividends from foreign securities where the dividend rate is not available. In such cases, the dividend is recorded as soon as the information is received by the Fund. 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 U.S. GAAP. 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. There were no redemption fees for the period.

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-20 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, 2015, 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, 2015						Year Ended December 31, 2014
	Shares			Amount			Shares			Amount
Class 1 Shares:
Shares sold		656,065		$	6,178,959			1,624,952		$	16,226,245
Shares issued in reinvestment of distributions		1,921,727			14,835,735			229,681			2,319,775
Shares redeemed		(2,021,987	)		(18,693,978	)		(3,701,849	)		(37,106,215	)
Net increase (decrease)		555,805		$	2,320,716			(1,847,216	)	$	(18,560,195	)
Class 2 Shares:
Shares sold		1,844,144		$	17,240,930			7,755,421		$	76,467,757
Shares issued in reinvestment of distributions		4,430,114			33,934,677			434,143			4,358,800
Shares redeemed		(3,190,230	)		(29,664,710	)		(7,896,683	)		(78,546,164	)
Net increase (decrease)		3,084,028		$	21,510,897			292,881		$	2,280,393
Class 3 Sharesa:
Shares sold								171,371		$	1,697,483
Shares redeemed								(3,593,907	)		(35,371,525	)
Net increase (decrease)								(3,422,536	)	$	(33,674,042	)
Class 4 Shares:
Shares sold		38,594		$	350,595			89,395		$	875,146
Shares issued in reinvestment of distributions		184,886			1,421,771			17,219			173,399
Shares redeemed		(222,189	)		(1,947,365	)		(395,412	)		(3,957,884	)
Net increase (decrease)		1,291		$	(174,999	)		(288,798	)	$	(2,909,339	)

^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 trustees 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

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

Semiannual Report TD-21

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Templeton Developing Markets VIP Fund (continued)

Annualized Fee Rate	Net Assets
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

b. Administrative Fees

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.

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. Investments in Institutional Fiduciary Trust Money Market Portfolio

The Fund invests in 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, as noted in the Statement of Operations, in an amount not to exceed the management and administrative fees paid directly or indirectly by the Sweep Money Fund. 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, 2015, there were no credits earned.

5. Income Taxes

At June 30, 2015, the cost of investments and net unrealized appreciation (depreciation) for income tax purposes were as follows:

Cost of investments	$	346,262,959
Unrealized appreciation	$	35,553,624
Unrealized depreciation		(42,595,111	)
Net unrealized appreciation (depreciation)	$	(7,041,487	)

TD-22 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Templeton Developing Markets VIP Fund (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, 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, 2015, aggregated $92,822,396 and $115,092,009 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 $2 billion (Global Credit Facility) which matures on February 12, 2016. 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 in the Statement of Operations. During the period ended June 30, 2015, 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.

Semiannual Report TD-23

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Templeton Developing Markets VIP Fund (continued)

A summary of inputs used as of June 30, 2015, 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
Greece	$	—	$	4,194,240	$	—	$	4,194,240
Russia		—		3,023,104		—		3,023,104
All Other Equity Investmentsb		305,712,616		—		—		305,712,616
Participatory Notes		—		3,316,493		—		3,316,493
Short Term Investments		22,975,019		—		—		22,975,019
Total Investments in Securities	$	328,687,635	$	10,533,837	$	—	$	339,221,472

^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 certain transactions accounted for as a sale for interim and annual reporting periods beginning after December 15, 2014, and transactions accounted for as secured borrowings for annual periods beginning after December 15, 2014, and for interim periods beginning after March 15, 2015. Management has reviewed the requirements and believes the adoption of this ASU will not have a material impact on the financial statements.

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
NVDR	Non-Voting Depository Receipt

TD-24 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Tax Information (unaudited)

Templeton Developing Markets VIP Fund

At December 31, 2014, 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, 2015, 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	$0.0236	$0.2262
Class 2	$0.0236	$0.1999
Class 4	$0.0236	$0.1841

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 TD-25

Templeton Foreign VIP Fund

This semiannual report for Templeton Foreign VIP Fund covers the period ended June 30, 2015.

Class 2 Performance Summary as of June 30, 2015

The Fund’s Class 2 shares delivered a +4.49% total return* for the six-month period ended June 30, 2015.

*The Fund has a fee waiver associated with any investment 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 +5.88% 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 expanded moderately during the six months under review despite slowing growth in some countries. As measured by the MSCI World Index, stocks in global developed markets advanced overall during the six-month period amid a generally accommodative monetary policy environment and signs of economic improvement in Europe and Japan. Oil prices rebounded from earlier lows as demand picked up despite rising inventories and strong global supply, while gold prices declined marginally during the period under review.

U.S. economic growth was mixed during the six months under review. In 2015’s first quarter, U.S. dollar strength, low energy prices, and a labor dispute at West Coast ports led exports to decline. In the second quarter, business capital spending rebounded and manufacturing and non-manufacturing activities increased, contributing to strong job gains. During the six-month period, the U.S. Federal Reserve Board (Fed) kept its target interest rate at 0%–0.25% while considering when an increase would be appropriate, based on labor market and inflation data. In its June meeting, the Fed lowered its economic growth forecast for 2015 and raised unemployment estimates given the weak start to the year.

Outside the U.S., the U.K. economy slowed in 2015’s first quarter as the mining and agriculture sectors contracted. Near period-end, the Conservative Party’s unexpected victory in the U.K. general elections supported investor sentiment. In the eurozone, economic growth improved somewhat during the six-month period. Spain expanded at a solid pace, and France and Italy returned to growth in 2015’s first quarter. However, Germany, the region’s largest economy, slowed during the first quarter amid sluggish exports. The region avoided deflation as the annual inflation rate rose in May. The European Central Bank (ECB) maintained its benchmark interest rates during the period and also expanded its asset purchases to boost inflation and the economy. The region generally benefited from a weaker euro that helped exports, the ECB’s accommodative policy and an improved 2015 eurozone growth forecast, but Greece’s debt situation remained a major concern.

1. Source: 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

The Japanese economy continued to grow in 2015’s first quarter after exiting recession in the previous quarter, driven by an increase in private demand as business investment and private consumption rose. The Bank of Japan maintained its monetary policy during the review period but lowered its economic growth and inflation forecasts at its April meeting.

In emerging markets, economic growth generally moderated. A ceasefire agreement between Russia and Ukraine helped emerging market stocks early in the period. However, Greece’s credit default due to the lack of progress in negotiations weighed on emerging market stocks toward period-end. China’s government implemented market-friendly policies to support new economic drivers that could help steer the economy toward more sustainable growth. Lower interest rates there fueled massive stock market speculation and a 60% price gain up to mid-June 2015 for the domestic A-share market.² Concerned the market was overheated, the People’s Bank of China reduced liquidity, which led to a market panic in the last two weeks of June, exacerbated by certain government intervention measures. Central bank actions varied across emerging markets, as some banks raised interest rates in response to rising inflation and weakening currencies, while others lowered interest rates to promote economic growth. In the recent global environment, emerging market stocks, as measured by the MSCI Emerging Markets Index, rose for the six-month period.³

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 for the six-month period lagged that of its benchmark, the MSCI EAFE Index, the Fund had several notable sector contributors. Stock selection in consumer staples aided the Fund’s relative results, notably food and staples retailer Tesco (U.K.).⁴ Tesco shares gained, despite the company’s huge fourth-quarter loss, based on expectations that

a new turnaround strategy the company adopted would help improve its market share and revenues. The firm’s sales increased in the first half of the period owing to generally falling grocery prices. Tesco’s first-quarter sales declined but beat market expectations, as transactions and sales volume rose compared with the previous fiscal year. Stock selection and positioning in energy overcame the negative effect of our overweighting and aided relative performance.⁵ Energy equipment and services company Petrofac (U.K.), oil and gas company Royal Dutch Shell (U.K.) and a position in oil explorer Dragon Oil (Turkmenistan)⁶ were particularly helpful. During the period, oil prices rebounded somewhat despite higher inventories and strong global supplies because of rising global demand. Toward period-end, a decline in U.S. inventories, a sharp drop in the number of active U.S. oil rigs and unrest in the Middle East also supported oil prices. Petrofac’s share price rose after it reported an increase in order backlog due to strong performance of its engineering and construction division and

Top 10 Holdings
6/30/15
Company Sector/Industry, Country	% of Total Net Assets
Samsung Electronics Co. Ltd. Technology Hardware, Storage & Peripherals, South Korea		3.4%
Credit Suisse Group AG Capital Markets, Switzerland		2.3%
BNP Paribas SA Banks, France		2.3%
Tesco PLC Food & Staples Retailing, U.K.		2.2%
Sanofi Pharmaceuticals, France		2.1%
Roche Holding AG Pharmaceuticals, Switzerland		2.1%
Hana Financial Group Inc. Banks, South Korea		2.0%
GlaxoSmithKline PLC Pharmaceuticals, U.K.		1.9%
Nissan Motor Co. Ltd. Automobiles, Japan		1.9%
AXA SA Insurance, France		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 (SOI).

2. Source: MSCI. Please see Index Descriptions following the Fund Summaries.

3. Please see Index Descriptions following the Fund Summaries.

4. The consumer staples sector comprises beverages and food and staples retailing in the SOI.

5. The energy sector comprises energy equipment and services; and oil, gas and consumable fuels in the SOI.

6. Not part of the index.

Semiannual Report TF-3

TEMPLETON FOREIGN VIP FUND

based on news that its high-cost flagship North Sea project was nearing completion. Other individual contributors included Japanese firms Nissan Motor, ITOCHU and Capcom.⁶ Also notably aiding relative performance was a lack of exposure to utilities, as that sector underperformed the index.

In contrast, stock selection in financials, especially banks and insurance companies, hindered Fund performance.⁷ Among the sector’s major detractors were the Fund’s investments in Hana Financial Group (South Korea)⁶ and ACE (U.S.).⁶ Stock selection in industrials, including German aviation company Deutsche Lufthansa, also hampered relative performance.⁸ Lufthansa’s share price fell after it canceled its dividend due to weak full-year 2014 earnings, which were hurt by the sale of its information technology (IT) unit, a wrong-way bet on fuel prices and an increase in its pension liabilities. The crash of a plane operated by Germanwings, Lufthansa’s budget airline, also hurt the aviation company’s stock price. Stock selection in IT, particularly the Fund’s position in Samsung Electronics (South Korea),⁶ hindered relative performance.⁹ Samsung’s full-year 2014 and first-quarter 2015 earnings declined, reflecting a slowdown in its mobile phone sales due to rising competition from Apple and low-cost rivals. The company adopted a series of measures to boost growth, including the implementation of its own operating system and introduction of its proprietary mobile payment system. The company also adopted cost-cutting measures to compete with its rivals’ expanding market share. An underweighted allocation and stock selection in the consumer discretionary sector hurt the Fund’s relative performance.¹⁰ The sector’s top detractors included investments in auto parts maker Hyundai Mobis⁶ and automobile maker Hyundai Motor,⁶ both based in South Korea.⁶ Other individual detractors included the Fund’s investments in steel manufacturer POSCO (South Korea),⁶ oil company Suncor Energy (Canada)⁶ and oilfield services company Trican Well Service (Canada).⁶ POSCO’s share price declined after news that a major shareholder sold its stake. Highlighting POSCO’s weak credit quality, international credit rating agency Moody’s Investors Service revised its outlook on the company to negative from stable.

From a geographic perspective, stock selection in Europe, primarily investments in the U.K., Switzerland, Spain and France, contributed to the Fund’s performance. A lack of exposure to Australia, which underperformed the index, helped relative results. Exposure to Turkmenistan⁶ and an overweighted allocation to China also aided returns. In contrast, stock selection in Asia detracted from relative returns. Our allocation in North America,⁶ especially in Canadian energy companies, also hurt relative performance.

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, 2015, the U.S. dollar appreciated in value relative to many currencies in which the Fund’s investments were traded. As a result, the Fund’s performance was negatively affected by the portfolio’s investment predominantly in securities with non-U.S. currency exposure.

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, 2015, 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 financials sector comprises banks, capital markets, diversified financial services and insurance in the SOI.

8. 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.

9. The information technology sector comprises electronic equipment, instruments and components; semiconductors and semiconductor equipment; software; and technology hardware, storage and peripherals in the SOI.

10. The consumer discretionary sector comprises auto components, automobiles, multiline retail and specialty retail in the SOI.

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 1/1/15		Ending Account Value 6/30/15		Fund-Level Expenses Incurred During Period* 1/1/15–6/30/15
Actual		$1,000		$1,044.90		$5.17
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

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Financial Highlights

Templeton Foreign VIP Fund

	Six Months Ended June 30, 2015 (unaudited)			Year Ended December 31,
				2014			2013			2012			2011			2010
Class 1
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$15.34			$17.56			$14.63			$12.78			$14.54			$13.68
Income from investment operationsa:
Net investment incomeb		0.23			0.53	c		0.34			0.38			0.42			0.28
Net realized and unrealized gains (losses)		0.48			(2.39	)		3.00			1.91			(1.90	)		0.86
Total from investment operations		0.71			(1.86	)		3.34			2.29			(1.48	)		1.14
Less distributions from:
Net investment income		(0.53	)		(0.36	)		(0.41	)		(0.44	)		(0.28	)		(0.28	)
Net realized gains		(0.50	)		—			—			—			—			—
Total distributions		(1.03	)		(0.36	)		(0.41	)		(0.44	)		(0.28	)		(0.28	)
Redemption fees		—			—	d		—	d		—	d		—	d		—	d
Net asset value, end of period		$15.02			$15.34			$17.56			$14.63			$12.78			$14.54
Total returne		4.55%			(10.89)%			23.27%			18.60%			(10.44)%			8.67%
Ratios to average net assetsf
Expenses before waiver and payments by affiliates		0.78%			0.77%			0.78%			0.79%			0.79%			0.78%
Expenses net of waiver and payments by affiliates		0.77%			0.77%	g		0.78%			0.79%			0.79%	h		0.78%	h
Net investment income		2.92%			3.11%	c		2.16%			2.84%			2.92%			2.10%
Supplemental data
Net assets, end of period (000’s)		$248,969			$248,355			$298,468			$265,924			$254,292			$321,282
Portfolio turnover rate		6.91%			25.71%			23.61%			12.53%			21.09%			19.16%

^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’s 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 $0.16 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 2.13%.

^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 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 payments by affiliates rounds to less than 0.01%.

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

TF-6 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, 2015 (unaudited)			Year Ended December 31,
				2014			2013			2012			2011			2010
Class 2
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$15.05			$17.24			$14.37			$12.56			$14.29			$13.45
Income from investment operationsa:
Net investment incomeb		0.21			0.48	c		0.30			0.34			0.37			0.25
Net realized and unrealized gains (losses)		0.48			(2.35	)		2.94			1.87			(1.86	)		0.84
Total from investment operations		0.69			(1.87	)		3.24			2.21			(1.49	)		1.09
Less distributions from:
Net investment income		(0.49	)		(0.32	)		(0.37	)		(0.40	)		(0.24	)		(0.25	)
Net realized gains		(0.50	)		—			—			—			—			—
Total distributions		(0.99	)		(0.32	)		(0.37	)		(0.40	)		(0.24	)		(0.25	)
Redemption fees		—			—	d		—	d		—	d		—	d		—	d
Net asset value, end of period		$14.75			$15.05			$17.24			$14.37			$12.56			$14.29
Total returne		4.49%			(11.13)%			22.97%			18.23%			(10.63)%			8.41%
Ratios to average net assetsf
Expenses before waiver and payments by affiliates		1.03%			1.02%			1.03%			1.04%			1.04%			1.03%
Expenses net of waiver and payments by affiliates		1.02%			1.02%	g		1.03%			1.04%			1.04%	h		1.03%	h
Net investment income		2.67%			2.86%	c		1.91%			2.59%			2.67%			1.85%
Supplemental data
Net assets, end of period (000’s)		$1,645,639			$1,645,571			$1,873,586			$1,744,231			$1,679,412			$2,090,757
Portfolio turnover rate		6.91%			25.71%			23.61%			12.53%			21.09%			19.16%

^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’s 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 $0.16 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 1.88%.

^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 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 payments by affiliates 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 TF-7

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL HIGHLIGHTS

Templeton Foreign VIP Fund (continued)

	Six Months Ended June 30, 2015 (unaudited)			Year Ended December 31,
				2014			2013			2012			2011			2010
Class 4
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$15.16			$17.37			$14.48			$12.66			$14.43			$13.59
Income from investment operationsa:
Net investment incomeb		0.20			0.46	c		0.28			0.33			0.36			0.17
Net realized and unrealized gains (losses)		0.48			(2.36	)		2.97			1.89			(1.88	)		0.92
Total from investment operations		0.68			(1.90	)		3.25			2.22			(1.52	)		1.09
Less distributions from:
Net investment income		(0.48	)		(0.31	)		(0.36	)		(0.40	)		(0.25	)		(0.25	)
Net realized gains		(0.50	)		—			—			—			—			—
Total distributions		(0.98	)		(0.31	)		(0.36	)		(0.40	)		(0.25	)		(0.25	)
Redemption fees		—			—	d		—	d		—	d		—	d		—	d
Net asset value, end of period		$14.86			$15.16			$17.37			$14.48			$12.66			$14.43
Total returne		4.38%			(11.22)%			22.86%			18.14%			(10.74)%			8.38%
Ratios to average net assetsf
Expenses before waiver and payments by affiliates		1.13%			1.12%			1.13%			1.14%			1.14%			1.13%
Expenses net of waiver and payments by affiliates		1.12%			1.12%	g		1.13%			1.14%			1.14%	h		1.13%	h
Net investment income		2.57%			2.76%	c		1.81%			2.49%			2.57%			1.75%
Supplemental data
Net assets, end of period (000’s)		$503,357			$503,143			$513,098			$416,277			$353,346			$305,505
Portfolio turnover rate		6.91%			25.71%			23.61%			12.53%			21.09%			19.16%

^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’s 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 $0.16 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 1.78%.

^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 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 payments by affiliates rounds to less than 0.01%.

^hBenefit 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

Statement of Investments, June 30, 2015 (unaudited)

Templeton Foreign VIP Fund
		Country		Shares		Value
	Common Stocks 97.5%
	Aerospace & Defense 1.0%
	BAE Systems PLC		United Kingdom		3,443,320	$	24,407,466
	Airlines 0.7%
a	Deutsche Lufthansa AG		Germany		1,207,980		15,569,188
	Auto Components 2.3%
	Cie Generale des Etablissements Michelin, B		France		301,290		31,559,271
	Hyundai Mobis Co. Ltd.		South Korea		118,532		22,443,628
							54,002,899
	Automobiles 3.4%
	Hero Motocorp Ltd.		India		178,802		7,099,113
	Hyundai Motor Co.		South Korea		100,134		12,163,038
	Nissan Motor Co. Ltd.		Japan		4,327,500		45,081,808
b	Toyota Motor Corp., ADR		Japan		136,317		18,232,399
							82,576,358
	Banks 14.9%
	Bangkok Bank PCL, fgn.		Thailand		2,994,500		15,809,472
	Barclays PLC		United Kingdom		5,471,520		22,391,951
	BNP Paribas SA		France		898,450		54,219,182
	DBS Group Holdings Ltd.		Singapore		929,520		14,278,542
	Hana Financial Group Inc.		South Korea		1,820,051		47,222,752
	HSBC Holdings PLC		United Kingdom		4,015,600		36,391,723
	ING Groep NV, IDR		Netherlands		1,898,874		31,340,924
	KB Financial Group Inc., ADR		South Korea		1,189,645		39,103,631
	Societe Generale SA		France		391,870		18,285,446
	Standard Chartered PLC		United Kingdom		1,546,140		24,751,368
	UniCredit SpA		Italy		5,333,111		35,809,501
	United Overseas Bank Ltd.		Singapore		985,000		16,871,297
							356,475,789
	Beverages 0.6%
	Suntory Beverage & Food Ltd.		Japan		377,600		15,040,444
	Building Products 1.0%
	Compagnie de Saint-Gobain		France		527,310		23,665,094
	Capital Markets 2.8%
	Credit Suisse Group AG		Switzerland		1,976,558		54,323,111
	GAM Holding Ltd.		Switzerland		639,660		13,441,684
							67,764,795
	Chemicals 1.0%
	Akzo Nobel NV		Netherlands		323,170		23,507,435
	Construction & Engineering 1.4%
	Carillion PLC		United Kingdom		3,750,730		20,146,106
	Sinopec Engineering Group Co. Ltd.		China		15,049,000		13,939,203
							34,085,309
	Construction Materials 1.0%
	CRH PLC		Ireland		811,570		22,900,780
	Diversified Financial Services 1.8%
	BM&F BOVESPA SA		Brazil		2,189,700		8,251,064
	Deutsche Boerse AG		Germany		419,350		34,700,337
							42,951,401

Semiannual Report TF-9

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Templeton Foreign VIP Fund (continued)

		Country		Shares		Value
	Common Stocks (continued)
	Diversified Telecommunication Services 4.1%
	China Telecom Corp. Ltd., H		China		52,438,357	$	30,779,838
	Singapore Telecommunications Ltd.		Singapore		4,671,000		14,600,126
b	Telefonica SA, ADR		Spain		2,270,951		32,247,504
	Telenor ASA		Norway		928,054		20,333,192
							97,960,660
	Electrical Equipment 0.7%
	ABB Ltd.		Switzerland		838,920		17,566,093
	Electronic Equipment, Instruments & Components 0.9%
a	Flextronics International Ltd.		Singapore		155,274		1,756,149
	Kingboard Chemical Holdings Ltd.		Hong Kong		11,646,000		20,192,119
							21,948,268
	Energy Equipment & Services 7.1%
	Ensign Energy Services Inc.		Canada		1,965,300		19,259,625
	Petrofac Ltd.		United Kingdom		2,312,160		33,617,895
	Precision Drilling Corp.		Canada		3,553,800		23,900,656
a	SBM Offshore NV		Netherlands		2,815,920		33,359,088
	Subsea 7 SA		United Kingdom		1,397,990		13,683,324
	Technip SA		France		604,680		37,414,130
	Trican Well Service Ltd.		Canada		2,373,000		7,884,668
							169,119,386
	Food & Staples Retailing 2.8%
	Metro AG		Germany		489,650		15,432,126
	Tesco PLC		United Kingdom		15,808,630		52,787,556
							68,219,682
	Health Care Equipment & Supplies 0.7%
	Getinge AB, B		Sweden		737,270		17,737,477
	Health Care Providers & Services 1.7%
	Shanghai Pharmaceuticals Holding Co. Ltd., H		China		6,434,800		17,930,593
	Sinopharm Group Co.		China		5,059,200		22,451,540
							40,382,133
	Industrial Conglomerates 1.4%
	CK Hutchison Holdings Ltd.		Hong Kong		676,877		9,989,451
	Siemens AG		Germany		233,124		23,473,386
							33,462,837
	Insurance 7.9%
	ACE Ltd.		United States		307,649		31,281,750
	Aegon NV		Netherlands		4,446,700		32,667,479
	Aviva PLC		United Kingdom		3,200,110		24,759,813
	AXA SA		France		1,685,708		42,513,562
	China Life Insurance Co. Ltd., H		China		4,946,000		21,438,739
	Muenchener Rueckversicherungs-Gesellschaft AG		Germany		68,060		12,060,065
	NN Group NV		Netherlands		453,400		12,740,928
	Swiss Re AG		Switzerland		130,190		11,520,931
							188,983,267
	Life Sciences Tools & Services 1.9%
	Lonza Group AG		Switzerland		121,930		16,286,019
a	MorphoSys AG		Germany		116,110		8,330,694

TF-10 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Templeton Foreign VIP Fund (continued)

		Country		Shares		Value
	Common Stocks (continued)
	Life Sciences Tools & Services (continued)
a	QIAGEN NV		Netherlands		807,901	$	19,839,549
							44,456,262
	Metals & Mining 2.1%
	HudBay Minerals Inc.		Canada		2,891,000		24,072,378
	POSCO		South Korea		136,907		27,390,204
							51,462,582
	Multiline Retail 1.7%
	Marks & Spencer Group PLC		United Kingdom		4,756,720		40,054,248
	Oil, Gas & Consumable Fuels 7.8%
	BP PLC		United Kingdom		5,463,315		36,060,921
	Dragon Oil PLC		Turkmenistan		1,624,250		18,525,320
	Eni SpA		Italy		1,319,747		23,415,009
	Kunlun Energy Co. Ltd.		China		9,072,000		9,233,915
	LUKOIL Holdings, ADR		Russia		160,535		7,064,343
	Royal Dutch Shell PLC, A		United Kingdom		16,803		471,592
	Royal Dutch Shell PLC, B		United Kingdom		1,094,263		31,063,907
	Suncor Energy Inc.		Canada		901,700		24,834,652
	Total SA, B		France		763,826		37,088,783
							187,758,442
	Pharmaceuticals 11.6%
	Bayer AG		Germany		212,040		29,668,467
	GlaxoSmithKline PLC		United Kingdom		2,246,815		46,680,898
	Merck KGaA		Germany		233,460		23,254,844
	Novartis AG		Switzerland		252,140		24,847,290
	Roche Holding AG		Switzerland		179,480		50,287,413
	Sanofi		France		513,135		50,461,218
	Teva Pharmaceutical Industries Ltd., ADR		Israel		712,823		42,127,839
	UCB SA		Belgium		160,740		11,534,612
							278,862,581
	Semiconductors & Semiconductor Equipment 1.9%
a	GCL-Poly Energy Holdings Ltd.		China		138,306,000		31,937,425
	Infineon Technologies AG		Germany		1,103,225		13,684,214
							45,621,639
	Software 0.8%
	Capcom Co. Ltd.		Japan		952,900		18,460,053
	Specialty Retail 1.3%
	Kingfisher PLC		United Kingdom		5,856,576		31,953,967
	Technology Hardware, Storage & Peripherals 4.5%
	CANON Inc.		Japan		521,800		16,979,071
	Konica Minolta Inc.		Japan		864,300		10,091,386
	Samsung Electronics Co. Ltd.		South Korea		71,408		80,870,051
							107,940,508
	Trading Companies & Distributors 2.0%
	Daewoo International Corp.		South Korea		496,809		11,448,030
	ITOCHU Corp.		Japan		2,838,600		37,503,196
							48,951,226

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)
	Wireless Telecommunication Services 2.7%
	China Mobile Ltd.		China		1,340,500	$	17,189,334
	SoftBank Group Corp.		Japan		477,500		28,125,643
	Vodafone Group PLC, ADR		United Kingdom		549,982		20,046,844
							65,361,821
	Total Common Stocks (Cost $2,110,115,310)						2,339,210,090
	Short Term Investments 3.0%
	Money Market Funds (Cost $58,616,745) 2.5%
a,c	Institutional Fiduciary Trust Money Market Portfolio		United States		58,616,745		58,616,745
d	Investments from Cash Collateral Received for Loaned Securities (Cost $11,088,700) 0.5%
	Money Market Funds 0.5%
a,c	Institutional Fiduciary Trust Money Market Portfolio		United States		11,088,700		11,088,700
	Total Investments (Cost $2,179,820,755) 100.5%						2,408,915,535
	Other Assets, less Liabilities (0.5)%						(10,949,941	)
	Net Assets 100.0%					$	2,397,965,594

See Abbreviations on page TF-22.

^aNon-income producing.

^bA portion or all of the security is on loan at June 30, 2015. See Note 1(c).

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

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

TF-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, 2015 (unaudited)

	Templeton Foreign VIP Fund
Assets:
Investments in securities:
Cost - Unaffiliated issuers	$	2,110,115,310
Cost - Sweep Money Fund (Note 3e)		69,705,445
Total cost of investments	$	2,179,820,755
Value - Unaffiliated issuers	$	2,339,210,090
Value - Sweep Money Fund (Note 3e)		69,705,445
Total value of investments (includes securities loaned in the amount $10,972,210)		2,408,915,535
Cash		659,054
Receivables:
Capital shares sold		1,235,877
Dividends		7,452,703
Due from custodian		35,400
Other assets		1,012
Total assets		2,418,299,581
Liabilities:
Payables:
Investment securities purchased		2,114,518
Capital shares redeemed		4,069,027
Management fees		1,501,208
Distribution fees		1,032,261
Payable upon return of securities loaned		11,124,100
Accrued expenses and other liabilities		492,873
Total liabilities		20,333,987
Net assets, at value	$	2,397,965,594
Net assets consist of:
Paid-in capital	$	2,140,693,451
Undistributed net investment income		32,906,565
Net unrealized appreciation (depreciation)		229,091,761
Accumulated net realized gain (loss)		(4,726,183	)
Net assets, at value	$	2,397,965,594
Class 1:
Net assets, at value	$	248,969,472
Shares outstanding		16,572,304
Net asset value and maximum offering price per share	$	15.02
Class 2:
Net assets, at value	$	1,645,639,135
Shares outstanding		111,579,509
Net asset value and maximum offering price per share	$	14.75
Class 4:
Net assets, at value	$	503,356,987
Shares outstanding		33,869,747
Net asset value and maximum offering price per share	$	14.86

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

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL STATEMENTS

Statement of Operations

for the six months ended June 30, 2015 (unaudited)

	Templeton Foreign VIP Fund
Investment income:
Dividends (net of foreign taxes of $4,664,676)	$	44,680,190
Income from securities loaned		737,942
Total investment income		45,418,132
Expenses:
Management fees (Note 3a)		9,144,270
Distribution fees: (Note 3c)
Class 2		2,112,759
Class 4		897,956
Custodian fees (Note 4)		121,101
Reports to shareholders		204,743
Registration and filing fees		330
Professional fees		50,756
Trustees’ fees and expenses		5,478
Other		30,838
Total expenses		12,568,231
Expenses waived/paid by affiliates (Note 3e)		(62,711	)
Net expenses		12,505,520
Net investment income		32,912,612
Realized and unrealized gains (losses):
Net realized gain (loss) from:
Investments		(483,705	)
Foreign currency transactions		418,713
Net realized gain (loss)		(64,992	)
Net change in unrealized appreciation (depreciation) on:
Investments		75,895,400
Translation of other assets and liabilities denominated in foreign currencies		89,921
Net change in unrealized appreciation (depreciation)		75,985,321
Net realized and unrealized gain (loss)		75,920,329
Net increase (decrease) in net assets resulting from operations	$	108,832,941

TF-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

	Templeton Foreign VIP Fund
	Six Months Ended June 30, 2015 (unaudited)			Year Ended December 31, 2014
Increase (decrease) in net assets:
Operations:
Net investment income	$	32,912,612		$	75,694,144
Net realized gain (loss)		(64,992	)		132,002,353
Net change in unrealized appreciation (depreciation)		75,985,321			(498,830,366	)
Net increase (decrease) in net assets resulting from operations		108,832,941			(291,133,869	)
Distributions to shareholders from:
Net investment income:
Class 1		(8,346,614	)		(5,893,509	)
Class 2		(51,791,116	)		(34,594,703	)
Class 4		(15,312,865	)		(9,091,879	)
Net realized gains:
Class 1		(7,826,999	)		—
Class 2		(52,898,439	)		—
Class 4		(16,028,658	)		—
Total distributions to shareholders		(152,204,691	)		(49,580,091	)
Capital share transactions: (Note 2)
Class 1		5,266,931			(13,666,266	)
Class 2		29,855,580			10,314,563
Class 3		—			(96,991,462	)
Class 4		9,146,216			57,564,581
Total capital share transactions		44,268,727			(42,778,584	)
Redemption fees		—			3,115
Net increase (decrease) in net assets		896,977			(383,489,429	)
Net assets:
Beginning of period		2,397,068,617			2,780,558,046
End of period	$	2,397,965,594		$	2,397,068,617
Undistributed net investment income included in net assets:
End of period	$	32,906,565		$	75,444,548

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

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 (1940 Act) as an open-end management investment company, consisting of nineteen separate funds and applies the specialized accounting and reporting guidance in U.S. Generally Accepted Accounting Principles (U.S. GAAP). 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. Each class of shares differs by its distribution fees, voting rights on matters affecting a single class and its exchange privilege.

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 NAV.

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).

TF-16 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Templeton Foreign VIP Fund (continued)

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.

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 in 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 to earn additional income. 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 deposited into a joint cash account with other funds and is used to invest in a money market fund managed by Franklin Advisers, Inc., an affiliate of the Fund. The total cash collateral received at period end was $11,124,100, of which $35,400 was uninvested cash included in due from custodian in the Statement of Assets and Liabilities. The Fund may receive income from the investment of cash collateral, in addition to lending fees and rebates paid by the borrower. Income from securities loaned is reported separately in the Statement of Operations. 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. If the borrower defaults on its obligation to return the securities loaned, the Fund has the right to repurchase the securities in the open market using the collateral received. 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

Semiannual Report TF-17

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Templeton Foreign VIP Fund (continued)

1. Organization and Significant Accounting Policies (continued)

d. Income and Deferred Taxes (continued)

amount that would be payable if the securities were disposed of on the valuation date. As a result of several court cases, in certain countries across the European Union, the Fund has filed additional tax reclaims for previously withheld taxes on dividends earned in those countries. These additional filings are subject to various administrative proceedings by the local jurisdictions’ tax authorities within the European Union, as well as a number of related judicial proceedings. At this time, uncertainty exists as to the ultimate resolution of these proceedings, the likelihood of receipt of these reclaims, and the potential timing of payment, and accordingly, no amounts are reflected in the financial statements.

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, 2015, 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’s 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 for certain dividends from foreign securities where the dividend rate is not available. In such cases, the dividend is recorded as soon as the information is received by the Fund. 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 U.S. GAAP. 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. There were no redemption fees for the period.

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.

TF-18 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Templeton Foreign VIP Fund (continued)

2. Shares of Beneficial Interest

At June 30, 2015, 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, 2015						Year Ended December 31, 2014
	Shares			Amount			Shares			Amount
Class 1 Shares:
Shares sold		232,679		$	3,715,265			620,933		$	10,378,692
Shares issued in reinvestment of distributions		1,057,790			16,173,613			329,615			5,893,509
Shares redeemed		(910,134	)		(14,621,947	)		(1,754,194	)		(29,938,467	)
Net increase (decrease)		380,335		$	5,266,931			(803,646	)	$	(13,666,266	)
Class 2 Shares:
Shares sold		6,958,125		$	108,664,246			18,861,260		$	315,063,591
Shares issued in reinvestment of distributions		6,974,654			104,689,555			1,967,844			34,594,703
Shares redeemed		(11,669,847	)		(183,498,221	)		(20,169,191	)		(339,343,731	)
Net increase (decrease)		2,262,932		$	29,855,580			659,913		$	10,314,563
Class 3 Sharesa:
Shares sold								149,791		$	2,553,688
Shares redeemed								(5,703,761	)		(99,545,150	)
Net increase (decrease)								(5,553,970	)	$	(96,991,462	)
Class 4 Shares:
Shares sold		1,542,741		$	24,309,180			6,994,024		$	113,655,992
Shares issued in reinvestment of distributions		2,072,852			31,341,523			513,375			9,091,879
Shares redeemed		(2,938,570	)		(46,504,487	)		(3,859,063	)		(65,183,290	)
Net increase (decrease)		677,023		$	9,146,216			3,648,336		$	57,564,581

^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

Semiannual Report TF-19

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Templeton Foreign VIP Fund (continued)

3. Transactions With Affiliates (continued)

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

b. Administrative Fees

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.

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. Investments in Institutional Fiduciary Trust Money Market Portfolio

The Fund invests in 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, as noted in the Statement of Operations, in an amount not to exceed the management and administrative fees paid directly or indirectly by the Sweep Money Fund. 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, 2015, there were no credits earned.

TF-20 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Templeton Foreign VIP Fund (continued)

5. Income Taxes

At June 30, 2015, the cost of investments and net unrealized appreciation (depreciation) for income tax purposes were as follows:

Cost of investments	$	2,184,481,312
Unrealized appreciation	$	441,828,050
Unrealized depreciation		(217,393,827	)
Net unrealized appreciation (depreciation)	$	224,434,223

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

6. Investment Transactions

Purchases and sales of investments (excluding short term securities) for the period ended June 30, 2015, aggregated $199,856,523 and $163,698,190 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 $2 billion (Global Credit Facility) which matures on February 12, 2016. 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 in the Statement of Operations. During the period ended June 30, 2015, 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.

Semiannual Report TF-21

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Templeton Foreign VIP Fund (continued)

9. Fair Value Measurements (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.

At June 30, 2015, 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.

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 certain transactions accounted for as a sale for interim and annual reporting periods beginning after December 15, 2014, and transactions accounted for as secured borrowings for annual periods beginning after December 15, 2014, and for interim periods beginning after March 15, 2015. Management has reviewed the requirements and believes the adoption of this ASU will not have a material impact on the financial statements.

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

TF-22 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Tax Information (unaudited)

Templeton Foreign VIP Fund

At December 31, 2014, 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, 2015, 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	$0.0275	$0.5528
Class 2	$0.0275	$0.5105
Class 4	$0.0275	$0.4982

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 TF-23

Templeton Global Bond VIP Fund

This semiannual report for Templeton Global Bond VIP Fund covers the period ended June 30, 2015.

Class 2 Performance Summary as of June 30, 2015

The Fund’s Class 2 shares had a -0.31% total return for the six-month period ended June 30, 2015.

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 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. Sovereign debt securities are subject to various risks in addition to those relating to debt securities and foreign securities generally, including, but not limited to, the risk that a government entity may be unwilling or unable to pay interest and repay principal on its sovereign debt, or otherwise meet its obligations when due. 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 markets for particular securities or types of securities are or may become relatively illiquid. Reduced liquidity will have an adverse impact on the security’s value and on the Fund’s ability to sell such securities when necessary to meet the Fund’s liquidity needs or in response to a specific market event. 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.

*Figures reflect certain derivatives held in the portfolio (or their underlying reference assets) and may not total 100% or may be negative due to rounding, use of any derivatives, unsettled trades or other factors.

**The Fund’s euro area investments were in Ireland, Slovenia and Portugal.

***The Fund’s supranational investment was denominated in the Mexican peso.

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) had a -3.43% total return and the Citigroup World Government Bond Index, had a -4.02% total return for the same period.¹

Economic and Market Overview

During the period, global financial markets were influenced by growth in the U.S., economic stabilization in China, lower oil prices, and the abundance of global liquidity from the Bank of Japan (BOJ) and the European Central Bank (ECB). Yields generally increased across much of Europe, Asia and the Americas during the period, though select markets experienced a decline in yields. The yield on the 10-year U.S. Treasury note declined from 2.17% at the start of the period to a low of 1.68% at the end of January, before rising to 2.35% by the end of June. The U.S. dollar broadly strengthened against most developed and emerging market currencies over the six-month period.

1. Source: 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

We continued to see differentiation among specific emerging market economies; some have healthy current account and fiscal balances, with large international reserves, while others struggle with deficits and economic imbalances. We believed economies that we feel have healthier balances and stronger growth prospects, such as Mexico, will be in a stronger position to potentially raise rates in conjunction with U.S. Federal Reserve rate hikes, which should lead to a fundamental strengthening of their respective currencies over the medium-to-long term.

In March, the ECB launched quantitative easing (QE) with the aim of increasing the size of its balance sheet to a level higher than its previous peak. The ECB has stated that it intends to continue its asset purchases until it sees a sustained adjustment in the path of inflation toward its price stability norm of inflation below and close to 2.0%, making the program effectively open ended. This could keep interest rates low for a while, and we anticipated that it would put further downward pressure on the euro. Additionally, we believed the ECB would likely continue with QE until there is a resolution to the debt crisis in Greece. The euro depreciated 7.92% against the U.S. dollar over the six-month period.²

Japan remained heavily indebted, compelling the country down a road of extraordinary policy measures. With government debt at more than 200% of gross domestic product, a persistent trade deficit and a current account deficit, Japan has become reliant on its central bank to function as the buyer of last resort for its debt financing. Though Japan’s QE measures have been positive for global risk assets, they are likely to contribute to further yen depreciation, in our assessment. The Japanese yen depreciated 2.02% against the U.S. dollar over the six-month period.²

Investment Strategy

We invest selectively in bonds around the world based upon our assessment of changing market, political and economic conditions. While seeking opportunities, we monitor various factors including changes in interest rates, currency exchange rates and credit risks. 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, or 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.

Currency Breakdown*
6/30/15
	% of Total Net Assets
Americas		101.1%
U.S. Dollar		78.7%
Mexican Peso		15.2%
Brazilian Real		4.2%
Chilean Peso		2.9%
Peruvian Nuevo Sol		0.1%
Asia Pacific		24.4%
South Korean Won		14.7%
Malaysian Ringgit		14.5%
Singapore Dollar		7.5%
Indonesian Rupiah		4.8%
Indian Rupee		4.0%
Philippine Peso		2.0%
Sri Lankan Rupee		1.3%
Japanese Yen		-24.4%
Europe		-23.1%
Polish Zloty		8.0%
Hungarian Forint		3.2%
Euro		-34.3%
Australia & New Zealand		-2.4%
Australian Dollar		-2.4%

*Figures reflect certain derivatives held in the portfolio (or their underlying reference assets) and may not total 100% or may be negative 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.

Manager’s Discussion

The core of our fixed income strategy remained positioning ourselves to navigate what we think is a rising-rate environment. Consequently, we continued to position defensively with regard to duration while actively seeking opportunities that could potentially offer positive real yields without taking undue interest rate risk. The Fund maintained low duration exposure with some select duration exposures in countries that had higher rates and/or that had healthier fiscal and monetary fundamentals, in our view.

2. Source: FactSet

Semiannual Report TGB-3

TEMPLETON GLOBAL BOND VIP FUND

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.

During the period, we selectively used interest rate swaps to manage duration exposures and used currency forwards to manage currency exposures. For example, we increased our negative duration exposure to U.S. Treasuries during the period. We also continued to position for value in currencies across several developed and emerging market economies that we believed had strong growth fundamentals. We maintained net-negative positions in the Japanese yen and the euro, through the use of currency forwards, as we continued to expect accommodative monetary policies from the BOJ and ECB.

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 and the other based on an interest rate that changes in accordance with changes in a designated benchmark (for example, LIBOR, prime, commercial paper or other benchmarks).

During the period, the Fund’s absolute performance benefited from interest rate strategies. Currency positions detracted from absolute return, while sovereign credit exposures had a largely neutral effect. The Fund maintained a defensive approach regarding interest rates in developed and emerging markets. Negative duration exposures to U.S. Treasuries contributed to absolute return. Among currencies, the Fund’s net-negative

positions in the euro and the Japanese yen, through the use of currency forwards, contributed to absolute performance. However, currency positions in Latin America and Asia ex-Japan detracted from absolute results.

Relative to the JPM GGBI, currency positions and interest rate strategies contributed to performance while sovereign credit exposures had a largely neutral effect. Among currencies, the Fund’s underweighted positions in the euro and the Japanese yen contributed to relative return. However, overweighted currency positions in Latin America and Asia ex-Japan detracted from relative results. The Fund maintained a shorter duration positioning relative to the JPM GGBI. Underweighted duration exposure to the U.S. contributed to relative 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, 2015, 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 1/1/15		Ending Account Value 6/30/15		Fund-Level Expenses Incurred During Period* 1/1/15–6/30/15
Actual	$	1,000	$	996.90	$	3.76
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, 2015 (unaudited)			Year Ended December 31,
				2014			2013			2012			2011			2010
Class 1
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$18.56			$19.15			$20.01			$18.61			$19.94			$17.72
Income from investment operationsa:
Net investment incomeb		0.28			0.58			0.64			0.72			0.87			1.00
Net realized and unrealized gains (losses)		(0.31	)		(0.16	)		(0.30	)		1.99			(0.92	)		1.58
Total from investment operations		(0.03	)		0.42			0.34			2.71			(0.05	)		2.58
Less distributions from:
Net investment income and net foreign currency gains		(1.43	)		(1.01	)		(0.96	)		(1.28	)		(1.15	)		(0.31	)
Net realized gains		(0.09	)		—			(0.24	)		(0.03	)		(0.13	)		(0.05	)
Total distributions		(1.52	)		(1.01	)		(1.20	)		(1.31	)		(1.28	)		(0.36	)
Redemption fees		—			—	c		—	c		—	c		—	c		—	c
Net asset value, end of period		$17.01			$18.56			$19.15			$20.01			$18.61			$19.94
Total returnd		(0.17)%			2.12%			1.89%			15.31%			(0.61)%			14.71%
Ratios to average net assetse
Expensesf		0.51%			0.51%			0.51%			0.55%			0.56%			0.55%
Net investment income		3.02%			3.08%			3.26%			3.71%			4.40%			5.27%
Supplemental data
Net assets, end of period (000’s)		$314,491			$323,491			$280,963			$307,142			$269,819			$272,232
Portfolio turnover rate		27.46%			39.14%			34.39%			43.26%			34.18%			8.77%

^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’s 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 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, 2015 (unaudited)			Year Ended December 31,
				2014			2013			2012			2011			2010
Class 2
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$17.99			$18.60			$19.47			$18.15			$19.49			$17.34
Income from investment operationsa:
Net investment incomeb		0.25			0.52			0.57			0.65			0.79			0.93
Net realized and unrealized gains (losses)		(0.30	)		(0.17	)		(0.27	)		1.94			(0.89	)		1.54
Total from investment operations		(0.05	)		0.35			0.30			2.59			(0.10	)		2.47
Less distributions from:
Net investment income and net foreign currency gains		(1.39	)		(0.96	)		(0.93	)		(1.24	)		(1.11	)		(0.27	)
Net realized gains		(0.09	)		—			(0.24	)		(0.03	)		(0.13	)		(0.05	)
Total distributions		(1.48	)		(0.96	)		(1.17	)		(1.27	)		(1.24	)		(0.32	)
Redemption fees		—			—	c		—	c		—	c		—	c		—	c
Net asset value, end of period		$16.46			$17.99			$18.60			$19.47			$18.15			$19.49
Total returnd		(0.31)%			1.83%			1.63%			15.07%			(0.87)%			14.45%
Ratios to average net assetse
Expensesf		0.76%			0.76%			0.76%			0.80%			0.81%			0.80%
Net investment income		2.77%			2.83%			3.01%			3.46%			4.15%			5.02%
Supplemental data
Net assets, end of period (000’s)		$3,182,833			$3,177,638			$2,826,039			$2,418,229			$1,812,814			$1,490,794
Portfolio turnover rate		27.46%			39.14%			34.39%			43.26%			34.18%			8.77%

^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’s 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 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, 2015 (unaudited)			Year Ended December 31,
				2014			2013			2012			2011			2010
Class 4
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$18.38			$18.97			$19.82			$18.44			$19.78			$17.61
Income from investment operationsa:
Net investment incomeb		0.24			0.51			0.56			0.64			0.79			0.93
Net realized and unrealized gains (losses)		(0.30	)		(0.18	)		(0.28	)		1.98			(0.91	)		1.56
Total from investment operations		(0.06	)		0.33			0.28			2.62			(0.12	)		2.49
Less distributions from:
Net investment income and net foreign currency gains		(1.36	)		(0.92	)		(0.89	)		(1.21	)		(1.09	)		(0.27	)
Net realized gains		(0.09	)		—			(0.24	)		(0.03	)		(0.13	)		(0.05	)
Total distributions		(1.45	)		(0.92	)		(1.13	)		(1.24	)		(1.22	)		(0.32	)
Redemption fees		—			—	c		—	c		—	c		—	c		—	c
Net asset value, end of period		$16.87			$18.38			$18.97			$19.82			$18.44			$19.78
Total returnd		(0.31)%			1.69%			1.54%			14.97%			(0.96)%			14.28%
Ratios to average net assetse
Expensesf		0.86%			0.86%			0.86%			0.90%			0.91%			0.90%
Net investment income		2.67%			2.73%			2.91%			3.36%			4.05%			4.92%
Supplemental data
Net assets, end of period (000’s)		$112,169			$111,199			$118,145			$163,241			$151,695			$150,891
Portfolio turnover rate		27.46%			39.14%			34.39%			43.26%			34.18%			8.77%

^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’s 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 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, 2015 (unaudited)

Templeton Global Bond VIP Fund
		Principal Amount*			Value
	Foreign Government and Agency Securities 57.4%
	Brazil 4.2%
	Letra Tesouro Nacional, Strip,
	10/01/15		4,950	a BRL	$	1,538,310
	1/01/16		38,490	a BRL		11,564,962
	7/01/16		8,470	a BRL		2,382,589
	10/01/16		4,700	a BRL		1,278,541
	1/01/17		46,660	a BRL		12,326,675
	1/01/18		28,770	a BRL		6,776,823
	Nota Do Tesouro Nacional,
	9.762%, 1/01/17		104,630	a BRL		31,961,466
	10.00%, 1/01/21		9,240	a BRL		2,672,259
	10.00%, 1/01/23		26,700	a BRL		7,570,231
	b Index Linked, 6.00%, 8/15/16		14,388	a BRL		12,168,172
	b Index Linked, 6.00%, 5/15/17		202	a BRL		171,030
	b Index Linked, 6.00%, 8/15/18		15,665	a BRL		13,178,938
	b Index Linked, 6.00%, 5/15/19		8,578	a BRL		7,180,752
	b Index Linked, 6.00%, 8/15/20		1,090	a BRL		910,788
	b Index Linked, 6.00%, 8/15/22		18,770	a BRL		15,643,442
	b Index Linked, 6.00%, 5/15/23		5,716	a BRL		4,764,418
	b Index Linked, 6.00%, 8/15/24		3,110	a BRL		2,635,160
	b Index Linked, 6.00%, 5/15/45		10,825	a BRL		9,176,960
	senior note, 10.00%, 1/01/19		21,390	a BRL		6,355,738
						150,257,254
	Hungary 3.9%
	Government of Hungary,
	4.125%, 2/19/18		13,132,000			13,692,802
	4.00%, 4/25/18		629,920,000	HUF		2,345,975
	6.50%, 6/24/19		1,445,130,000	HUF		5,859,521
	7.50%, 11/12/20		317,540,000	HUF		1,368,099
	5.375%, 2/21/23		26,430,000			28,674,568
	A, 6.75%, 11/24/17		2,394,300,000	HUF		9,498,854
	A, 5.50%, 12/20/18		446,060,000	HUF		1,746,997
	A, 7.00%, 6/24/22		1,459,910,000	HUF		6,219,638
	A, 6.00%, 11/24/23		1,118,980,000	HUF		4,574,351
	B, 6.75%, 2/24/17		178,880,000	HUF		686,893
	B, 5.50%, 6/24/25		2,661,360,000	HUF		10,671,975
	senior note, 6.25%, 1/29/20		6,420,000			7,201,410
	senior note, 6.375%, 3/29/21		14,820,000			16,876,794
	c senior note, Reg S, 4.375%, 7/04/17		6,602,000	EUR		7,849,638
	c senior note, Reg S, 5.75%, 6/11/18		14,475,000	EUR		18,242,492
	c senior note, Reg S, 3.875%, 2/24/20		3,120,000	EUR		3,821,315
						139,331,322
	Iceland 0.2%
d	Government of Iceland, 144A, 5.875%, 5/11/22		7,660,000			8,641,399
	India 2.0%
	Government of India,
	senior bond, 7.80%, 5/03/20		720,800,000	INR		11,228,343
	senior bond, 8.28%, 9/21/27		217,800,000	INR		3,457,039
	senior bond, 8.60%, 6/02/28		747,500,000	INR		12,196,027
	senior note, 7.28%, 6/03/19		28,000,000	INR		431,389
	senior note, 8.12%, 12/10/20		541,300,000	INR		8,524,013

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)
	India (continued)
	senior note, 8.35%, 5/14/22		212,700,000	INR	$	3,387,852
	senior note, 7.16%, 5/20/23		133,700,000	INR		1,986,151
	senior note, 8.83%, 11/25/23		1,805,900,000	INR		29,607,967
						70,818,781
	Indonesia 4.6%
	Government of Indonesia,
	7.875%, 4/15/19		183,634,000,000	IDR		13,706,130
	8.375%, 3/15/34		81,180,000,000	IDR		6,073,660
	FR31, 11.00%, 11/15/20		243,036,000,000	IDR		20,377,208
	FR34, 12.80%, 6/15/21		390,269,000,000	IDR		35,386,783
	FR35, 12.90%, 6/15/22		67,421,000,000	IDR		6,267,207
	FR36, 11.50%, 9/15/19		49,810,000,000	IDR		4,169,246
	FR39, 11.75%, 8/15/23		5,491,000,000	IDR		493,953
	FR40, 11.00%, 9/15/25		46,856,000,000	IDR		4,143,659
	FR43, 10.25%, 7/15/22		146,713,000,000	IDR		12,134,456
	FR44, 10.00%, 9/15/24		4,454,000,000	IDR		369,536
	FR46, 9.50%, 7/15/23		226,780,000,000	IDR		18,168,003
	FR48, 9.00%, 9/15/18		16,920,000,000	IDR		1,301,404
	FR61, 7.00%, 5/15/22		198,861,000,000	IDR		13,983,289
	senior bond, 5.625%, 5/15/23		240,596,000,000	IDR		15,311,433
	senior bond, 9.00%, 3/15/29		20,350,000,000	IDR		1,610,294
	senior bond, FR53, 8.25%, 7/15/21		51,204,000,000	IDR		3,839,424
	senior bond, FR56, 8.375%, 9/15/26		4,994,000,000	IDR		377,420
	senior note, 8.50%, 10/15/16		3,358,000,000	IDR		254,917
	senior note, FR70, 8.375%, 3/15/24		113,021,000,000	IDR		8,527,966
						166,495,988
	Ireland 1.4%
	Government of Ireland, senior bond, 5.40%, 3/13/25		34,251,980	EUR		50,967,986
	Lithuania 0.5%
d	Government of Lithuania, 144A,
	7.375%, 2/11/20		12,690,000			15,145,325
	6.125%, 3/09/21		3,240,000			3,741,050
						18,886,375
	Malaysia 7.2%
	Government of Malaysia,
	3.835%, 8/12/15		204,045,000	MYR		54,095,840
	4.72%, 9/30/15		47,770,000	MYR		12,705,643
	3.197%, 10/15/15		193,520,000	MYR		51,287,029
	senior bond, 4.262%, 9/15/16		57,800,000	MYR		15,524,172
	senior bond, 3.814%, 2/15/17		63,345,000	MYR		16,959,783
	senior bond, 4.24%, 2/07/18		44,360,000	MYR		12,035,066
	senior note, 3.172%, 7/15/16		147,616,000	MYR		39,149,225
	senior note, 3.394%, 3/15/17		220,880,000	MYR		58,751,564
						260,508,322
	Mexico 7.1%
	Government of Mexico,
	8.00%, 12/17/15		8,264,450	f MXN		53,734,528
	6.25%, 6/16/16		5,519,810	f MXN		36,021,580

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)
	7.25%, 12/15/16		18,216,300f	MXN	$	121,476,189
	7.75%, 12/14/17		4,473,000f	MXN		30,735,058
g	Mexican Udibonos, Index Linked,
	5.00%, 6/16/16		593,742h	MXN		3,962,022
	3.50%, 12/14/17		595,273h	MXN		4,030,367
	4.00%, 6/13/19		408,580h	MXN		2,820,686
	2.50%, 12/10/20		321,778h	MXN		2,080,820
						254,861,250
	Peru 0.1%
	Government of Peru, senior bond, 7.84%, 8/12/20		11,090,000	PEN		3,876,665
	Philippines 1.3%
	Government of the Philippines,
	senior bond, 7.00%, 1/27/16		1,053,220,000	PHP		23,852,901
	senior bond, 9.125%, 9/04/16		31,840,000	PHP		748,805
	senior note, 1.625%, 4/25/16		985,550,000	PHP		21,730,804
						46,332,510
	Poland 5.9%
	Government of Poland,
	6.25%, 10/24/15		34,630,000	PLN		9,336,308
	5.00%, 4/25/16		61,000,000	PLN		16,645,037
	4.75%, 10/25/16		340,685,000	PLN		93,990,234
	5.75%, 9/23/22		48,750,000	PLN		15,154,408
	j FRN, 2.01%, 1/25/17		59,279,000	PLN		15,754,613
	j FRN, 2.01%, 1/25/21		60,135,000	PLN		15,780,173
	Strip, 1/25/16		177,077,000	PLN		46,644,168
						213,304,941
	Portugal 2.2%
	Government of Portugal,
	d 144A, 5.125%, 10/15/24		28,820,000			29,689,067
	c Reg S, 3.875%, 2/15/30		41,530,000	EUR		48,967,529
	c senior bond, Reg S, 4.95%, 10/25/23		284,900	EUR		372,342
	c senior note, Reg S, 5.65%, 2/15/24		712,400	EUR		969,449
						79,998,387
	Serbia 1.4%
d	Government of Serbia, senior note, 144A,
	5.25%, 11/21/17		4,590,000			4,759,876
	4.875%, 2/25/20		8,800,000			8,918,756
	7.25%, 9/28/21		32,130,000			36,107,533
						49,786,165
	Singapore 0.2%
	Government of Singapore, senior note, 1.125%, 4/01/16		11,000,000	SGD		8,181,602
	Slovenia 0.4%
d	Government of Slovenia, senior note, 144A,
	5.50%, 10/26/22		8,140,000			9,069,629
	5.85%, 5/10/23		5,030,000			5,705,252
						14,774,881

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 11.2%
	Korea Monetary Stabilization Bond, senior note,
	2.80%, 8/02/15		68,737,030,000	KRW	$	61,460,411
	2.81%, 10/02/15		2,932,000,000	KRW		2,627,084
	2.90%, 12/02/15		55,739,500,000	KRW		50,065,236
	2.78%, 2/02/16		20,416,550,000	KRW		18,364,135
	2.80%, 4/02/16		38,761,670,000	KRW		34,936,358
	2.79%, 6/02/16		24,830,400,000	KRW		22,418,661
	1.62%, 6/09/16		6,427,100,000	KRW		5,741,406
	2.46%, 8/02/16		48,720,700,000	KRW		43,904,766
	2.22%, 10/02/16		8,481,500,000	KRW		7,628,517
	2.07%, 12/02/16		32,544,900,000	KRW		29,238,205
	1.96%, 2/02/17		16,503,100,000	KRW		14,809,278
	Korea Treasury Bond,
	senior bond, 4.00%, 3/10/16		1,283,100,000	KRW		1,165,086
	senior note, 4.00%, 9/10/15		3,390,100,000	KRW		3,042,236
	senior note, 2.75%, 12/10/15		32,942,000,000	KRW		29,576,510
	senior note, 2.75%, 6/10/16		41,481,500,000	KRW		37,447,018
	senior note, 5.00%, 9/10/16		2,806,000,000	KRW		2,605,166
	senior note, 3.00%, 12/10/16		44,123,360,000	KRW		40,160,950
						405,191,023
	Sri Lanka 1.3%
	Government of Sri Lanka,
	8.25%, 3/01/17		41,710,000	LKR		317,901
	8.00%, 6/15/17		40,210,000	LKR		305,302
	10.60%, 7/01/19		447,990,000	LKR		3,641,052
	10.60%, 9/15/19		644,010,000	LKR		5,234,932
	8.00%, 11/01/19		40,210,000	LKR		299,151
	11.20%, 7/01/22		69,990,000	LKR		584,502
	A, 6.50%, 7/15/15		239,920,000	LKR		1,792,089
	A, 11.00%, 8/01/15		1,349,700,000	LKR		10,117,206
	A, 8.50%, 11/01/15		144,870,000	LKR		1,088,786
	A, 6.40%, 8/01/16		109,200,000	LKR		814,270
	A, 5.80%, 1/15/17		112,300,000	LKR		825,819
	A, 7.50%, 8/15/18		63,830,000	LKR		474,010
	A, 8.00%, 11/15/18		512,300,000	LKR		3,849,348
	A, 9.00%, 5/01/21		861,720,000	LKR		6,506,761
	B, 6.40%, 10/01/16		119,100,000	LKR		885,974
	B, 8.50%, 7/15/18		146,350,000	LKR		1,115,431
	C, 8.50%, 4/01/18		483,480,000	LKR		3,694,511
	D, 8.50%, 6/01/18		633,000,000	LKR		4,830,425
						46,377,470
k	Supranational 0.4%
	Inter-American Development Bank, senior note, 7.50%, 12/05/24		200,000,000	MXN		14,468,398
	Ukraine 1.9%
d	Government of Ukraine,
	144A, 9.25%, 7/24/17		57,230,000			27,863,856
	144A, 7.75%, 9/23/20		17,227,000			8,508,157
	senior bond, 144A, 6.58%, 11/21/16		12,541,000			6,239,148
	senior bond, 144A, 7.80%, 11/28/22		10,110,000			5,320,388

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)
	senior note, 144A, 4.95%, 10/13/15		290,000	EUR	$	170,887
	senior note, 144A, 6.25%, 6/17/16		8,760,000			4,341,675
	senior note, 144A, 7.95%, 2/23/21		24,098,000			12,726,756
	senior note, 144A, 7.50%, 4/17/23		8,160,000			4,289,100
						69,459,967
	Total Foreign Government and Agency Securities (Cost $2,295,326,495)					2,072,520,686
	Quasi-Sovereign and Corporate Bonds 0.1%
	South Korea 0.0%†
	The Export-Import Bank of Korea, senior note, 4.625%, 2/20/17		230,000	EUR		274,315
	Ukraine 0.1%
d	Financing of Infrastructure Projects State Enterprise, 144A,
	8.375%, 11/03/17		1,100,000			538,131
	7.40%, 4/20/18		840,000			415,800
c,l	State Export-Import Bank of Ukraine, (Biz Finance PLC), loan participation, Reg S, 8.75%, 1/22/18		2,480,000			1,858,450
						2,812,381
	Total Quasi-Sovereign and Corporate Bonds (Cost $4,126,532)					3,086,696
	Total Investments before Short Term Investments (Cost $2,299,453,027)					2,075,607,382
	Short Term Investments 29.0%
	Foreign Government and Agency Securities 16.4%
	Indonesia 0.1%
e	Indonesia Treasury Bills, 1/07/16 - 2/04/16		40,862,000,000	IDR		2,965,687
	Malaysia 3.3%
e	Bank of Negara Monetary Notes, 7/16/15 - 11/24/15		350,910,000	MYR		92,358,280
e	Malaysia Treasury Bills, 4/29/15 - 5/27/16		102,330,000	MYR		26,895,130
						119,253,410
	Mexico 7.3%
e	Mexico Treasury Bills,
	3/31/16		132,797,920	i MXN		82,303,525
	9/17/15 - 6/23/16		292,512,040	i MXN		182,207,957
						264,511,482
	Philippines 0.5%
e	Philippine Treasury Bills, 7/08/15 - 3/02/16		817,460,000	PHP		18,017,235
	Singapore 3.4%
e	Monetary Authority of Singapore Treasury Bills,
	7/31/15		56,520,000	SGD		41,938,688
	7/03/15 - 8/21/15		107,130,000	SGD		79,488,782
						121,427,470

Semiannual Report TGB-13

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Templeton Global Bond VIP Fund (continued)

		Principal Amount*			Value
	Short Term Investments (continued)
	Foreign Government and Agency Securities (continued)
	South Korea 1.8%
	Korea Monetary Stabilization Bonds,
	e 7/07/15 - 12/15/15		56,995,780,000	KRW	$	50,700,245
	senior note, 2.13%, 10/08/15		3,266,500,000	KRW		2,922,022
	senior note, 1.92%, 3/09/16		640,770,000	KRW		573,641
	senior note, 1.74%, 5/09/16		11,405,300,000	KRW		10,199,107
						64,395,015
	Total Foreign Government and Agency Securities (Cost $615,412,396)					590,570,299
	U.S. Government and Agency Securities 11.8%
	United States 11.8%
e	FHLB,
	7/01/15		223,446,000			223,446,000
	7/06/15		203,295,000			203,294,797
	Total U.S. Government and Agency Securities (Cost $426,739,681)					426,740,797
	Total Investments before Repurchase Agreements (Cost $3,341,605,104)					3,092,918,478
	Repurchase Agreements (Cost $29,083,774) 0.8%
	United States 0.8%
m	Joint Repurchase Agreement, 0.095%, 7/01/15 (Maturity Value $29,083,851)		29,083,774			29,083,774
	BNP Paribas Securities Corp. (Maturity Value $7,137,177)
	HSBC Securities (USA) Inc. (Maturity Value $14,988,072) Merrill Lynch, Pierce, Fenner & Smith Inc. (Maturity Value $6,958,602)
	Collateralized by U.S. Government Agency Securities, 0.000% - 5.50%, 12/01/15 - 6/12/20; U.S. Government Agency Securities, Strips, 6/01/17; eU.S. Treasury Bills, 3/31/16; U.S. Treasury Bonds, 3.125%, 8/15/44; and U.S. Treasury Notes, 1.25% - 1.75%, 1/31/19 - 9/30/19 (valued at $29,671,401)
	Total Investments (Cost $3,370,688,878) 86.5%					3,122,002,252
	Other Assets, less Liabilities 13.5%					487,491,722
	Net Assets 100.0%				$	3,609,493,974

TGB-14 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Templeton Global Bond VIP Fund (continued)

See Abbreviations on page TGB-38.

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

*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(h).

^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, 2015, the aggregate value of these securities was $82,081,215, representing 2.27% 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, 2015, the aggregate value of these securities was $192,191,785, representing 5.32% of net assets.

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

^fPrincipal amount is stated in 100 Mexican Peso Units.

^gPrincipal amount of security is adjusted for inflation. See Note 1(h).

^hPrincipal amount is stated in Unidad de Inversion Units.

ⁱPrincipal amount is stated in 10 Mexican Peso Units.

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

^kA supranational organization is an entity formed by two or more central governments through international treaties.

^lSee Note 1(f) regarding loan participation notes.

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

At June 30, 2015, 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
OTC Forward Exchange Contracts
Malaysian Ringgit		JPHQ		Buy		5,661,200		1,519,785			7/03/15	$	—	$	(20,729	)
Chilean Peso		DBAB		Buy		719,621,000		1,148,710			7/06/15		—		(23,675	)
Chilean Peso		DBAB		Sell		719,621,000		1,136,842			7/06/15		11,807		—
Chilean Peso		MSCO		Buy		3,180,970,000		5,105,317			7/06/15		—		(132,278	)
Chilean Peso		MSCO		Sell		3,180,970,000		5,027,215			7/06/15		54,175		—
Indian Rupee		DBAB		Buy		457,757,494		7,153,858			7/06/15		41,302		—
Indian Rupee		DBAB		Sell		457,757,494		7,173,758			7/06/15		—		(21,402	)
Chilean Peso		DBAB		Buy		1,461,296,000		2,316,723			7/07/15		—		(32,392	)
Chilean Peso		DBAB		Sell		1,461,296,000		2,308,524			7/07/15		24,194		—
Chilean Peso		DBAB		Buy		1,151,779,000		1,828,656			7/08/15		—		(28,342	)
Malaysian Ringgit		DBAB		Buy		8,862,500		2,449,219			7/08/15		—		(103,521	)
Malaysian Ringgit		DBAB		Sell		8,862,500		2,456,211			7/08/15		110,513		—
Chilean Peso		CITI		Buy		2,285,090,000		3,618,053			7/09/15		—		(46,635	)
Hungarian Forint		DBAB		Buy		18,260,690,000		58,591,703	EUR		7/09/15		—		(758,431	)
Indian Rupee		DBAB		Buy		258,123,000		4,070,704			7/09/15		5,595		(21,026	)
Polish Zloty		DBAB		Buy		17,528,000		4,201,846	EUR		7/09/15		—		(25,973	)
Mexican Peso		CITI		Buy		105,786,172		7,946,081			7/10/15		—		(1,220,944	)
Mexican Peso		CITI		Sell		105,786,172		6,930,981			7/10/15		205,844		—
Chilean Peso		DBAB		Buy		1,284,460,000		2,080,771			7/13/15		—		(74,029	)
Mexican Peso		CITI		Buy		109,357,558		7,383,237			7/13/15		—		(432,637	)
Mexican Peso		CITI		Sell		109,357,558		7,163,472			7/13/15		212,871		—
Polish Zloty		BZWS		Buy		17,528,000		4,213,092	EUR		7/13/15		—		(39,294	)
Polish Zloty		CITI		Buy		5,990,000		1,436,322	EUR		7/13/15		—		(9,576	)
Polish Zloty		DBAB		Buy		17,528,000		4,198,122	EUR		7/13/15		—		(22,608	)
Malaysian Ringgit		DBAB		Buy		18,006,622		5,557,599			7/14/15		—		(794,212	)
Malaysian Ringgit		DBAB		Sell		18,006,622		4,987,984			7/14/15		224,596		—
Polish Zloty		DBAB		Buy		30,704,000		7,396,415	EUR		7/14/15		—		(87,338	)
Chilean Peso		MSCO		Buy		2,370,410,000		3,780,860			7/15/15		—		(78,222	)
Indian Rupee		DBAB		Buy		239,338,000		3,782,445			7/15/15		—		(25,955	)
Malaysian Ringgit		DBAB		Buy		13,610,000		4,200,617			7/15/15		—		(600,612	)

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		DBAB		Sell		13,610,000		3,769,770			7/15/15	$	169,765	$	—
Euro		BZWS		Sell		2,243,000		3,063,624			7/16/15		563,362		—
Euro		MSCO		Sell		9,679,000		13,215,319			7/16/15		2,426,184		—
Japanese Yen		HSBC		Sell		536,380,000		4,620,779			7/16/15		237,343		—
Japanese Yen		SCNY		Sell		707,660,000		6,070,635			7/16/15		287,455		—
Chilean Peso		MSCO		Buy		1,592,750,000		2,507,517			7/17/15		—		(20,080	)
Indian Rupee		JPHQ		Buy		21,500,000		339,585			7/17/15		—		(2,245	)
Chilean Peso		BZWS		Buy		199,342,000		311,837			7/20/15		—		(609	)
Chilean Peso		DBAB		Buy		2,188,820,000		3,517,872			7/20/15		—		(100,520	)
Chilean Peso		MSCO		Buy		4,469,425,000		7,036,527			7/20/15		—		(58,520	)
Euro		BZWS		Sell		3,518,000		4,769,458			7/20/15		847,744		—
Indian Rupee		DBAB		Buy		491,655,000		7,759,094			7/20/15		—		(48,657	)
Malaysian Ringgit		DBAB		Buy		2,637,000		807,781			7/20/15		—		(110,574	)
Malaysian Ringgit		DBAB		Buy		11,455,000		2,581,641	EUR		7/20/15		150,732		—
Malaysian Ringgit		DBAB		Sell		2,637,000		730,127			7/20/15		32,920		—
Japanese Yen		DBAB		Sell		858,140,000		7,379,628			7/21/15		366,242		—
Euro		DBAB		Sell		1,935,000		2,623,667			7/22/15		466,553		—
Euro		MSCO		Sell		12,182,000		16,491,261			7/22/15		2,910,922		—
Indian Rupee		DBAB		Buy		79,271,000		1,247,708			7/22/15		—		(4,934	)
Indian Rupee		JPHQ		Buy		378,455,000		5,959,612			7/22/15		—		(26,370	)
Malaysian Ringgit		DBAB		Buy		4,160,000		1,279,016			7/22/15		—		(179,333	)
Malaysian Ringgit		DBAB		Buy		12,933,000		2,932,587	EUR		7/22/15		149,589		—
Malaysian Ringgit		DBAB		Sell		4,160,000		1,151,621			7/22/15		51,937		—
Chilean Peso		DBAB		Buy		2,227,910,000		3,527,127			7/23/15		—		(49,743	)
Euro		DBAB		Sell		1,759,000		2,382,882			7/23/15		421,944		—
Singapore Dollar		JPHQ		Buy		5,740,000		4,294,157			7/23/15		—		(34,156	)
Japanese Yen		CITI		Sell		913,412,000		9,038,135			7/24/15		1,572,740		—
Japanese Yen		JPHQ		Sell		1,407,000,000		13,914,849			7/24/15		2,415,317		—
Chilean Peso		JPHQ		Buy		1,501,938,000		2,412,171			7/27/15		—		(68,801	)
Euro		DBAB		Sell		4,715,000		6,358,460			7/27/15		1,101,877		—
Euro		GSCO		Sell		4,711,000		6,355,846			7/27/15		1,103,722		—
Indian Rupee		DBAB		Buy		130,201,000		2,026,948			7/27/15		12,631		—
Japanese Yen		JPHQ		Sell		490,100,000		4,849,594			7/27/15		843,812		—
Malaysian Ringgit		DBAB		Buy		5,058,000		1,563,959			7/27/15		—		(227,487	)
Malaysian Ringgit		DBAB		Buy		16,628,000		3,811,838	EUR		7/27/15		143,926		—
Malaysian Ringgit		DBAB		Sell		5,058,000		1,399,635			7/27/15		63,162		—
Malaysian Ringgit		JPHQ		Buy		9,715,000		2,649,521			7/27/15		—		(82,533	)
Chilean Peso		DBAB		Buy		1,967,720,000		3,386,490			7/28/15		—		(316,687	)
Chilean Peso		MSCO		Buy		1,963,430,000		3,378,293			7/28/15		—		(315,183	)
Euro		CITI		Sell		1,935,410		2,610,733			7/28/15		452,984		—
Euro		GSCO		Sell		11,263,000		15,199,644			7/28/15		2,642,758		—
Japanese Yen		BZWS		Sell		1,079,470,000		10,640,152			7/29/15		1,816,991		—
Chilean Peso		JPHQ		Buy		675,370,000		1,160,629			7/30/15		—		(107,199	)
Malaysian Ringgit		JPHQ		Buy		5,318,000		1,644,403			7/30/15		—		(239,606	)
Malaysian Ringgit		JPHQ		Buy		16,628,000		3,812,712	EUR		7/30/15		141,604		—
Chilean Peso		DBAB		Buy		635,690,000		1,093,096			7/31/15		—		(101,653	)
Euro		JPHQ		Sell		11,263,000		15,142,653			7/31/15		2,585,238		—
Indian Rupee		DBAB		Buy		326,663,137		5,067,255			7/31/15		46,549		—
Malaysian Ringgit		HSBC		Buy		3,005,000		925,128			7/31/15		—		(131,411	)
Malaysian Ringgit		JPHQ		Buy		11,703,000		3,604,028			7/31/15		—		(512,889	)
Polish Zloty		CITI		Buy		135,806,000		36,404,528			7/31/15		—		(341,991	)
Chilean Peso		DBAB		Buy		1,271,380,000		2,156,343			8/04/15		—		(174,215	)
Euro		BZWS		Sell		282,898		379,461			8/04/15		64,032		—
Euro		HSBC		Sell		11,263,000		15,115,228			8/04/15		2,557,079		—
Chilean Peso		BZWS		Buy		1,142,900,000		1,853,401			8/05/15		—		(71,749	)
Euro		BZWS		Sell		7,003,000		9,413,958			8/05/15		1,605,559		—

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
Euro		JPHQ		Sell		5,724,900		7,696,327			8/05/15	$	1,313,019	$	—
Indian Rupee		HSBC		Buy		120,016,750		1,865,570			8/05/15		11,710		—
Chilean Peso		DBAB		Buy		760,285,000		1,234,489			8/06/15		—		(49,404	)
Malaysian Ringgit		DBAB		Buy		143,249,150		34,519,531	EUR		8/06/15		—		(676,370	)
Malaysian Ringgit		HSBC		Buy		21,208,085		6,488,828			8/06/15		—		(890,491	)
Malaysian Ringgit		JPHQ		Buy		1,100,000		338,826			8/06/15		—		(48,457	)
Singapore Dollar		DBAB		Buy		6,207,000		4,986,343			8/06/15		—		(380,750	)
Euro		CITI		Sell		7,698,954		10,300,172			8/10/15		1,715,151		—
Malaysian Ringgit		HSBC		Buy		1,320,000		364,440			8/10/15		—		(16,138	)
South Korean Won		HSBC		Buy		21,363,430,000		19,509,982			8/10/15		—		(448,714	)
Chilean Peso		MSCO		Buy		2,814,050,000		4,565,521			8/11/15		—		(181,248	)
Euro		DBAB		Sell		4,845,000		6,492,082			8/11/15		1,089,396		—
Euro		JPHQ		Sell		6,343,900		8,496,861			8/11/15		1,422,743		—
Indian Rupee		HSBC		Buy		251,448,000		3,863,675			8/11/15		65,556		—
Japanese Yen		CITI		Sell		751,731,000		7,378,955			8/11/15		1,233,726		—
Malaysian Ringgit		HSBC		Buy		2,230,000		680,895			8/11/15		—		(92,536	)
Singapore Dollar		HSBC		Buy		6,206,000		4,596,697			8/11/15		7,827		—
Chilean Peso		DBAB		Buy		1,145,000,000		1,934,775			8/12/15		—		(151,043	)
Indian Rupee		DBAB		Buy		39,609,000		607,693			8/12/15		11,152		—
Indian Rupee		HSBC		Buy		42,784,000		656,304			8/12/15		12,147		—
Indian Rupee		JPHQ		Buy		60,607,000		939,527			8/12/15		7,388		—
Malaysian Ringgit		HSBC		Buy		6,100,000		1,857,321			8/12/15		—		(248,070	)
Singapore Dollar		BZWS		Buy		1,717,028		1,266,992			8/12/15		6,933		—
Singapore Dollar		DBAB		Buy		12,363,000		9,119,611			8/12/15		52,951		—
South Korean Won		HSBC		Buy		11,980,000,000		1,157,868,285	JPY		8/12/15		1,223,087		—
Indian Rupee		HSBC		Buy		108,000,000		1,664,111			8/13/15		22,988		—
Euro		MSCO		Sell		1,962,500		2,451,084			8/14/15		262,593		—
Chilean Peso		CITI		Buy		3,039,493,000		5,030,857			8/17/15		—		(298,059	)
Chilean Peso		JPHQ		Buy		612,933,000		1,015,378			8/17/15		—		(60,979	)
Euro		MSCO		Sell		1,962,500		2,634,705			8/17/15		446,119		—
Japanese Yen		CITI		Sell		684,870,000		5,746,663			8/17/15		147,643		—
Singapore Dollar		BZWS		Buy		4,886,000		3,604,042			8/17/15		20,802		—
Singapore Dollar		HSBC		Buy		3,667,000		2,700,145			8/17/15		20,342		—
Chilean Peso		MSCO		Buy		981,300,000		1,653,551			8/18/15		—		(125,714	)
Euro		BZWS		Sell		7,066,000		9,482,678			8/18/15		1,602,536		—
Japanese Yen		DBAB		Sell		838,612,000		8,222,613			8/18/15		1,366,631		—
Singapore Dollar		HSBC		Buy		3,667,000		2,700,145			8/18/15		20,304		—
Malaysian Ringgit		HSBC		Buy		4,899,000		1,350,889			8/19/15		—		(59,390	)
Polish Zloty		DBAB		Buy		59,155,000		13,879,634	EUR		8/19/15		221,572		—
Chilean Peso		JPHQ		Buy		528,050,000		890,097			8/20/15		—		(68,105	)
Euro		DBAB		Sell		3,964,000		5,317,012			8/20/15		896,153		—
Euro		JPHQ		Sell		7,851,000		10,535,061			8/20/15		1,779,215		—
Japanese Yen		HSBC		Sell		1,621,372,000		15,864,697			8/20/15		2,609,057		—
Japanese Yen		JPHQ		Sell		1,135,828,000		11,119,108			8/20/15		1,833,067		—
Chilean Peso		DBAB		Buy		1,812,300,000		2,979,776			8/24/15		—		(159,727	)
Japanese Yen		BZWS		Sell		376,247,000		3,656,824			8/24/15		580,657		—
Singapore Dollar		DBAB		Buy		3,667,000		2,689,205			8/24/15		31,012		—
Japanese Yen		DBAB		Sell		371,821,000		3,595,670			8/25/15		555,656		—
Japanese Yen		HSBC		Sell		746,218,000		7,220,300			8/25/15		1,119,212		—
Euro		BZWS		Sell		2,680,925		3,567,306			8/26/15		577,136		—
Euro		SCNY		Sell		13,581,483		15,417,835			8/26/15		269,728		—
Indian Rupee		DBAB		Buy		98,937,000		1,525,040			8/26/15		17,195		—
Japanese Yen		BZWS		Sell		1,085,075,000		10,507,573			8/26/15		1,635,889		—
Japanese Yen		JPHQ		Sell		1,135,833,000		10,494,692			8/26/15		1,208,006		—
Japanese Yen		SCNY		Sell		937,086,000		7,858,658			8/26/15		196,948		—
Malaysian Ringgit		HSBC		Buy		1,223,000		332,202			8/26/15		—		(10,016	)

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
Singapore Dollar		DBAB		Buy		15,499,000		11,386,277			8/26/15	$	110,709	$	—
Chilean Peso		DBAB		Buy		4,238,800,000		6,978,846			8/27/15		—		(384,902	)
Euro		HSBC		Sell		18,537,726		24,543,023			8/27/15		3,866,667		—
Euro		JPHQ		Sell		14,996,625		19,862,655			8/27/15		3,135,924		—
Japanese Yen		DBAB		Sell		685,950,000		6,621,746			8/27/15		1,013,289		—
Japanese Yen		HSBC		Sell		1,247,125,000		12,039,978			8/27/15		1,843,247		—
Japanese Yen		JPHQ		Sell		751,903,000		7,268,029			8/27/15		1,120,327		—
Malaysian Ringgit		JPHQ		Buy		8,340,000		2,577,734			8/27/15		—		(380,877	)
Chilean Peso		JPHQ		Buy		593,800,000		990,988			8/28/15		—		(67,352	)
Malaysian Ringgit		HSBC		Buy		2,087,700		568,252			8/28/15		—		(18,382	)
Chilean Peso		DBAB		Buy		1,346,508,000		2,163,865			8/31/15		—		(70,010	)
Euro		DBAB		Sell		1,058,312		1,399,745			8/31/15		219,269		—
Japanese Yen		JPHQ		Sell		372,662,000		3,602,775			8/31/15		555,634		—
Euro		DBAB		Sell		1,732,000		2,288,803			9/02/15		356,815		—
Chilean Peso		BZWS		Buy		3,010,700,000		4,820,205			9/03/15		—		(139,815	)
Chilean Peso		MSCO		Buy		3,307,630,000		5,296,106			9/03/15		—		(154,113	)
Chilean Peso		DBAB		Buy		385,308,000		611,600			9/04/15		—		(12,662	)
Chilean Peso		DBAB		Buy		3,733,979,000		6,082,565			9/08/15		—		(280,512	)
Euro		DBAB		Sell		8,105,300		10,692,674			9/08/15		1,650,658		—
Euro		JPHQ		Sell		20,765,000		27,017,342			9/08/15		3,852,567		—
Singapore Dollar		CITI		Buy		21,075,381		15,414,995			9/08/15		216,082		—
Chilean Peso		DBAB		Buy		1,320,220,000		2,165,360			9/09/15		—		(114,126	)
Indian Rupee		JPHQ		Buy		139,661,000		2,149,623			9/10/15		21,413		—
Indian Rupee		CITI		Buy		69,318,000		1,058,775			9/11/15		18,572		—
Singapore Dollar		HSBC		Buy		10,521,600		7,547,776			9/16/15		255,134		—
Chilean Peso		DBAB		Buy		1,231,460,000		1,931,399			9/17/15		—		(19,514	)
Japanese Yen		BZWS		Sell		285,057,504		2,673,734			9/18/15		342,087		—
Chilean Peso		DBAB		Buy		1,216,245,000		1,900,234			9/21/15		—		(12,682	)
Euro		BZWS		Sell		678,250		882,658			9/21/15		125,874		—
Singapore Dollar		HSBC		Buy		9,120,000		7,226,624			9/21/15		—		(463,529	)
Chilean Peso		JPHQ		Buy		1,792,000,000		2,786,503			9/22/15		—		(5,669	)
Euro		DBAB		Sell		8,070,000		10,422,002			9/23/15		1,417,315		—
Hungarian Forint		JPHQ		Buy		1,156,013,000		3,674,198	EUR		9/23/15		—		(18,356	)
Chilean Peso		MSCO		Buy		3,180,970,000		4,992,498			9/24/15		—		(57,183	)
Euro		BZWS		Sell		1,647,381		2,124,100			9/24/15		285,888		—
Hungarian Forint		JPHQ		Buy		925,405,000		2,938,073	EUR		9/25/15		—		(11,320	)
Philippine Peso		JPHQ		Buy		123,740,000		2,754,062			9/25/15		—		(23,019	)
Chilean Peso		DBAB		Buy		719,621,000		1,128,959			9/28/15		—		(12,878	)
Euro		CITI		Sell		1,532,964		1,977,064			9/28/15		266,418		—
Euro		DBAB		Sell		3,753,000		4,833,226			9/28/15		645,227		—
Malaysian Ringgit		DBAB		Buy		11,080,500		3,343,341			9/28/15		—		(432,934	)
Malaysian Ringgit		DBAB		Sell		11,080,500		3,050,630			9/28/15		140,224		—
Malaysian Ringgit		HSBC		Buy		11,490,000		3,467,005			9/28/15		—		(449,039	)
Euro		BZWS		Sell		6,085,000		7,769,358			9/29/15		978,937		—
Japanese Yen		JPHQ		Sell		285,510,329		2,628,065			9/29/15		292,204		—
Euro		HSBC		Sell		5,430,000		6,919,096			9/30/15		859,494		—
Indian Rupee		DBAB		Buy		283,149,851		4,331,992			9/30/15		53,019		—
Japanese Yen		JPHQ		Sell		172,207,000		1,586,540			9/30/15		177,622		—
Malaysian Ringgit		HSBC		Buy		7,790,000		2,089,088			9/30/15		—		(43,311	)
South Korean Won		HSBC		Buy		9,530,000,000		9,062,381			9/30/15		—		(569,108	)
Euro		DBAB		Sell		14,880,000		18,981,226			10/01/15		2,375,595		—
Indian Rupee		HSBC		Buy		120,016,750		1,848,024			10/05/15		8,895		—
Chilean Peso		DBAB		Buy		1,461,296,000		2,289,894			10/07/15		—		(25,330	)
Euro		JPHQ		Sell		6,370,000		8,073,147			10/07/15		963,620		—
Japanese Yen		JPHQ		Sell		5,663,900,000		52,286,176			10/07/15		5,939,563		—
Mexican Peso		HSBC		Buy		377,048,070		27,308,472			10/07/15		—		(3,489,669	)

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
Mexican Peso		HSBC		Sell		377,048,070		24,541,648			10/07/15	$	722,846	$	—
Euro		DBAB		Sell		6,200,000		6,751,490			10/08/15		—		(168,431	)
Euro		DBAB		Sell		12,680,000		16,085,214			10/09/15		1,932,595		—
Japanese Yen		HSBC		Sell		2,816,800,000		26,142,602			10/09/15		3,092,239		—
Euro		HSBC		Sell		8,692,000		9,430,472			10/13/15		—		(271,719	)
Japanese Yen		BZWS		Sell		1,426,300,000		13,246,191			10/13/15		1,573,491		—
Japanese Yen		DBAB		Sell		1,406,600,000		13,071,276			10/13/15		1,559,799		—
Mexican Peso		DBAB		Buy		259,112,000		18,946,476			10/14/15		—		(2,586,587	)
Mexican Peso		DBAB		Sell		259,112,000		16,792,741			10/14/15		432,853		—
Malaysian Ringgit		DBAB		Buy		60,000,000		15,166,298	EUR		10/15/15		—		(1,192,602	)
Indian Rupee		JPHQ		Buy		60,607,000		928,686			10/19/15		6,604		—
Japanese Yen		JPHQ		Sell		652,895,000		6,177,044			10/19/15		833,101		—
Euro		HSBC		Sell		12,569,000		16,093,348			10/20/15		2,061,726		—
Japanese Yen		JPHQ		Sell		1,233,160,000		11,663,845			10/20/15		1,570,211		—
Malaysian Ringgit		JPHQ		Buy		8,104,000		2,421,490			10/20/15		—		(296,847	)
Malaysian Ringgit		JPHQ		Buy		15,728,213		4,190,949			10/21/15		—		(67,799	)
Japanese Yen		BZWS		Sell		735,200,000		6,909,125			10/22/15		891,115		—
Malaysian Ringgit		HSBC		Buy		14,613,000		4,370,308			10/23/15		—		(540,159	)
Euro		DBAB		Sell		4,545,000		5,769,196			10/26/15		694,735		—
Malaysian Ringgit		DBAB		Buy		10,811,000		3,244,306			10/26/15		—		(411,399	)
Malaysian Ringgit		DBAB		Sell		10,811,000		2,970,300			10/26/15		137,393		—
Malaysian Ringgit		HSBC		Buy		7,209,825		2,163,813			10/26/15		—		(274,556	)
Euro		BZWS		Sell		5,604,306		7,117,300			10/27/15		860,015		—
Indian Rupee		JPHQ		Buy		358,075,000		5,524,817			10/29/15		—		(9,199	)
Euro		DBAB		Sell		3,319,244		4,238,509			10/30/15		532,318		—
Indian Rupee		HSBC		Buy		679,529,000		10,481,027			10/30/15		—		(15,819	)
Malaysian Ringgit		JPHQ		Buy		7,468,000		2,236,263			10/30/15		—		(280,015	)
Euro		DBAB		Sell		224,556		284,400			11/03/15		33,647		—
Euro		UBSW		Sell		32,701,000		41,113,332			11/04/15		4,596,733		—
Euro		BZWS		Sell		1,581,109		1,986,252			11/06/15		220,591		—
Indian Rupee		DBAB		Buy		457,757,494		7,032,685			11/06/15		7,983		—
Euro		GSCO		Sell		2,990,000		3,366,292			11/09/15		27,101		—
Euro		DBAB		Sell		15,875,000		19,827,081			11/10/15		2,097,769		—
Japanese Yen		CITI		Sell		341,992,119		2,999,865			11/10/15		199,290		—
Euro		JPHQ		Sell		8,969,211		11,238,870			11/12/15		1,221,616		—
Euro		MSCO		Sell		4,572,000		5,715,937			11/12/15		609,704		—
Japanese Yen		CITI		Sell		796,524,000		6,841,843			11/12/15		318,813		—
Japanese Yen		HSBC		Sell		413,563,000		3,625,281			11/12/15		238,460		—
Japanese Yen		JPHQ		Sell		335,950,000		2,951,798			11/12/15		200,579		—
Euro		BZWS		Sell		2,643,000		3,298,966			11/13/15		347,079		—
Euro		CITI		Sell		5,658,426		6,336,192			11/13/15		16,466		—
Euro		GSCO		Sell		2,279,000		2,545,711			11/13/15		365		—
Euro		SCNY		Sell		629,000		703,235			11/13/15		723		—
Japanese Yen		GSCO		Sell		490,555,000		4,099,334			11/13/15		81,908		—
Japanese Yen		SCNY		Sell		366,681,000		3,063,922			11/13/15		60,968		—
Euro		DBAB		Sell		10,778,730		13,489,042			11/16/15		1,449,925		—
Euro		GSCO		Sell		3,095,000		3,488,344			11/16/15		31,437		—
Euro		MSCO		Sell		5,391,000		6,746,028			11/16/15		724,643		—
Japanese Yen		CITI		Sell		366,680,000		3,064,119			11/16/15		60,972		—
Japanese Yen		MSCO		Sell		300,000,000		2,616,089			11/16/15		159,059		—
Japanese Yen		SCNY		Sell		340,600,700		2,975,146			11/16/15		185,592		—
Australian Dollar		JPHQ		Sell		57,889,000		46,565,912			11/18/15		2,257,818		—
Euro		DBAB		Sell		2,240,000		2,791,376			11/18/15		289,353		—
Euro		UBSW		Sell		3,245,000		4,046,191			11/18/15		421,608		—
Japanese Yen		BOFA		Sell		1,105,661,700		9,315,621			11/18/15		259,736		—
Japanese Yen		DBAB		Sell		796,770,000		6,869,891			11/18/15		343,974		—

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
Australian Dollar		CITI		Sell		13,307,000		10,617,456		11/19/15	$	432,856	$	—
Australian Dollar		JPHQ		Sell		42,398,000		33,791,206		11/19/15		1,341,619		—
Euro		DBAB		Sell		5,073,398		6,346,537		11/19/15		679,574		—
Japanese Yen		CITI		Sell		986,239,000		8,516,377		11/19/15		438,440		—
Malaysian Ringgit		DBAB		Buy		7,197,960		2,106,145		11/19/15		—		(223,811	)
Malaysian Ringgit		DBAB		Sell		7,197,960		1,973,991		11/19/15		91,657		—
Singapore Dollar		DBAB		Buy		11,645,100		8,782,127		11/19/15		—		(153,272	)
Japanese Yen		CITI		Sell		1,107,834,000		9,558,533		11/20/15		484,453		—
Malaysian Ringgit		HSBC		Buy		4,326,000		1,262,365		11/20/15		—		(131,171	)
Euro		GSCO		Sell		4,454,000		4,999,615		11/23/15		24,143		—
Japanese Yen		HSBC		Sell		207,909,000		1,778,520		11/24/15		75,421		—
Singapore Dollar		BZWS		Buy		21,427,761		16,002,211		11/27/15		—		(126,268	)
Euro		DBAB		Sell		837,570		1,044,140		11/30/15		108,385		—
Singapore Dollar		DBAB		Buy		5,960,000		4,435,858		11/30/15		6,922		(27,164	)
Euro		GSCO		Sell		463,000		505,865		12/01/15		—		(11,421	)
Euro		DBAB		Sell		5,440,000		6,787,488		12/04/15		709,321		—
Euro		HSBC		Sell		2,155,292		2,655,061		12/09/15		246,706		—
Euro		SCNY		Sell		2,400,751		2,965,696		12/09/15		283,061		—
Japanese Yen		HSBC		Sell		2,052,400,000		16,392,317		12/09/15		—		(425,663	)
Euro		MSCO		Sell		1,412,000		1,769,808		12/11/15		191,959		—
Mexican Peso		CITI		Buy		95,083,400		6,461,665		12/11/15		—		(484,528	)
Mexican Peso		CITI		Sell		95,083,400		6,158,092		12/11/15		180,955		—
Malaysian Ringgit		JPHQ		Buy		13,361,013		3,526,171		12/14/15		—		(39,486	)
Singapore Dollar		JPHQ		Buy		5,686,000		4,225,624		12/14/15		—		(13,809	)
Euro		BOFA		Sell		17,769,000		22,094,863		12/15/15		2,237,281		—
Euro		JPHQ		Sell		5,095,000		6,360,241		12/15/15		666,371		—
Mexican Peso		CITI		Buy		45,585,080		3,001,981		12/18/15		—		(137,922	)
Mexican Peso		CITI		Sell		45,585,080		2,950,701		12/18/15		86,642		—
Japanese Yen		DBAB		Sell		1,453,310,000		12,440,592		12/21/15		528,549		—
Japanese Yen		HSBC		Sell		1,455,540,000		12,445,832		12/21/15		515,510		—
Japanese Yen		BZWS		Sell		696,650,000		5,891,731		12/22/15		181,517		—
Japanese Yen		CITI		Sell		1,086,780,000		9,203,760		12/22/15		295,778		—
Malaysian Ringgit		HSBC		Buy		36,880,000		9,737,551		12/22/15		—		(119,831	)
Singapore Dollar		HSBC		Buy		6,864,000		5,085,462		12/22/15		—		(1,613	)
Singapore Dollar		DBAB		Buy		8,589,700		6,413,335		12/23/15		—		(51,427	)
Euro		BZWS		Sell		6,863,000		8,364,804		1/05/16		691,748		—
Euro		DBAB		Sell		2,285,618		2,741,416		1/07/16		185,899		—
Japanese Yen		DBAB		Sell		770,370,000		6,468,045		1/07/16		151,160		—
Japanese Yen		GSCO		Sell		329,010,000		2,778,449		1/08/16		80,564		—
Euro		BZWS		Sell		6,181,000		7,355,019		1/11/16		443,473		—
Malaysian Ringgit		JPHQ		Buy		3,956,000		1,070,202		1/11/16		—		(40,083	)
Euro		CITI		Sell		5,040,000		5,988,528		1/13/16		352,570		—
Euro		SCNY		Sell		15,572,000		18,495,643		1/13/16		1,082,323		—
Japanese Yen		CITI		Sell		138,680,000		1,169,743		1/14/16		32,398		—
Japanese Yen		SCNY		Sell		415,980,000		3,530,640		1/14/16		119,097		—
Euro		DBAB		Sell		9,460,000		11,193,545		1/15/16		614,438		—
Euro		JPHQ		Sell		29,033,000		34,339,030		1/15/16		1,871,459		—
Japanese Yen		BZWS		Sell		1,089,820,000		9,275,616		1/15/16		337,545		—
Japanese Yen		JPHQ		Sell		708,450,000		6,007,072		1/15/16		196,775		—
Malaysian Ringgit		JPHQ		Buy		1,700,000		461,180		1/15/16		—		(18,637	)
Euro		BZWS		Sell		28,096,000		33,250,857		1/19/16		1,828,136		—
Euro		JPHQ		Sell		27,973,000		33,054,295		1/19/16		1,769,138		—
Malaysian Ringgit		JPHQ		Buy		1,856,000		499,327		1/19/16		—		(16,313	)
Euro		DBAB		Sell		4,856,000		5,692,932		1/20/16		261,825		—
Japanese Yen		JPHQ		Sell		652,895,000		5,619,274		1/20/16		263,949		—
Euro		BZWS		Sell		2,638,000		3,078,810		1/21/16		128,315		—

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		JPHQ		Sell		300,000		349,890		1/22/16	$	14,344	$	—
Euro		JPHQ		Sell		28,236,000		33,053,880		1/25/16		1,470,064		—
Japanese Yen		GSCO		Sell		944,420,000		8,073,691		1/27/16		325,818		—
Japanese Yen		DBAB		Sell		8,368,505,770		71,593,000		1/28/16		2,937,407		—
Japanese Yen		HSBC		Sell		1,162,462,488		9,934,091		1/28/16		397,197		—
Euro		CITI		Sell		4,998,400		5,694,777		1/29/16		103,206		—
Euro		DBAB		Sell		57,063,000		65,106,030		1/29/16		1,271,235		—
Japanese Yen		DBAB		Sell		897,860,782		7,658,576		1/29/16		292,305		—
Japanese Yen		JPHQ		Sell		1,719,500,000		14,740,045		2/08/16		629,371		—
Japanese Yen		SCNY		Sell		1,720,000,000		14,741,804		2/08/16		627,026		—
Euro		CITI		Sell		6,572,000		7,548,599		2/09/16		194,756		—
Euro		DBAB		Sell		1,738,000		2,000,264		2/09/16		55,502		—
Euro		GSCO		Sell		2,045,000		2,350,728		2/09/16		62,442		—
Japanese Yen		BZWS		Sell		1,720,220,000		14,743,563		2/09/16		626,633		—
Japanese Yen		CITI		Sell		366,860,000		3,145,179		2/09/16		134,554		—
Japanese Yen		JPHQ		Sell		1,723,960,000		14,770,681		2/09/16		623,058		—
Euro		HSBC		Sell		1,800,000		2,044,332		2/10/16		30,146		—
Euro		BZWS		Sell		6,341,000		7,206,694		2/11/16		110,994		—
Japanese Yen		GSCO		Sell		394,373,000		3,346,540		2/12/16		109,891		—
Japanese Yen		HSBC		Sell		1,035,240,000		8,788,190		2/12/16		291,898		—
Japanese Yen		JPHQ		Sell		1,034,700,000		8,783,792		2/12/16		291,933		—
Euro		SCNY		Sell		657,000		747,354		2/16/16		12,071		—
Japanese Yen		CITI		Sell		1,371,360,000		11,534,793		2/16/16		278,831		—
Japanese Yen		JPHQ		Sell		686,710,000		5,795,143		2/16/16		158,708		—
Euro		GSCO		Sell		2,038,000		2,341,519		2/17/16		60,632		—
Euro		JPHQ		Sell		3,942,000		4,525,613		2/17/16		113,808		—
Japanese Yen		GSCO		Sell		810,877,280		6,875,979		2/17/16		220,229		—
Japanese Yen		JPHQ		Sell		831,970,000		7,042,327		2/17/16		213,447		—
Euro		BZWS		Sell		6,280,000		7,197,948		2/22/16		168,663		—
Japanese Yen		BZWS		Sell		343,460,000		2,910,135		2/25/16		90,431		—
Japanese Yen		HSBC		Sell		385,460,000		3,267,552		2/25/16		103,040		—
Euro		BOFA		Sell		2,694,506		3,076,668		2/26/16		60,385		—
Euro		BZWS		Sell		13,673,773		15,603,553		2/26/16		296,861		—
Euro		DBAB		Sell		1,530,900		1,744,154		2/26/16		30,435		—
Japanese Yen		BZWS		Sell		1,576,550,000		13,282,362		2/26/16		339,038		—
Euro		DBAB		Sell		2,579,651		2,951,043		2/29/16		63,124		—
Japanese Yen		DBAB		Sell		229,660,000		1,943,965		2/29/16		58,339		—
Japanese Yen		JPHQ		Sell		848,300,000		7,158,801		3/03/16		193,310		—
Japanese Yen		HSBC		Sell		400,800,000		3,371,609		3/04/16		80,512		—
Euro		DBAB		Sell		1,536,000		1,730,765		3/07/16		10,926		—
Euro		BZWS		Sell		7,226,276		8,050,361		3/09/16		—		(41,193	)
Euro		GSCO		Sell		21,480,000		23,909,818		3/09/16		—		(142,207	)
Euro		HSBC		Sell		1,844,000		2,050,344		3/09/16		—		(14,458	)
Japanese Yen		BZWS		Sell		1,712,605,900		14,359,548		3/09/16		295,061		—
Euro		CITI		Sell		31,404,613		34,460,282		3/10/16		—		(705,572	)
Euro		MSCO		Sell		5,225,000		5,727,384		3/10/16		—		(123,400	)
Mexican Peso		CITI		Buy		30,688,400		1,927,506		3/11/16		—		(11,827	)
Mexican Peso		CITI		Sell		30,688,400		1,973,569		3/11/16		57,889		—
Mexican Peso		HSBC		Buy		135,500,950		8,518,858		3/11/16		—		(60,405	)
Mexican Peso		HSBC		Sell		135,500,950		8,714,728		3/11/16		256,276		—
Mexican Peso		CITI		Buy		13,389,800		834,177		3/14/16		1,468		—
Mexican Peso		CITI		Sell		13,389,800		860,892		3/14/16		25,246		—
Euro		BZWS		Sell		1,161,439		1,242,902		3/16/16		—		(57,825	)
Euro		CITI		Sell		861,168		922,742		3/16/16		—		(41,704	)
Euro		JPHQ		Sell		541,000		579,330		3/16/16		—		(26,551	)
Japanese Yen		CITI		Sell		286,112,008		2,381,889		3/16/16		31,837		—

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
Mexican Peso		CITI		Buy		12,505,100		784,806		3/18/16	$	—	$	(4,614	)
Mexican Peso		CITI		Sell		12,505,100		803,763		3/18/16		23,570		—
Japanese Yen		CITI		Sell		1,866,452,000		15,518,075		3/22/16		185,242		—
Japanese Yen		MSCO		Sell		575,230,000		4,781,868		3/22/16		56,375		—
Euro		BZWS		Sell		744,197		799,573		3/23/16		—		(34,013	)
Mexican Peso		CITI		Buy		75,637,200		4,824,170		3/23/16		—		(106,987	)
Mexican Peso		CITI		Sell		75,637,200		4,859,722		3/23/16		142,539		—
Japanese Yen		DBAB		Sell		725,287,000		6,040,535		3/24/16		82,035		—
Japanese Yen		BZWS		Sell		983,714,840		8,304,475		3/28/16		221,992		—
Malaysian Ringgit		HSBC		Buy		7,634,000		2,020,218		3/28/16		—		(43,275	)
Euro		BOFA		Sell		50,857,200		56,167,756		3/29/16		—		(807,354	)
Euro		BZWS		Sell		18,402,361		20,274,801		3/29/16		—		(341,287	)
Euro		DBAB		Sell		2,736,000		3,015,346		3/29/16		—		(49,784	)
Euro		GSCO		Sell		30,376,000		33,387,780		3/29/16		—		(642,326	)
Euro		HSBC		Sell		20,544,891		22,609,653		3/29/16		—		(406,703	)
South Korean Won		DBAB		Buy		21,440,000,000		19,317,056		3/29/16		—		(232,056	)
Euro		BOFA		Sell		14,283,200		15,836,712		3/30/16		—		(165,177	)
Euro		BZWS		Sell		6,085,000		6,725,659		3/30/16		—		(91,545	)
Euro		GSCO		Sell		4,020,000		4,415,568		3/31/16		—		(88,292	)
Euro		CITI		Sell		6,421,600		7,126,576		4/08/16		—		(69,675	)
Malaysian Ringgit		HSBC		Buy		4,010,000		1,072,422		4/11/16		—		(34,944	)
Euro		DBAB		Sell		7,243,000		7,842,938		4/13/16		—		(275,018	)
Euro		SCNY		Sell		4,346,000		4,664,236		4/13/16		—		(206,762	)
Japanese Yen		CITI		Sell		261,800,000		2,191,455		4/13/16		39,354		—
Euro		JPHQ		Sell		3,907,000		4,175,098		4/14/16		—		(203,999	)
Euro		HSBC		Sell		6,919,000		7,372,195		4/18/16		—		(383,786	)
Japanese Yen		BZWS		Sell		700,840,000		5,918,507		4/18/16		156,420		—
Japanese Yen		JPHQ		Sell		917,650,000		7,782,224		4/21/16		236,885		—
Euro		BZWS		Sell		6,575,679		7,186,987		4/29/16		—		(186,576	)
Euro		SCNY		Sell		11,263,000		12,403,942		4/29/16		—		(225,696	)
Euro		BZWS		Sell		1,259,000		1,410,584		5/09/16		—		(1,606	)
Euro		BZWS		Sell		8,551,980		9,822,804		5/18/16		227,664		—
Japanese Yen		CITI		Sell		1,104,534,000		9,341,458		5/18/16		251,791		—
Japanese Yen		BOFA		Sell		1,102,846,375		9,272,759		5/19/16		196,697		—
Japanese Yen		BZWS		Sell		1,105,842,500		9,295,919		5/19/16		195,199		—
Japanese Yen		HSBC		Sell		1,106,730,400		9,348,570		5/19/16		240,542		—
Euro		JPHQ		Sell		15,309,581		17,571,036		5/20/16		392,978		—
Japanese Yen		JPHQ		Sell		715,709,000		6,026,186		5/20/16		135,952		—
Euro		DBAB		Sell		3,887,000		4,355,461		5/23/16		—		(6,326	)
Malaysian Ringgit		HSBC		Buy		298,500		80,621		5/23/16		—		(3,609	)
Euro		JPHQ		Sell		4,730,771		5,303,265		5/26/16		—		(5,836	)
Euro		BZWS		Sell		2,836,669		3,093,785		5/31/16		—		(90,141	)
Malaysian Ringgit		HSBC		Buy		1,229,300		332,243		5/31/16		—		(15,257	)
Euro		BZWS		Sell		7,895,591		8,783,253		6/06/16		—		(80,493	)
Euro		GSCO		Sell		2,033,100		2,315,111		6/08/16		32,576		—
Japanese Yen		CITI		Sell		1,370,500,000		11,124,577		6/08/16		—		(161,259	)
Japanese Yen		BZWS		Sell		1,689,110,000		13,602,548		6/10/16		—		(307,859	)
Japanese Yen		CITI		Sell		2,595,800,000		20,921,217		6/10/16		—		(456,096	)
Japanese Yen		HSBC		Sell		1,798,900,000		14,511,354		6/10/16		—		(303,212	)
Euro		GSCO		Sell		8,105,300		9,231,531		6/13/16		130,447		—
Japanese Yen		DBAB		Sell		595,700,000		4,837,348		6/13/16		—		(68,910	)
Japanese Yen		JPHQ		Sell		1,666,680,000		13,520,949		6/13/16		—		(206,030	)
Euro		DBAB		Sell		2,383,000		2,715,524		6/15/16		39,597		—
Japanese Yen		CITI		Sell		310,702,000		2,533,220		6/16/16		—		(26,000	)
Japanese Yen		JPHQ		Sell		702,800,000		5,727,441		6/16/16		—		(61,449	)
Malaysian Ringgit		JPHQ		Buy		14,772,000		3,838,877		6/20/16		—		(34,860	)

TGB-22 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		BZWS		Sell		1,124,367		1,291,195		6/22/16	$	28,351	$	—
Japanese Yen		DBAB		Sell		1,455,820,000		11,913,421		6/22/16		—		(80,273	)
Philippine Peso		JPHQ		Buy		251,010,000		5,477,219		6/27/16		733		—
Philippine Peso		JPHQ		Buy		17,950,000		392,093		6/29/16		—		(392	)
Totals Forward Exchange Contracts unrealized appreciation (depreciation)												158,285,277		(35,020,649	)
Net unrealized appreciation (depreciation)											$	123,264,628

^aMay be comprised of multiple contracts with the same counterparty, currency and settlement date.

*In U.S. dollars unless otherwise indicated.

See Abbreviations on page TGB - 38

At June 30, 2015, the Fund had the following interest rate swap contracts outstanding. See Note 1(d).

Interest Rate Swap Contracts

Description	Counterparty / Exchange		Notional Amount		Expiration Date		Unrealized Appreciation		Unrealized Depreciation
Centrally Cleared Swap Contracts
Receive Floating rate 3-month USD BBA LIBOR Pay Fixed rate 0.926%		LCH	$	183,490,000		10/17/17	$	149,311	$	—
Receive Floating rate 3-month USD BBA LIBOR Pay Fixed rate 2.775%		CME		13,090,000		10/04/23		—		(551,629	)
Receive Floating rate 3-month USD BBA LIBOR Pay Fixed rate 2.795%		CME		13,090,000		10/04/23		—		(572,421	)
Receive Floating rate 3-month USD BBA LIBOR Pay Fixed rate 2.765%		CME		13,090,000		10/07/23		—		(539,304	)
Receive Floating rate 3-month USD BBA LIBOR Pay Fixed rate 2.731%		LCH		34,000,000		7/07/24		—		(1,408,596	)
Receive Floating rate 3-month USD BBA LIBOR Pay Fixed rate 1.914%		LCH		114,670,000		1/22/25		4,327,082		—
Receive Floating rate 3-month USD BBA LIBOR Pay Fixed rate 1.970%		LCH		143,340,000		1/23/25		4,689,175		—
Receive Floating rate 3-month USD BBA LIBOR Pay Fixed rate 1.973%		LCH		84,590,000		1/27/25		2,767,042		—
Receive Floating rate 3-month USD BBA LIBOR Pay Fixed rate 1.937%		LCH		21,150,000		1/29/25		765,030		—
Receive Floating rate 3-month USD BBA LIBOR Pay Fixed rate 1.942%		LCH		17,910,000		1/30/25		642,090		—
Receive Floating rate 3-month USD BBA LIBOR Pay Fixed rate 1.817%		LCH		28,210,000		2/03/25		1,344,946		—
Receive Floating rate 3-month USD BBA LIBOR Pay Fixed rate 3.668%		CME		6,370,000		10/04/43		—		(979,938	)
Receive Floating rate 3-month USD BBA LIBOR Pay Fixed rate 3.687%		CME		6,370,000		10/04/43		—		(1,004,015	)
Receive Floating rate 3-month USD BBA LIBOR Pay Fixed rate 3.675%		CME		6,370,000		10/07/43		—		(988,504	)
Totals Centrally Cleared Swap Contracts								14,684,676		(6,044,407	)
OTC Swap Contracts
Receive Floating rate 3-month USD BBA LIBOR Pay Fixed rate 3.558%		JPHQ	$	3,240,000		3/04/21		—		(325,518	)
Receive Floating rate 3-month USD BBA LIBOR Pay Fixed rate 3.523%		DBAB		14,630,000		3/28/21		—		(1,411,561	)
Receive Floating rate 3-month USD BBA LIBOR Pay Fixed rate 4.347%		CITI		7,460,000		2/25/41		—		(2,114,040	)

Semiannual Report TGB-23

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Templeton Global Bond VIP Fund (continued)

Interest Rate Swap Contracts (continued)
Description	Counterparty / Exchange		Notional Amount		Expiration Date		Unrealized Appreciation		Unrealized Depreciation
OTC Swap Contracts (continued)
Receive Floating rate 3-month USD BBA LIBOR Pay Fixed rate 4.349%		JPHQ	$	7,460,000		2/25/41	$	—	$	(2,117,848	)
Receive Floating rate 3-month USD BBA LIBOR Pay Fixed rate 4.320%		JPHQ		5,600,000		2/28/41		—		(1,563,760	)
Receive Floating rate 3-month USD BBA LIBOR Pay Fixed rate 4.299%		JPHQ		1,870,000		3/01/41		—		(511,646	)
Totals OTC Swap Contracts								—		(8,044,373	)
Totals Interest Rate Swap Contracts								14,684,676		(14,088,780	)
Net unrealized appreciation (depreciation)							$	595,896

See Abbreviations on page TGB - 38

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

June 30, 2015 (unaudited)

	Templeton Global Bond VIP Fund
Assets:
Investments in securities:
Cost - Unaffiliated issuers	$	3,341,605,104
Cost - Repurchase agreements		29,083,774
Total cost of investments	$	3,370,688,878
Value - Unaffiliated issuers	$	3,092,918,478
Value - Repurchase agreements		29,083,774
Total value of investments		3,122,002,252
Cash		260,867,224
Restricted cash (Note 1e)		90,161,000
Foreign currency, at value (cost $57,514,172)		57,437,227
Receivables:
Capital shares sold		1,444,513
Interest		29,334,413
Due from brokers		31,738,882
Variation margin		496,994
Unrealized appreciation on OTC forward exchange contracts		158,285,277
Other assets		1,520
Total assets		3,751,769,302
Liabilities:
Payables:
Investment securities purchased		362,907
Capital shares redeemed		2,689,298
Management fees		1,361,466
Distribution fees		1,408,066
Due to Brokers		90,161,000
Unrealized depreciation on OTC forward exchange contracts		35,020,649
Unrealized depreciation on OTC swap contracts		8,044,373
Deferred tax		2,114,112
Accrued expenses and other liabilities		1,113,457
Total liabilities		142,275,328
Net assets, at value	$	3,609,493,974
Net assets consist of:
Paid-in capital	$	3,824,400,848
Distributions in excess of net investment income		(189,107,472	)
Net unrealized appreciation (depreciation)		(127,778,666	)
Accumulated net realized gain (loss)		101,979,264
Net assets, at value	$	3,609,493,974

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 Assets and Liabilities (continued)

June 30, 2015 (unaudited)

	Templeton Global Bond VIP Fund
Class 1:
Net assets, at value	$	314,491,442
Shares outstanding		18,492,358
Net asset value and maximum offering price per share	$	17.01
Class 2:
Net assets, at value	$	3,182,833,155
Shares outstanding		193,365,027
Net asset value and maximum offering price per share	$	16.46
Class 4:
Net assets, at value	$	112,169,377
Shares outstanding		6,650,496
Net asset value and maximum offering price per share	$	16.87

TGB-26 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, 2015 (unaudited)

	Templeton Global Bond VIP Fund
Investment income:
Interest (net of foreign taxes $1,593,998)	$	63,647,816
Expenses:
Management fees (Note 3a)		8,222,285
Distribution fees: (Note 3c)
Class 2		3,965,344
Class 4		194,267
Custodian fees (Note 4)		645,147
Reports to shareholders		265,712
Professional fees		44,099
Trustees’ fees and expenses		7,299
Other		54,854
Total expenses		13,399,007
Expense reductions (Note 4)		(3,034	)
Net expenses		13,395,973
Net investment income		50,251,843
Realized and unrealized gains (losses):
Net realized gain (loss) from:
Investments		(67,044,871	)
Foreign currency transactions		171,457,838
Swap contracts		(2,361,145	)
Net realized gain (loss)		102,051,822
Net change in unrealized appreciation (depreciation) on:
Investments		(111,113,040	)
Translation of other assets and liabilities denominated in foreign currencies		(68,964,991	)
Swap contracts		16,623,319
Change in deferred taxes on unrealized appreciation		510,553
Net change in unrealized appreciation (depreciation)		(162,944,159	)
Net realized and unrealized gain (loss)		(60,892,337	)
Net increase (decrease) in net assets resulting from operations	$	(10,640,494	)

The accompanying notes are an integral part of these financial statements.    |   Semiannual Report TGB-27

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL STATEMENTS

Statements of Changes in Net Assets

	Templeton Global Bond VIP Fund
	Six Months Ended June 30, 2015 (unaudited)			Year Ended December 31, 2014
Increase (decrease) in net assets:
Operations:
Net investment income	$	50,251,843		$	100,660,962
Net realized gain (loss)		102,051,822			33,697,929
Net change in unrealized appreciation (depreciation)		(162,944,159	)		(73,886,293	)
Net increase (decrease) in net assets resulting from operations		(10,640,494	)		60,472,598
Distributions to shareholders from:
Net investment income and net foreign currency gains:
Class 1		(24,254,176	)		(15,858,865	)
Class 2		(245,964,961	)		(156,385,457	)
Class 4		(8,346,133	)		(5,645,270	)
Net realized gains:
Class 1		(1,526,914	)		—
Class 2		(15,975,209	)		—
Class 4		(550,981	)		—
Total distributions to shareholders		(296,618,374	)		(177,889,592	)
Capital share transactions: (Note 2)
Class 1		17,326,539			52,744,146
Class 2		276,832,821			457,068,596
Class 3		—			(195,888,546	)
Class 4		10,264,899			(3,448,828	)
Total capital share transactions		304,424,259			310,475,368
Redemption fees		—			1,163
Net increase (decrease) in net assets		(2,834,609	)		193,059,537
Net assets:
Beginning of period		3,612,328,583			3,419,269,046
End of period	$	3,609,493,974		$	3,612,328,583
Undistributed net investment income (distributions in excess of net investment income) included in net assets:
End of period	$	(189,107,472	)	$	39,205,955

TGB-28 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 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 (1940 Act) as an open-end management investment company, consisting of nineteen separate funds and applies the specialized accounting and reporting guidance in U.S. Generally Accepted Accounting Principles (U.S. GAAP). 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.

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.

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)

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 in 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, 2015.

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 in 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.

TGB-30 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Templeton Global Bond VIP Fund (continued)

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 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 in 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, 2015, the Fund held 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. 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. 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

Semiannual Report TGB-31

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Templeton Global Bond VIP Fund (continued)

1. Organization and Significant Accounting Policies (continued)

g. Income and Deferred Taxes (continued)

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, 2015, 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’s 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. 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 U.S. GAAP. 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 in the Statement of Operations.

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. 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. There were no redemption fees for the period.

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.

TGB-32 Semiannual Report

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, 2015, 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, 2015						Year Ended December 31, 2014
	Shares			Amount			Shares			Amount
Class 1 Shares:
Shares sold		1,743,610		$	32,333,219			4,252,687		$	81,034,541
Shares issued in reinvestment of distributions		1,514,753			25,781,090			844,006			15,858,865
Shares redeemed		(2,198,476	)		(40,787,770	)		(2,332,299	)		(44,149,260	)
Net increase (decrease)		1,059,887		$	17,326,539			2,764,394		$	52,744,146
Class 2 Shares:
Shares sold		9,372,994		$	168,432,060			34,833,702		$	645,437,884
Shares issued in reinvestment of distributions		15,904,078			261,940,170			8,573,764			156,385,457
Shares redeemed		(8,564,291	)		(153,539,409	)		(18,696,173	)		(344,754,745	)
Net increase (decrease)		16,712,781		$	276,832,821			24,711,293		$	457,068,596
Class 3 Sharesa:
Shares sold								167,296		$	3,090,319
Shares redeemed								(10,595,103	)		(198,978,865	)
Net increase (decrease)								(10,427,807	)	$	(195,888,546	)
Class 4 Shares:
Shares sold		574,525		$	10,511,082			721,184		$	13,510,739
Shares issued on reinvestment of distributions		527,080			8,897,114			302,695			5,645,270
Shares redeemed		(500,493	)		(9,143,297	)		(1,203,628	)		(22,604,837	)
Net increase (decrease)		601,112		$	10,264,899			(179,749	)	$	(3,448,828	)

^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

Semiannual Report TGB-33

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Templeton Global Bond VIP Fund (continued)

3. Transactions with Affiliates (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 0.25% 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.

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, 2015, the custodian fees were reduced as noted in the Statement of Operations.

5. Income Taxes

At June 30, 2015, the cost of investments and net unrealized appreciation (depreciation) for income tax purposes were as follows:

Cost of investments	$	3,389,954,591
Unrealized appreciation	$	27,115,431
Unrealized depreciation		(295,067,770	)
Net unrealized appreciation (depreciation)	$	(267,952,339	)

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.

TGB-34 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Templeton Global Bond VIP Fund (continued)

6. Investment Transactions

Purchases and sales of investments (excluding short term securities) for the period ended June 30, 2015, aggregated $636,286,941 and $567,920,060, respectively.

7. Credit Risk

At June 30, 2015, the Fund had 12.42% 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, 2015, the Fund’s investments in derivative contracts are reflected in 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			Statement of Assets and Liabilities Location	Fair Value
Interest rate contracts	Variation margin	$	14,684,676	a	Variation margin	$	6,044,407	a
	Unrealized appreciation on OTC swap contracts		—		Unrealized depreciation on OTC swap contracts		8,044,373
Foreign exchange contracts	Unrealized appreciation on OTC forward exchange contracts		158,285,277		Unrealized depreciation on OTC forward exchange contracts		35,020,649
Totals		$	172,969,953			$	49,109,429

^aThis amount reflects the cumulative appreciation (depreciation) of centrally cleared swap contracts as reported in the Statement of Investments. Only the variation margin receivable/payable at period end is separately reported within the Statement of Assets and Liabilities. Prior variation margin movements were recorded to cash upon receipt or payment.

For the period ended June 30, 2015, the effect of derivative contracts in the Fund’s Statement of Operations was as follows:

Derivative Contracts Not Accounted for as Hedging Instruments	Statement of Operations Locations	Net Realized Gain (Loss) for the Period			Statement of Operations Locations	Net Change in Unrealized Appreciation (Depreciation) for the Period
	Net realized gain (loss) from:				Net change in unrealized appreciation (depreciation) on:
Interest rate contracts	Swap contracts	$	(2,361,145	)	Swap contracts	$	16,623,319
Foreign exchange contracts	Foreign currency transactions		179,005,384	a	Translation of other assets and liabilities denominated in foreign currencies		(69,398,655	)a
Totals		$	176,644,239			$	(52,775,336	)

^aForward exchange contracts are included in net realized gain (loss) from foreign currency transactions and net change in unrealized appreciation (depreciation) on translation of other assets and liabilities denominated in foreign currencies in the Statement of Operations.

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, 2015, 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	$	158,285,277	$	35,020,649
Swap contracts		—		8,044,373
Total	$	158,285,277	$	43,065,022

^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, 2015, 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 and Liabilities
	Gross and Net Amounts of Assets Presented in the Statement of Assets and Liabilities		Financial Instruments Available for Offset			Financial Instruments Collateral Receiveda,b			Cash Collateral Receivedb			Net Amount (Not less than zero)
Counterparty
BOFA	$	2,754,099	$	(972,531	)	$	(1,781,568	)	$	—		$	—
BZWS		21,314,759		(1,610,273	)		—			(19,704,486	)		—
CITI		10,411,947		(6,670,066	)		—			—			3,741,881
DBAB		33,510,651		(13,654,784	)		—			(19,855,867	)		—
GSCO		4,934,033		(884,246	)		—			(4,030,000	)		19,787
HSBC		23,092,608		(9,975,984	)		(13,116,624	)		—			—
JPHQ		46,282,114		(7,618,739	)		(4,049,583	)		(34,600,000	)		13,792
MSCO		7,841,733		(1,245,941	)		—			(6,595,792	)		—
SCNY		3,124,992		(432,458	)		—			(2,692,534	)		—
UBSW		5,018,341		—			(5,018,341	)		—			—
Total	$	158,285,277	$	(43,065,022	)	$	(23,966,116	)	$	(87,478,679	)	$	3,775,460

^aAt June 30, 2015, the Fund received United Kingdom Treasury Bonds and Notes, U.S. Government and Agency Securities 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 the collateral amounts to avoid the effect of overcollateralization. Actual collateral received and/or pledged may be more than the amounts disclosed herein.

TGB-36 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Templeton Global Bond VIP Fund (continued)

At June 30, 2015, 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 and Liabilities
	Gross and Net Amounts of Liabilities Presented in the Statement of Assets and Liabilities		Financial Instruments Available for Offset			Financial Instruments Collateral Pledged		Cash Collateral Pledged		Net Amount (Not less than zero)
Counterparty
BOFA	$	972,531	$	(972,531	)	$	—	$	—	$	—
BZWS		1,610,273		(1,610,273	)		—		—		—
CITI		6,670,066		(6,670,066	)		—		—		—
DBAB		13,654,784		(13,654,784	)		—		—		—
GSCO		884,246		(884,246	)		—		—		—
HSBC		9,975,984		(9,975,984	)		—		—		—
JPHQ		7,618,739		(7,618,739	)		—		—		—
MSCO		1,245,941		(1,245,941	)		—		—		—
SCNY		432,458		(432,458	)		—		—		—
UBSW		—		—			—		—		—
Total	$	43,065,022	$	(43,065,022	)	$	—	$	—	$	—

^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, 2015, the average month end fair value of derivatives represented 7.95% of average month end net assets. The average month end number of open derivative contracts for the period was 509.

See Note 1(d) regarding derivative financial instruments.

See Abbreviations on page TGB - 42

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 $2 billion (Global Credit Facility) which matures on February 12, 2016. 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 in the Statement of Operations. During the period ended June 30, 2015, the Fund did not use the Global Credit Facility.

Semiannual Report TGB-37

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Templeton Global Bond VIP Fund (continued)

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.

At June 30, 2015, all of the Fund’s investments in financial instruments carried at fair value were valued using Level 2 inputs.

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/Exchange		Currency		Select Portfolio
BOFA	Bank of America N.A.	BRL	Brazilian Real	FHLB	Federal Home Loan Bank
BZWS	Barclays Bank PLC	EUR	Euro	FRN	Floating Rate Note
CITI	Citigroup, Inc.	HUF	Hungarian Forint
CME	Chicago Mercantile Exchange	IDR	Indonesian Rupiah
DBAB	Deutsche Bank AG	INR	Indian Rupee
GSCO	Goldman Sachs Bank	JPY	Japanese Yen
HSBC	HSBC Bank USA N.A.	KRW	South Korean Won
JPHQ	JP Morgan Chase & Co.	LKR	Sri Lankan Rupee
LCH	London Clearing House	MXN	Mexican Peso
MSCO	Morgan Stanley	MYR	Malaysian Ringgit
SCNY	Standard Chartered Bank	PEN	Peruvian Nuevo Sol
UBSW	UBS AG	PHP	Philippine Peso
		PLN	Polish Zloty
		SGD	Singapore Dollar

TGB-38 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Tax Information (unaudited)

Templeton Global Bond VIP Fund

At December 31, 2014, 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, 2015, 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	$0.0142	$0.6667
Class 2	$0.0142	$0.6479
Class 4	$0.0142	$0.6378

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 TGB-39

Templeton Growth VIP Fund

This semiannual report for Templeton Growth VIP Fund covers the period ended June 30, 2015.

Class 2 Performance Summary as of June 30, 2015

The Fund’s Class 2 shares delivered a +1.10% total return for the six-month period ended June 30, 2015.

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. In addition, smaller and midsized-company stocks have historically experienced more price volatility than larger company stocks, especially over the short term. Value securities may not increase in price as anticipated or may decline further in value. 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) returned +2.97%, and the MSCI World Index returned +2.95% for the period under review.¹

Economic and Market Overview

The global economy expanded moderately during the six months under review despite slowing growth in some countries. As measured by the MSCI World Index, stocks in global developed markets advanced overall during the six-month period amid a generally accommodative monetary policy environment and signs of economic improvement in Europe and Japan. Oil prices rebounded from earlier lows as demand picked up despite rising inventories and strong global supply, while gold prices declined marginally during the period under review.

U.S. economic growth was mixed during the six months under review. In 2015’s first quarter, U.S. dollar strength, low energy prices, and a labor dispute at West Coast ports led exports to

decline. In the second quarter, business capital spending rebounded and manufacturing and non-manufacturing activities increased, contributing to strong job gains. During the six-month period, the U.S. Federal Reserve Board (Fed) kept its target interest rate at 0%–0.25% while considering when an increase would be appropriate, based on labor market and inflation data. In its June meeting, the Fed lowered its economic growth forecast for 2015 and raised unemployment estimates given the weak start to the year.

Outside the U.S., the U.K. economy slowed in 2015’s first quarter as the mining and agriculture sectors contracted. Near period-end, the Conservative Party’s unexpected victory in the U.K. general elections supported investor sentiment. In the eurozone, economic growth improved somewhat during the six-month period. Spain expanded at a solid pace, and France and Italy returned to growth in 2015’s first quarter. However, Germany, the region’s largest economy, slowed during the first quarter amid sluggish exports. The region avoided deflation as the annual inflation rate rose in May. The European Central Bank (ECB) maintained its benchmark interest rates during the period and also expanded its asset purchases to boost inflation and the economy. The region generally benefited from a weaker euro that helped exports, the ECB’s accommodative policy and an improved 2015 eurozone growth forecast, but Greece’s debt situation remained a major concern.

The Japanese economy continued to grow in 2015’s first quarter after exiting recession in the previous quarter, driven by an

1. Source: 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.

TG-2 Semiannual Report

TEMPLETON GROWTH VIP FUND

increase in private demand as business investment and private consumption rose. The Bank of Japan maintained its monetary policy during the review period, but lowered its economic growth and inflation forecasts at its April meeting.

In emerging markets, economic growth generally moderated. A ceasefire agreement between Russia and Ukraine helped emerging market stocks early in the period. However, Greece’s credit default due to the lack of progress in negotiations weighed on emerging market stocks toward period-end. China’s government implemented market-friendly policies to support new economic drivers that could help steer the economy toward more sustainable growth. Lower interest rates there fueled massive stock market speculation and a 60% price gain up to mid-June 2015 for the domestic A-share market.² Concerned the market was overheated, the People’s Bank of China reduced liquidity, which led to a market panic in the last two weeks of June, exacerbated by certain government intervention measures. Central bank actions varied across emerging markets, as some banks raised interest rates in response to rising inflation and weakening currencies, while others lowered interest rates to promote economic growth. In the recent global environment, emerging market stocks, as measured by the MSCI Emerging Markets Index, rose for the six-month period.³

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

Global equities advanced during the six months under review, though momentum waned toward period-end as the Greek debt drama intensified, Chinese market volatility flared and U.S. economic growth disappointed. The prevailing market trends during the period were the outperformance of defensive and late-cycle consumer sectors and the underperformance of early-cycle resource and industrial sectors. In this environment, the Fund delivered absolute gains but trailed its benchmark MSCI ACWI.

Top 10 Holdings
6/30/15
Company Sector/Industry, Country	% of Total Net Assets
Microsoft Corp. Software, U.S.		3.1%
Samsung Electronics Co. Ltd. Technology Hardware, Storage & Peripherals, South Korea		3.1%
Citigroup Inc. Banks, U.S.		2.5%
Teva Pharmaceutical Industries Ltd., ADR Pharmaceuticals, Israel		2.4%
Comcast Corp., Special A Media, U.S.		2.1%
American International Group Inc. Insurance, U.S.		2.1%
CRH PLC Construction Materials, Ireland		2.0%
Roche Holding AG Pharmaceuticals, Switzerland		1.9%
Amgen Inc. Biotechnology, U.S.		1.9%
Pfizer Inc. Pharmaceuticals, 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 (SOI).

In our analysis, conditions remained difficult for value-oriented equity investors during the period as value stocks extended their longest stretch of underperformance on record, trailing their growth counterparts by a wide margin. We feel that sustained low interest rate policies in many regions and expanded global stimulus measures ensured that correlations between stocks stayed historically elevated. In other words, our view is that broad-based economic and policy news remained the key market drivers, overshadowing stock-specific fundamental factors that typically influence share prices over time.

At the sector level, stock selection in information technology (IT) detracted from relative performance.⁴ Shares of U.S. computer-maker Hewlett-Packard declined after the company forecast lower-than-expected earnings, saying a rising U.S. dollar would hurt results as the firm prepared to split in two. Nevertheless, we remained favorable toward Hewlett-Packard given what we considered its still cheap sum-of-the-parts valuation and the prospect of additional cost savings from restructuring initiatives. South Korean semiconductor and

2. MSCI.

3. Please see Index Descriptions following the Fund Summaries.

4. The IT sector comprises communications equipment; electronic equipment, instruments and components; software; and technology hardware, storage and peripherals in the SOI.

Semiannual Report TG-3

TEMPLETON GROWTH VIP FUND

consumer electronics firm Samsung Electronics also lagged. After more than doubling in value between 2011 and 2013 as the firm successfully grew its profitable mobile phone business, shares of Samsung showed little movement more recently due to slower handset growth and an unfavorable South Korean won-to-Japanese yen exchange rate. We believed Samsung remained inexpensive and were encouraged by the positive changes under way at the company, including a recently announced US$2 billion buyback and renewed expectations for a dividend hike. In our analysis, Samsung has solid net cash and investment levels, a reinvigorated leadership focused on shareholder value, and significant scope for operational and strategic improvement across business lines, and remains well positioned for additional increases from recent modest valuation levels.

Stock selection in industrials and consumer discretionary also detracted from relative returns.⁵ From the industrials sector, shares of German airline Deutsche Lufthansa declined due to charges tied to pension obligations, an asset disposal and a wrong-way bet on fuel prices. We continued to see additional opportunity in Lufthansa at what we deemed recently depressed valuations given its strong balance sheet, diversified business portfolio and ongoing restructuring program. From the consumer discretionary sector, U.S. luxury lifestyle brand Michael Kors Holdings declined after the firm posted a surprising sales decline in its primary North American market and gave a disappointing forecast for the coming year. This company has had a phenomenal growth trajectory in recent years and it appeared to us that expectations for future growth had run ahead of what was realistically achievable. However, Michael Kors seemed cheap to us based on near-term measures and, as a relatively young company with strong brand recognition, it may have numerous opportunities to expand global penetration over a long-term investment horizon.

Although the Fund’s overweighted allocation in the health care sector contributed to relative performance, the negative effect of stock selection more than offset the gains from the overweighting.⁶ Within the biotechnology sector, U.S.-based Amgen detracted from relative performance. However, we believed select biotechnology stocks offered an interesting value proposition. Biotechnology drugs have tended to have longer duration lifecycles than traditional pharmaceutical products, and have generally been more immune to pricing pressures and

generic competition. We remained positive on our holdings in this industry, as cash flow generation and pipeline innovation continued to accelerate. Elsewhere in the health care sector, pharmaceuticals firms Sanofi (France), Allergan (U.S.) and Pfizer (U.S.) contributed. In general, pharmaceuticals stocks have consolidated gains after a long stretch of outperformance driven by earnings improvements and growing cash flow generation at the company level and mergers and acquisition activity at the industry level. We became more active in the pharmaceuticals industry during the mid- and late-2000s, when research and development (R&D) productivity faltered, cost structures were bloated and patent expirations loomed. These conditions gave us a chance to buy, at a discount that we considered significant, businesses that we believed could be restructured and repositioned for long-term growth. For the most part, we believed our investment theses have worked out as cost-cutting buffered margins and improving R&D productivity offset patent losses with new, often longer life, revenue streams. In our analysis, shares had appreciated as the value cycle progressed, and the industry had recently traded at a slight premium to the broader market, making continued pipeline development essential to future return prospects. During the period, we found a few bargains among major pharmaceuticals stocks; however, our mature value holdings in the sector generated strong cash flows to support healthy dividend yields and continued to self-fund R&D.

Turning to contributors, we were encouraged by the strong absolute and relative gains of our European financials holdings overall at a time when Greece’s escalating debt drama created significant turmoil and uncertainty in the European financial system.⁷ Shares of Dutch financial services firm ING Groep advanced to a post-financial crisis high after the firm posted a major increase in profit at its banking operation in the first quarter, helped by a boost in fees from new lending. The company comfortably passed the ECB’s recent stress tests and has repaid the final installment of the Dutch government’s bailout-era loan. Following years of drastic restructuring, ING has improved its capital position, allowing it to return to lending growth and, consequently, higher levels of profitability. The stock remained reasonably valued, in our analysis, given its slight premium to book value and double-digit return on equity. More broadly, the European banking system has restructured and recapitalized, with systemically important firms exiting non-core businesses and shoring up their balance sheets. We

5. The industrials sector comprises aerospace and defense, air freight and logistics, airlines, commercial services and supplies, construction and engineering, industrial conglomerates, and machinery in the SOI. The consumer discretionary sector comprises auto components; automobiles; media; multiline retail; specialty retail; and textiles, apparel and luxury goods in the SOI.

6. The health care sector comprises biotechnology, life sciences tools and services, and pharmaceuticals in the SOI.

7. The financials sector comprises banks, capital markets, consumer finance and insurance in the SOI.

TG-4 Semiannual Report

TEMPLETON GROWTH VIP FUND

believe an emerging banking union with a single supervisor will soon support the financial system, ensuring regulatory consistency and a stronger industry safety net. Across the sector, major eurozone bank exposure to Greece was minimal. In 2010–2011, during the last round of fears that Greece would leave the eurozone, formal and robust support mechanisms were lacking. Five years later, the ECB has launched large-scale quantitative easing measures and policy tools such as the European Stability Mechanism, Long-Term Refinancing Operations and Outright Monetary Transactions. Such progress suggested to us that firewalls have strengthened and the scope for targeted policy intervention has increased dramatically in the eurozone. The recent revival of credit growth in the region was further evidence that the rightsizing of loan books and capital buffers along with the ECB’s stimulatory efforts were beginning to have their intended effect on the economy.

Stock selection in the materials sector also contributed to relative performance.⁸ In our view, the sector had offered only limited value in recent years, with selective opportunities concentrated primarily in chemicals and building materials companies. Irish building materials firm CRH delivered solid gains after agreeing to buy the assets that two rivals were required to divest as a regulatory condition to complete their merger. The company’s diverse geographical assets generated strong revenues and earnings last year and should help CRH gain market share and transform into a major cement producer. The deal will likely add quickly to CRH’s earnings and represent considerable value for long-term shareholders, in our analysis. We found fewer opportunities among metals and mining firms, where stock prices seemed to reflect excessive optimism about demand scenarios as the Chinese economy moderates and Beijing attempts to rebalance away from commodity-intensive fixed asset investment toward a more sustainable, consumption-oriented growth model. Bulk commodities like iron ore and coal looked particularly vulnerable to us in this environment given abundant global supply and the disproportionate reliance on a moderating China to drive demand growth. Base and precious metals, however, offered what we generally considered more attractive supply and demand fundamentals and may present select value opportunities following a sustained period of weakness. A position in Russian miner Mining and Metallurgical Co. Norilsk Nickel was a major contributor during the period as nickel prices rebounded from a bear market and investor sentiment on Russia improved.

From a regional standpoint, an underweighting and stock selection in Asia notably detracted, pressured by an underweighting in Japan and stock selection in South Korea and China. Chinese equities suffered a steep decline at period-end following a dramatic rally in the mainland A-share market, prompting the government to enact a number of heavy-handed market controls intended to stem the massive sell-off. We believed Beijing’s determined efforts to regain control of share prices underscored the importance of buoyant markets to a government undertaking delicate economic and political transitions; it also raised concerns about China’s commitment to liberalizing its markets at a time when the country desires greater representation and influence in the global financial system. Shortly after period-end, the new measures and their effects were still being monitored; however, many international investors added moral hazard to their list of Chinese market concerns that also included systemic leverage, illiquidity, volatility, lack of transparency and insufficient price discovery. In our analysis, although such concerns raised the risk premium for Chinese equities, we noted that select Hong Kong-listed H shares, which did not participate in the extreme A-share rally, have likely been oversold and represented what we believed to be compelling long-term value.

Encouragingly, European holdings contributed to relative performance, buoyed by an overweighted allocation and stock selection. Despite the negative headlines and periodic crises, we believe Europe has made significant progress in strengthening its defenses and positioning for sustainable growth. Economic conditions have also improved, with recent sentiment readings above average and multiple leading indicators consistent with improving economic growth. Critically, in a region where a majority of lending is carried out by banks, credit conditions have been improving, with loan growth for households and corporations recently turning positive. In fact, credit demand in Europe was at an eight-year high and bank balance sheets have started growing again. Challenges remained as Europe tried to balance the need for further integration with the desire to respect national sovereignty and political self-determination. However, in our opinion, the European experiment has been a continual study of disagreement and reconciliation among countries whose strong national identities often obscure a foundation of deeply shared interests and values. There will be more bumps along the way, but we believed Europe continued to advance in the right direction. European equities, trading at a considerable discount to their global peers based on price-to-book value and a record discount to their U.S. peers based on cyclically

8. The materials sector comprises chemicals, construction materials, and metals and mining in the SOI.

Semiannual Report TG-5

TEMPLETON GROWTH VIP FUND

adjusted earnings, remained a source of selective value in this environment, in our analysis.

It is also 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, 2015, the U.S. dollar rose in value relative to most currencies. As a result, the Fund’s performance was negatively affected by the portfolio’s substantial investment in securities with non-U.S. currency exposure.

Through six decades of investing in global equity markets, our goal has always been simple: to maximize total returns over time. Admittedly, attempting to buy stocks at the point of maximum pessimism involves weathering volatility and

“capturing down markets” at times, but this matters little to long-term risk mitigation and investment excellence, in our opinion.

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, 2015, 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.

TG-6 Semiannual Report

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 1/1/15		Ending Account Value 6/30/15		Fund-Level Expenses Incurred During Period* 1/1/15–6/30/15
Actual		$1,000		$1,011.00		$5.19
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 TG-7

SUPPLEMENT DATED MAY 1, 2015

TO THE PROSPECTUSES

DATED MAY 1, 2015

OF TEMPLETON GROWTH VIP FUND

(A series of Franklin Templeton Variable Insurance Products Trust)

The Prospectus is amended as follows:

I.  The section in the Fund Summary under the heading “Portfolio Managers” on page TG-S4 is replaced with the following:

Portfolio Managers

Norman J. Boersma, CFA    President, Chief Executive Officer and Director of Global Advisors and portfolio manager of the Fund since 2011.

Tucker Scott, CFA    Executive Vice President of Global Advisors and portfolio manager of the Fund since May 2015.

James Harper, CFA    Executive Vice President of Global Advisors and portfolio manager of the Fund since 2010.

Heather Arnold, CFA    Executive Vice President, Director of Research and Portfolio Manager of Global Advisors and portfolio manager of the Fund since 2014.

II.  In the Fund Details, under the heading “Management,” the portfolio manager information beginning on page TG-D6 is replaced with the following:

The Fund is managed by a team of dedicated professionals focused on investments in equity securities of companies anywhere in the world. The portfolio managers of the team are as follows:

Norman J. Boersma, CFA    President, Chief Executive Officer and Director of Global Advisors Mr. Boersma has been lead portfolio manager of the Fund since 2011. 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 1991.

Tucker Scott, CFA    Executive Vice President of Global Advisors Mr. Scott has been a portfolio manager of the Fund since May 2015, providing research and advice on the purchases and sales of individual securities, and portfolio risk assessment. He joined Franklin Templeton Investments in 1996.

TG-8

James Harper, CFA    Executive Vice President of Global Advisors Mr. Harper has been a portfolio manager of the Fund since 2010, providing research and advice on the purchases and sales of individual securities, and portfolio risk assessment. He joined Franklin Templeton Investments in 2007.

Heather Arnold, CFA    Executive Vice President, Director of Research and Portfolio Manager of Global Advisors Ms. Arnold has been a portfolio manager of the Fund since 2014, providing research and advice on the purchases and sales of individual securities, and portfolio risk assessment. She first joined Franklin Templeton Investments in 1997, left in 2001 to start her own company and rejoined again in 2008.

CFA^® and Chartered Financial Analyst^® are trademarks owned by CFA Institute.

Please keep this supplement with your prospectus for future reference.

TG-9

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Financial Highlights

Templeton Growth VIP Fund

	Six Months Ended June 30, 2015 (unaudited)			Year Ended December 31,
				2014			2013			2012			2011			2010
Class 1
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$14.85			$15.47			$12.16			$10.27			$11.19			$10.56
Income from investment operationsa:
Net investment incomeb		0.21			0.38	c		0.22			0.27			0.25			0.17
Net realized and unrealized gains (losses)		(0.03	)		(0.75	)		3.49			1.88			(0.99	)		0.62
Total from investment operations		0.18			(0.37	)		3.71			2.15			(0.74	)		0.79
Less distributions from net investment income		(0.42	)		(0.25	)		(0.40	)		(0.26	)		(0.18	)		(0.16	)
Net asset value, end of period		$14.61			$14.85			$15.47			$12.16			$10.27			$11.19
Total returnd		1.17%			(2.53)%			31.05%			21.40%			(6.80)%			7.74%
Ratios to average net assetse
Expenses		0.79%	f		0.78%			0.78%	g		0.78%	g		0.78%	g		0.77%	g
Net investment income		2.73%			2.46%	c		1.62%			2.31%			2.22%			1.71%
Supplemental data
Net assets, end of period (000’s)		$538,340			$572,860			$588,409			$476,954			$1,200,682			$1,348,622
Portfolio turnover rate		10.10%			17.46%			11.60%			18.73%	h		42.13%	h		9.61%

^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’s 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 1.88%.

^dTotal return does not include fees, charges or expenses imposed by the variable annuity and life insurance contracts for which 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 payments by affiliates rounds to less than 0.01%.

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

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

TG-10 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, 2015 (unaudited)			Year Ended December 31,
				2014			2013			2012			2011			2010
Class 2
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$14.61			$15.23			$11.97			$10.11			$11.01			$10.40
Income from investment operationsa:
Net investment incomeb		0.18			0.34	c		0.19			0.21			0.21			0.15
Net realized and unrealized gains (losses)		(0.01	)		(0.75	)		3.44			1.88			(0.96	)		0.60
Total from investment operations		0.17			(0.41	)		3.63			2.09			(0.75	)		0.75
Less distributions from net investment income		(0.38	)		(0.21	)		(0.37	)		(0.23	)		0.15			(0.14	)
Net asset value, end of period		$14.40			$14.61			$15.23			$11.97			$10.11			$11.01
Total returnd		1.10%			(2.81)%			30.82%			21.07%			(6.97)%			7.39%
Ratios to average net assetse
Expenses		1.04%	f		1.03%			1.03%	g		1.03%	g		1.03%	g		1.02%	g
Net investment income		2.48%			2.21%	c		1.37%			2.06%			1.97%			1.46%
Supplemental data
Net assets, end of period (000’s)		$1,093,508			$1,171,896			$1,450,304			$1,352,554			$1,254,193			$1,626,885
Portfolio turnover rate		10.10%			17.46%			11.60%			18.73%	h		42.13%	h		9.61%

^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’s 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 1.63%.

^dTotal return does not include fees, charges or expenses imposed by the variable annuity and life insurance contracts for which 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 payments by affiliates rounds to less than 0.01%.

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

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

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

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL HIGHLIGHTS

Templeton Growth VIP Fund (continued)

	Six Months Ended June 30, 2015 (unaudited)			Year Ended December 31,
				2014			2013			2012			2011			2010
Class 4
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$14.73			$15.35			$12.07			$10.19			$11.11			$10.50
Income from investment operationsa:
Net investment incomeb		0.18			0.33	c		0.17			0.20			0.20			0.14
Net realized and unrealized gains (losses)		(0.02	)		(0.76	)		3.47			1.90			(0.98	)		0.61
Total from investment operations		0.16			(0.43	)		3.64			2.10			(0.78	)		0.75
Less distributions from net investment income		(0.36	)		(0.19	)		(0.36	)		(0.22	)		(0.14	)		(0.14	)
Net asset value, end of period		$14.53			$14.73			$15.35			$12.07			$10.19			$11.11
Total returnd		1.04%			(2.88)%			30.64%			21.02%			(7.14)%			7.31%
Ratios to average net assetse
Expenses		1.14%	f		1.13%			1.13%	g		1.13%	g		1.13%	g		1.12%	g
Net investment income		2.38%			2.11%	c		1.27%			1.96%			1.87%			1.36%
Supplemental data
Net assets, end of period (000’s)		$55,833			$59,989			$72,683			$67,158			$56,170			$60,569
Portfolio turnover rate		10.10%			17.46%			11.60%			18.73%	h		42.13%	h		9.61%

^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’s 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 1.53%.

^dTotal return does not include fees, charges or expenses imposed by the variable annuity and life insurance contracts for which 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 payments by affiliates rounds to less than 0.01%.

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

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

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

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Statement of Investments, June 30, 2015 (unaudited)

Templeton Growth VIP Fund
		Country		Shares		Value
	Common Stocks 97.9%
	Aerospace & Defense 0.7%
	BAE Systems PLC		United Kingdom		1,730,147	$	12,263,892
	Air Freight & Logistics 0.9%
	United Parcel Service Inc., B		United States		160,030		15,508,507
	Airlines 1.3%
a	Deutsche Lufthansa AG		Germany		1,735,414		22,367,082
	Auto Components 1.3%
	Cie Generale des Etablissements Michelin, B		France		207,869		21,773,686
	Automobiles 2.7%
	Hero Motocorp Ltd.		India		114,200		4,534,170
	Hyundai Motor Co.		South Korea		130,180		15,812,654
	Nissan Motor Co. Ltd.		Japan		2,342,720		24,405,327
							44,752,151
	Banks 15.6%
	Bangkok Bank PCL, fgn.		Thailand		913,600		4,809,843
	BNP Paribas SA		France		401,637		24,237,776
	Citigroup Inc.		United States		770,990		42,589,488
a	Commerzbank AG		Germany		547,840		6,999,844
	Credit Agricole SA		France		1,640,346		24,386,635
	DBS Group Holdings Ltd.		Singapore		932,690		14,327,238
	HSBC Holdings PLC		United Kingdom		2,567,864		23,271,490
	ING Groep NV, IDR		Netherlands		1,273,446		21,018,232
	JPMorgan Chase & Co.		United States		440,760		29,865,898
	KB Financial Group Inc.		South Korea		657,984		21,685,193
	Standard Chartered PLC		United Kingdom		539,080		8,629,857
	SunTrust Banks Inc.		United States		478,520		20,585,930
	UniCredit SpA		Italy		3,118,881		20,941,918
							263,349,342
	Biotechnology 2.2%
	Amgen Inc.		United States		207,480		31,852,330
	Gilead Sciences Inc.		United States		49,050		5,742,774
							37,595,104
	Capital Markets 3.1%
	Credit Suisse Group AG		Switzerland		1,058,236		29,084,232
	Morgan Stanley		United States		609,690		23,649,875
							52,734,107
	Chemicals 1.0%
	Akzo Nobel NV		Netherlands		227,412		16,541,983
	Commercial Services & Supplies 0.5%
	Serco Group PLC		United Kingdom		4,886,178		9,057,900
	Communications Equipment 1.7%
	Cisco Systems Inc.		United States		778,890		21,388,320
	Ericsson, B		Sweden		723,972		7,499,586
							28,887,906
	Construction & Engineering 0.7%
b	FLSmidth & Co. AS		Denmark		250,000		12,025,515

Semiannual Report TG-13

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Templeton Growth VIP Fund (continued)

		Country		Shares		Value
	Common Stocks (continued)
	Construction Materials 2.0%
	CRH PLC		Ireland		1,172,741	$	33,092,258
c	CRH PLC, 144A		Ireland		38,100		1,075,101
							34,167,359
	Consumer Finance 0.8%
	Capital One Financial Corp.		United States		154,710		13,609,839
	Diversified Telecommunication Services 3.5%
	China Telecom Corp. Ltd., ADR		China		179,195		10,577,881
	Singapore Telecommunications Ltd.		Singapore		4,679,470		14,626,601
	Telefonica SA		Spain		1,787,635		25,400,930
	Verizon Communications Inc.		United States		158,750		7,399,337
							58,004,749
	Electronic Equipment, Instruments & Components 0.5%
a	Flextronics International Ltd.		Singapore		691,118		7,816,544
	Energy Equipment & Services 2.4%
	Baker Hughes Inc.		United States		301,680		18,613,656
	Halliburton Co.		United States		129,480		5,576,704
	Noble Corp. PLC		United States		523,100		8,050,509
	Technip SA		France		137,470		8,505,855
							40,746,724
	Food & Staples Retailing 3.0%
	CVS Health Corp.		United States		139,920		14,674,810
	Metro AG		Germany		587,740		18,523,593
	Tesco PLC		United Kingdom		5,191,768		17,336,148
							50,534,551
	Health Care Equipment & Supplies 3.1%
	Getinge AB, B		Sweden		925,050		22,255,148
	Medtronic PLC		United States		408,310		30,255,771
							52,510,919
	Industrial Conglomerates 1.2%
	Siemens AG		Germany		201,712		20,310,494
	Insurance 6.3%
	Aegon NV		Netherlands		1,717,940		12,620,768
	American International Group Inc.		United States		569,370		35,198,453
	Aviva PLC		United Kingdom		947,200		7,328,653
	AXA SA		France		1,091,068		27,516,739
	Swiss Re AG		Switzerland		270,006		23,893,697
							106,558,310
	Internet Software & Services 0.8%
a	Google Inc., A		United States		24,310		13,128,372
	Life Sciences Tools & Services 0.6%
a	QIAGEN NV		Netherlands		385,000		9,454,409
	Machinery 0.8%
a	Navistar International Corp.		United States		598,440		13,542,697
	Media 4.7%
	Comcast Corp., Special A		United States		592,942		35,540,943

TG-14 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Templeton Growth VIP Fund (continued)

		Country		Shares		Value
	Common Stocks (continued)
	Media (continued)
a	News Corp., A		United States		319,435	$	4,660,557
	Sky PLC		United Kingdom		1,055,761		17,199,689
	Twenty-First Century Fox Inc., A		United States		641,182		20,867,268
							78,268,457
	Metals & Mining 2.0%
	Mining and Metallurgical Co. Norilsk Nickel OJSC, ADR		Russia		1,040,760		17,557,621
	POSCO		South Korea		76,429		15,290,715
	POSCO, ADR		South Korea		27,740		1,361,757
							34,210,093
	Multiline Retail 0.9%
	Target Corp.		United States		191,680		15,646,838
	Oil, Gas & Consumable Fuels 8.7%
	Apache Corp.		United States		209,000		12,044,670
	BP PLC		United Kingdom		2,847,664		18,796,168
	Chesapeake Energy Corp.		United States		1,136,570		12,695,487
	Chevron Corp.		United States		137,470		13,261,731
	Eni SpA		Italy		776,759		13,781,292
	Galp Energia SGPS SA, B		Portugal		1,575,520		18,471,419
	Kunlun Energy Co. Ltd.		China		17,103,030		17,408,282
	Royal Dutch Shell PLC, A		United Kingdom		4,510		126,577
	Royal Dutch Shell PLC, B		United Kingdom		299,573		8,504,270
	Suncor Energy Inc.		Canada		46,000		1,266,934
	Total SA, B		France		618,659		30,039,969
							146,396,799
	Pharmaceuticals 11.6%
a	Allergan PLC		United States		56,124		17,031,389
	GlaxoSmithKline PLC		United Kingdom		1,207,210		25,081,570
	Merck KGaA		Germany		219,854		21,899,556
	Pfizer Inc.		United States		908,503		30,462,106
	Roche Holding AG		Switzerland		115,383		32,328,463
	Sanofi		France		290,857		28,602,606
	Teva Pharmaceutical Industries Ltd., ADR		Israel		688,930		40,715,763
							196,121,453
	Software 3.4%
	Microsoft Corp.		United States		1,177,169		51,972,011
	SAP SE		Germany		80,912		5,644,791
							57,616,802
	Specialty Retail 2.0%
	Best Buy Co. Inc.		United States		223,160		7,277,247
	Kingfisher PLC		United Kingdom		4,891,448		26,688,148
							33,965,395
	Technology Hardware, Storage & Peripherals 4.7%
	Hewlett-Packard Co.		United States		942,050		28,270,920
	Samsung Electronics Co. Ltd.		South Korea		45,620		51,664,964
							79,935,884

Semiannual Report TG-15

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Templeton Growth VIP Fund (continued)

		Country		Shares		Value
	Common Stocks (continued)
	Textiles, Apparel & Luxury Goods 0.8%
a	Michael Kors Holdings Ltd.		United States		321,440	$	13,529,410
	Wireless Telecommunication Services 2.4%
	SoftBank Group Corp.		Japan		149,680		8,816,432
	Turkcell Iletisim Hizmetleri AS, ADR		Turkey		1,653,543		18,999,209
	Vodafone Group PLC		United Kingdom		3,292,417		11,888,733
							39,704,374
	Total Common Stocks (Cost $1,360,517,289)						1,652,637,647
	Preferred Stocks (Cost $22,230,600) 0.9%
	Oil, Gas & Consumable Fuels 0.9%
a	Petroleo Brasileiro SA, ADR, pfd.		Brazil		1,913,392		15,613,279
	Total Investments before Short Term Investments (Cost $1,382,747,889)						1,668,250,926
				Principal Amount
	Short Term Investments 1.6%
	Time Deposits 1.1%
	Bank of Montreal, 0.03%, 7/01/15		United States	$	7,000,000		7,000,000
	Royal Bank of Canada, 0.05%, 7/01/15		United States		11,500,000		11,500,000
	Total Time Deposits (Cost $18,500,000)						18,500,000
	Total Investments before Money Market Funds (Cost $1,401,247,889)						1,686,750,926
				Shares
d	Investments from Cash Collateral Received for Loaned Securities (Cost $7,762,500) 0.5%
	Money Market Funds 0.5%
a,e	Institutional Fiduciary Trust Money Market Portfolio		United States		7,762,500		7,762,500
	Total Investments (Cost $1,409,010,389) 100.4%						1,694,513,426
	Other Assets, less Liabilities (0.4)%						(6,832,503	)
	Net Assets 100.0%					$	1,687,680,923

See Abbreviations on page TG-26.

^aNon-income producing.

^bA portion or all of the security is on loan at June 30, 2015. See Note 1(c).

^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. This security has been deemed liquid under guidelines approved by the Trust’s Board of Trustee. At June 30, 2015, the aggregate value of this security was $1,075,101, representing 0.06% of net assets.

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

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

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 Assets and Liabilities

June 30, 2015 (unaudited)

	Templeton Growth VIP Fund
Assets:
Investments in securities:
Cost - Unaffiliated issuers	$	1,401,247,889
Cost - Sweep Money Fund (Note 3e)		7,762,500
Total cost of investments	$	1,409,010,389
Value - Unaffiliated issuers	$	1,686,750,926
Value - Sweep Money Fund (Note 3e)		7,762,500
Total value of investments (Includes securities loaned in the amount of $7,215,309)		1,694,513,426
Cash		451,364
Receivables:
Investment securities sold		2,410,959
Capital shares sold		1,460,092
Dividends and interest		2,832,070
Other assets		735
Total assets		1,701,668,646
Liabilities:
Payables:
Investment securities purchased		3,892,107
Capital shares redeemed		359,392
Management fees		1,088,580
Distribution fees		516,905
Payable upon return of securities loaned		7,762,500
Accrued expenses and other liabilities		368,239
Total liabilities		13,987,723
Net assets, at value	$	1,687,680,923
Net assets consist of:
Paid-in capital	$	1,406,775,027
Undistributed net investment income		22,591,055
Net unrealized appreciation (depreciation)		285,479,348
Accumulated net realized gain (loss)		(27,164,507	)
Net assets, at value	$	1,687,680,923
Class 1:
Net assets, at value	$	538,339,902
Shares outstanding		36,842,340
Net asset value and maximum offering price per share	$	14.61
Class 2:
Net assets, at value	$	1,093,508,315
Shares outstanding		75,959,830
Net asset value and maximum offering price per share	$	14.40
Class 4:
Net assets, at value	$	55,832,706
Shares outstanding		3,843,702
Net asset value and maximum offering price per share	$	14.53

The accompanying notes are an integral part of these financial statements.    |   Semiannual Report TG-17

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

FINANCIAL STATEMENTS

Statement of Operations

for the six months ended June 30, 2015 (unaudited)

	Templeton Growth VIP Fund
Investment income:
Dividends (net of foreign taxes of $3,152,458)	$	30,546,737
Interest		3,442
Income from securities loaned		549,280
Total investment income		31,099,459
Expenses:
Management fees (Note 3a)		6,726,036
Distribution fees: (Note 3c)
Class 2		1,433,072
Class 4		103,414
Custodian fees (Note 4)		62,553
Reports to shareholders		126,678
Professional fees		45,392
Trustees’ fees and expenses		4,207
Other		25,076
Total expenses		8,526,428
Expenses waived/paid by affiliates (Note 3e)		(20,553	)
Net expenses		8,505,875
Net investment income		22,593,584
Realized and unrealized gains (losses):
Net realized gain (loss) from:
Investments		62,244,166
Foreign currency transactions		137,342
Net realized gain (loss)		62,381,508
Net change in unrealized appreciation (depreciation) on:
Investments		(63,281,066	)
Translation of other assets and liabilities denominated in foreign currencies		23,776
Net change in unrealized appreciation (depreciation)		(63,257,290	)
Net realized and unrealized gain (loss)		(875,782	)
Net increase (decrease) in net assets resulting from operations	$	21,717,802

TG-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 Growth VIP Fund
	Six Months Ended June 30, 2015 (unaudited)			Year Ended December 31, 2014
Increase (decrease) in net assets:
Operations:
Net investment income	$	22,593,584		$	45,743,743
Net realized gain (loss)		62,381,508			105,495,221
Net change in unrealized appreciation (depreciation)		(63,257,290	)		(200,494,822	)
Net increase (decrease) in net assets resulting from operations		21,717,802			(49,255,858	)
Distributions to shareholders from:
Net investment income:
Class 1		(15,123,132	)		(9,482,577	)
Class 2		(28,110,279	)		(18,300,865	)
Class 4		(1,358,156	)		(885,005	)
Total distributions to shareholders		(44,591,567	)		(28,668,447	)
Capital share transactions: (Note 2)
Class 1		(26,831,138	)		9,471,206
Class 2		(63,809,621	)		(227,816,318	)
Class 4		(3,549,129	)		(10,381,665	)
Total capital share transactions		(94,189,888	)		(228,726,777	)
Net increase (decrease) in net assets		(117,063,653	)		(306,651,082	)
Net assets:
Beginning of period		1,804,744,576			2,111,395,658
End of period	$	1,687,680,923		$	1,804,744,576
Undistributed net investment income included in net assets:
End of period	$	22,591,055		$	44,589,038

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

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 (1940 Act) as an open-end management investment company, consisting of nineteen separate funds and applies the specialized accounting and reporting guidance in U.S. Generally Accepted Accounting Principles (U.S. GAAP). 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.

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 NAV. 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 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).

TG-20 Semiannual Report

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Templeton Growth VIP Fund (continued)

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.

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 in 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 to earn additional income. 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 deposited into a joint cash account with other funds and is used to invest in a money market fund managed by Franklin Advisers, Inc., an affiliate of the Funds. The Fund may receive income from the investment of cash collateral, in addition to lending fees and rebates paid by the borrower. Income from securities loaned is reported separately in the Statement of Operations. 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. If the borrower defaults on its obligation to return the securities loaned, the Fund has the right to repurchase the securities in the open market using the collateral received. 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. As a result of several court cases, in certain countries across the European Union, the Fund has filed

Semiannual Report TG-21

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Templeton Growth VIP Fund (continued)

1. Organization and Significant Accounting Policies (continued)

d. Income and Deferred Taxes (continued)

additional tax reclaims for previously withheld taxes on dividends earned in those countries. These additional filings are subject to various administrative proceedings by the local jurisdictions’ tax authorities within the European Union, as well as a number of related judicial proceedings. At this time, uncertainty exists as to the ultimate resolution of these proceedings, the likelihood of receipt of these reclaims, and the potential timing of payment, and accordingly, no amounts are reflected in the financial statements.

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, 2015, 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’s 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 for certain dividends from foreign securities where the dividend rate is not available. In such cases, the dividend is recorded as soon as the information is received by the Fund. 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 U.S.

GAAP. 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)

Templeton Growth VIP Fund (continued)

2. Shares of Beneficial Interest

At June 30, 2015, 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, 2015						Year Ended December 31, 2014
	Shares			Amount			Shares			Amount
Class 1 Shares:
Shares sold		174,719		$	2,628,557			2,100,767		$	33,047,439
Shares issued in reinvestment of distributions		1,016,340			15,123,132			589,713			9,482,577
Shares redeemed		(2,923,773	)		(44,582,827	)		(2,142,457	)		(33,058,810	)
Net increase (decrease)		(1,732,714	)	$	(26,831,138	)		548,023		$	9,471,206
Class 2 Shares:
Shares sold		1,886,017		$	28,562,254			2,721,083		$	41,308,837
Shares issued in reinvestment of distributions		1,917,482			28,110,279			1,155,358			18,300,865
Shares redeemed		(8,045,951	)		(120,482,154	)		(18,911,727	)		(287,426,020	)
Net increase (decrease)		(4,242,452	)	$	(63,809,621	)		(15,035,286	)	$	(227,816,318	)
Class 4 Shares:
Shares sold		130,521		$	1,929,451			416,620		$	6,355,215
Shares issued on reinvestment of distributions		91,767			1,358,156			55,382			885,005
Shares redeemed		(451,066	)		(6,836,736	)		(1,134,025	)		(17,621,885	)
Net increase (decrease)		(228,778	)	$	(3,549,129	)		(662,023	)	$	(10,381,665	)

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

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FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Templeton Growth VIP Fund (continued)

3. Transactions With Affiliates (continued)

a. Management Fees (continued)

Annualized Fee Rate	Net Assets
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.

c. Distribution Fees

The Board has adopted a 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. Investments in Institutional Fiduciary Trust Money Market Portfolio

The Fund invests in 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, as noted in the Statement of Operations, in an amount not to exceed the management and administrative fees paid directly or indirectly by the Sweep Money Fund.

f. Other Affiliated Transactions

At June 30, 2015, Franklin Templeton Variable Insurance Products Trust – Franklin Founding Funds Allocation VIP Fund owned 22.86% 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, 2015, 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)

Templeton Growth VIP Fund (continued)

At December 31, 2014, capital loss carryforwards were as follows:

Capital loss carryforwards subject to expiration:
2017	$	16,985,638
2018		55,299,629

At June 30, 2015, the cost of investments and net unrealized appreciation (depreciation) for income tax purposes were as follows:

Cost of investments	$	1,425,100,820
Unrealized appreciation	$	397,481,041
Unrealized depreciation		(128,068,435	)
Net unrealized appreciation (depreciation)	$	269,412,606

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 and wash sales.

6. Investment Transactions

Purchases and sales of investments (excluding short term securities) for the period ended June 30, 2015, aggregated $176,481,952 and $269,835,278, 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 $2 billion (Global Credit Facility) which matures on February 12, 2016. 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 in the Statement of Operations. During the period ended June 30, 2015, 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)

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FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Templeton Growth VIP Fund (continued)

9. Fair Value Measurements (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, 2015, 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	$	1,668,250,926	$	—	$	—	$	1,668,250,926
Short Term Investments		7,762,500		18,500,000		—		26,262,500
Total Investments in Securities	$	1,676,013,426	$	18,500,000	$	—	$	1,694,513,426

^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 certain transactions accounted for as a sale for interim and annual reporting periods beginning after December 15, 2014, and transactions accounted for as secured borrowings for annual periods beginning after December 15, 2014, and for interim periods beginning after March 15, 2015. Management has reviewed the requirements and believes the adoption of this ASU will not have a material impact on the financial statements.

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

ADR	American Depositary Receipt
IDR	International Depositary Receipt

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FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

TAX INFORMATION (UNAUDITED)

Templeton Growth VIP Fund

At December 31, 2014 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, 2015, 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	$0.0215	$0.3708
Class 2	$0.0215	$0.3332
Class 4	$0.0215	$0.3183

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 TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Index Descriptions

The indexes are unmanaged and include reinvestment of any income or distributions.

For Russell Indexes: Russell Investment Group is the source and owner of the trademarks, service marks and copyrights related to the Russell Indexes. Russell^® is a trademark of Russell Investment Group.

See www.franklintempletondatasources.com for additional data provider information.

Barclays 1-3 Month U.S. Treasury Bill Index includes all publicly issued zero-coupon U.S. Treasury bills that have a remaining maturity between one month and three months and are investment-grade rated, U.S. dollar denominated, fixed rate and nonconvertible.

Barclays U.S. Aggregate Bond 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.

Bloomberg Commodity Index comprises exchange-traded futures on physical commodities, which are weighted to account for economic significance and market liquidity. Prior to 7/1/14, the index was known as the Dow Jones-UBS Commodity Index.

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.

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.

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 6/30/15, there were 293 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 6/30/15, there were 71 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 6/30/15, there were 52 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.

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FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

INDEX DESCRIPTIONS

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 6/30/15, there were 113 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 China A Index is a free float-adjusted, market capitalization-weighted index designed to measure equity market performance of companies incorporated in China that are listed on the Shanghai and Shenzhen Stock Exchanges, are quoted in the Chinese renminbi and entail foreign investment regulations.

MSCI China Index is a free float-adjusted, market capitalization-weighted index designed to measure equity market performance of China, as represented by B, China H, Red Chip and P Chip shares.

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 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.

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 ^TM Value Index is market capitalization weighted and measures performance of those Russell 2500 ^TM 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.

Standard & Poor’s^® 500 Index (S&P 500^®) is a market capitalization-weighted index of 500 stocks designed to measure total U.S. equity market performance.

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.

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FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Shareholder Information

Board Review of Investment Management Agreement

At a meeting held April 14, 2015, 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 each Fund’s investment performance and expenses with those of other mutual funds deemed comparable to the Fund as selected by Lipper. The Fund profitability analysis discussed the profitability to Franklin Templeton Investments (FTI) 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 FTI 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 its shareholders, except as noted later with respect to investment performance. The Board’s opinion was based, in part, upon periodic reports furnished it 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 effective business continuity plans and developing strategies to address cybersecurity threats. 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 that 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 FTI 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 continued subsidization of money market funds.

INVESTMENT PERFORMANCE. The Board placed significant emphasis on the investment performance of each of the

Semiannual Report SI-1

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

SHAREHOLDER INFORMATION

Board Review of Investment Management Agreement (continued)

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, 2015, 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. In certain cases, income return was indicated 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 VIP Fund – The performance universe for this Fund, which has been in operation for 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 lowest performing quintile of its performance universe, and on an annualized basis to also 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 and steps management was taking to evaluate its highest conviction stocks, but found the Fund’s absolute performance on an annualized basis as shown in the Lipper report to be acceptable.

Franklin Founding Funds Allocation VIP 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 seven years and the Lipper report showed its income return to be in the highest quintile of such Lipper universe for the one-year period, and on an annualized basis to also be in the highest 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 lowest performing quintile of such performance universe and on an annualized basis to be in the second-highest performing quintile of such universe for the previous three-year period, and to be in the second-lowest performing quintile of such universe for the previous five-year

period. 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, which are not perfectly aligned to the investment style of comparative funds. The Board was satisfied with the Fund’s performance as shown in the Lipper report.

Franklin Global Real Estate VIP 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 highest 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- and five-year periods, but in the lowest performing quintile of such universe for the previous 10-year period. Noting the marked improvement in performance in recent years, the Board was satisfied with the Fund’s comparative performance as shown in the Lipper report.

Franklin Growth and Income VIP 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 quintile of its Lipper 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 middle performing quintile of its performance universe, and on an annualized basis, to be in the second-lowest performing quintile of such universe for each of the previous three- and 10-year periods, and the second-highest performing quintile of such universe for the previous five-year period. The Board noted management’s attention to intensifying its focus on its highest conviction investments and found the Fund’s comparative performance as shown in the Lipper report to be satisfactory.

Franklin High Income VIP 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 second-highest quintile of such performance universe, and on an annualized basis to be in the highest and second-highest quintiles of such universe for the previous three- and five-year periods, respectively, and to be in the middle quintile of such universe for the previous 10-year period. The Lipper report showed the Fund’s total return to be in the lowest

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FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

SHAREHOLDER INFORMATION

performing quintile of its performance universe for the one-year period, and, on an annualized basis, to be in the middle performing quintile of such universe for the previous three-year period, and in the second-highest performing quintile 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, noting the Fund’s income objective.

Franklin Income VIP 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 quintile of such performance universe for the one-year period and to also be in the highest quintile of such universe for each of the previous three-, five- and 10-year periods on an annualized basis. The Lipper report showed the Fund’s total return to be in the lowest performing quintile of its performance universe for the one-year period, and on an annualized basis to be in the middle performing quintile of such universe for the previous three- and five-year periods, and the second-highest 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 Large Cap Growth VIP Fund – The performance universe for this Fund consisted of the Fund and all large-cap growth funds underlying variable insurance products as selected by Lipper. The Lipper report showed the Fund’s total return to be in the highest or best 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 Fund’s historical underperformance and noted that a new portfolio manager was appointed for the Fund, effective May 1, 2014. In view of such discussions, and in light of the Fund’s positive total return during the most recent year, the Board believed that appropriate action had been taken and that the Fund’s comparative performance as shown in the Lipper report was acceptable.

Franklin Mutual Global Discovery VIP Fund – The performance universe for this Fund consisted of the Fund and all global 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 highest 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-, five- and 10-year periods. The Board found the Fund’s overall comparative performance as set forth in the Lipper report to be satisfactory, noting that the three-year annualized total return exceeded 13%.

Franklin Mutual Shares VIP 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 second-lowest performing quintile of the performance universe, and on an annualized basis to be in the lowest performing quintile of such universe for the previous three- and five-year periods, and to be in the middle performing quintile for the previous 10-year period. The Board found the Fund’s overall performance as set forth in the Lipper report to be unacceptable, but acknowledged management’s explanation that the Fund is managed conservatively and the Fund’s cash holdings detract from relative performance in sharply rising markets. The Board indicated it would continue to monitor the Fund.

Franklin Rising Dividends VIP 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 second-lowest 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 acceptable, noting that its total return was above the median for the one-year period as well as the annualized five-year period.

Franklin Small Cap Value VIP Fund – The performance group 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 second-lowest performing quintile of such performance universe, and on an annualized basis to also be in the second-lowest performing quintile of such universe for the previous three-year period, and in the second-highest 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 acceptable, noting management’s recent commitment of two additional analysts to support the Fund and the Fund’s longer term positive returns.

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Board Review of Investment Management Agreement (continued)

Franklin Small-Mid Cap Growth VIP 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-lowest 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 discussed with management portfolio adjustments and the commitment of additional resources to the portfolio team. Given management’s attention to the Fund, the Board found the Fund’s performance to be acceptable and noted that the 10-year annualized performance was less than 1% below the median.

Franklin Strategic Income VIP Fund – The performance universe for this Fund consisted of the Fund and all general bond funds underlying variable insurance products as selected by Lipper. The Lipper report showed the Fund’s income return to be in the highest quintile of such Lipper universe for the one-year period, and on an annualized basis to also be in the highest quintile of such universe during each of the previous three- and five-year periods, and in the second-highest quintile of such universe for the previous 10-year period. The Lipper report showed the Fund’s total return to be in the second-lowest performing quintile of such universe during the one-year period, 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 performance as shown in the Lipper report.

Templeton Developing Markets VIP 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 also be in the second-lowest performing quintile of such universe for each of the previous three-, five- and 10-year periods. The Board found the performance of the Fund as set forth in the Lipper report to be disappointing and discussed with management the impact of the Manager’s approach to investing, which was out of favor in current markets. The Board also discussed with management steps it was

evaluating to improve the performance, including a more rigorous selling discipline. The Board concluded that continued monitoring is warranted in light of the Fund’s underperformance, but did not believe a portfolio management change was needed at this time.

Templeton Foreign VIP Fund – The performance universe for this Fund consisted of the Fund and all international large-cap 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 lowest performing quintile of such performance universe and on an annualized basis to be in the second-lowest performing quintile of such universe for the previous three-year period, in the second-highest performing quintile of such universe for the previous five-year period, and in the highest performing quintile of such universe for the previous 10-year period. The Board was satisfied with the Fund’s comparative investment performance as set forth in the Lipper report, noting that performance was in the highest or second-highest quintile in each of the previous seven years.

Templeton Global Bond VIP 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 highest quintile of such Lipper universe, and on an annualized basis to also be in the highest quintile of such universe for the previous three- and 10-year periods, and in the second-highest quintile of such universe for the previous five-year period. 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 also be in the highest performing quintile of such universe for each of the previous three-, five- and 10-year annualized periods. The Board was satisfied with the Fund’s comparative performance as set forth in the Lipper report.

Templeton Growth VIP Fund – The performance universe for this Fund consisted of the Fund and all global 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 or worst performing quintile of such performance universe and on an annualized basis to be in the middle performing quintile of such universe for the previous three-year period, and the second-lowest performing quintile of such universe for the previous five- and 10-year periods. The Board found the Fund’s comparative performance as set forth in the Lipper report to be acceptable, noting that the

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SHAREHOLDER INFORMATION

Fund’s performance had been in the highest quintile in three of the previous five one-year periods. They also observed that the Fund’s annualized performance was within 1% of the median for the trailing five-year period.

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 each Fund’s 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 Small Cap Value VIP Fund, Franklin Growth and Income VIP Fund, Franklin High Income VIP Fund, Franklin Income VIP Fund and Templeton Global Bond VIP 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 and actual total expense ratios of each of Franklin Global Real Estate VIP Fund, Franklin Mutual Global Discovery VIP Fund and Templeton Developing Markets VIP Fund were above the medians of their Lipper expense groups, but in no case by more than 22 basis points. The Board found the comparative contractual investment management fees and expenses of these Funds as shown in their Lipper report to be acceptable. The contractual investment management fee rates of the following Funds were at or above the median while the actual total expense ratios were in the middle performing quintile:

Franklin Flex Cap Growth VIP Fund, Franklin Large Cap Growth VIP Fund and Franklin Mutual Shares VIP Fund. The Board found the comparative expenses of these Funds as shown in the Lipper reports to be acceptable. The contractual investment management fee rates of the following Funds were at or above the median while the actual total expense ratios were below the median: Franklin Small-Mid Cap Growth VIP Fund and Templeton Growth VIP Fund. The Board was satisfied with the comparative expenses of these Funds as shown in the Lipper reports. The contractual investment management fee rates and actual total expense ratios for the following Funds were in the first or second quintiles of their expense groups, meaning they were among the least expensive of their peers: Franklin Strategic Income VIP Fund, Franklin Rising Dividends VIP Fund, Franklin Founding Funds Allocation VIP Fund, Franklin U.S. Government Securities VIP Fund and Templeton Foreign VIP Fund. The Board was satisfied with the comparative expenses of these Funds as shown in the Lipper reports.

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, 2014, 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 Fund’s profitability report presentations from prior years. Additionally, the Fund’s 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

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Board Review of Investment Management Agreement (continued)

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 personnel, systems enhancements necessitated by fund growth, as well as increased leverage with the service providers and counterparties. 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 Founding Funds Allocation VIP Fund, the management fees of the underlying funds in 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 VIP 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 structure of Franklin Rising Dividends VIP Fund provides for a

fee of 0.750% 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, 2014, 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.

Board Review of Investment Management Agreement for Franklin VolSmart Allocation VIP Fund

At a meeting held February 24, 2015, the Board of Trustees (Board), including a majority of non-interested or independent Trustees, approved renewal of the investment management agreement for Franklin VolSmart Allocation VIP Fund (Fund). 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 the 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, as well as marketing support payments made to financial intermediaries. 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 the Fund’s investment performance and expenses with those of other mutual funds deemed comparable to the Fund as selected by Lipper. The Fund profitability analysis discussed the profitability to Franklin Templeton Investments (FTI) from its overall U.S. fund operations, as well as on an individual fund-by-fund basis. Additional material accompanying such profitability analysis

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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. 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 Fund by the FTI organization, as well as a memorandum relating to economies of scale. The Board also noted that at the February meetings each year, it receives an annual report on all marketing support payments made by FTI to financial intermediaries.

In considering such materials, the independent Trustees received assistance and advice from and met separately with independent counsel. The investment management agreement for the Fund was the only agreement considered at the Board meeting. The Board will address the investment management agreements for the remaining funds in the Trust at the April Board meeting. In approving continuance of the investment management agreement for the 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 the 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 Fund and its shareholders. In addition to investment performance and expenses discussed later, the Board’s opinion was based, in part, upon periodic reports furnished it showing that the investment policies and restrictions for the 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 effective business continuity plans and developing strategies to address cybersecurity threats. 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 that also covered FOREX transactions. Consideration was also given

to the experience of the 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 Fund and other accounts managed by FTI 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 continued subsidization of money market funds.

INVESTMENT PERFORMANCE. The Board placed significant emphasis on the investment performance of the Fund 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 report furnished for the agreement renewal of the Fund. The Lipper report prepared for the Fund showed the investment performance of Class 2 shares in comparison to a performance universe selected by Lipper. Comparative performance for the Fund was shown for the one-year period ended December 31, 2014, in comparison to a performance universe consisting of the Fund and all flexible portfolio funds underlying variable insurance products as selected by Lipper. The Lipper report showed the Fund’s total return during the one-year period to be in the middle performing quintile of its performance universe. The Board was satisfied with the Fund’s comparative performance as shown in the Lipper report noting that the Fund had only been in existence for a limited period and its return exceeded the median of its peer universe by 69 basis points.

COMPARATIVE EXPENSES. Consideration was given to expense comparison information contained in the Lipper report furnished for the 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

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Board Review of Investment Management Agreement (continued)

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 Fund’s 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 rate and actual total expense ratio of the Fund were in the most expensive quintile of their respective Lipper expense groups. 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 Board further noted that management is waiving these management fees at the top tier and that, as a result, the actual total expenses including underlying Fund expenses are only 4 basis points above the median.

MANAGEMENT PROFITABILITY. The Board also considered the level of profits realized by the Manager and its affiliates in connection with the operation of the 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, 2014, 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 Fund’s profitability report presentations from prior years. Additionally, the Fund’s 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 Fund’s 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 the 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 Fund, 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 personnel and systems enhancements necessitated by fund growth, as well as increased leverage with the service providers and counterparties. 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 the 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 Fund grows 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.

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The investment management structure of the Fund provides for a fee of 1.0% on the first $1 billion of net assets; 0.980% on the next $4 billion of net assets; and 0.960% on the next $5 billion of net assets; 0.940% on the next $5 billion of net assets; 0.920% on the next $5 billion of net assets; and 0.90% on net assets in excess of $20 billion. This Fund had net assets of $20 million at December 31, 2014. The Board believed that the schedule of investment management fees provides a sharing of benefits for the Fund and its shareholders as the Fund grows.

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-9

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

Subadvisors

K2/D&S Management Co., L.L.C.

Franklin Advisory Services, 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.

© 2015 Franklin Templeton Investments. All rights reserved. VIP2 S 08/15

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, 2015

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, 2015

By	/s/  GASTON GARDEY
	Gaston Gardey
	Chief Financial Officer and
	Chief Accounting Officer

Date August 27, 2015

EX-99.CODE

Exhibit 12(a)(1)

CODE OF ETHICS FOR PRINCIPAL EXECUTIVES & SENIOR FINANCIAL OFFICERS

PROCEDURES Revised December 18, 2009

FRANKLIN TEMPLETON FUNDS

CODE OF ETHICS FOR PRINCIPAL EXECUTIVE AND

SENIOR FINANCIAL OFFICERS

I. Covered Officers and Purpose of the Code

This code of ethics (the “Code”) applies to the Principal Executive Officers, Principal Financial Officer and Principal Accounting Officer (the “Covered Officers,” each of whom is set forth in Exhibit A) of each investment company advised by a Franklin Resources subsidiary and that is registered with the United States Securities & Exchange Commission (“SEC”) (collectively, “FT Funds”) for the purpose of promoting:

• Honest and ethical conduct, including the ethical resolution of actual or apparent conflicts of interest between personal and professional relationships;

• Full, fair, accurate, timely and understandable disclosure in reports and documents that a registrant files with, or submits to, the SEC and in other public communications made by or on behalf of the FT Funds;

• Compliance with applicable laws and governmental rules and regulations;

• The prompt internal reporting of violations of the Code to an appropriate person or persons identified in the Code; and

• Accountability for adherence to the Code.

Each Covered Officer will be expected to adhere to a high standard of business ethics and must be sensitive to situations that may give rise to actual as well as apparent conflicts of interest.

II. Other Policies and Procedures

This Code shall be the sole code of ethics adopted by the Funds for purposes of Section 406 of the Sarbanes-Oxley Act and the rules and forms applicable to registered investment companies thereunder.

Franklin Resources, Inc. has separately adopted the CODE OF ETHICS AND BUSINESS CONDUCT (“Business Conduct”), which is applicable to all officers, directors and employees of Franklin Resources, Inc., including Covered Officers. It summarizes the values, principles and business practices that guide the employee’s business conduct and also provides a set of basic principles to guide officers, directors and employees regarding the minimum ethical requirements expected of them. It supplements the values, principles and business conduct identified in the Code and other existing employee policies.

Additionally, the Franklin Templeton Funds have separately adopted the CODE OF ETHICS AND POLICY STATEMENT ON INSIDER TRADING governing personal securities trading and other related matters. The Code for Insider Trading provides for separate requirements that apply to the Covered Officers and others, and therefore is not part of this Code.

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Insofar as other policies or procedures of Franklin Resources, Inc., the Funds, the Funds’ adviser, principal underwriter, or other service providers govern or purport to govern the behavior or activities of the Covered Officers who are subject to this Code, they are superceded by this Code to the extent that they overlap or conflict with the provisions of this Code. Please review these other documents or consult with the Legal Department if have questions regarding the applicability of these policies to you.

III. Covered Officers Should Handle Ethically Actual and Apparent Conflicts of Interest

OVERVIEW. A “conflict of interest” occurs when a Covered Officer’s private interest interferes with the interests of, or his or her service to, the FT Funds. For example, a conflict of interest would arise if a Covered Officer, or a member of his family, receives improper personal benefits as a result of apposition with the FT Funds.

Certain conflicts of interest arise out of the relationships between Covered Officers and the FT Funds and already are subject to conflict of interest provisions in the Investment Company Act of 1940 (“Investment Company Act”) and the Investment Advisers Act of 1940 (“Investment Advisers Act”). For example, Covered Officers may not individually engage in certain transactions (such as the purchase or sale of securities or other property) with the FT Funds because of their status as “affiliated persons” of the FT Funds. The FT Funds’ and the investment advisers’ compliance programs and procedures are designed to prevent, or identify and correct, violations of these provisions. This Code does not, and is not intended to, repeat or replace these programs and procedures, and such conflicts fall outside of the parameters of this Code.

Although typically not presenting an opportunity for improper personal benefit, conflicts arise from, or as a result of, the contractual relationship between the FT Funds, the investment advisers and the fund administrator of which the Covered Officers are also officers or employees. As a result, this Code recognizes that the Covered Officers will, in the normal course of their duties (whether formally for the FT Funds, for the adviser, the administrator, or for all three), be involved in establishing policies and implementing decisions that will have different effects on the adviser, administrator and the FT Funds. The participation of the Covered Officers in such activities is inherent in the contractual relationship between the FT Funds, the adviser, and the administrator and is consistent with the performance by the Covered Officers of their duties as officers of the FT Funds. Thus, if performed in conformity with the provisions of the Investment Company Act and the Investment Advisers Act, such activities will be deemed to have been handled ethically. In addition, it is recognized by the FT Funds’ Boards of Directors (“Boards”) that the Covered Officers may also be officers or employees of one or more other investment companies covered by this or other codes.

Other conflicts of interest are covered by the Code, even if such conflicts of interest are not subject to provisions in the Investment Company Act and the Investment Advisers Act. The following list provides examples of conflicts of interest under the Code, but Covered Officers should keep in mind that these examples are not exhaustive. The overarching principle is that the personal interest of a Covered Officer should not be placed improperly before the interest of the FT Funds.

Each Covered Officer must:

• Not use his or her personal influence or personal relationships improperly to influence investment decisions orfinancial reporting by the FT Funds whereby the Covered Officer would benefit personally to the detriment of the FT Funds;

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• Not cause the FT Funds to take action, or fail to take action, for the individual personal benefit of the Covered Officer rather than the benefit the FT Funds;

• Not retaliate against any other Covered Officer or any employee of the FT Funds or their affiliated persons for reports of potential violations that are made in good faith;

• Report at least annually the following affiliations or other relationships:/1

• all directorships for public companies and all companies that are required to file reports with the SEC;

• any direct or indirect business relationship with any independent directors of the FT Funds;

• any direct or indirect business relationship with any independent public accounting firm (which are not related to the routine issues related to the firm’s service as the Covered Persons accountant); and

• any direct or indirect interest in any transaction with any FT Fund that will benefit the officer (not including benefits derived from the advisory, sub-advisory, distribution or service agreements with affiliates of Franklin Resources).

These reports will be reviewed by the Legal Department for compliance with the Code.

There are some conflict of interest situations that should always be approved in writing by Franklin Resources General Counsel or Deputy General Counsel, if material. Examples of these include/2:

• Service as a director on the board of any public or private Company;

• The receipt of any gifts in excess of $100 from any person, from any corporation or association

• The receipt of any entertainment from any Company with which the FT Funds has current or prospective business dealings unless such entertainment is business related, reasonable in cost, appropriate as to time and place, and not so frequent as to raise any question of impropriety. Notwithstanding the foregoing, the Covered Officers must obtain prior approval from the Franklin Resources General Counsel for any entertainment with a value in excess of $1000.

• Any ownership interest in, or any consulting or employment relationship with, any of the FT Fund’s service providers, other than an investment adviser, principal underwriter, administrator or any affiliated person thereof;

• A direct or indirect financial interest in commissions, transaction charges or spreads paid by the FT Funds for effecting portfolio transactions or for selling or redeeming shares other than an interest arising from the Covered Officer’s employment, such as compensation or equity ownership.

Franklin Resources General Counsel or Deputy General Counsel will provide a report to the FT Funds Audit Committee of any approvals granted at the next regularly scheduled meeting.

IV. Disclosure and Compliance

• Each Covered Officer should familiarize himself with the disclosure requirements generally applicable to the FT Funds;

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• Each Covered Officer should not knowingly misrepresent, or cause others to misrepresent, facts about the FT Funds to others, whether within or outside the FT Funds, including to the FT Funds’ directors and auditors, and to governmental regulators and self-regulatory organizations;

• Each Covered Officer should, to the extent appropriate within his or her area of responsibility, consult with other officers and employees of the FT Funds, the FT Fund’s adviser and the administrator with the goal of promoting full, fair, accurate, timely and understandable disclosure in the reports and documents the FT Funds file with, or submit to, the SEC and in other public communications made by the FT Funds; and

• It is the responsibility of each Covered Officer to promote compliance with the standards and restrictions imposed by applicable laws, rules and regulations.

V. Reporting and Accountability

Each Covered Officer must:

• Upon becoming a covered officer affirm in writing to the Board that he or she has received, read, and understands the Code (see Exhibit B);

• Annually thereafter affirm to the Board that he has complied with the requirements of the Code; and

• Notify Franklin Resources’ General Counsel or Deputy General Counsel promptly if he or she knows of any violation of this Code. Failure to do so is itself is a violation of this Code.

Franklin Resources’ General Counsel and Deputy General Counsel are responsible for applying this Code to specific situations in which questions are presented under it and have the authority to interpret this Code in any particular situation./3 However, the Independent Directors of the respective FT Funds will consider any approvals or waivers/4 sought by any Chief Executive Officers of the Funds.

The FT Funds will follow these procedures in investigating and enforcing this Code:

• Franklin Resources General Counsel or Deputy General Counsel will take all appropriate action to investigate any potential violations reported to the Legal Department;

• If, after such investigation, the General Counsel or Deputy General Counsel believes that no violation has occurred, The General Counsel is not required to take any further action;

• Any matter that the General Counsel or Deputy General Counsel believes is a violation will be reported to the Independent Directors of the appropriate FT Fund;

• If the Independent Directors concur that a violation has occurred, it will inform and make a recommendation to the Board of the appropriate FT Fund or Funds, which will consider appropriate action, which may include review of, and appropriate modifications to, applicable policies and procedures; notification to appropriate personnel of the investment adviser or its board; or a recommendation to dismiss the Covered Officer;

• The Independent Directors will be responsible for granting waivers, as appropriate; and

• Any changes to or waivers of this Code will, to the extent required, are disclosed as provided by SEC rules./5

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VI. Other Policies and Procedures

This Code shall be the sole code of ethics adopted by the FT Funds for purposes of Section 406 of the Sarbanes-Oxley Act and the rules and forms applicable to registered investment companies thereunder. Insofar as other policies or procedures of the FT Funds, the FT Funds’ advisers, principal underwriter, or other service providers govern or purport to govern the behavior or activities of the Covered Officers who are subject to this Code, they are superseded by this Code to the extent that they overlap or conflict with the provisions of this Code. The FT Code of Ethics and Policy Statement On Insider Trading, adopted by the FT Funds, FT investment advisers and FT Fund’s principal underwriter pursuant to Rule 17j-1 under the Investment Company Act, the Code of Ethics and Business Conduct and more detailed policies and procedures set forth in FT’s Employee Handbook are separate requirements applying to the Covered Officers and others, and are not part of this Code.

VII. Amendments

Any amendments to this Code, other than amendments to Exhibit A, must be approved or ratified by a majority vote of the FT Funds’ Board including a majority of independent directors.

VIII. Confidentiality

All reports and records prepared or maintained pursuant to this Code will be considered confidential and shall be maintained and protected accordingly. Except as otherwise required by law or this Code, such matters shall not be disclosed to anyone other than the FT Funds’ Board and their counsel.

IX. Internal Use

The Code is intended solely for the internal use by the FT Funds and does not constitute an admission, by or on behalf of any FT Funds, as to any fact, circumstance, or legal conclusion.

X. Disclosure on Form N-CSR

Item 2 of Form N-CSR requires a registered management investment company to disclose annually whether, as of the end of the period covered by the report, it has adopted a code of ethics that applies to the registrant’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these officers are employed by the registrant or a third party. If the registrant has not adopted such a code of ethics, it must explain why it has not done so.

The registrant must also: (1) file with the SEC a copy of the code as an exhibit to its annual report; (2) post the text of the code on its Internet website and disclose, in its most recent report on Form N-CSR, its Internet address and the fact that it has posted the code on its Internet website; or (3) undertake in its most recent report on Form N-CSR to provide to any person without charge, upon request, a copy of the code and explain the manner in which such request may be made. Disclosure is also required of amendments to, or waivers (including implicit waivers) from, a provision of the code in the registrant’s annual report on Form N-CSR or on its website. If the registrant intends to satisfy the requirement to disclose amendments and waivers by posting such information on its website, it will be required to disclose its Internet address and this intention.

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The Legal Department shall be responsible for ensuring that:

• a copy of the Code is filed with the SEC as an exhibit to each Fund’s annual report; and

• any amendments to, or waivers (including implicit waivers) from, a provision of the Code is disclosed in the registrant’s annual report on Form N-CSR.

In the event that the foregoing disclosure is omitted or is determined to be incorrect, the Legal Department shall promptly file such information with the SEC as an amendment to Form N-CSR.

In such an event, the Fund Chief Compliance Officer shall review the Code and propose such changes to the Code as are necessary or appropriate to prevent reoccurrences.

EXHIBIT A

Persons Covered by the Franklin Templeton Funds

Code of Ethics

December 2013

FRANKLIN GROUP OF FUNDS

Edward B. Jamieson	President and Chief Executive Officer – Investment Management
Rupert H. Johnson, Jr.	President and Chief Executive Officer – Investment Management
William J. Lippman	President and Chief Executive Officer – Investment Management
Christopher Molumphy	President and Chief Executive Officer – Investment Management
Laura Fergerson	Chief Executive Officer – Finance and Administration
Gaston R. Gardey	Chief Financial Officer and Chief Accounting Officer

FRANKLIN MUTUAL SERIES FUNDS

Peter Langerman	Chief Executive Officer – Investment Management
Laura Fergerson	Chief Executive Officer – Finance and Administration
Robert G. Kubilis	Chief Financial Officer and Chief Accounting Officer

FRANKLIN ALTERNATIVE STRTEGIES FUNDS

William Yun	Chief Executive Officer – Investment Management
Laura Fergerson	Chief Executive Officer – Finance and Administration
Robert G. Kubilis	Chief Financial Officer and Chief Accounting Officer

TEMPLETON GROUP OF FUNDS

Mark Mobius	President and Chief Executive Officer – Investment Management
Christopher J. Molumphy	President and Chief Executive Officer – Investment Management
Norman Boersma	President and Chief Executive Officer – Investment Management
Donald F. Reed	President and Chief Executive Officer – Investment Management
Laura Fergerson	Chief Executive Officer – Finance and Administration
Mark H. Otani	Chief Financial Officer and Chief Accounting Officer

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EXHIBIT B

ACKNOWLEDGMENT FORM

DECEMBER

FRANKLIN TEMPLETON FUNDS CODE OF ETHICS

FOR PRINCIPAL EXECUTIVE AND SENIOR FINANCIAL OFFICERS

INSTRUCTIONS:

1. Complete all sections of this form.

2. Print the completed form, sign, and date.

3. Submit completed form to FT’s General Counsel c/o Code of Ethics Administration within 10 days of becoming a Covered Officer and by February 15th of each subsequent year.

INTER-OFFICE MAIL:	Code of Ethics Administration, Global Compliance SM-920/2
Fax:	(650) 312-5646
E-MAIL:	Preclear-Code of Ethics (internal address);
	lpreclear@frk.com (external address)

COVERED OFFICER’S NAME:

TITLE:

DEPARTMENT:

LOCATION:

CERTIFICATION FOR YEAR ENDING:

TO:  Franklin Resources General Counsel, Legal Department

I acknowledge receiving, reading and understanding the Franklin Templeton Fund’s Code of Ethics for Principal Executive Officers and Senior Financial Officers (the “Code”). I will comply fully with all provisions of the Code to the extent they apply to me during the period of my employment. I further understand and acknowledge that any violation of the Code may subject me to disciplinary action, including termination of employment.

Signature Date signed

1. Reporting of these affiliations or other relationships shall be made by completing the annual Directors and Officers Questionnaire and returning the questionnaire to Franklin Resources Inc, General Counsel or Deputy General Counsel.

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2. Any activity or relationship that would present a conflict for a Covered Officer may also present a conflict for the Covered Officer if a member of the Covered Officer’s immediate family engages in such an activity or has such a relationship. The Cover Person should also obtain written approval by FT’s General Counsel in such situations.

3. Franklin Resources General Counsel and Deputy General Counsel are authorized to consult, as appropriate, with members of the Audit Committee, counsel to the FT Funds and counsel to the Independent Directors, and are encouraged to do so.

4. Item 2 of Form N-CSR defines “waiver” as “the approval by the registrant of a material departure from a provision of the code of ethics” and “implicit waiver,” which must also be disclosed, as “the registrant’s failure to take action within a reasonable period of time regarding a material departure from a provision of the code of ethics that has been made known to an executive officer” of the registrant. See Part X.

5. See Part X.

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EX-99.CERT

Exhibit 12(a)(2)

I, Laura F. Fergerson, certify that:

1. I have reviewed this report on Form N-CSR of Franklin Templeton Variable Insurance Products Trust;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

8/27/2015

S\LAURA F. FERGERSON

Laura F. Fergerson

Chief Executive Officer – Finance and Administration

Exhibit 12(a)(2)

I, Gaston Gardey, certify that:

1. I have reviewed this report on Form N-CSR of Franklin Templeton Variable Insurance Products Trust;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

8/27/2015

S\GASTON GARDEY

Gaston Gardey

Chief Financial Officer and Chief Accounting Officer

EX-99.906CERT

Exhibit 12(b)

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

I, Laura F. Fergerson, Chief Executive Officer of the Franklin Templeton Variable Insurance Products Trust (the “Registrant”), certify, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

1. The periodic report on Form N-CSR of the Registrant for the period ended 6/30/2015 (the “Form N-CSR”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Form N-CSR fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

Dated: 8/27/2015

S\LAURA F. FERGERSON

Laura F. Fergerson

Chief Executive Officer – Finance and Administration

Exhibit 12(b)

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

I, Gaston Gardey, Chief Financial Officer of the Franklin Templeton Variable Insurance Products Trust (the “Registrant”), certify, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

1. The periodic report on Form N-CSR of the Registrant for the period ended 6/30/2015 (the “Form N-CSR”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Form N-CSR fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

Dated: 8/27/2015

S\GASTON GARDEY

Gaston Gardey

Chief Financial Officer and Chief Accounting Officer