PREFERRED LIFE VARIABLE ACCOUNT C
of
PREFERRED LIFE INSURANCE COMPANY OF NEW YORK
Financial Statements
December 31, 1995
<PAGE>
PREFERRED LIFE VARIABLE ACCOUNT C
OF PREFERRED LIFE INSURANCE COMPANY OF NEW YORK
INDEPENDENT AUDITORS' REPORT
The Board of Directors of Preferred Life Insurance Company of New York and
Contract Owners of Preferred Life Variable Account C:
We have audited the accompanying statements of assets and liabilities of the
sub-accounts of Preferred Life Variable Account C as of December 31, 1995, the
related statements of operations for the year then ended and the statements of
changes in net assets for each of the years in the two-years then ended.
These financial statements are the responsibility of the Variable Account's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements.
Investment securities held in custody for the benefit of the Variable Account
were confirmed to us by the Franklin Valuemark Funds. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the assets and liabilities of the sub-accounts of
Preferred Life Variable Account C at December 31, 1995, the results of their
operations for the year then ended and the changes in their net assets for
each of the years in the two-years then ended, in conformity with generally
accepted accounting principles.
KPMG Peat Marwick LLP
Minneapolis, Minnesota
January 22, 1996
<PAGE>
<TABLE>
<CAPTION>
PREFERRED LIFE VARIABLE ACCOUNT C
of
PREFERRED LIFE INSURANCE COMPANY OF NEW YORK
Statements of Assets and Liabilities
December 31, 1995
Growth Real U.S.
Money and Precious High Estate Government
Market Income Metals Income Securities Securities
Fund Fund Fund Fund Fund Fund
----------- ---------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Investments at net asset value:
Franklin Valuemark Funds:
Money Market Fund, 28,616,253
shares, cost $28,616,253 $28,616,253 - - - - -
Growth and Income Fund, 4,394,911
shares, cost $60,973,198 - 75,328,781 - - - -
Precious Metals Fund, 517,704
shares, cost $7,087,492 - - 7,289,270 - - -
High Income Fund, 2,624,571
shares, cost $33,346,493 - - - 35,851,643 - -
Real Estate Securities Fund,
825,468 shares, cost $12,476,703 - - - - 14,363,143 -
U.S. Government Securities Fund,
5,930,900 shares, cost $79,882,566 - - - - - 83,032,596
----------- ---------- --------- ---------- ---------- ----------
Total assets 28,616,253 75,328,781 7,289,270 35,851,643 14,363,143 83,032,596
----------- ---------- --------- ---------- ---------- ----------
Liabilities:
Accrued mortality and expense risk charges 40,678 78,913 9,742 38,776 17,536 87,383
Accrued administrative charges 4,881 9,469 1,169 4,653 2,104 10,486
----------- ---------- --------- ---------- ---------- ----------
Total liabilities 45,559 88,382 10,911 43,429 19,640 97,869
----------- ---------- --------- ---------- ---------- ----------
Net assets $28,570,694 75,240,399 7,278,359 35,808,214 14,343,503 82,934,727
=========== ========== ========= ========== ========== ==========
Contract owners' equity (note 5) $28,570,694 75,240,399 7,278,359 35,808,214 14,343,503 82,934,727
=========== ========== ========= ========== ========== ==========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
PREFERRED LIFE VARIABLE ACCOUNT C
of
PREFERRED LIFE INSURANCE COMPANY OF NEW YORK
Statements of Assets and Liabilities (Continued)
December 31, 1995
Zero Zero Zero
Utility Coupon Coupon Coupon Global
Equity Fund - Fund - Fund - Income
Fund 2000 2005 2010 Fund
------------ ---------- --------- --------- ----------
<S> <C> <C> <C> <C> <C>
Investments at net asset value:
Franklin Valuemark Funds:
Utility Equity Fund, 6,473,700
shares, cost $105,368,128 $115,879,236 - - - -
Zero Coupon Fund - 2000, 1,649,204
shares, cost $23,746,948 - 25,941,979 - - -
Zero Coupon Fund - 2005, 549,178
shares, cost $8,149,304 - - 9,544,710 - -
Zero Coupon Fund - 2010, 462,374
shares, cost $6,782,664 - - - 8,341,232 -
Global Income Fund, 1,699,803
shares, cost $21,878,611 - - - - 22,879,348
------------ ---------- --------- --------- ----------
Total assets 115,879,236 25,941,979 9,544,710 8,341,232 22,879,348
------------ ---------- --------- --------- ----------
Liabilities:
Accrued mortality and expense risk charges 121,746 28,423 12,398 11,226 25,406
Accrued administrative charges 14,610 3,411 1,488 1,347 3,049
------------ ---------- --------- --------- ----------
Total liabilities 136,356 31,834 13,886 12,573 28,455
------------ ---------- --------- --------- ----------
Net assets $115,742,880 25,910,145 9,530,824 8,328,659 22,850,893
============ ========== ========= ========= ==========
Contract owners' equity (note 5) $115,742,880 25,910,145 9,530,824 8,328,659 22,850,893
============ ========== ========= ========= ==========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
PREFERRED LIFE VARIABLE ACCOUNT C
of
PREFERRED LIFE INSURANCE COMPANY OF NEW YORK
Statements of Assets and Liabilities (Continued)
December 31, 1995
Investment Adjustable Templeton Templeton
Grade Income U.S. Pacific Rising International
Intermediate Securities Government Growth Dividends Equity
Bond Fund Fund Fund Fund Fund Fund
------------- ---------- ---------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
Investments at net asset value:
Franklin Valuemark Funds:
Investment Grade Intermediate Bond Fund,
1,126,912 shares, cost $15,095,668 $ 15,833,118 - - - - -
Income Securities Fund, 5,493,020
shares, cost $82,263,813 - 90,470,044 - - - -
Adjustable U.S. Government Fund,
1,435,234 shares, cost $15,798,935 - - 15,443,114 - - -
Templeton Pacific Growth Fund,
1,777,444 shares, cost $23,935,347 - - - 24,724,244 - -
Rising Dividends Fund, 3,145,163
shares, cost $33,512,716 - - - - 39,817,759 -
Templeton International Equity Fund,
4,060,207 shares, cost $51,176,118 - - - - - 54,081,956
------------- ---------- ---------- ---------- ---------- -------------
Total assets 15,833,118 90,470,044 15,443,114 24,724,244 39,817,759 54,081,956
------------- ---------- ---------- ---------- ---------- -------------
Liabilities:
Accrued mortality and expense risk charges 18,756 94,418 17,872 27,795 42,921 57,325
Accrued administrative charges 2,251 11,330 2,145 3,335 5,150 6,879
------------- ---------- ---------- ---------- ---------- -------------
Total liabilities 21,007 105,748 20,017 31,130 48,071 64,204
------------- ---------- ---------- ---------- ---------- -------------
Net assets $ 15,812,111 90,364,296 15,423,097 24,693,114 39,769,688 54,017,752
============= ========== ========== ========== ========== =============
Contract owners' equity (note 5) $ 15,812,111 90,364,296 15,423,097 24,693,114 39,769,688 54,017,752
============= ========== ========== ========== ========== =============
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
PREFERRED LIFE VARIABLE ACCOUNT C
of
PREFERRED LIFE INSURANCE COMPANY OF NEW YORK
Statements of Assets and Liabilities (Continued)
December 31, 1995
Templeton Templeton
Developing Templeton Global
Markets Global Asset Total
Equity Growth Allocation All
Fund Fund Fund Funds
----------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
Investments at net asset value:
Franklin Valuemark Funds:
Templeton Developing Markets Equity Fund,
742,850 shares, cost $7,462,623 $ 7,265,075 - -
Templeton Global Growth Fund,
1,368,630 shares, cost $14,792,088 - 16,081,401 -
Templeton Global Asset Allocation Fund,
36,125 shares, cost $375,595 - - 380,039
----------- ---------- ----------
Total assets 7,265,075 16,081,401 380,039 691,164,941
----------- ---------- ---------- -----------
Liabilities:
Accrued mortality and expense risk charges 9,851 17,922 692 759,779
Accrued administrative charges 1,182 2,151 83 91,173
----------- ---------- ---------- -----------
Total liabilities 11,033 20,073 775 850,952
----------- ---------- ---------- -----------
Net assets $ 7,254,042 16,061,328 379,264 690,313,989
=========== ========== ========== ===========
Contract owners' equity (note 5) $ 7,254,042 16,061,328 379,264 690,313,989
=========== ========== ========== ===========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
PREFERRED LIFE VARIABLE ACCOUNT C
of
PREFERRED LIFE INSURANCE COMPANY OF NEW YORK
Statements of Operations
For the year ended December 31, 1995
Growth Real U.S.
Money and Precious High Estate Government
Market Income Metals Income Securities Securities
Fund Fund Fund Fund Fund Fund
------------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Dividends reinvested in fund shares $ 1,702,719 686,196 114,561 1,981,032 449,629 5,443,054
------------- ----------- ----------- ----------- ----------- -----------
Expenses:
Mortality and expense risk charges 384,368 729,516 101,362 379,560 171,462 987,589
Administrative charges 46,124 87,542 12,163 45,547 20,575 118,511
------------- ----------- ----------- ----------- ----------- -----------
Total expenses 430,492 817,058 113,525 425,107 192,037 1,106,100
------------- ----------- ----------- ----------- ----------- -----------
Investment income (loss), net 1,272,227 (130,862) 1,036 1,555,925 257,592 4,336,954
Realized gains (losses) and
unrealized appreciation
(depreciation) on investments:
Realized capital gain
distributions on mutual funds - 1,493,701 84,810 - - -
------------- ----------- ----------- ----------- ----------- -----------
Realized gains (losses)
on sales of investments:
Proceeds from sales 34,706,801 6,248,121 3,571,693 3,114,040 3,371,551 9,941,087
Cost of investments sold (34,706,801) (5,370,730) (3,462,116) (2,930,236) (3,185,183) (9,673,610)
------------- ----------- ----------- ----------- ----------- -----------
Total realized gains (losses) on
sales of investments, net - 877,391 109,577 183,804 186,368 267,477
------------- ----------- ----------- ----------- ----------- -----------
Realized gains (losses)
on investments, net - 2,371,092 194,387 183,804 186,368 267,477
Net change in unrealized appreciation
(depreciation) on investments - 13,508,956 (159,374) 3,050,410 1,571,058 8,140,679
------------- ----------- ----------- ----------- ----------- -----------
Total realized gains (losses)
and unrealized appreciation
(depreciation) on investments, net - 15,880,048 35,013 3,234,214 1,757,426 8,408,156
------------- ----------- ----------- ----------- ----------- -----------
Net increase (decrease) in
net assets from operations $ 1,272,227 15,749,186 36,049 4,790,139 2,015,018 12,745,110
============= =========== =========== =========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
PREFERRED LIFE VARIABLE ACCOUNT C
of
PREFERRED LIFE INSURANCE COMPANY OF NEW YORK
Statements of Operations (Continued)
For the year ended December 31, 1995
Zero Zero Zero Zero
Utility Coupon Coupon Coupon Coupon Global
Equity Fund - Fund - Fund - Fund - Income
Fund 1995 2000 2005 2010 Fund
------------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Dividends reinvested in fund shares $ 5,790,676 305,200 1,020,445 335,762 190,626 848,947
------------- ----------- ----------- ----------- ----------- -----------
Expenses:
Mortality and expense risk charges 1,316,445 47,905 283,564 101,234 77,260 282,767
Administrative charges 157,973 5,749 34,028 12,148 9,271 33,932
------------- ----------- ----------- ----------- ----------- -----------
Total expenses 1,474,418 53,654 317,592 113,382 86,531 316,699
------------- ----------- ----------- ----------- ----------- -----------
Investment income (loss), net 4,316,258 251,546 702,853 222,380 104,095 532,248
Realized gains (losses) and
unrealized appreciation
(depreciation) on investments:
Realized capital gain
distributions on mutual funds - 1,505 - - - -
------------- ----------- ----------- ----------- ----------- -----------
Realized gains (losses)
on sales of investments:
Proceeds from sales 13,252,568 5,370,197 1,966,586 1,126,263 1,248,944 4,501,239
Cost of investments sold (13,196,612) (5,562,152) (1,839,860) (1,032,980) (1,112,897) (4,502,654)
------------- ----------- ----------- ----------- ----------- -----------
Total realized gains (losses) on
sales of investments, net 55,956 (191,955) 126,726 93,283 136,047 (1,415)
------------- ----------- ----------- ----------- ----------- -----------
Realized gains (losses)
on investments, net 55,956 (190,450) 126,726 93,283 136,047 (1,415)
Net change in unrealized appreciation
(depreciation) on investments 22,857,816 189,438 2,953,835 1,761,299 1,835,020 2,220,962
------------- ----------- ----------- ----------- ----------- -----------
Total realized gains (losses)
and unrealized appreciation
(depreciation) on investments, net 22,913,772 (1,012) 3,080,561 1,854,582 1,971,067 2,219,547
------------- ----------- ----------- ----------- ----------- -----------
Net increase (decrease) in
net assets from operations $ 27,230,030 250,534 3,783,414 2,076,962 2,075,162 2,751,795
============= =========== =========== =========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
PREFERRED LIFE VARIABLE ACCOUNT C
of
PREFERRED LIFE INSURANCE COMPANY OF NEW YORK
Statements of Operations (Continued)
For the year ended December 31, 1995
Investment Adjustable Templeton Templeton
Grade Income U.S. Pacific Rising International
Intermediate Securities Government Growth Dividends Equity
Bond Fund Fund Fund Fund Fund Fund
-------------- ----------- ----------- ------------ ----------- --------------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Dividends reinvested in fund shares $ 625,846 4,463,912 1,064,752 475,320 705,270 868,500
-------------- ----------- ----------- ------------ ----------- --------------
Expenses:
Mortality and expense risk charges 194,807 1,007,879 205,641 315,150 420,881 652,856
Administrative charges 23,377 120,945 24,677 37,818 50,506 78,343
-------------- ----------- ----------- ------------ ----------- --------------
Total expenses 218,184 1,128,824 230,318 352,968 471,387 731,199
-------------- ----------- ----------- ------------ ----------- --------------
Investment income (loss), net 407,662 3,335,088 834,434 122,352 233,883 137,301
Realized gains (losses) and
unrealized appreciation
(depreciation) on investments:
Realized capital gain
distributions on mutual funds - 359,303 - 197,651 - 1,076,084
-------------- ----------- ----------- ------------ ----------- --------------
Realized gains (losses)
on sales of investments:
Proceeds from sales 2,396,819 7,645,636 8,638,265 10,736,934 3,225,174 11,357,476
Cost of investments sold (2,283,330) (7,277,276) (8,608,092) (10,757,017) (3,053,289) (10,862,358)
-------------- ----------- ----------- ------------ ----------- --------------
Total realized gains (losses) on
sales of investments, net 113,489 368,360 30,173 (20,083) 171,885 495,118
-------------- ----------- ----------- ------------ ----------- --------------
Realized gains (losses)
on investments, net 113,489 727,663 30,173 177,568 171,885 1,571,202
Net change in unrealized appreciation
(depreciation) on investments 741,960 10,991,916 408,278 1,218,429 7,802,711 2,705,597
-------------- ----------- ----------- ------------ ----------- --------------
Total realized gains (losses)
and unrealized appreciation
(depreciation) on investments, net 855,449 11,719,579 438,451 1,395,997 7,974,596 4,276,799
-------------- ----------- ----------- ------------ ----------- --------------
Net increase (decrease) in
net assets from operations $ 1,263,111 15,054,667 1,272,885 1,518,349 8,208,479 4,414,100
============== =========== =========== ============ =========== ==============
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
PREFERRED LIFE VARIABLE ACCOUNT C
of
PREFERRED LIFE INSURANCE COMPANY OF NEW YORK
Statements of Operations (Continued)
For the year ended December 31, 1995
Templeton Templeton
Developing Templeton Global
Markets Global Asset Total
Equity Growth Allocation All
Fund Fund Fund Funds
------------ ----------- ----------- -------------
<S> <C> <C> <C> <C>
Investment income:
Dividends reinvested in fund shares $ 24,621 62,358 6,393 27,165,819
------------ ----------- ----------- -------------
Expenses:
Mortality and expense risk charges 82,308 152,297 691 7,895,542
Administrative charges 9,877 18,276 83 947,465
------------ ----------- ----------- -------------
Total expenses 92,185 170,573 774 8,843,007
------------ ----------- ----------- -------------
Investment income (loss), net (67,564) (108,215) 5,619 18,322,812
Realized gains (losses) and unrealized
appreciation (depreciation) on investments:
Realized capital gain distributions on mutual funds 5,785 - - 3,218,839
------------ ----------- ----------- -------------
Realized gains (losses) on sales of investments:
Proceeds from sales 1,468,510 1,168,762 5 135,056,671
Cost of investments sold (1,555,799) (1,129,187) (5) (132,102,184)
------------ ----------- ----------- -------------
Total realized gains (losses) on
sales of investments, net (87,289) 39,575 - 2,954,487
------------ ----------- ----------- -------------
Realized gains (losses) on investments, net (81,504) 39,575 - 6,173,326
Net change in unrealized appreciation
(depreciation) on investments 194,657 1,297,011 4,444 83,295,102
------------ ----------- ----------- -------------
Total realized gains (losses) and unrealized
appreciation (depreciation) on investments, net 113,153 1,336,586 4,444 89,468,428
------------ ----------- ----------- -------------
Net increase (decrease) in net assets from operations $ 45,589 1,228,371 10,063 107,791,240
============ =========== =========== =============
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
PREFERRED LIFE VARIABLE ACCOUNT C
of
PREFERRED LIFE INSURANCE COMPANY OF NEW YORK
Statements of Changes in Net Assets
For the years ended December 31, 1995 and 1994
Growth Growth
Money Money and and Precious Precious
Market Market Income Income Metals Metals
Fund Fund Fund Fund Fund Fund
------------ ----------- ----------- ----------- ----------- -----------
1995 1994 1995 1994 1995 1994
------------ ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Investment income (loss), net $ 1,272,227 564,232 (130,862) (284,817) 1,036 (64,893)
Realized gains (losses) on investments, net - - 2,371,092 850,469 194,387 166,832
Net change in unrealized appreciation
(depreciation) on investments - - 13,508,956 (2,200,082) (159,374) (466,699)
------------ ----------- ----------- ----------- ----------- -----------
Net increase (decrease) in net assets
from operations 1,272,227 564,232 15,749,186 (1,634,430) 36,049 (364,760)
------------ ----------- ----------- ----------- ----------- -----------
Contract transactions (note 5):
Purchase payments 10,218,144 20,235,166 9,813,889 12,533,220 519,389 3,576,266
Transfers between funds (4,383,738) 9,008,938 9,626,678 4,254,917 (1,028,654) 1,278,991
Surrenders and terminations (9,093,964) (6,138,474) (5,346,187) (2,158,598) (1,296,763) (1,073,457)
Rescissions (157,205) (611,504) (240,118) (226,365) (10,660) (22,490)
Other transactions (note 2) (14,462) 105,617 20,814 (9,269) 8,924 (317)
------------ ----------- ----------- ----------- ----------- -----------
Net increase (decrease) in net assets
resulting from contract transactions (3,431,225) 22,599,743 13,875,076 14,393,905 (1,807,764) 3,758,993
------------ ----------- ----------- ----------- ----------- -----------
Increase (decrease) in net assets (2,158,998) 23,163,975 29,624,262 12,759,475 (1,771,715) 3,394,233
------------ ----------- ----------- ----------- ----------- -----------
Net assets at beginning of year 30,729,692 7,565,717 45,616,137 32,856,662 9,050,074 5,655,841
------------ ----------- ----------- ----------- ----------- -----------
Net assets at end of year $28,570,694 30,729,692 75,240,399 45,616,137 7,278,359 9,050,074
============ =========== =========== =========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
PREFERRED LIFE VARIABLE ACCOUNT C
of
PREFERRED LIFE INSURANCE COMPANY OF NEW YORK
Statements of Changes in Net Assets (Continued)
For the years ended December 31, 1995 and 1994
Real Real U.S. U.S.
High High Estate Estate Government Government
Income Income Securities Securities Securities Securities
Fund Fund Fund Fund Fund Fund
------------ ----------- ----------- ----------- ------------ ------------
1995 1994 1995 1994 1995 1994
------------ ----------- ----------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Investment income (loss), net $ 1,555,925 704,962 257,592 (27,841) 4,336,954 3,017,608
Realized gains (losses) on investments, net 183,804 153,346 186,368 12,292 267,477 (473,434)
Net change in unrealized appreciation
(depreciation) on investments 3,050,410 (1,605,134) 1,571,058 (9,769) 8,140,679 (7,889,476)
------------ ----------- ----------- ----------- ------------ ------------
Net increase (decrease) in net assets
from operations 4,790,139 (746,826) 2,015,018 (25,318) 12,745,110 (5,345,302)
------------ ----------- ----------- ----------- ------------ ------------
Contract transactions (note 5):
Purchase payments 5,159,574 8,837,799 855,153 4,925,336 6,926,791 15,371,426
Transfers between funds 4,954,937 1,621,416 (1,207,296) 3,344,209 191,742 (16,943,563)
Surrenders and terminations (3,965,674) (1,841,609) (1,337,000) (912,278) (10,633,602) (8,269,859)
Rescissions (140,311) (104,329) (3,433) (23,872) (102,845) (826,373)
Other transactions (note 2) 26,007 10,298 (13,953) 15,171 60,100 (12,573)
------------ ----------- ----------- ----------- ------------ ------------
Net increase (decrease) in net assets
resulting from contract transactions 6,034,533 8,523,575 (1,706,529) 7,348,566 (3,557,814) (10,680,942)
------------ ----------- ----------- ----------- ------------ ------------
Increase (decrease) in net assets 10,824,672 7,776,749 308,489 7,323,248 9,187,296 (16,026,244)
------------ ----------- ----------- ----------- ------------ ------------
Net assets at beginning of year 24,983,542 17,206,793 14,035,014 6,711,766 73,747,431 89,773,675
------------ ----------- ----------- ----------- ------------ ------------
Net assets at end of year $35,808,214 24,983,542 14,343,503 14,035,014 82,934,727 73,747,431
============ =========== =========== =========== ============ ============
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
PREFERRED LIFE VARIABLE ACCOUNT C
of
PREFERRED LIFE INSURANCE COMPANY OF NEW YORK
Statements of Changes in Net Assets (Continued)
For the years ended December 31, 1995 and 1994
Zero Zero Zero Zero
Utility Utility Coupon Coupon Coupon Coupon
Equity Equity Fund - Fund - Fund - Fund -
Fund Fund 1995 1995 2000 2000
------------- ------------ ----------- ---------- ----------- -----------
1995 1994 1995 1994 1995 1994
------------- ------------ ----------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Investment income (loss), net $ 4,316,258 2,838,666 251,546 206,133 702,853 524,224
Realized gains (losses) on investments, net 55,956 (1,415,406) (190,450) (8,594) 126,726 91,297
Net change in unrealized appreciation
(depreciation) on investments 22,857,816 (17,590,119) 189,438 (222,658) 2,953,835 (1,812,252)
------------- ------------ ----------- ---------- ----------- -----------
Net increase (decrease) in net assets
from operations 27,230,030 (16,166,859) 250,534 (25,119) 3,783,414 (1,196,731)
------------- ------------ ----------- ---------- ----------- -----------
Contract transactions (note 5):
Purchase payments 5,661,401 16,521,939 98,208 1,016,548 4,576,315 6,524,472
Transfers between funds 12,705 (26,596,445) (4,136,645) 612,501 1,668,576 1,062,503
Surrenders and terminations (12,439,249) (7,474,582) (1,151,452) (515,158) (1,821,211) (1,747,638)
Rescissions (77,953) (383,473) - (51,312) (83,503) (150,398)
Other transactions (note 2) (58,695) (13,092) (2,549) (1,699) (10,464) 7,579
------------- ------------ ----------- ---------- ----------- -----------
Net increase (decrease) in net assets
resulting from contract transactions (6,901,791) (17,945,653) (5,192,438) 1,060,880 4,329,713 5,696,518
------------- ------------ ----------- ---------- ----------- -----------
Increase (decrease) in net assets 20,328,239 (34,112,512) (4,941,904) 1,035,761 8,113,127 4,499,787
------------- ------------ ----------- ---------- ----------- -----------
Net assets at beginning of year 95,414,641 129,527,153 4,941,904 3,906,143 17,797,018 13,297,231
------------- ------------ ----------- ---------- ----------- -----------
Net assets at end of year $115,742,880 95,414,641 - 4,941,904 25,910,145 17,797,018
============= ============ =========== ========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
PREFERRED LIFE VARIABLE ACCOUNT C
of
PREFERRED LIFE INSURANCE COMPANY OF NEW YORK
Statements of Changes in Net Assets (Continued)
For the years ended December 31, 1995 and 1994
Zero Zero Zero Zero
Coupon Coupon Coupon Coupon Global Global
Fund - Fund - Fund - Fund - Income Income
2005 2005 2010 2010 Fund Fund
----------- ---------- ---------- ---------- ----------- -----------
1995 1994 1995 1994 1995 1994
----------- ---------- ---------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Investment income (loss), net $ 222,380 151,642 104,095 94,989 532,248 276,443
Realized gains (losses) on investments, net 93,283 86,433 136,047 18,712 (1,415) 155,497
Net change in unrealized appreciation
(depreciation) on investments 1,761,299 (887,768) 1,835,020 (515,561) 2,220,962 (1,886,070)
----------- ---------- ---------- ---------- ----------- -----------
Net increase (decrease) in net assets
from operations 2,076,962 (649,693) 2,075,162 (401,860) 2,751,795 (1,454,130)
----------- ---------- ---------- ---------- ----------- -----------
Contract transactions (note 5):
Purchase payments 1,473,577 2,062,590 1,372,656 1,257,365 1,801,423 8,011,192
Transfers between funds 233,767 (716,211) 1,449,788 (205,063) (2,122,962) 2,676,522
Surrenders and terminations (674,347) (342,303) (546,211) (118,829) (2,408,309) (1,501,529)
Rescissions (57,421) (25,851) (37,383) (23,229) (55,851) (163,384)
Other transactions (note 2) (5,108) (3,720) 6,378 (2,063) (2,956) 16,850
----------- ---------- ---------- ---------- ----------- -----------
Net increase (decrease) in net assets
resulting from contract transactions 970,468 974,505 2,245,228 908,181 (2,788,655) 9,039,651
----------- ---------- ---------- ---------- ----------- -----------
Increase (decrease) in net assets 3,047,430 324,812 4,320,390 506,321 (36,860) 7,585,521
----------- ---------- ---------- ---------- ----------- -----------
Net assets at beginning of year 6,483,394 6,158,582 4,008,269 3,501,948 22,887,753 15,302,232
----------- ---------- ---------- ---------- ----------- -----------
Net assets at end of year $9,530,824 6,483,394 8,328,659 4,008,269 22,850,893 22,887,753
=========== ========== ========== ========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
PREFERRED LIFE VARIABLE ACCOUNT C
of
PREFERRED LIFE INSURANCE COMPANY OF NEW YORK
Statements of Changes in Net Assets (Continued)
For the years ended December 31, 1995 and 1994
Investment Investment Adjustable Adjustable
Grade Grade Income Income U.S. U.S.
Intermediate Intermediate Securities Securities Government Government
Bond Fund Bond Fund Fund Fund Fund Fund
-------------- ------------- ----------- ----------- ----------- ------------
1995 1994 1995 1994 1995 1994
-------------- ------------- ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Investment income (loss), net $ 407,662 213,851 3,335,088 1,073,586 834,434 664,691
Realized gains (losses) on investments, net 113,489 76,610 727,663 260,851 30,173 (264,507)
Net change in unrealized appreciation
(depreciation) on investments 741,960 (412,173) 10,991,916 (6,238,272) 408,278 (745,000)
-------------- ------------- ----------- ----------- ----------- ------------
Net increase (decrease) in net assets
from operations 1,263,111 (121,712) 15,054,667 (4,903,835) 1,272,885 (344,816)
-------------- ------------- ----------- ----------- ----------- ------------
Contract transactions (note 5):
Purchase payments 1,409,677 4,279,682 9,139,669 29,130,260 3,442,581 10,829,027
Transfers between funds (567,286) (536,649) 3,107,003 6,471,357 (6,776,712) (11,523,439)
Surrenders and terminations (1,684,507) (953,308) (9,000,292) (4,321,170) (1,983,546) (1,461,901)
Rescissions (109,318) (52,789) (299,389) (694,175) (109,220) (97,065)
Other transactions (note 2) 29,946 4,934 (26,339) (110) 5,818 (9,159)
-------------- ------------- ----------- ----------- ----------- ------------
Net increase (decrease) in net assets
resulting from contract transactions (921,488) 2,741,870 2,920,652 30,586,162 (5,421,079) (2,262,537)
-------------- ------------- ----------- ----------- ----------- ------------
Increase (decrease) in net assets 341,623 2,620,158 17,975,319 25,682,327 (4,148,194) (2,607,353)
-------------- ------------- ----------- ----------- ----------- ------------
Net assets at beginning of year 15,470,488 12,850,330 72,388,977 46,706,650 19,571,291 22,178,644
-------------- ------------- ----------- ----------- ----------- ------------
Net assets at end of year $ 15,812,111 15,470,488 90,364,296 72,388,977 15,423,097 19,571,291
============== ============= =========== =========== =========== ============
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
PREFERRED LIFE VARIABLE ACCOUNT C
of
PREFERRED LIFE INSURANCE COMPANY OF NEW YORK
Statements of Changes in Net Assets (Continued)
For the years ended December 31, 1995 and 1994
Templeton Templeton Templeton Templeton
Pacific Pacific Rising Rising International International
Growth Growth Dividends Dividends Equity Equity
Fund Fund Fund Fund Fund Fund
------------ ----------- ----------- ----------- -------------- --------------
1995 1994 1995 1994 1995 1994
------------ ----------- ----------- ----------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Investment income (loss), net $ 122,352 (266,437) 233,883 83,405 137,301 (423,506)
Realized gains (losses)
on investments, net 177,568 417,268 171,885 (150,567) 1,571,202 520,885
Net change in unrealized
appreciation (depreciation)
on investments 1,218,429 (2,435,240) 7,802,711 (1,515,045) 2,705,597 (1,575,004)
------------ ----------- ----------- ----------- -------------- --------------
Net increase (decrease) in
net assets from operations 1,518,349 (2,284,409) 8,208,479 (1,582,207) 4,414,100 (1,477,625)
------------ ----------- ----------- ----------- -------------- --------------
Contract transactions (note 5):
Purchase payments 2,319,030 12,437,434 3,197,446 5,956,165 6,496,208 21,636,160
Transfers between funds (3,818,916) 6,046,223 2,459,150 (2,607,296) (1,789,112) 15,583,976
Surrenders and terminations (2,340,908) (2,090,878) (2,693,128) (1,593,730) (4,549,735) (2,203,244)
Rescissions (28,713) (108,539) (85,057) (105,012) (162,298) (401,811)
Other transactions (note 2) 7,196 14,043 (1,840) (6,097) 1,255 19,358
------------ ----------- ----------- ----------- -------------- --------------
Net increase (decrease)
in net assets resulting
from contract transactions (3,862,311) 16,298,283 2,876,571 1,644,030 (3,682) 34,634,439
------------ ----------- ----------- ----------- -------------- --------------
Increase (decrease) in net assets (2,343,962) 14,013,874 11,085,050 61,823 4,410,418 33,156,814
------------ ----------- ----------- ----------- -------------- --------------
Net assets at beginning of year 27,037,076 13,023,202 28,684,638 28,622,815 49,607,334 16,450,520
------------ ----------- ----------- ----------- -------------- --------------
Net assets at end of year $24,693,114 27,037,076 39,769,688 28,684,638 54,017,752 49,607,334
============ =========== =========== =========== ============== ==============
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
PREFERRED LIFE VARIABLE ACCOUNT C
of
PREFERRED LIFE INSURANCE COMPANY OF NEW YORK
Statements of Changes in Net Assets (Continued)
For the years ended December 31, 1995 and 1994
Templeton Templeton Templeton Templeton
Developing Developing Templeton Templeton Global Global
Markets Markets Global Global Asset Asset
Equity Equity Growth Growth Allocation Allocation
Fund Fund Fund Fund Fund Fund
------------ ----------- ----------- ---------- ----------- ----------
1995 1994 1995 1994 1995 1994
------------ ----------- ----------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Investment income (loss), net $ (67,564) (25,848) (108,215) (42,501) 5,619 -
Realized gains (losses)
on investments, net (81,504) 2,075 39,575 208 - -
Net change in unrealized
appreciation (depreciation)
on investments 194,657 (392,205) 1,297,011 (7,698) 4,444 -
------------ ----------- ----------- ---------- ----------- ----------
Net increase (decrease) in
net assets from operations 45,589 (415,978) 1,228,371 (49,991) 10,063 -
------------ ----------- ----------- ---------- ----------- ----------
Contract transactions (note 5):
Purchase payments 1,669,155 3,620,848 4,461,457 4,944,049 210,368 -
Transfers between funds 274,802 2,487,493 1,693,077 4,679,620 159,096 -
Surrenders and terminations (335,121) (83,207) (718,944) (138,417) (250) -
Rescissions - (24,211) (11,376) (33,934) - -
Other transactions (note 2) 10,658 4,014 8,442 (1,026) (13) -
------------ ----------- ----------- ---------- ----------- ----------
Net increase (decrease)
in net assets resulting
from contract transactions 1,619,494 6,004,937 5,432,656 9,450,292 369,201 -
------------ ----------- ----------- ---------- ----------- ----------
Increase (decrease) in net assets 1,665,083 5,588,959 6,661,027 9,400,301 379,264 -
------------ ----------- ----------- ---------- ----------- ----------
Net assets at beginning of year 5,588,959 - 9,400,301 - - -
------------ ----------- ----------- ---------- ----------- ----------
Net assets at end of year $ 7,254,042 5,588,959 16,061,328 9,400,301 379,264 -
============ =========== =========== ========== =========== ==========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
PREFERRED LIFE VARIABLE ACCOUNT C
of
PREFERRED LIFE INSURANCE COMPANY OF NEW YORK
Statements of Changes in Net Assets (Continued)
For the years ended December 31, 1995 and 1994
Total Total
All All
Funds Funds
------------- ------------
1995 1994
------------- ------------
<S> <C> <C>
Increase (decrease) in net assets:
Operations:
Investment income (loss), net $ 18,322,812 9,278,589
Realized gains (losses) on investments, net 6,173,326 500,267
Net change in unrealized appreciation
(depreciation) on investments 83,295,102 (48,406,225)
------------- ------------
Net increase (decrease) in net assets
from operations 107,791,240 (38,627,369)
------------- ------------
Contract transactions (note 5):
Purchase payments 80,822,111 193,706,944
Transfers between funds - -
Surrenders and terminations (74,020,400) (44,940,169)
Rescissions (1,772,054) (4,130,116)
Other transactions (note 2) 49,159 138,739
------------- ------------
Net increase (decrease) in net assets
resulting from contract transactions 5,078,816 144,775,398
------------- ------------
Increase (decrease) in net assets 112,870,056 106,148,029
------------- ------------
Net assets at beginning of year 577,443,933 471,295,904
------------- ------------
Net assets at end of year $690,313,989 577,443,933
============= ============
</TABLE>
See accompanying notes to financial statements.
<PAGE>
PREFERRED LIFE VARIABLE ACCOUNT C
of
PREFERRED LIFE INSURANCE COMPANY OF NEW YORK
Notes to Financial Statements
December 31, 1995
1. ORGANIZATION
Preferred Life Variable Account C (Variable Account) is a segregated
investment account of Preferred Life Insurance Company of New York (Preferred
Life) and is registered with the Securities and Exchange Commission as a unit
investment trust pursuant to the provisions of the Investment Company Act of
1940 (as amended). The Variable Account was established by Preferred Life on
February 26, 1988 and commenced operations September 6, 1991. Accordingly, it
is an accounting entity wherein all segregated account transactions are
reflected.
The Variable Account's assets are the property of Preferred Life and are held
for the benefit of the owners and other persons entitled to payments under
variable annuity contracts issued through the Variable Account and
underwritten by Preferred Life. The assets of the Variable Account, equal to
the reserves and other liabilities of the Variable Account, are not chargeable
with liabilities that arise from any other business which Preferred Life may
conduct.
The Variable Account's sub-accounts may invest, at net asset values, in one or
more of the funds of the Franklin Valuemark Funds (FVF), managed by Franklin
Advisers, Inc., in accordance with the selection made by the contract owner.
Certain officers and trustees of the FVF are also officers and/or directors of
Franklin Advisers, Inc. and/or Preferred Life.
2. SIGNIFICANT ACCOUNTING POLICIES
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
INVESTMENTS
Investments of the Variable Account are valued daily at market value using net
asset values provided by Franklin Advisers, Inc.
Realized investment gains include gains on the sale of fund shares as
determined by the average cost method. Dividend distributions received from
the FVF are reinvested in additional shares of the FVF and are recorded as
income to the Variable Account on the ex-dividend date.
The Templeton Developing Markets Equity Fund and Templeton Global Growth Fund
were added as available investment options on April 25, 1994. The Templeton
Global Asset Allocation Fund was added as an available investment option on
August 4, 1995. The Zero Coupon - 1995 Fund matured and was closed on
December 15, 1995.
In April 1995, the Equity Growth Fund name was changed to Growth and Income
Fund.
EXPENSES
ASSET BASED EXPENSES
A mortality and expense risk charge is deducted from the Variable Account on a
daily basis equal, on an annual basis, to 1.25% of the daily net assets of the
Variable Account.
An administrative charge is deducted from the Variable Account on a daily
basis equal, on an annual basis, to 0.15% of the daily net assets of the
Variable Account.
CONTRACT BASED EXPENSES
A contract maintenance charge is paid by the contract owner annually from each
contract by liquidating contract units at the end of the contract year and at
the time of full surrender. The amount of the charge is $30 each year.
Contract maintenance charges deducted during the years ended December 31, 1995
and 1994 were $475,980 and $369,180, respectively. These contract charges are
reflected in the financial statements as other transactions.
A contingent deferred sales charge is deducted from the contract value at the
time of a surrender. This charge applies only to a surrender of purchase
payments received within five years of the date of surrender. For this
purpose, purchase payments are allocated on a first-in, first-out basis. The
amount of the contingent deferred sales charge is calculated by: (a)
allocating purchase payments to the amount surrendered; and (b) multiplying
each allocated purchase payment that has been held under the contract for the
period shown below by the charge shown below:
<TABLE>
<CAPTION>
<S> <C>
Years Since Payment Charge
- ------------------- -------
0-1 5%
1-2 5%
2-3 4%
3-4 3%
4-5 1.5%
5 + 0%
</TABLE>
and (c) adding the products of each multiplication in (b) above.
A contract owner may, not more frequently than once annually on a cumulative
basis, make a surrender each contract year of fifteen percent (15%) of
purchase payments paid less any prior surrenders without incurring a
contingent deferred sales charge. For a partial surrender, the contingent
deferred sales charge will be deducted from the remaining contract value, if
sufficient; otherwise it will be deducted from the amount surrendered. Total
contingent deferred sales charges paid by the contract owners for the years
ended December 31, 1995 and 1994 were $1,304,496 and $944,991, respectively.
Currently, twelve transfers are permitted each contract year. Thereafter, the
fee is $25 per transfer, or 2% of the amount transferred, if less. Currently,
transfers associated with the dollar cost averaging program are not counted.
Total transfer charges for the years ended December 31, 1995 and 1994 were
$9,505 and $12,900, respectively.
Premium taxes or other taxes payable to a state or other governmental entity
will be charged against the contract values. Preferred Life may, at its sole
discretion, pay taxes when due and deduct that amount from the contract value
at a later date. Payment at an earlier date does not waive any right
Preferred Life may have to deduct such amounts at a later date.
On certain contracts, a systematic withdrawal plan is available which allows
an owner to withdraw up to 9% of purchase payments less prior surrenders
annually, paid quarterly, without incurring a contingent deferred sales
charge. The exercise of the systematic withdrawal plan in any contract year
replaces the 15% penalty free privilege for that year.
A rescission is defined as a contract that is returned to the company and
canceled within the free-look period, generally within 10 days.
3. INVESTMENT TRANSACTIONS
The sub-account purchases of fund shares, including reinvestment of dividend
distributions, were as follows during the year ended December 31, 1995:
<TABLE>
<CAPTION>
<S> <C>
Money Market Fund $32,584,295
Growth and Income Fund 21,568,094
Precious Metals Fund 1,857,301
High Income Fund 10,743,605
Real Estate Securities Fund 1,938,652
U.S. Government Securities Fund 10,810,327
Utility Equity Fund 10,793,452
Zero Coupon Fund - 1995 427,463
Zero Coupon Fund - 2000 7,026,743
Zero Coupon Fund - 2005 2,330,493
Zero Coupon Fund - 2010 3,607,798
Global Income Fund 2,269,532
Investment Grade Intermediate Bond Fund 1,900,177
Income Securities Fund 14,358,504
Adjustable U.S. Government Fund 4,067,937
Templeton Pacific Growth Fund 7,221,593
Rising Dividends Fund 6,379,014
Templeton International Equity Fund 12,625,379
Templeton Developing Markets Equity Fund 3,034,409
Templeton Global Growth Fund 6,509,776
Templeton Global Asset Allocation Fund 375,601
</TABLE>
4. FEDERAL INCOME TAXES
Operations of the Variable Account form a part of, and are taxed with,
operations of Preferred Life, which is taxed as a life insurance company under
the Internal Revenue Code.
Preferred Life does not expect to incur any federal income taxes in the
operation of the Variable Account. If in the future Preferred Life determines
that the Variable Account may incur federal income taxes, it may then assess a
charge against the Variable Account for such taxes.
<PAGE>
5. CONTRACT TRANSACTIONS - UNIT ACTIVITY
Transactions in units for each fund for the years ended December 31, 1995 and
1994 were as follows:
<TABLE>
<CAPTION>
Growth U.S.
Money and Precious High Real Estate Government
Market Income Metals Income Securities Securities
Fund Fund Fund Fund Fund Fund
------------ ----------- ---------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
Units outstanding at December 31, 1993 627,038 2,402,339 391,041 1,135,378 436,709 6,107,774
Contract transactions:
Purchase payments 1,661,743 923,189 255,888 600,639 314,797 1,080,502
Transfers between funds 742,599 305,438 80,754 107,167 208,412 (1,203,909)
Surrenders and terminations (502,247) (161,395) (78,581) (126,425) (59,351) (593,751)
Rescissions (50,318) (16,981) (1,666) (7,160) (1,532) (59,151)
Other transactions 8,617 (648) (21) 713 987 (934)
------------ ----------- ---------- ----------- ------------ -----------
Net increase (decrease) in
accumulation units resulting
from contract transactions 1,860,394 1,049,603 256,374 574,934 463,313 (777,243)
------------ ----------- ---------- ----------- ------------ -----------
Units outstanding at December 31, 1994 2,487,432 3,451,942 647,415 1,710,312 900,022 5,330,531
============ =========== ========== =========== ============ ===========
Accumulation unit value
per unit at December 31, 1994 $ 12.354 13.215 13.979 14.608 15.594 13.835
============ =========== ========== =========== ============ ===========
Contract transactions:
Purchase payments 808,615 638,299 37,598 314,237 53,324 450,010
Transfers between funds (343,975) 625,732 (75,156) 305,234 (76,349) 12,062
Surrenders and terminations (720,868) (354,878) (93,799) (247,052) (82,254) (701,350)
Rescissions (12,471) (15,727) (826) (8,639) (216) (6,620)
Other transactions (1,113) 1,361 646 1,528 (877) 4,103
------------ ----------- ---------- ----------- ------------ -----------
Net increase (decrease) in
accumulation units resulting
from contract transactions (269,812) 894,787 (131,537) 365,308 (106,372) (241,795)
------------ ----------- ---------- ----------- ------------ -----------
Units outstanding at December 31, 1995 2,217,620 4,346,729 515,878 2,075,620 793,650 5,088,736
============ =========== ========== =========== ============ ===========
Accumulation unit value
per unit at December 31, 1995 $ 12.883 17.310 14.109 17.252 18.073 16.298
============ =========== ========== =========== ============ ===========
Accumulation net assets at December 31, 1995 $28,570,694 75,240,399 7,278,359 35,808,214 14,343,503 82,934,727
============ =========== ========== =========== ============ ===========
</TABLE>
<PAGE>
5. CONTRACT TRANSACTIONS - UNIT ACTIVITY (CONTINUED)
<TABLE>
<CAPTION>
Zero Zero Zero Zero
Utility Coupon Coupon Coupon Coupon Global
Equity Fund - Fund - Fund - Fund - Income
Fund 1995 2000 2005 2010 Fund
------------- --------- ----------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Units outstanding at December 31, 1993 7,478,993 269,765 795,411 341,197 193,003 1,044,532
Contract transactions:
Purchase payments 1,051,921 70,708 414,919 125,015 76,028 561,113
Transfers between funds (1,696,778) 42,828 68,710 (40,577) (8,676) 180,054
Surrenders and terminations (491,312) (35,886) (112,129) (21,155) (7,322) (107,849)
Rescissions (24,704) (3,621) (9,747) (1,457) (1,286) (11,608)
Other transactions (922) (118) 503 (227) (127) 1,196
------------- --------- ----------- ---------- ---------- -----------
Net increase (decrease) in accumulation
units resulting from contract transactions (1,161,795) 73,911 362,256 61,599 58,617 622,906
------------- --------- ----------- ---------- ---------- -----------
Units outstanding at December 31, 1994 6,317,198 343,676 1,157,667 402,796 251,620 1,667,438
============= ========= =========== ========== ========== ===========
Accumulation unit value per unit at December 31, 1994 $ 15.104 14.380 15.373 16.096 15.930 13.726
============= ========= =========== ========== ========== ===========
Contract transactions:
Purchase payments 333,194 6,693 273,272 79,107 72,448 124,367
Transfers between funds 3,713 (272,809) 98,289 13,994 76,355 (148,545)
Surrenders and terminations (730,042) (77,389) (107,109) (36,702) (27,481) (167,077)
Rescissions (4,745) - (5,154) (3,194) (1,958) (3,868)
Other transactions (3,359) (171) (616) (278) 311 (199)
------------- --------- ----------- ---------- ---------- -----------
Net increase (decrease) in accumulation
units resulting from contract transactions (401,239) (343,676) 258,682 52,927 119,675 (195,322)
------------- --------- ----------- ---------- ---------- -----------
Units outstanding at December 31, 1995 5,915,959 - 1,416,349 455,723 371,295 1,472,116
============= ========= =========== ========== ========== ===========
Accumulation unit value per unit at December 31, 1995 $ 19.565 - 18.294 20.914 22.431 15.522
============= ========= =========== ========== ========== ===========
Accumulation net assets at December 31, 1995 $115,742,880 - 25,910,145 9,530,824 8,328,659 22,850,893
============= ========= =========== ========== ========== ===========
</TABLE>
<PAGE>
5. CONTRACT TRANSACTIONS - UNIT ACTIVITY (CONTINUED)
<TABLE>
<CAPTION>
Investment Adjustable Templeton
Grade Income U.S. Pacific Rising
Intermediate Securities Government Growth Dividends
Bond Fund Fund Fund Fund Fund
-------------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Units outstanding at December 31, 1993 893,048 2,633,679 1,970,803 914,981 2,771,594
Contract transactions:
Purchase payments 300,084 1,705,232 968,718 921,042 599,000
Transfers between funds (37,700) 374,341 (1,032,132) 440,484 (261,335)
Surrenders and terminations (66,963) (256,277) (130,996) (157,447) (161,474)
Rescissions (3,708) (40,792) (8,659) (8,240) (10,761)
Other transactions 348 9 (819) 1,165 (653)
-------------- ----------- ----------- ----------- -----------
Net increase (decrease) in accumulation
units resulting from contract transactions 192,061 1,782,513 (203,888) 1,197,004 164,777
-------------- ----------- ----------- ----------- -----------
Units outstanding at December 31, 1994 1,085,109 4,416,192 1,766,915 2,111,985 2,936,371
============== =========== =========== =========== ===========
Accumulation unit value per unit at December 31, 1994 $ 14.257 16.392 11.077 12.802 9.769
============== =========== =========== =========== ===========
Contract transactions:
Purchase payments 94,073 501,986 295,879 180,173 283,866
Transfers between funds (37,800) 168,155 (590,890) (297,776) 215,526
Surrenders and terminations (113,583) (501,023) (172,610) (181,062) (246,273)
Rescissions (7,335) (16,684) (9,352) (2,214) (7,459)
Other transactions 2,084 (1,392) 549 517 (39)
-------------- ----------- ----------- ----------- -----------
Net increase (decrease) in accumulation
units resulting from contract transactions (62,561) 151,042 (476,424) (300,362) 245,621
-------------- ----------- ----------- ----------- -----------
Units outstanding at December 31, 1995 1,022,548 4,567,234 1,290,491 1,811,623 3,181,992
============== =========== =========== =========== ===========
Accumulation unit value per unit at December 31, 1995 $ 15.463 19.785 11.951 13.630 12.498
============== =========== =========== =========== ===========
Accumulation net assets at December 31, 1995 $ 15,812,111 90,364,296 15,423,097 24,693,114 39,769,688
============== =========== =========== =========== ===========
</TABLE>
<PAGE>
5. CONTRACT TRANSACTIONS - UNIT ACTIVITY (CONTINUED)
<TABLE>
<CAPTION>
Templeton Templeton
Templeton Developing Templeton Global
International Markets Global Asset Total
Equity Equity Growth Allocation All
Fund Fund Fund Fund Funds
--------------- ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Units outstanding at December 31, 1993 1,345,574 - - - 31,752,859
Contract transactions:
Purchase payments 1,712,426 358,401 482,780 - 14,184,145
Transfers between funds 1,226,646 242,892 455,573 - 194,791
Surrenders and terminations (175,010) (8,146) (13,427) - (3,267,143)
Rescissions (32,139) (2,370) (3,306) - (299,206)
Other transactions 1,611 381 (99) - 10,962
--------------- ----------- ----------- ----------- ------------
Net increase (decrease) in accumulation
units resulting from contract transactions 2,733,534 591,158 921,521 - 10,823,549
--------------- ----------- ----------- ----------- ------------
Units outstanding at December 31, 1994 4,079,108 591,158 921,521 - 42,576,408
=============== =========== =========== =========== ============
Accumulation unit value per unit at December 31, 1994 $ 12.161 9.454 10.201 -
=============== =========== =========== ===========
Contract transactions:
Purchase payments 509,261 176,313 410,139 20,426 5,663,280
Transfers between funds (146,606) 23,378 151,645 15,409 (280,414)
Surrenders and terminations (356,227) (34,856) (66,588) (24) (5,018,247)
Rescissions (12,742) - (1,052) - (120,256)
Other transactions 120 1,079 808 (2) 5,060
--------------- ----------- ----------- ----------- ------------
Net increase (decrease) in accumulation
units resulting from contract transactions (6,194) 165,914 494,952 35,809 249,423
--------------- ----------- ----------- ----------- ------------
Units outstanding at December 31, 1995 4,072,914 757,072 1,416,473 35,809 42,825,831
=============== =========== =========== =========== ============
Accumulation unit value per unit at December 31, 1995 $ 13.263 9.582 11.339 10.591
=============== =========== =========== ===========
Accumulation net assets at December 31, 1995 $ 54,017,752 7,254,042 16,061,328 379,264 690,313,989
=============== =========== =========== =========== ============
</TABLE>
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