<TABLE>
<CAPTION>
PREFERRED LIFE VARIABLE ACCOUNT C
OF PREFERRED LIFE INSURANCE COMPANY OF NEW YORK
Financial Statements
Statements of Assets and Liabilities
June 30, 1997 (unaudited)
(in thousands)
Mutual
Capital Growth and High Income Money Discovery
Growth Income Income Securities Market Securities
Fund Fund Fund Fund Fund Fund
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Investments at net asset value:
Franklin Valuemark Funds:
Capital Growth Fund, 399 shares, cost $4,524 $4,977 - - - - -
Growth and Income Fund, 6,030 shares, cost $92,458 - 112,092 - - - -
High Income Fund, 3,016 shares, cost $40,170 - - 40,986 - - -
Income Securities Fund, 5,864 shares, cost $89,794 - - - 98,105 - -
Money Market Fund, 31,434 shares, cost $31,434 - - - - 31,434 -
Mutual Discovery Securities Fund, 490 shares, cost $5,268 - - - - - 5,550
- ---------------------------------------------------------------------------------------------------------------------------
Total assets 4,977 112,092 40,986 98,105 31,434 5,550
- ---------------------------------------------------------------------------------------------------------------------------
Liabilities:
Accrued mortality and expense risk charges 3 13 6 12 5 3
Accrued administrative charges - 2 1 2 1 1
- ---------------------------------------------------------------------------------------------------------------------------
Total liabilities 3 15 7 14 6 4
- ---------------------------------------------------------------------------------------------------------------------------
Net assets $4,974 112,077 40,979 98,091 31,428 5,546
===========================================================================================================================
Contract owners' equity (note 4) $4,974 112,077 40,979 98,091 31,428 5,546
===========================================================================================================================
<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 (continued)
Statements of Assets and Liabilities (cont.)
June 30, 1997 (unaudited)
(in thousands)
Mutual Natural Templeton
Shares Resources Real Estate Rising Small Developing
Securities Securities Securities Dividends Cap Markets Equity
Fund Fund Fund Fund Fund Fund
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Investments at net asset value:
Franklin Valuemark Funds:
Mutual Shares Securities Fund, 955 shares, cost $10,221 $10,638 - - - - -
Natural Resources Securities Fund, 506 shares,
cost $7,433 - 6,514 - - - -
Real Estate Securities Fund, 1,022 shares, cost $17,627 - - 23,326 - - -
Rising Dividends Fund, 3,512 shares, cost $41,128 - - - 60,438 - -
Small Cap Fund, 657 shares, cost $8,477 - - - - 9,095 -
Templeton Developing Markets Equity Fund,
1,196 shares, cost $12,979 - - - - - 16,113
- ---------------------------------------------------------------------------------------------------------------------------
Total assets 10,638 6,514 23,326 60,438 9,095 16,113
- ---------------------------------------------------------------------------------------------------------------------------
Liabilities:
Accrued mortality and expense risk charges 3 3 5 8 3 4
Accrued administrative charges - - 1 1 - 1
- ---------------------------------------------------------------------------------------------------------------------------
Total liabilities 3 3 6 9 3 5
- ---------------------------------------------------------------------------------------------------------------------------
Net assets $10,635 6,511 23,320 60,429 9,092 16,108
===========================================================================================================================
Contract owners' equity (note 4) $10,635 6,511 23,320 60,429 9,092 16,108
===========================================================================================================================
<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 (continued)
Statements of Assets and Liabilities (cont.)
June 30, 1997 (unaudited)
(in thousands)
Templeton
Templeton Templeton Templeton Templeton International Templeton
Global Asset Global Global Income International Smaller Pacific
Allocation Growth Securities Equity Companies Growth
Fund Fund Fund Fund Fund Fund
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Investments at net asset value:
Franklin Valuemark Funds:
Templeton Global Asset Allocation Fund,
386 shares, cost $4,514 $5,186 - - - - -
Templeton Global Growth Fund,
2,420 shares, cost $28,911 - 37,238 - - - -
Templeton Global Income Securities Fund,
1,586 shares, cost $20,383 - - 20,141 - - -
Templeton International Equity Fund,
4,854 shares, cost $64,984 - - - 79,745 - -
Templeton International Smaller Companies Fund,
146 shares, cost $1,620 - - - - 1,732 -
Templeton Pacific Growth Fund,
1,600 shares, cost $22,427 - - - - - 23,872
- ---------------------------------------------------------------------------------------------------------------------------
Total assets 5,186 37,238 20,141 79,745 1,732 23,872
- ---------------------------------------------------------------------------------------------------------------------------
Liabilities:
Accrued mortality and expense risk charges 3 6 4 10 3 4
Accrued administrative charges - 1 1 1 - 1
- ---------------------------------------------------------------------------------------------------------------------------
Total liabilities 3 7 5 11 3 5
===========================================================================================================================
Net assets $5,183 37,231 20,136 79,734 1,729 23,867
- ---------------------------------------------------------------------------------------------------------------------------
Contract owners' equity (note 4) $5,183 37,231 20,136 79,734 1,729 23,867
===========================================================================================================================
<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 (continued)
Statements of Assets and Liabilities (cont.)
June 30, 1997 (unaudited)
(in thousands)
U.S. Government Utility Zero Zero Zero Total
Securities Equity Coupon Coupon Coupon All
Fund Fund Fund - 2000 Fund - 2005 Fund - 2010 Funds
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Investments at net asset value:
Franklin Valuemark Funds:
U.S. Government Securities Fund, 6,968 shares,
cost $93,099 $92,048 - - - -
Utility Equity Fund, 5,466 shares, cost $89,789 - 94,122 - - -
Zero Coupon Fund - 2000, 1,575 shares, cost $22,787 - - 22,785 - -
Zero Coupon Fund - 2005, 472 shares, cost $7,111 - - - 7,379 -
Zero Coupon Fund - 2010, 415 shares, cost $6,252 - - - - 6,469
- ---------------------------------------------------------------------------------------------------------------------------
Total assets 92,048 94,122 22,785 7,379 6,469 809,985
- ---------------------------------------------------------------------------------------------------------------------------
Liabilities:
Accrued mortality and expense risk charges 12 12 4 3 3 132
Accrued administrative charges 1 1 1 1 1 19
- ---------------------------------------------------------------------------------------------------------------------------
Total liabilities 13 13 5 4 4 151
- ---------------------------------------------------------------------------------------------------------------------------
Net assets $92,035 94,109 22,780 7,375 6,465 809,834
===========================================================================================================================
Contract owners' equity (note 4) $92,035 94,109 22,780 7,375 6,465 809,834
===========================================================================================================================
<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 (continued)
Statements of Operations
For the period ended June 30, 1997 (unaudited)
(in thousands)
Mutual
Capital Growth and High Income Money Discovery
Growth Income Income Securities Market Securities
Fund Fund Fund Fund Fund Fund
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Dividends reinvested in fund shares $ 7 3,629 3,340 7,199 835 2
- ---------------------------------------------------------------------------------------------------------------------------
Expenses:
Mortality and expense risk charges 24 650 257 613 207 17
Administrative charges 3 78 31 74 25 2
- ---------------------------------------------------------------------------------------------------------------------------
Total expenses 27 728 288 687 232 19
- ---------------------------------------------------------------------------------------------------------------------------
Investment income (loss), net (20) 2,901 3,052 6,512 603 (17)
Realized gains (losses) and unrealized appreciation
(depreciation) on investments:
Realized capital gain distributions on mutual funds - 3,519 110 1,546 - -
Realized gains (losses) on sales of investments, net 10 1,200 890 1,027 - 1
- ---------------------------------------------------------------------------------------------------------------------------
Realized gains (losses) on investments, net 10 4,719 1,000 2,573 - 1
Net change in unrealized appreciation
(depreciation) on investments 368 4,318 (2,444) (3,512) - 278
- ---------------------------------------------------------------------------------------------------------------------------
Total realized gains (losses) and unrealized
appreciation (depreciation) on investments, net 378 9,037 (1,444) (939) - 279
- ---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from operations $358 11,938 1,608 5,573 603 262
===========================================================================================================================
<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 (continued)
Statements of Operations (cont.)
For the period ended June 30, 1997 (unaudited)
(in thousands)
Mutual Natural Templeton
Shares Resources Real Estate Rising Small Developing
Securities Securities Securities Dividends Cap Markets Equity
Fund Fund Fund Fund Fund Fund
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Dividends reinvested in fund shares $ 4 102 661 884 20 167
- ---------------------------------------------------------------------------------------------------------------------------
Expenses:
Mortality and expense risk charges 32 45 135 345 45 88
Administrative charges 4 5 16 41 5 11
- ---------------------------------------------------------------------------------------------------------------------------
Total expenses 36 50 151 386 50 99
- ---------------------------------------------------------------------------------------------------------------------------
Investment income (loss), net (32) 52 510 498 (30) 68
Realized gains (losses) and unrealized
appreciation (depreciation) on investments:
Realized capital gain distributions on mutual funds - - 316 1,510 232 265
Realized gains (losses) on sales of investments, net - (161) 571 1,125 52 99
- ---------------------------------------------------------------------------------------------------------------------------
Realized gains (losses) on investments, net - (161) 887 2,635 284 364
Net change in unrealized appreciation
(depreciation) on investments 410 (641) 64 4,894 403 1,925
- ---------------------------------------------------------------------------------------------------------------------------
Total realized gains (losses) and unrealized
appreciation (depreciation) on investments, net 410 (802) 951 7,529 687 2,289
- ---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from operations $378 (750) 1,461 8,027 657 2,357
===========================================================================================================================
<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 (continued)
Statements of Operations (cont.)
For the period ended June 30, 1997 (unaudited)
(in thousands)
Templeton
Templeton Templeton Templeton Templeton International Templeton
Global Asset Global Global Income International Smaller Pacific
Allocation Growth Securities Equity Companies Growth
Fund Fund Fund Fund Fund Fund
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Dividends reinvested in fund shares $ 96 570 1,440 2,045 9 438
- ---------------------------------------------------------------------------------------------------------------------------
Expenses:
Mortality and expense risk charges 27 206 130 460 8 150
Administrative charges 3 25 16 55 1 18
- ---------------------------------------------------------------------------------------------------------------------------
Total expenses 30 231 146 515 9 168
- ---------------------------------------------------------------------------------------------------------------------------
Investment income (loss), net 66 339 1,294 1,530 - 270
Realized gains (losses) and unrealized
appreciation (depreciation) on investments:
Realized capital gain distributions on mutual funds 28 190 - 3,136 - -
Realized gains (losses) on sales of investments, net 20 130 113 971 6 173
- ---------------------------------------------------------------------------------------------------------------------------
Realized gains (losses) on investments, net 48 320 113 4,107 6 173
Net change in unrealized appreciation
(depreciation) on investments 269 3,497 (1,513) 3,514 64 51
- ---------------------------------------------------------------------------------------------------------------------------
Total realized gains (losses) and unrealized
appreciation (depreciation) on investments, net 317 3,817 (1,400) 7,621 70 224
- ---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from operations $383 4,156 (106) 9,151 70 494
===========================================================================================================================
<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 (continued)
Statements of Operations (cont.)
For the period ended June 30, 1997 (unaudited)
(in thousands)
U.S. Government Utility Zero Zero Zero Total
Securities Equity Coupon Coupon Coupon All
Fund Fund Fund - 2000 Fund - 2005 Fund - 2010 Funds
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Dividends reinvested in fund shares $ 5,093 4,714 1,569 476 406 33,706
- ---------------------------------------------------------------------------------------------------------------------------
Expenses:
Mortality and expense risk charges 595 601 148 49 42 4,874
Administrative charges 71 72 18 6 5 585
- ---------------------------------------------------------------------------------------------------------------------------
Total expenses 666 673 166 55 47 5,459
- ---------------------------------------------------------------------------------------------------------------------------
Investment income (loss), net 4,427 4,041 1,403 421 359 28,247
Realized gains (losses) and unrealized
appreciation (depreciation) on investments:
Realized capital gain distributions on mutual funds - 6,522 35 2 3 17,414
Realized gains (losses) on sales of investments, net 185 1,563 143 126 72 8,316
- ---------------------------------------------------------------------------------------------------------------------------
Realized gains (losses) on investments, net 185 8,085 178 128 75 25,730
Net change in unrealized appreciation
(depreciation) on investments (1,803) (6,174) (1,207) (455) (385) 1,921
- ---------------------------------------------------------------------------------------------------------------------------
Total realized gains (losses) and unrealized
appreciation (depreciation) on investments, net (1,618) 1,911 (1,029) (327) (310) 27,651
- ---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from operations $ 2,809 5,952 374 94 49 55,898
===========================================================================================================================
<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 (continued)
Statements of Changes in Net Assets
For the period ended June 30, 1997 (unaudited) and the year ended December 31, 1996
(in thousands)
Adjustable U.S. Capital Growth and
Government Fund Growth Fund Income Fund High Income Fund
- ---------------------------------------------------------------------------------------------------------------------------
1997 1996 1997 1996 1997 1996 1997 1996
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Investment income (loss), net $ - 852 (20) (8) 2,901 813 3,052 2,395
Realized gains (losses) on investments, net - (733) 10 20 4,719 9,008 1,000 1,332
Net change in unrealized appreciation
(depreciation) on investments - 356 368 84 4,318 960 (2,444) 754
- ---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
from operations - 475 358 96 11,938 10,781 1,608 4,481
- ---------------------------------------------------------------------------------------------------------------------------
Contract transactions (note 4):
Purchase payments - 1,552 1,092 788 5,173 15,819 3,607 5,922
Transfers between funds - (15,809) 1,087 1,776 4,824 6,402 (2,981) 1,603
Surrenders and terminations - (1,613) (67) (128) (8,588)(9,128) (3,192)(5,831)
Rescissions - (53) (24) (3) (107) (264) (18) (53)
Other transactions (note 2) - 25 (1) - 16 (29) 34 (9)
- ---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from contract transactions - (15,898) 2,087 2,433 1,318 12,800 (2,550) 1,632
- ---------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets - (15,423) 2,445 2,529 13,256 23,581 (942) 6,113
Net assets at beginning of period - 15,423 2,529 - 98,821 75,240 41,921 35,808
- ---------------------------------------------------------------------------------------------------------------------------
Net assets at end of period $ - - 4,974 2,529 112,077 98,821 40,979 41,921
===========================================================================================================================
<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 (continued)
Statements of Changes in Net Assets (cont.)
For the period ended June 30, 1997 (unaudited) and the year ended December 31, 1996
(in thousands)
Investment Mutual
Grade Discovery
Income Intermediate Money Securities Mutual Shares
Securities Fund Bond Fund Market Fund Fund Securities Fund
- ---------------------------------------------------------------------------------------------------------------------------
1997 1996 1997 1996 1997 1996 1997 1996 1997 1996
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Investment income (loss), net $ 6,512 3,485 - 638 603 1,165 (17) - (32) -
Realized gains (losses) on
investments, net 2,573 1,687 - 360 - - 1 - - -
Net change in unrealized appreciation
(depreciation) on investments (3,512) 3,616 - (737) - - 278 3 410 8
- ---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in
net assets from operations 5,573 8,788 - 261 603 1,165 262 3 378 8
- ---------------------------------------------------------------------------------------------------------------------------
Contract transactions (note 4):
Purchase payments 3,686 10,882 - 939 7,388 14,336 1,725 18 4,541 50
Transfers between funds (1,913) (1,355) -(15,408) (3,285)(3,631) 3,462 257 5,512 384
Surrenders and terminations (7,354)(10,309) - (1,630) (5,779)(7,844) (164) - (227) -
Rescissions (31) (259) - (14) (21) (83) (15) - (12) -
Other transactions (note 2) 21 (1) - 40 14 (6) (2) - 1 -
- ---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net
assets resulting from
contract transactions (5,591) (1,042) -(16,073) (1,683) 2,772 5,006 275 9,815 434
- ---------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets (18) 7,746 -(15,812) (1,080) 3,937 5,268 278 10,193 442
Net assets at beginning of period 98,109 90,363 - 15,812 32,508 28,571 278 - 442 -
- ---------------------------------------------------------------------------------------------------------------------------
Net assets at end of period $98,091 98,109 - - 31,428 32,508 5,546 278 10,635 442
===========================================================================================================================
<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 (continued)
Statements of Changes in Net Assets (cont.)
For the period ended June 30, 1997 (unaudited) and the year ended December 31, 1996
(in thousands)
Natural Resources Real Estate Rising
Securities Fund Securities Fund Dividends Fund Small Cap Fund
- ---------------------------------------------------------------------------------------------------------------------------
1997 1996 1997 1996 1997 1996 1997 1996
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Investment income (loss), net $ 52 (13) 510 422 498 278 (30) (21)
Realized gains (losses) on investments, net (161) 506 887 475 2,635 932 284 95
Net change in unrealized appreciation
(depreciation) on investments (641) (480) 64 3,748 4,894 8,111 403 215
- ---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net
assets from operations (750) 13 1,461 4,645 8,027 9,321 657 289
- ---------------------------------------------------------------------------------------------------------------------------
Contract transactions (note 4):
Purchase payments 194 1,159 1,657 1,633 3,101 5,191 1,574 1,263
Transfers between funds (237) 669 1,350 1,434 1,552 2,038 1,866 3,907
Surrenders and terminations (885) (915) (1,488)(1,728) (4,163)(4,321) (335) (74)
Rescissions - (13) - (21) (32) (78) (37) (15)
Other transactions (note 2) - (2) 5 28 10 13 (2) (1)
- ---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from contract transactions (928) 898 1,524 1,346 468 2,843 3,066 5,080
- ---------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets (1,678) 911 2,985 5,991 8,495 12,164 3,723 5,369
Net assets at beginning of period 8,189 7,278 20,335 14,344 51,934 39,770 5,369 -
- ---------------------------------------------------------------------------------------------------------------------------
Net assets at end of period $ 6,511 8,189 23,320 20,335 60,429 51,934 9,092 5,369
===========================================================================================================================
<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 (continued)
Statements of Changes in Net Assets (cont.)
For the period ended June 30, 1997 (unaudited) and the year ended December 31, 1996
(in thousands)
Templeton Templeton Templeton
Developing Markets Global Asset Templeton Global Global Income
Equity Fund Allocation Fund Growth Fund Securities Fund
- ---------------------------------------------------------------------------------------------------------------------------
1997 1996 1997 1996 1997 1996 1997 1996
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Investment income (loss), net $ 68 (52) 66 (29) 339 42 1,294 1,378
Realized gains (losses) on investments, net 364 297 48 18 320 495 113 107
Net change in unrealized appreciation
(depreciation) on investments 1,925 1,405 269 398 3,497 3,541 (1,513) 271
- ---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net
assets from operations 2,357 1,650 383 387 4,156 4,078 (106) 1,756
- ---------------------------------------------------------------------------------------------------------------------------
Contract transactions (note 4):
Purchase payments 1,351 2,224 767 1,950 3,631 6,947 653 1,712
Transfers between funds 1,105 1,512 470 1,240 1,968 3,817 (1,378) (928)
Surrenders and terminations (650) (633) (178) (162) (1,552)(1,698) (1,783)(2,722)
Rescissions (23) (32) (18) (35) (70) (114) - (1)
Other transactions (note 2) (2) (6) - - (5) 13 31 50
- ---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from contract transactions 1,781 3,065 1,041 2,993 3,972 8,965 (2,477)(1,889)
- ---------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets 4,138 4,715 1,424 3,380 8,128 13,043 (2,583) (133)
Net assets at beginning of period 11,970 7,255 3,759 379 29,103 16,060 22,719 22,852
- ---------------------------------------------------------------------------------------------------------------------------
Net assets at end of period $16,108 11,970 5,183 3,759 37,231 29,103 20,136 22,719
===========================================================================================================================
<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 (continued)
Statements of Changes in Net Assets (cont.)
For the period ended June 30, 1997 (unaudited) and the year ended December 31, 1996
(in thousands)
Templeton
Templeton International Templeton
International Smaller Pacific
Equity Fund Companies Fund Growth Fund
- ---------------------------------------------------------------------------------------------------------------------------
1997 1996 1997 1996 1997 1996
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Investment income (loss), net $ 1,530 734 - (3) 270 413
Realized gains (losses) on investments, net 4,107 2,946 6 2 173 1,371
Net change in unrealized appreciation (depreciation) on investments 3,514 8,342 64 48 51 605
- ---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from operations 9,151 12,022 70 47 494 2,389
- ---------------------------------------------------------------------------------------------------------------------------
Contract transactions (note 4):
Purchase payments 2,907 6,974 412 229 258 2,063
Transfers between funds 1,990 3,648 548 446 (1,408) 439
Surrenders and terminations (4,636) (6,296) (23) - (1,613)(3,400)
Rescissions (46) (18) - - (14) (20)
Other transactions (note 2) 6 14 - - 2 (17)
- ---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from contract transactions 221 4,322 937 675 (2,775) (935)
- ---------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets 9,372 16,344 1,007 722 (2,281) 1,454
Net assets at beginning of period 70,362 54,018 722 - 26,148 24,694
- ---------------------------------------------------------------------------------------------------------------------------
Net assets at end of period $79,734 70,362 1,729 722 23,867 26,148
===========================================================================================================================
<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 (continued)
Statements of Changes in Net Assets (cont.)
For the period ended June 30, 1997 (unaudited) and the year ended December 31, 1996
(in thousands)
U.S. Government Zero Coupon Zero Coupon
Securities Fund Utility Equity Fund Fund- 2000 Fund- 2005
- ---------------------------------------------------------------------------------------------------------------------------
1997 1996 1997 1996 1997 1996 1997 1996
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Investment income (loss), net $ 4,427 4,323 4,041 3,967 1,403 1,049 421 340
Realized gains (losses) on investments, net 185 (40) 8,085 1,652 178 169 128 133
Net change in unrealized appreciation
(depreciation) on investments (1,803) (2,399) (6,174) (4) (1,207) (990) (455) (672)
- ---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
from operations 2,809 1,884 5,952 5,615 374 228 94 (199)
- ---------------------------------------------------------------------------------------------------------------------------
Contract transactions (note 4):
Purchase payments 2,918 7,463 1,230 5,199 420 2,220 270 1,208
Transfers between funds (5,098) 19,458 (6,632) (9,257) (1,227)(1,036) (767) (671)
Surrenders and terminations (8,721)(11,371) (9,715)(14,003) (1,868)(2,141) (997)(1,026)
Rescissions (44) (165) - (61) - (85) - (64)
Other transactions (note 2) (14) (19) 49 (11) (4) (10) (2) (2)
- ---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from contract transactions (10,959) 15,366 (15,068)(18,133) (2,679)(1,052) (1,496) (555)
- ---------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets (8,150) 17,250 (9,116)(12,518) (2,305) (824) (1,402) (754)
Net assets at beginning of period 100,185 82,935 103,225 115,743 25,085 25,909 8,777 9,531
- ---------------------------------------------------------------------------------------------------------------------------
Net assets at end of period $ 92,035 100,185 94,109 103,225 22,780 25,085 7,375 8,777
===========================================================================================================================
<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 (continued)
Statements of Changes in Net Assets (cont.)
For the period ended June 30, 1997 (unaudited) and the year ended December 31, 1996
(in thousands)
Zero Coupon
Fund- 2010 Total All Funds
- ---------------------------------------------------------------------------------------------------------------------------
1997 1996 1997 1996
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase (decrease) in net assets:
Operations:
Investment income (loss), net $ 359 291 28,247 22,459
Realized gains (losses) on investments, net 75 294 25,730 21,126
Net change in unrealized appreciation (depreciation) on investments (385) (957) 1,921 26,226
- ---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from operations 49 (372) 55,898 69,811
- ---------------------------------------------------------------------------------------------------------------------------
Contract transactions (note 4):
Purchase payments 141 1,097 48,696 98,838
Transfers between funds (808) (935) - -
Surrenders and terminations (407) (595) (64,385)(87,568)
Rescissions - (27) (512) (1,478)
Other transactions (note 2) (2) (5) 155 65
- ---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from contract transactions (1,076) (465) (16,046) 9,857
- ---------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets (1,027) (837) 39,852 79,668
Net assets at beginning of period 7,492 8,329 769,982 690,314
- ---------------------------------------------------------------------------------------------------------------------------
Net assets at end of period $ 6,465 7,492 809,834 769,982
===========================================================================================================================
<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, 1997 (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. and its Templeton and Franklin affiliates, 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 Small Cap Fund, Capital Growth Fund and Templeton International Smaller
Companies Fund were added as available investment options on June 10, 1996. The
Mutual Discovery Securities Fund and Mutual Shares Securities Fund were added as
available investment options on December 2, 1996. The Investment Grade
Intermediate Bond Fund and Adjustable U.S. Government Fund were closed on Octo-
ber 25, 1996 when shares of the U.S. Government Securities Fund were substituted
for all shares of both funds.
On May 1, 1996, the Global Income Fund name was changed to Templeton Global
Income Securities Fund. The Precious Metals Fund name was changed to Natural
Resources Securities Fund on May 1, 1997.
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.
<PAGE>
PREFERRED LIFE VARIABLE ACCOUNT C
OF PREFERRED LIFE INSURANCE COMPANY OF NEW YORK
Notes to Financial Statements (continued)
June 30, 1997 (unaudited)
2. SIGNIFICANT ACCOUNTING POLICIES (cont.)
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, 1997 (unaudited)
and the year ended December 31, 1996 were $244,540 and $468,180, respectively.
These contract charges are reflected in the Statements of Changes in Net Assets
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:
Years Since Payment Charge
- --------------------------------------
0-1 5%
1-2 5%
2-3 4%
3-4 3%
4-5 1.5%
5 + 0%
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, 1997 (unaudited) and
the year ended December 31, 1996 were $534,856 and $1,012,666, 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, 1997 (unaudited) and the
year ended December 31, 1996 were $4,306 and $11,086, 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. 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>
PREFERRED LIFE VARIABLE ACCOUNT C
OF PREFERRED LIFE INSURANCE COMPANY OF NEW YORK
Notes to Financial Statements (continued)
June 30, 1997 (unaudited)
4. CONTRACT TRANSACTIONS - UNIT ACTIVITY (IN THOUSANDS)
Transactions in units for each fund for the period ended June 30, 1997
(unaudited) and the year ended December 31, 1996 were as follows:
<TABLE>
<CAPTION>
Adjustable Investment Mutual Mutual
U.S. Capital Growth and High Income Grade Money Discovery Shares
Government Growth Income Income Securities Intermediate Market Securities Securities
Fund Fund Fund Fund Fund Bond Fund Fund Fund Fund
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Accumulation units outstanding
at December 31, 1995 1,291 - 4,346 2,075 4,567 1,022 2,218 - -
Contract transactions:
Purchase payments 128 71 882 329 537 61 1,093 2 5
Transfers between funds (1,284) 165 360 84 (69) (980) (274) 25 38
Surrenders and terminations (133) (11) (501) (321) (503) (105) (597) - -
Rescissions (4) - (15) (3) (13) (1) (6) - -
Other transactions 2 - (2) - - 3 (1) - -
- ---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in
accumulation units resulting
from contract transactions (1,291) 225 724 89 (48) (1,022) 215 27 43
- ---------------------------------------------------------------------------------------------------------------------------
Accumulation units outstanding
at December 31, 1996 - 225 5,070 2,164 4,519 - 2,433 27 43
===========================================================================================================================
Contract transactions (unaudited):
Purchase payments - 94 252 182 166 - 546 160 425
Transfers between funds - 94 224 (153) (87) - (239) 323 517
Surrenders and terminations - (6) (419) (162) (331) - (429) (15) (21)
Rescissions - (2) (5) (1) (1) - (2) (1) (1)
Other transactions - - 1 2 1 - 1 - -
- ---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in
accumulation units resulting
from contract transactions - 180 53 (132) (252) - (123) 467 920
- ---------------------------------------------------------------------------------------------------------------------------
Accumulation units outstanding at
June 30, 1997 (unaudited) - 405 5,123 2,032 4,267 - 2,310 494 963
===========================================================================================================================
</TABLE>
<PAGE>
PREFERRED LIFE VARIABLE ACCOUNT C
OF PREFERRED LIFE INSURANCE COMPANY OF NEW YORK
Notes to Financial Statements (continued)
June 30, 1997 (unaudited)
4. CONTRACT TRANSACTIONS- UNIT ACTIVITY (IN THOUSANDS) (cont.)
<TABLE>
<CAPTION>
Templeton
Natural Real Developing Templeton Templeton Templeton Templeton
Resources Estate Rising Small Markets Global Asset Global Global Income International
Securities Securities Dividends Cap Equity Allocation Growth Securities Equity
Fund Fund Fund Fund Fund Fund Fund Fund Fund
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Accumulation units outstanding
at December 31, 1995 516 794 3,182 - 757 36 1,417 1,472 4,073
Contract transactions:
Purchase payments 73 83 388 103 206 172 564 109 479
Transfers between funds 37 68 147 320 140 109 310 (58) 251
Surrenders and terminations (59) (87) (318) (6) (58) (14) (136) (172) (428)
Rescissions (1) (1) (6) (1) (3) (3) (10) - (1)
Other transactions - 2 1 - - - 1 3 1
- ---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in
accumulation units resulting
from contract transactions 50 65 212 416 285 264 729 (118) 302
- ---------------------------------------------------------------------------------------------------------------------------
Accumulation units outstanding at
December 31, 1996 566 859 3,394 416 1,042 300 2,146 1,354 4,375
===========================================================================================================================
Contract transactions (unaudited):
Purchase payments 14 69 191 125 107 60 255 39 173
Transfers between funds (21) 56 91 145 86 36 139 (83) 116
Surrenders and terminations (64) (62) (257) (27) (51) (14) (107) (108) (275)
Rescissions - - (2) (3) (2) (1) (5) - (3)
Other transactions - - 1 - - - - 2 -
- ---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in
accumulation units resulting
from contract transactions (71) 63 24 240 140 81 282 (150) 11
- ---------------------------------------------------------------------------------------------------------------------------
Accumulation units outstanding
at June 30, 1997 (unaudited) 495 922 3,418 656 1,182 381 2,428 1,204 4,386
===========================================================================================================================
</TABLE>
<PAGE>
PREFERRED LIFE VARIABLE ACCOUNT C
OF PREFERRED LIFE INSURANCE COMPANY OF NEW YORK
Notes to Financial Statements (continued)
June 30, 1997 (unaudited)
4. CONTRACT TRANSACTIONS- UNIT ACTIVITY (IN THOUSANDS) (cont.)
<TABLE>
<CAPTION>
Templeton
International Templeton U.S. Zero Zero Zero
Smaller Pacific Government Utility Coupon Coupon Coupon Total
Companies Growth Securities Equity Fund- Fund- Fund- All
Fund Fund Fund Fund 2000 2005 2010 Funds
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Accumulation units outstanding
at December 31, 1995 - 1,811 5,089 5,916 1,416 456 372 42,826
Contract transactions:
Purchase payments 22 140 462 265 123 61 54 6,412
Transfers between funds 43 32 1,177 (471) (56) (34) (47) 33
Surrenders and terminations - (230) (700) (708) (119) (52) (29) (5,287)
Rescissions - (1) (10) (3) (5) (3) (1) (91)
Other transactions - (1) (1) (1) (1) - (1) 5
- ---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in accumulation
units resulting from contract transactions 65 (60) 928 (918) (58) (28) (24) 1,072
- ---------------------------------------------------------------------------------------------------------------------------
Accumulation units outstanding at
December 31, 1996 65 1,751 6,017 4,998 1,358 428 348 43,898
===========================================================================================================================
Contract transactions (unaudited):
Purchase payments 36 18 174 59 23 13 7 3,188
Transfers between funds 48 (95) (303) (320) (67) (38) (39) 430
Surrenders and terminations (2) (110) (518) (466) (101) (49) (19) (3,613)
Rescissions - (1) (3) - - - - (33)
Other transactions - - (1) 2 - - - 9
- ---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in accumulation
units resulting from contract transactions 82 (188) (651) (725) (145) (74) (51) (19)
- ---------------------------------------------------------------------------------------------------------------------------
Accumulation units outstanding at
June 30, 1997 (unaudited) 147 1,563 5,366 4,273 1,213 354 297 43,879
===========================================================================================================================
</TABLE>
<PAGE>
PREFERRED LIFE VARIABLE ACCOUNT C
OF PREFERRED LIFE INSURANCE COMPANY OF NEW YORK
Notes to Financial Statements (continued)
June 30, 1997 (unaudited)
5. UNIT VALUES
A summary of accumulation unit values and accumulation units outstanding for
variable annuity contracts and the expense ratios, including expenses of the
underlying funds, for the six-month period ended June 30, 1997 (unaudited) and
each of the five years in the period ended December 31, 1996 follows.
<TABLE>
<CAPTION>
Accumulation Ratio of Expenses
Units Outstanding Accumulation Net Assets to Average
(in thousands) Unit Value (in thousands) Net Assets*
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ADJUSTABLE U.S. GOVERNMENT FUND
December 31,
19961 912 $12.389 $ 11,298 1.99+%
1995 1,290 11.951 15,423 1.99
1994 1,767 11.077 19,571 1.97
1993 1,971 11.254 22,179 1.98
1992 1,453 11.020 16,007 2.00
CAPITAL GROWTH FUND
June 30, 1997 (unaudited) 405 12.277 4,974 2.16
December 31,
19962 225 11.254 2,529 2.17+
GROWTH AND INCOME FUND
June 30, 1997 (unaudited) 5,123 21.877 112,077 1.88
December 31,
1996 5,070 19.490 98,821 1.90
1995 4,347 17.310 75,240 1.92
1994 3,452 13.215 45,616 1.94
1993 2,402 13.677 32,857 1.98
1992 1,227 12.574 15,424 2.02
HIGH INCOME FUND
June 30, 1997 (unaudited) 2,032 20.171 40,979 1.92
December 31,
1996 2,164 19.375 41,921 1.94
1995 2,076 17.252 35,808 1.96
1994 1,710 14.608 24,984 2.00
1993 1,135 15.155 17,207 2.04
1992 266 13.278 3,532 2.08
INCOME SECURITIES FUND
June 30, 1997 (unaudited) 4,267 22.989 98,091 1.90
December 31,
1996 4,519 21.708 98,109 1.90
1995 4,567 19.785 90,364 1.91
1994 4,416 16.392 72,389 1.94
1993 2,634 17.734 46,707 1.96
1992 668 15.163 10,128 2.07
</TABLE>
<PAGE>
PREFERRED LIFE VARIABLE ACCOUNT C
OF PREFERRED LIFE INSURANCE COMPANY OF NEW YORK
Notes to Financial Statements (continued)
June 30, 1997 (unaudited)
5. UNIT VALUES (cont.)
<TABLE>
<CAPTION>
Accumulation Ratio of Expenses
Units Outstanding Accumulation Net Assets to Average
(in thousands) Unit Value (in thousands) Net Assets*
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INVESTMENT GRADE INTERMEDIATE BOND FUND
December 31,
19961 891 $15.740 $ 14,032 2.00+%
1995 1,023 15.463 15,812 2.01
1994 1,085 14.257 15,470 2.03
1993 893 14.389 12,850 2.06
1992 352 13.442 4,725 2.08
MONEY MARKET FUND
June 30, 1997 (unaudited) 2,310 13.603 31,428 1.84
December 31,
1996 2,433 13.359 32,508 1.83
1995 2,218 12.883 28,571 1.80
1994 2,487 12.354 30,730 1.86
1993 627 12.066 7,566 2.06
1992 301 11.932 3,587 2.09
MUTUAL DISCOVERY SECURITIES FUND
June 30, 1997 (unaudited) 494 11.225 5,546 2.52
December 31,
19963 27 10.180 278 2.77+
MUTUAL SHARES SECURITIES FUND
June 30, 1997 (unaudited) 963 11.047 10,635 2.23
December 31,
19963 43 10.330 442 2.40+
NATURAL RESOURCES SECURITIES FUND
June 30, 1997 (unaudited) 495 13.141 6,511 2.06
December 31,
1996 566 14.467 8,189 2.05
1995 516 14.109 7,278 2.06
1994 647 13.979 9,050 2.08
1993 391 14.464 5,656 2.08
1992 30 9.424 279 2.09
REAL ESTATE SECURITIES FUND
June 30, 1997 (unaudited) 922 25.288 23,320 1.93
December 31,
1996 859 23.668 20,335 1.97
1995 794 18.073 14,344 1.99
1994 900 15.594 14,035 2.02
1993 437 15.369 6,712 2.07
1992 77 13.095 1,012 2.09
</TABLE>
<PAGE>
PREFERRED LIFE VARIABLE ACCOUNT C
OF PREFERRED LIFE INSURANCE COMPANY OF NEW YORK
Notes to Financial Statements (continued)
June 30, 1997 (unaudited)
5. UNIT VALUES (cont.)
<TABLE>
<CAPTION>
Accumulation Ratio of Expenses
Units Outstanding Accumulation Net Assets to Average
(in thousands) Unit Value (in thousands) Net Assets*
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
RISING DIVIDENDS FUND
June 30, 1997 (unaudited) 3,418 $17.679 $ 60,429 2.14%
December 31,
1996 3,394 15.303 51,934 2.16
1995 3,182 12.498 39,770 2.18
1994 2,936 9.769 28,685 2.20
1993 2,772 10.327 28,623 2.19
19924 617 10.848 6,696 2.07+
SMALL CAP FUND
June 30, 1997 (unaudited) 656 13.857 9,092 2.17
December 31,
19962 416 12.913 5,369 2.17+
TEMPLETON DEVELOPING MARKETS EQUITY FUND
June 30, 1997 (unaudited) 1,182 13.631 16,108 2.82
December 31,
1996 1,042 11.487 11,970 2.89
1995 757 9.582 7,254 2.81
19945 591 9.454 5,589 2.93+
TEMPLETON GLOBAL ASSET ALLOCATION FUND
June 30, 1997 (unaudited) 381 13.590 5,183 2.27
December 31,
1996 300 12.514 3,759 2.26
19956 36 10.591 379 2.30+
TEMPLETON GLOBAL GROWTH FUND
June 30, 1997 (unaudited) 2,428 15.334 37,231 2.29
December 31,
1996 2,146 13.560 29,103 2.33
1995 1,416 11.339 16,061 2.37
19945 922 10.201 9,400 2.54+
TEMPLETON GLOBAL INCOME SECURITIES FUND
June 30, 1997 (unaudited) 1,204 16.721 20,136 2.01
December 31,
1996 1,354 16.781 22,719 2.01
1995 1,472 15.522 22,851 2.04
1994 1,667 13.726 22,888 2.11
1993 1,045 14.650 15,302 2.13
1992 406 12.733 5,164 2.07
</TABLE>
<PAGE>
PREFERRED LIFE VARIABLE ACCOUNT C
OF PREFERRED LIFE INSURANCE COMPANY OF NEW YORK
Notes to Financial Statements (continued)
June 30, 1997 (unaudited)
5. UNIT VALUES (cont.)
<TABLE>
<CAPTION>
Accumulation Ratio of Expenses
Units Outstanding Accumulation Net Assets to Average
(in thousands) Unit Value (in thousands) Net Assets*
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
TEMPLETON INTERNATIONAL EQUITY FUND
June 30, 1997 (unaudited) 4,386 $18.180 $ 79,734 2.29%
December 31,
1996 4,375 16.081 70,362 2.29
1995 4,073 13.263 54,018 2.32
1994 4,079 12.161 49,607 2.39
1993 1,346 12.226 16,451 2.52
19924 88 9.642 849 3.17+
TEMPLETON INTERNATIONAL SMALLER COMPANIES FUND
June 30, 1997 (unaudited) 147 11.743 1,729 2.48
December 31,
19963 65 11.145 722 2.18+
TEMPLETON PACIFIC GROWTH FUND
June 30, 1997 (unaudited) 1,563 15.270 23,867 2.40
December 31,
1996 1,751 14.932 26,148 2.39
1995 1,812 13.630 24,693 2.41
1994 2,112 12.802 27,037 2.47
1993 915 14.233 13,023 2.54
19924 58 9.761 568 2.71+
U.S. GOVERNMENT SECURITIES FUND
June 30, 1997 (unaudited) 5,366 17.152 92,035 1.90
December 31,
1996 6,017 16.650 100,185 1.91
1995 5,089 16.298 82,935 1.92
1994 5,331 13.835 73,747 1.93
1993 6,108 14.698 89,774 1.94
1992 2,266 13.586 30,781 1.99
UTILITY EQUITY FUND
June 30, 1997 (unaudited) 4,273 22.024 94,109 1.90
December 31,
1996 4,998 20.654 103,225 1.90
1995 5,916 19.555 115,743 1.90
1994 6,317 15.104 95,415 1.92
1993 7,479 17.319 129,527 1.91
1992 2,519 15.889 40,022 1.95
</TABLE>
<PAGE>
PREFERRED LIFE VARIABLE ACCOUNT C
OF PREFERRED LIFE INSURANCE COMPANY OF NEW YORK
Notes to Financial Statements (continued)
June 30, 1997 (unaudited)
5. UNIT VALUES (cont.)
<TABLE>
<CAPTION>
Accumulation Ratio of Expenses
Units Outstanding Accumulation Net Assets to Average
(in thousands) Unit Value (in thousands) Net Assets*
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ZERO COUPON FUND- 2000
June 30, 1997 (unaudited) 1,213 $18.781 $ 22,780 1.80%
December 31,
1996 1,358 18.475 25,085 1.80
1995 1,416 18.294 25,910 1.80
1994 1,158 15.373 17,797 1.80
1993 795 16.717 13,297 1.77
1992 397 14.595 5,789 1.65
ZERO COUPON FUND- 2005
June 30, 1997 (unaudited) 354 20.815 7,375 1.80
December 31,
1996 428 20.517 8,777 1.80
1995 456 20.914 9,531 1.80
1994 403 16.096 6,483 1.80
1993 341 18.050 6,159 1.77
1992 108 14.975 1,622 1.65
ZERO COUPON FUND- 2010
June 30, 1997 (unaudited) 297 21.771 6,465 1.80
December 31,
1996 348 21.522 7,492 1.80
1995 371 22.431 8,329 1.80
1994 252 15.930 4,008 1.80
1993 193 18.144 3,502 1.65
1992 60 14.670 885 1.65
<FN>
* For the period ended June 30, 1997 (unaudited) or the year ended December 31,
including the effect of the expenses of the underlying funds.
+ Annualized.
1 Period from January 1, 1996 to October 25, 1996 (fund closure).
2 Period from June 10, 1996 (fund commencement) to December 31, 1996.
3 Period from December 2, 1996 (fund commencement) to December 31, 1996.
4 Period from March 10, 1992 (fund commencement) to December 31, 1992.
5 Period from April 25, 1994 (fund commencement) to December 31, 1994.
6 Period from August 4, 1995 (fund commencement) to December 31, 1995.
</FN>
</TABLE>
