<TABLE>
<CAPTION>
PREFERRED LIFE VARIABLE ACCOUNT C
OF PREFERRED LIFE INSURANCE COMPANY OF NEW YORK
===========================================================================================================================
Financial Statements
Statements of Assets and Liabilities
June 30, 1996 (unaudited)
(In thousands except per unit data)
U.S.
Money Growth 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>
Investments at net asset value:
Franklin Valuemark Funds:
Money Market Fund, 30,044 shares, cost $30,044................ $30,044 - - - - -
Growth and Income Fund, 5,705 shares, cost $84,018............ - 92,543 - - - -
Precious Metals Fund, 594 shares, cost $8,785................. - - 8,874 - - -
High Income Fund, 2,692 shares, cost $34,686.................. - - - 34,730 - -
Real Estate Securities Fund, 868 shares, cost $13,421......... - - - - 15,538 -
U.S. Government Securities Fund, 6,017 shares, cost $80,712... - - - - - 77,075
------- ------- ------ ------ ------- ---------
Total assets.............................................. 30,044 92,543 8,874 34,730 15,538 77,075
------- ------- ------ ------ ------- ---------
Liabilities:
Accrued mortality and expense risk charges..................... 3 5 2 3 3 5
Accrued administrative charges................................. 1 1 - - - 1
------- ------- ------ ------ ------- ---------
Total liabilities......................................... 4 6 2 3 3 6
------- ------- ------ ------ ------- ---------
Net assets................................................ $30,040 92,537 8,872 34,727 15,535 77,069
======= ======= ====== ====== ======= =========
Contract owners' equity (note 5)................................ $30,040 92,537 8,872 34,727 15,535 77,069
======= ======= ====== ====== ======= =========
Accumulation units outstanding................................. 2,290 5,101 583 1,954 808 4,833
======= ======= ====== ====== ======= =========
Accumulation unit value per unit............................... $13.116 18.142 15.213 17.777 19.235 15.948
======= ======= ====== ====== ======= =========
<FN>
See accompanying notes to unaudited financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PREFERRED LIFE VARIABLE ACCOUNT C
OF PREFERRED LIFE INSURANCE COMPANY OF NEW YORK
===========================================================================================================================
Financial Statements (cont.)
Statements of Assets and Liabilities (cont.)
June 30, 1996 (unaudited)
(In thousands except per unit data)
Templeton Investment
Utility Zero Zero Zero Global Income Grade
Equity Coupon Coupon Coupon Securities Intermediate
Fund Fund-2000 Fund-2005 Fund-2010 Fund Bond Fund
-------- ------- ------- ------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
Investments at net asset value:
Franklin Valuemark Funds:
Utility Equity Fund, 6,279 shares, cost $102,495......... $111,324 - - - - -
Zero Coupon Fund - 2000, 1,733 shares, cost $25,044...... - 25,170 - - - -
Zero Coupon Fund - 2005, 564 shares, cost $8,447......... - - 8,658 - - -
Zero Coupon Fund - 2010, 487 shares, cost $7,248......... - - - 7,285 - -
Templeton Global Income Securities Fund, 1,773 shares,
cost $22,795.............................................. - - - - 22,308 -
Investment Grade Intermediate Bond Fund, 1,143 shares,
cost $15,338.............................................. - - - - - 15,323
-------- ------- ------- ------- -------- --------
Total assets......................................... 111,324 25,170 8,658 7,285 22,308 15,323
-------- ------- ------- ------- -------- --------
Liabilities:
Accrued mortality and expense risk charges................ 5 3 3 3 3 3
Accrued administrative charges............................ 1 - - - 1 1
-------- ------- ------- ------- -------- --------
Total liabilities.................................... 6 3 3 3 4 4
-------- ------- ------- ------- -------- --------
Net assets........................................... $111,318 25,167 8,655 7,282 22,304 15,319
======== ======= ======= ======= ======== ========
Contract owners' equity (note 5)........................... $111,318 25,167 8,655 7,282 22,304 15,319
======== ======= ======= ======= ======== ========
Accumulation units outstanding............................ 5,487 1,415 446 366 1,429 990
======== ======= ======= ======= ======== ========
Accumulation unit value per unit.......................... $20.287 17.786 19.387 19.907 15.610 15.475
======== ======= ======= ======= ======== ========
<FN>
See accompanying notes to unaudited financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PREFERRED LIFE VARIABLE ACCOUNT C
OF PREFERRED LIFE INSURANCE COMPANY OF NEW YORK
===========================================================================================================================
Financial Statements (cont.)
Statements of Assets and Liabilities (cont.)
June 30, 1996 (unaudited)
(In thousands except per unit data)
Adjustable Templeton Templeton Templeton
Income U.S. Pacific Rising International Developing
Securities Government Growth Dividends Equity Markets Equity
Fund Fund Fund Fund Fund Fund
------ ---------- ------- ------ -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Investments at net asset value:
Franklin Valuemark Funds:
Income Securities Fund, 5,851 shares, cost $88,330...... $94,145 - - - - -
Adjustable U.S. Government Fund, 1,307 shares,
cost $14,286........................................... - 13,362 - - - -
Templeton Pacific Growth Fund, 1,909 shares,
cost $26,507........................................... - - 28,438 - - -
Rising Dividends Fund, 3,355 shares, cost $36,675....... - - - 44,628 - -
Templeton International Equity Fund, 4,550 shares,
cost $58,596........................................... - - - - 64,196 -
Templeton Developing Markets Equity Fund, 959 shares,
cost $9,908............................................ - - - - - 10,599
------- -------- ------- ------- -------- ---------
Total assets........................................ 94,145 13,362 28,438 44,628 64,196 10,599
------- -------- ------- ------- -------- ---------
Liabilities:
Accrued mortality and expense risk charges............... 5 3 3 4 4 3
Accrued administrative charges........................... 1 - 1 - 1 -
------- -------- ------- ------- -------- ---------
Total liabilities................................... 6 3 4 4 5 3
------- -------- ------- ------- -------- ---------
Net assets.......................................... $94,139 13,359 28,434 44,624 64,191 10,596
======= ======== ======= ======= ======== =========
Contract owners' equity (note 5).......................... $94,139 13,359 28,434 44,624 64,191 10,596
======= ======== ======= ======= ======== =========
Accumulation units outstanding........................... 4,605 1,095 1,873 3,352 4,340 960
======= ======== ======= ======= ======== =========
Accumulation unit value per unit......................... $20.441 12.203 15.181 13.311 14.792 11.030
======= ======== ======= ======= ======== =========
<FN>
See accompanying notes to unaudited financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PREFERRED LIFE VARIABLE ACCOUNT C
OF PREFERRED LIFE INSURANCE COMPANY OF NEW YORK
===========================================================================================================================
Financial Statements (cont.)
Statements of Assets and Liabilities (cont.)
June 30, 1996 (unaudited)
(In thousands except per unit data)
Templeton
Templeton Templeton International
Global Global Asset Small Capital Smaller Total
Growth Allocation Cap Growth Companies All
Fund Fund Fund Fund Fund Funds
------- --------- ----- ----- --------- ------
<S> <C> <C> <C> <C> <C> <C>
Investments at net asset value:
Franklin Valuemark Funds:
Templeton Global Growth Fund, 1,870 shares, cost $21,127.......... $23,580 - - - -
Templeton Global Asset Allocation Fund, 195 shares, cost $2,144... - 2,213 - - -
Small Cap Fund, 79 shares, cost $960.............................. - - 960 - -
Capital Growth Fund, 12 shares, cost $123......................... - - - 124 -
Templeton International Smaller Companies Fund, 6 shares, cost $57 - - - - 57
------- -------- ----- ----- --------
Total assets.................................................. 23,580 2,213 960 124 57 731,174
------- -------- ----- ----- -------- -------
Liabilities:
Accrued mortality and expense risk charges......................... 3 2 1 - - 69
Accrued administrative charges..................................... - - - - - 9
------- -------- ----- ----- -------- -------
Total liabilities............................................. 3 2 1 - - 78
------- -------- ----- ----- -------- -------
Net assets.................................................... $23,577 2,211 959 124 57 731,096
======= ======== ===== ===== ======== =======
Contract owners' equity (note 5).................................... $23,577 2,211 959 124 57 731,096
======= ======== ===== ===== ======== =======
Accumulation units outstanding..................................... 1,889 194 80 12 5 44,107
======= ======== ====== ====== ======== =======
Accumulation unit value per unit................................... $12.479 11.382 11.971 10.157 10.307
======= ======== ====== ====== ========
<FN>
See accompanying notes to unaudited financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PREFERRED LIFE VARIABLE ACCOUNT C
OF PREFERRED LIFE INSURANCE COMPANY OF NEW YORK
===========================================================================================================================
Financial Statements (cont.)
Statements of Operations
For the period ended June 30, 1996 (unaudited)
(In thousands)
U.S.
Money Growth 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>
Investment income:
Dividends reinvested in fund shares........................... $ 778 2,058 114 2,915 627 5,488
------- ------- ------ ------ ------- ----------
Expenses:
Mortality and expense risk charges............................ 196 518 58 215 94 497
Administrative charges........................................ 24 62 7 26 11 60
------- ------- ------ ------ ------- ----------
Total expenses........................................... 220 580 65 241 105 557
------- ------- ------ ------ ------- ----------
Investment income (loss), net............................ 558 1,478 49 2,674 522 4,931
Realized gains (losses) and unrealized appreciation
(depreciation) on investments:
Realized capital gain distributions on mutual funds.......... - 7,289 105 155 - -
------- ------- ------ ------ ------- ----------
Realized gains (losses) on sales of investments:
Proceeds from sales......................................... 23,087 5,345 3,304 8,383 1,172 6,211
Cost of investments sold.................................... (23,087) (4,335) (2,880) (7,633) (992) (6,130)
------- ------- ------ ------ ------- ----------
Total realized gains (losses) on sales of investments, net - 1,010 424 750 180 81
------- ------- ------ ------ ------- ----------
Realized gains (losses) on investments, net.............. - 8,299 529 905 180 81
Net change in unrealized appreciation (depreciation) on
investments................................................. - (5,831) (113) (2,461) 230 (6,787)
------- ------- ------ ------ ------- ----------
Total realized gains (losses) and unrealized appreciation
(depreciation) on investments, net...................... - 2,468 416 (1,556) 410 (6,706)
------- ------- ------ ------ ------- ----------
Net increase (decrease) in net assets from operations.......... $ 558 3,946 465 1,118 932 (1,775)
======= ======= ====== ====== ======= ==========
<FN>
See accompanying notes to unaudited financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PREFERRED LIFE VARIABLE ACCOUNT C
OF PREFERRED LIFE INSURANCE COMPANY OF NEW YORK
===========================================================================================================================
Financial Statements (cont.)
Statements of Operations (cont.)
For the period ended June 30, 1996 (unaudited)
(In thousands)
Templeton Investment
Utility Zero Zero Zero Global Income Grade
Equity Coupon Coupon Coupon Securities Intermediate
Fund Fund-2000 Fund-2005 Fund-2010 Fund Bond Fund
------ --------- ------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Dividends reinvested in fund shares........................ $ 5,502 1,407 465 397 1,696 819
------- ------- ------- ------- --------- --------
Expenses:
Mortality and expense risk charges......................... 699 159 56 47 139 98
Administrative charges..................................... 84 19 7 6 17 12
------- ------- ------- ------- --------- --------
Total expenses........................................ 783 178 63 53 156 110
------- ------- ------- ------- --------- --------
Investment income (loss), net......................... 4,719 1,229 402 344 1,540 709
Realized gains (losses) and unrealized appreciation
(depreciation) on investments:
Realized capital gain distributions on mutual funds....... - 14 - 108 - -
------- ------- ------- ------- --------- --------
Realized gains (losses) on sales of investments:
Proceeds from sales...................................... 10,558 1,577 1,016 1,290 2,066 1,237
Cost of investments sold................................. (9,686) (1,481) (932) (1,175) (1,997) (1,185)
------- ------- ------- ------- --------- --------
Total realized gains (losses) on sales
of investments, net.................................. 872 96 84 115 69 52
------- ------- ------- ------- --------- --------
Realized gains (losses) on investments, net........... 872 110 84 223 69 52
Net change in unrealized appreciation (depreciation) on
investments.............................................. (1,682) (2,069) (1,184) (1,522) (1,488) (753)
------- ------- ------- ------- --------- --------
Total realized gains (losses) and unrealized
appreciation (depreciation) on investments, net...... (810) (1,959) (1,100) (1,299) (1,419) (701)
------- ------- ------- ------- --------- --------
Net increase (decrease) in net assets from operations....... $ 3,909 (730) (698) (955) 121 8
======= ======= ======= ======= ========= ========
<FN>
See accompanying notes to unaudited financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PREFERRED LIFE VARIABLE ACCOUNT C
OF PREFERRED LIFE INSURANCE COMPANY OF NEW YORK
===========================================================================================================================
Financial Statements (cont.)
Statements of Operations (cont.)
For the period ended June 30, 1996 (unaudited)
(In thousands)
Adjustable Templeton Templeton Templeton
Income U.S. Pacific Rising International Developing
Securities Government Growth Dividends Equity Markets Equity
Fund Fund Fund Fund Fund Fund
------ ---------- ------- ------ --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Dividends reinvested in fund shares...................... $4,813 1,013 799 912 1,626 92
------ -------- ------- ----- -------- --------
Expenses:
Mortality and expense risk charges....................... 577 90 173 263 376 58
Administrative charges................................... 69 11 21 32 45 7
------ -------- ------- ----- -------- --------
Total expenses...................................... 646 101 194 295 421 65
------ -------- ------- ----- -------- --------
Investment income (loss), net....................... 4,167 912 605 617 1,205 27
Realized gains (losses) and unrealized appreciation
(depreciation) on investments:
Realized capital gain distributions on mutual funds..... 800 - 463 - 1,990 170
------ -------- ------- ----- -------- --------
Realized gains (losses) on sales of investments:
Proceeds from sales.................................... 4,588 3,288 6,231 2,004 4,640 1,061
Cost of investments sold............................... (4,151) (3,338) (5,586) (1,656) (4,168) (987)
------ -------- ------- ------ -------- --------
Total realized gains (losses) on sales
of investments, net................................ 437 (50) 645 348 472 74
------ -------- ------- ----- -------- --------
Realized gains (losses) on investments, net......... 1,237 (50) 1,108 348 2,462 244
Net change in unrealized appreciation (depreciation) on
investments............................................ (2,391) (569) 1,142 1,648 2,694 888
------ -------- ------- ------ -------- --------
Total realized gains (losses) and unrealized
appreciation (depreciation) on investments, net.... (1,154) (619) 2,250 1,996 5,156 1,132
------ -------- ------- ------ -------- --------
Net increase (decrease) in net assets from operations..... $3,013 293 2,855 2,613 6,361 1,159
====== ======== ======= ====== ======== ========
<FN>
See accompanying notes to unaudited financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PREFERRED LIFE VARIABLE ACCOUNT C
OF PREFERRED LIFE INSURANCE COMPANY OF NEW YORK
===========================================================================================================================
Financial Statements (cont.)
Statements of Operations (cont.)
For the period ended June 30, 1996 (unaudited)
(In thousands)
Templeton
Templeton Templeton International
Global Global Asset Small Capital Smaller Total
Growth Allocation Cap Growth Companies All
Fund Fund Fund Fund Fund Funds
-------- -------- ---- ----- --------- ------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Dividends reinvested in fund shares.................................. $ 365 1 - - - 31,887
------- ------- ----- ---- ------ ------
Expenses:
Mortality and expense risk charges................................... 124 7 - - - 4,444
Administrative charges............................................... 15 1 - - - 536
------- ------- ----- ---- ------ ------
Total expenses.................................................. 139 8 - - - 4,980
------- ------- ----- ---- ------ ------
Investment income (loss), net................................... 226 (7) - - - 26,907
Realized gains (losses) and unrealized appreciation (depreciation) on
investments:
Realized capital gain distributions on mutual funds................. 365 2 - - - 11,461
------- ------- ----- ---- ------ ------
Realized gains (losses) on sales of investments:
Proceeds from sales................................................ 257 12 407 - - 87,734
Cost of investments sold........................................... (228) (12) (422) - - (82,061)
------- ------- ----- ---- ------ ------
Total realized gains (losses) on sales of investments, net...... 29 - (15) - - 5,673
------- ------- ----- ---- ------ ------
Realized gains (losses) on investments, net..................... 394 2 (15) - - 17,134
Net change in unrealized appreciation (depreciation) on investments. 1,164 64 - 2 - (19,018)
------- ------- ----- ---- ------ ------
Total realized gains (losses) and unrealized appreciation
(depreciation) on investments, net............................. 1,558 66 (15) 2 - (1,884)
------- ------- ----- ---- ------ ------
Net increase (decrease) in net assets from operations................. $1,784 59 (15) 2 - 25,023
======= ======= ===== ==== ====== ======
<FN>
See accompanying notes to unaudited financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PREFERRED LIFE VARIABLE ACCOUNT C
OF PREFERRED LIFE INSURANCE COMPANY OF NEW YORK
===========================================================================================================================
Financial Statements (cont.)
Statements of Changes in Net Assets
For the period ended June 30, 1996 (unaudited)
and the year ended December 31, 1995
(In thousands)
Growth and Precious Real Estate
Money Market Fund Income Fund Metals Fund High Income Fund Securities Fund
------------- ------------ ----------- ------------ ------------
1996 1995 1996 1995 1996 1995 1996 1995 1996 1995
----- ----- ---- ---- ---- ---- ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Investment income (loss), net............ $ 558 1,272 1,478 (131) 49 1 2,674 1,556 522 258
Realized gains (losses) on investments,
net..................................... - - 8,299 2,371 529 194 905 184 180 186
Net change in unrealized appreciation
(depreciation) on investments........... - - (5,831) 13,509 (113) (159) (2,461) 3,050 230 1,571
------- ------ ------ ------ ----- ----- ------ ------ ------ ------
Net increase (decrease) in net assets
from operations..................... 558 1,272 3,946 15,749 465 36 1,118 4,790 932 2,015
------- ------ ------ ------ ----- ----- ------ ------ ------ ------
Contract transactions (note 5):
Purchase payments......................... 7,274 10,218 9,543 9,814 743 519 3,344 5,160 705 855
Transfers between funds................... (3,049) (4,384) 7,858 9,626 834 (1,029) (3,048) 4,955 94 (1,207)
Surrenders and terminations............... (3,249) (9,094) (3,857) (5,346) (439) (1,297) (2,488) (3,966) (573) (1,337)
Rescissions............................... (67) (157) (178) (240) (9) (10) - (140) - (3)
Other transactions (note 2)............... 2 (14) (15) 21 - 9 (7) 26 33 (14)
------- ------ ------ ------ ----- ----- ------ ------ ------ ------
Net increase (decrease) in net assets
resulting from contract transactions 911 (3,431) 13,351 13,875 1,129 (1,808) (2,199) 6,035 259 (1,706)
------- ------ ------ ------ ----- ----- ------ ------ ------ ------
Increase (decrease) in net assets.......... 1,469 (2,159) 17,297 29,624 1,594 (1,772) (1,081) 10,825 1,191 309
------- ------ ------ ------ ----- ----- ------ ------ ------ ------
Net assets at beginning of period.......... 28,571 30,730 75,240 45,616 7,278 9,050 35,808 24,983 14,344 14,035
------- ------ ------ ------ ----- ----- ------ ------ ------ ------
Net assets at end of period................ $30,040 28,571 92,537 75,240 8,872 7,278 34,727 35,808 15,535 14,344
======= ====== ====== ====== ===== ===== ====== ====== ====== ======
<FN>
See accompanying notes to unaudited financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PREFERRED LIFE VARIABLE ACCOUNT C
OF PREFERRED LIFE INSURANCE COMPANY OF NEW YORK
===========================================================================================================================
Financial Statements (cont.)
Statements of Changes in Net Assets (cont.)
For the period ended June 30, 1996 (unaudited)
and the year ended December 31, 1995
(In thousands)
U.S. Government Utility Equity Zero Coupon Zero Coupon Zero Coupon
Securities Fund Fund Fund - 1995 Fund - 2000 Fund - 2005
------------- -------------- ------------ ------------- ------------
1996 1995 1996 1995 1996 1995 1996 1995 1996 1995
------ ------ ----- ------ ---- ---- ----- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Investment income (loss), net............. $ 4,931 4,337 4,719 4,316 - 252 1,229 703 402 222
Realized gains (losses) on investments, net 81 267 872 56 - (190) 110 127 84 93
Net change in unrealized appreciation
(depreciation) on investments............. (6,787) 8,141 (1,682) 22,858 - 189 (2,069) 2,954 (1,184) 1,761
------- ------ ------- ------ --- ----- ------ ------ ----- -----
Net increase (decrease) in net assets
from operations....................... (1,775) 12,745 3,909 27,230 - 251 (730) 3,784 (698) 2,076
------- ------ ------- ------ --- ----- ------ ------ ----- -----
Contract transactions (note 5):
Purchase payments.......................... 3,605 6,927 3,674 5,661 - 98 1,459 4,576 883 1,474
Transfers between funds.................... (2,919) 192 (5,132) 13 - (4,137) (332) 1,668 (443) 234
Surrenders and terminations................ (4,725) (10,634) (6,859) (12,439) - (1,151) (1,076) (1,821) (579) (674)
Rescissions................................ (62) (103) (39) (78) - - (57) (85) (38) (57)
Other transactions (note 2)................ 10 60 22 (59) - (3) (6) (10) (1) (5)
------- ------ ------- ------ --- ----- ------ ------ ----- -----
Net increase (decrease) in net assets
resulting from contract transactions. (4,091) (3,558) (8,334) (6,902) - (5,193) (12) 4,328 (178) 972
------- ------ ------- ------ --- ----- ------ ------ ----- -----
Increase (decrease) in net assets........... (5,866) 9,187 (4,425) 20,328 - (4,942) (742) 8,112 (876) 3,048
------- ------ ------- ------ --- ----- ------ ------ ----- -----
Net assets at beginning of period........... 82,935 73,748 115,743 95,415 - 4,942 25,909 17,797 9,531 6,483
------- ------ ------- ------ --- ----- ------ ------ ----- -----
Net assets at end of period................. $77,069 82,935 111,318 15,743 - - 25,167 25,909 8,655 9,531
======= ====== ======= ====== === ===== ====== ====== ===== =====
<FN>
See accompanying notes to unaudited financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PREFERRED LIFE VARIABLE ACCOUNT C
OF PREFERRED LIFE INSURANCE COMPANY OF NEW YORK
===========================================================================================================================
Financial Statements (cont.)
Statements of Changes in Net Assets (cont.)
For the period ended June 30, 1996 (unaudited)
and the year ended December 31, 1995
(In thousands)
Templeton Investment Grade Adjustable U.S.
Zero Coupon Global Income Intermediate Income Government
Fund - 2010 Securities Fund Bond Fund Securities Fund Fund
------------ ------------ ------------ ------------ ------------
1996 1995 1996 1995 1996 1995 1996 1995 1996 1995
------ ----- ------ ------ ----- ----- ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Investment income (loss), net............ $ 344 104 1,540 532 709 408 4,167 3,335 912 834
Realized gains (losses) on investments,
net..................................... 223 136 69 (1) 52 113 1,237 728 (50) 30
Net change in unrealized appreciation
(depreciation) on investments........... (1,522) 1,835 (1,488) 2,221 (753) 742 (2,391) 10,992 (569) 408
------ ----- ------ ------ ------ ------ ------ ------ ------ -----
Net increase (decrease) in net assets
from operations...................... (955) 2,075 121 2,752 8 1,263 3,013 15,055 293 1,272
------ ----- ------ ------ ------ ------ ------ ------ ------ -----
Contract transactions (note 5):
Purchase payments......................... 686 1,373 927 1,801 729 1,410 6,320 9,139 1,295 3,443
Transfers between funds................... (525) 1,450 (407) (2,122) (426) (567) (503) 3,107 (2,626) (6,777)
Surrenders and terminations............... (251) (546) (1,225) (2,408) (831) (1,685) (4,886) (9,000) (1,000) (1,984)
Rescissions............................... - (37) (1) (56) (14) (109) (193) (300) (53) (109)
Other transactions (note 2)............... (2) 6 37 (3) 41 30 25 (26) 27 6
------ ----- ------ ------ ------ ------ ------ ------ ------ -----
Net increase (decrease) in net assets
resulting from contract transactions. (92) 2,246 (669) (2,788) (501) (921) 763 2,920 (2,357) (5,421)
------ ----- ------ ------ ---- ------ ------ ------ ------ ------
Increase (decrease) in net assets.......... (1,047) 4,321 (548) (36) (493) 342 3,776 17,975 (2,064) (4,149)
------ ----- ------ ------ ------ ------ ------ ------ ------ ------
Net assets at beginning of period.......... 8,329 4,008 22,852 22,888 15,812 15,470 90,363 72,388 15,423 19,572
------ ----- ------ ------ ------ ------ ------ ------ ------ ------
Net assets at end of period................ $7,282 8,329 22,304 22,852 15,319 15,812 94,139 90,363 13,359 15,423
====== ===== ====== ====== ====== ====== ====== ====== ====== ======
<FN>
See accompanying notes to unaudited financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PREFERRED LIFE VARIABLE ACCOUNT C
OF PREFERRED LIFE INSURANCE COMPANY OF NEW YORK
===========================================================================================================================
Financial Statements (cont.)
Statements of Changes in Net Assets (cont.)
For the period ended June 30, 1996 (unaudited)
and the year ended December 31, 1995
(In thousands)
Templeton
Templeton Developing Templeton
Templeton Pacific Rising International Markets Global
Growth Fund Dividends Fund Equity Fund Equity Fund Growth Fund
------------- ------------ ------------ ----------- ------------
1996 1995 1996 1995 1996 1995 1996 1995 1996 1995
------ ----- ------ ------ ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Investment income (loss), net............ $ 605 122 617 234 1,205 137 27 (67) 226 (108)
Realized gains (losses) on investments,
net..................................... 1,108 178 348 172 2,462 1,571 244 (82) 394 40
Net change in unrealized appreciation
(depreciation) on investments........... 1,142 1,218 1,648 7,803 2,694 2,706 888 195 1,164 1,297
------- ------ ------ ------ ------ ------ ------ ----- ------ ------
Net increase (decrease) in net assets
from operations..................... 2,855 1,518 2,613 8,209 6,361 4,414 1,159 46 1,784 1,229
------- ------ ------ ------ ------ ------ ------ ----- ------ ------
Contract transactions (note 5):
Purchase payments......................... 1,224 2,320 2,919 3,197 3,680 6,496 1,196 1,669 3,903 4,462
Transfers between funds................... 1,177 (3,819) 1,076 2,459 3,037 (1,789) 1,259 275 2,350 1,693
Surrenders and terminations............... (1,489) (2,341) (1,719) (2,693) (2,927) (4,550) (250) (335) (489) (719)
Rescissions............................... (20) (28) (60) (85) (7) (162) (20) - (44) (13)
Other transactions (note 2)............... (7) 7 25 (2) 29 1 (3) 11 13 8
------- ------ ------ ------ ------ ------ ------ ----- ------ ------
Net increase (decrease) in net assets
resulting from contract transactions 885 (3,861) 2,241 2,876 3,812 (4) 2,182 1,620 5,733 5,431
------- ------ ------ ------ ------ ------ ------ ----- ------ ------
Increase (decrease) in net assets.......... 3,740 (2,343) 4,854 11,085 10,173 4,410 3,341 1,666 7,517 6,660
------- ------ ------ ------ ------ ------ ------ ----- ------ ------
Net assets at beginning of period.......... 24,694 27,037 39,770 28,685 54,018 49,608 7,255 5,589 16,060 9,400
------- ------ ------ ------ ------ ------ ------ ----- ------ ------
Net assets at end of period................ $28,434 24,694 44,624 39,770 64,191 54,018 10,596 7,255 23,577 16,060
======= ====== ====== ====== ====== ====== ====== ===== ====== ======
<FN>
See accompanying notes to unaudited financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PREFERRED LIFE VARIABLE ACCOUNT C
OF PREFERRED LIFE INSURANCE COMPANY OF NEW YORK
===========================================================================================================================
Financial Statements (cont.)
Statements of Changes in Net Assets (cont.)
For the period ended June 30, 1996 (unaudited)
and the year ended December 31, 1995
(In thousands)
Templeton
Templeton International
Global Asset Capital Smaller
Allocation Small Growth Companies
Fund Cap Fund Fund Fund Total All Funds
----------- -------- -------- -------- -------------
1996 1995 1996 1995 1996 1995 1996 1995 1996 1995
----- --- --- --- --- --- --- --- ----- -----
<S> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Investment income (loss), net............................... $ (7) 6 - - - - - - 26,907 18,323
Realized gains (losses) on investments, net................. 2 - (15) - - - - - 17,134 6,173
Net change in unrealized appreciation (depreciation) on
investments.................................................. 64 4 - - 2 - - - (19,018) 83,295
------ --- --- --- --- --- --- --- ------- -------
Net increase (decrease) in net assets from operations... 59 10 (15) - 2 - - - 25,023 107,791
------ --- --- --- --- --- --- --- ------- -------
Contract transactions (note 5):
Purchase payments............................................ 1,091 210 118 - 12 - 4 - 55,334 80,822
Transfers between funds...................................... 706 159 856 - 110 - 53 - - -
Surrenders and terminations.................................. (8) - - - - - - - (38,920) (74,020)
Rescissions.................................................. (16) - - - - - - - (878) (1,772)
Other transactions (note 2).................................. - - - - - - - - 223 49
------ --- --- --- --- --- --- --- ------- -------
Net increase (decrease) in net assets resulting from
contract transactions.................................. 1,773 369 974 - 122 - 57 - 15,759 5,079
------ --- --- --- --- --- --- --- ------- -------
Increase (decrease) in net assets............................. 1,832 379 959 - 124 - 57 - 40,782 112,870
------ --- --- --- --- --- --- --- ------- -------
Net assets at beginning of period............................. 379 - - - - - - - 690,314 577,444
------ --- --- --- --- --- --- --- ------- -------
Net assets at end of period................................... $2,211 379 959 - 124 - 57 - 731,096 690,314
====== === === === === === === === ======= =======
<FN>
See accompanying notes to unaudited financial statements.
</FN>
</TABLE>
<PAGE>
PREFERRED LIFE VARIABLE ACCOUNT C
OF PREFERRED LIFE INSURANCE COMPANY OF NEW YORK
================================================================================
Notes to Financial Statements
June 30, 1996 (unaudited)
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 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. The Small Cap Fund, Capital Growth Fund and Templeton
International Smaller Companies Fund were added as available investment options
on June 10, 1996.
On May 1, 1995, the Equity Growth Fund name was changed to Growth and Income
Fund. The Global Income Fund name was changed to Templeton Global Income
Securities Fund on May 1, 1996.
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 period ended June 30, 1996 (unaudited)
and the year ended December 31, 1995 were $227,670 and $475,980, respectively.
These contract charges are reflected in the Statements of Changes in Net Assets
as other transactions.
<PAGE>
PREFERRED LIFE VARIABLE ACCOUNT C
OF PREFERRED LIFE INSURANCE COMPANY OF NEW YORK
================================================================================
Notes to Financial Statements (cont.)
June 30, 1996 (unaudited)
2. Significant Accounting Policies (cont.)
Expenses (cont.)
Contract Based Expenses (cont.)
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>
Years Since Payment Charge
------------------- ------
<S> <C> <C>
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 period ended June 30, 1996 (unaudited) and
the year ended December 31, 1995 were $496,376 and $1,304,496, 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 period ended June 30, 1996 (unaudited) and the
year ended December 31, 1995 were $6,936 and $9,505, 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 period ended June 30, 1996 (unaudited)
(in thousands):
<TABLE>
<CAPTION>
<S> <C>
Money Market Fund................................. $ 24,515
Growth and Income Fund............................ 27,380
Precious Metals Fund.............................. 4,578
High Income Fund.................................. 8,973
Real Estate Securities Fund....................... 1,936
U.S. Government Securities Fund................... 6,959
Utility Equity Fund............................... 6,813
Zero Coupon Fund - 2000........................... 2,778
Zero Coupon Fund - 2005........................... 1,229
Zero Coupon Fund - 2010........................... 1,640
Templeton Global Income Securities Fund........... 2,913
Investment Grade Intermediate Bond Fund........... 1,427
Income Securities Fund............................ 10,217
Adjustable U.S. Government Fund................... 1,825
Templeton Pacific Growth Fund..................... 8,157
Rising Dividends Fund............................. 4,819
Templeton International Equity Fund............... 11,588
Templeton Developing Markets Equity Fund.......... 3,432
Templeton Global Growth Fund...................... 6,563
Templeton Global Asset Allocation Fund............ 1,781
Small Cap Fund.................................... 1,382
Capital Growth Fund............................... 123
Templeton International Smaller Companies Fund.... 57
</TABLE>
<PAGE>
PREFERRED LIFE VARIABLE ACCOUNT C
OF PREFERRED LIFE INSURANCE COMPANY OF NEW YORK
================================================================================
Notes to Financial Statements (cont.)
June 30, 1996 (unaudited)
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.
5. Contract Transactions - Unit Activity (In thousands)
Transactions in units for each fund for the period ended June 30, 1996
(unaudited) and the year ended December 31, 1995 were as follows:
<TABLE>
<CAPTION>
U.S. Zero
Money Growth and Precious High Real Estate Government Utility Coupon
Market Income Metals Income Securities Securities Equity Fund -
Fund Fund Fund Fund Fund Fund Fund 1995
----- ------- ------ ----- ------- -------- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Accumulation units outstanding at December 31, 1994.... 2,487 3,452 647 1,710 900 5,331 6,317 344
Contract transactions:
Purchase payments..................................... 809 638 38 314 53 450 333 7
Transfers between funds............................... (344) 626 (75) 305 (76) 12 4 (273)
Surrenders and terminations........................... (721) (355) (94) (247) (82) (701) (730) (78)
Rescissions........................................... (12) (16) (1) (9) - (7) (5) -
Other transactions.................................... (1) 1 1 2 (1) 4 (3) -
----- ------- ------ ----- ------- -------- ----- -----
Net increase (decrease) in accumulation units
resulting from contract transactions............ (269) 894 (131) 365 (106) (242) (401) (344)
----- ------- ------ ----- ------- -------- ----- -----
Accumulation units outstanding at December 31, 1995.... 2,218 4,346 516 2,075 794 5,089 5,916 -
===== ======= ====== ===== ======= ======== ====== =====
Contract transactions (unaudited):
Purchase payments..................................... 559 541 45 190 38 225 189 -
Transfers between funds............................... (232) 443 50 (170) 5 (183) (265) -
Surrenders and terminations........................... (250) (218) (27) (141) (31) (295) (351) -
Rescissions........................................... (5) (10) (1) - - (4) (2) -
Other transactions.................................... - (1) - - 2 1 - -
----- ------- ------ ----- ------- -------- ----- -----
Net increase (decrease) in accumulation units
resulting from contract transactions............ 72 755 67 (121) 14 (256) (429) -
----- ------- ------ ----- ------- -------- ----- -----
Accumulation units outstanding at June 30, 1996
(unaudited)........................................... 2,290 5,101 583 1,954 808 4,833 5,487 -
===== ======= ====== ===== ======= ======== ====== =====
</TABLE>
<PAGE>
PREFERRED LIFE VARIABLE ACCOUNT C
OF PREFERRED LIFE INSURANCE COMPANY OF NEW YORK
================================================================================
Notes to Financial Statements (cont.)
June 30, 1996 (unaudited)
<TABLE>
<CAPTION>
5. Contract Transactions - Unit Activity (In thousands) (cont.)
Zero Zero Zero Templeton Investment Adjustable Templeton
Coupon Coupon Coupon Global Income Grade Income U.S. Pacific
Fund - Fund - Fund - Securities Intermediate Securities Government Growth
2000 2005 2010 Fund Bond Fund Fund Fund Fund
------ ------ ------ ---------- -------- ------ -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Accumulation units outstanding at
December 31, 1994............................. 1,158 403 252 1,667 1,085 4,416 1,767 2,112
Contract transactions:
Purchase payments............................. 273 79 73 124 94 502 296 180
Transfers between funds....................... 98 14 76 (148) (38) 168 (591) (298)
Surrenders and terminations................... (107) (37) (27) (167) (114) (501) (172) (181)
Rescissions................................... (5) (3) (2) (4) (7) (17) (9) (2)
Other transactions............................ (1) - - - 2 (1) - -
----- ----- ----- ------- ------ ------ ------- -------
Net increase (decrease) in accumulation
units resulting from contract
transactions............................ 258 53 120 (195) (63) 151 (476) (301)
----- ----- ----- ------- ------ ------ ------- -------
Accumulation units outstanding at
December 31, 1995............................. 1,416 456 372 1,472 1,022 4,567 1,291 1,811
===== ===== ===== ======= ====== ====== ======= =======
Contract transactions (unaudited):
Purchase payments............................. 81 44 33 61 47 316 107 83
Transfers between funds....................... (19) (23) (26) (26) (28) (25) (218) 80
Surrenders and terminations................... (60) (29) (13) (80) (54) (244) (83) (101)
Rescissions................................... (3) (2) - - (1) (10) (4) (1)
Other transactions............................ - - - 2 4 1 2 1
----- ----- ----- -------- ------- ------ ------- ------
Net increase (decrease) in accumulation
units resulting from contract
transactions............................ (1) (10) (6) (43) (32) 38 (196) 62
----- ----- ----- -------- ------- ------ -------- -------
Accumulation units outstanding at
June 30, 1996 (unaudited)..................... 1,415 446 366 1,429 990 4,605 1,095 1,873
===== ===== ===== ======== ======== ====== ======== =======
</TABLE>
<TABLE>
<CAPTION>
Templeton
Templeton Templeton Templeton Templeton International
Rising International Developing Global Global Asset Small Capital Smaller Total
Dividends Equity Markets Equity Growth Allocation Cap Growth Companies All
Fund Fund Fund Fund Fund Fund Fund Fund Funds
------ -------- --------- ------- -------- ---- ----- ---------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Accumulation units outstanding at
December 31, 1994.................. 2,936 4,079 591 922 - - - - 42,576
Contract transactions:
Purchase payments.................. 284 509 176 410 21 - - - 5,663
Transfers between funds............ 215 (146) 24 152 15 - - - (280)
Surrenders and terminations........ (246) (356) (35) (67) - - - - (5,018)
Rescissions........................ (7) (13) - (1) - - - - (120)
Other transactions................. - - 1 1 - - - - 5
------ -------- --------- ------- -------- ---- ----- --------- -------
Net increase (decrease) in
accumulation units resulting
from contract transactions... 246 (6) 166 495 36 - - - 250
------ -------- --------- ------- -------- ---- ----- --------- -------
Accumulation units outstanding at
December 31, 1995.................. 3,182 4,073 757 1,417 36 - - - 42,826
====== ======== ========= ======= ======== ==== ===== ========= =======
Contract transactions (unaudited):
Purchase payments.................. 226 259 111 322 97 10 1 - 3,585
Transfers between funds............ 80 211 117 194 63 70 11 5 114
Surrenders and terminations........ (133) (205) (23) (41) (1) - - - (2,380)
Rescissions........................ (5) - (2) (4) (1) - - - (55)
Other transactions................. 2 2 - 1 - - - - 17
------ -------- --------- ------- -------- ---- ----- --------- -------
Net increase (decrease) in
accumulation units resulting
from contract transactions... 170 267 203 472 158 80 12 5 1,281
------ -------- --------- ------- -------- ---- ----- --------- -------
Accumulation units outstanding at
June 30, 1996 (unaudited).......... 3,352 4,340 960 1,889 194 80 12 5 44,107
====== ======== ========= ======= ======== ==== ===== ========= ========
</TABLE>
