<PAGE>
VIP Growth Fund
VIP Fixed Income Fund
VIP Diversified Assets Fund
[LOGO]
USAllianz VIP Funds
Annual Report
December 31, 1999
USAllianz Funds
[LOGO]
<PAGE>
This report is submitted for the general information of the shareholders of the
Funds. The report is not authorized for distribution to prospective investors
in the Funds unless preceded or accompanied by an effective prospectus, which
contains details concerning the sales charges and other pertinent information.
<PAGE>
Table of Contents
Letter to Shareholders
Page 1
Growth Fund Review
Page 4
Fixed Income Fund Review
Page 6
Diversified Assets Fund Review
Page 8
Schedules of Portfolio Investments
Page 10
Statements of Assets and Liabilities
Page 16
Statements of Operations
Page 17
Statements of Changes in Net Assets
Page 18
Notes to Financial Statements
Page 19
Financial Highlights
Page 22
Report of Independent Auditors
Page 25
<PAGE>
Letter to Shareholders
Dear Shareholders,
We are pleased to present this report for the new USAllianz Variable Insurance
Products Trust (the "USAllianz VIP Funds"), which includes three portfolios:
the Growth Fund, the Fixed Income Fund and the Diversified Assets Fund (each a
"Fund" and collectively the "Funds"). This report covers the period from the
Funds' inception on November 9, 1999 through December 31, 1999.
We introduced these Funds to provide our investors access to the asset
management services of Allianz of America, Inc., a subsidiary of Allianz AG. In
business for more than a century, Allianz AG is one of the world's largest
insurance companies, with businesses in 68 countries and 105,000 employees
worldwide. Allianz AG has also been awarded the highest ratings by AM Best
(A++) and Standard & Poor's (AAA).
A Strong Economy and Equity Market
The period from the Funds' inception through December 31, 1999, was
characterized by an unexpectedly strong economy, excellent performance by a
small number of stocks and poor performance by bonds. In November, the Federal
Reserve Board (the "Fed") increased interest rates for the third time during
the year in order to slow the economy and head off inflation.
Stock market averages performed exceptionally well, although gains were
concentrated among a small number of stocks. Investors especially favored the
earnings potential of technology and other growth-oriented firms, while value
stocks continued to lag.
The bond market was relatively flat during the period ended December 31, 1999,
after performing poorly throughout most of 1999. Yields stood at their highest
levels in years, due to the Fed's rate hikes and investors' fears that the
strong economy would ignite inflation. Yields began to increase further toward
the end of the period, as investors anticipated another rate hike at the Fed's
February meeting.
Looking Ahead
As anticipated, the Fed again raised interest rates in early February by one
quarter of a percentage point. Such an increase, combined with the Fed's three
earlier interest rate hikes, should slow the economy enough to help prevent an
uptick in inflation.
In this environment, we expect returns on equities to revert to levels closer
to their historical norms. We will continue to use bottom-up stock research to
identify companies with good long-term prospects, bearing in mind themes such
as the technology revolution and consolidation in the financial services
industry.
1
<PAGE>
The past year's high bond yields could fall if the Fed's interest rate hikes
are successful in slowing the economy and decreasing the likelihood of
inflation. We will continue to look for opportunities to lock in high yields
for shareholders in anticipation of an improving bond market.
We would like to remind shareholders that a long-term investment view is the
best way to achieve long-term financial goals. Such an approach will help you
weather short-term market volatility, allowing you to take advantage of the
financial markets' growth potential over time.
Thank you for your confidence in the USAllianz VIP Funds. We will work hard to
retain that trust, bringing to bear our expertise and our faith in the power of
well-managed and well-diversified portfolios. If you have questions about the
Funds, please call our shareholder representatives at 1-800-624-0197.
Sincerely,
[PHOTO APPEARS HERE]
/s/ David Marks
David P. Marks
Chief Investment Officer, Allianz of America, Inc.
Chairperson, USAllianz VIP
The USAllianz VIP Funds are NOT INSURED BY THE FDIC or
any other governmental agency, are not deposits or
obligations of, or endorsed or guaranteed by, Allianz
of America, Inc., the distributor or any of their
affiliates, and involve investment risks, including
the possible loss of the principal amount invested.
2
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[This Page Intentionally Left Blank]
3
<PAGE>
Growth Fund
- --------------------------------------------------------------------------------
What market factors affected the Fund's performance during the period between
its inception and December 31, 1999?
Stock market averages climbed during the period, as a strong flow of funds into
the market pushed up a small number of stocks. Shares of technology firms
performed especially well. The Standard & Poor's 500 Stock Index (S&P 500
Index) gained 6.91% since the Fund's inception, while the Fund gained 8.52%. As
of December 31, 1999 the Fund outperformed its benchmark, the S&P 500, by 161
basis points.
The Fund's returns were driven by individual stock selection in several
sectors. Stocks that boosted the Fund's returns included retailer Home Depot
(2.75% of net assets), up 30% for the period; broadband Internet access
provider ADC Telecom (1.49%), up 46%; semiconductor capital equipment maker
Novellus (0.79%), up 37%; Cisco (2.20%), up 42%; and computer hardware maker
Sun Microsystems (3.11%), up 36%.*
What is your outlook for the economy and the stock market going forward?
As anticipated, the Fed raised interest rates in early 2000. Such a rate hike,
in conjunction with previous interest rate increases by the Fed, we believe
should slow the economy somewhat and help to prevent an uptick in inflation. In
our opinion, economic growth will likely remain strong and we do not foresee a
recession in the near future.
In addition, we continue to see strong corporate earnings, suggesting that the
stock market can continue its positive performance. The recent merger and
acquisition activity has taken some equity out of the market, while fund flows
into the market remain strong. We believe that the combination of lower supply
and strong demand could help push stock prices higher.
Going forward, we will continue to use bottom-up, fundamental stock selection
in our efforts to outperform the Fund's benchmark, the S&P 500 Index. Stock
selections will be influenced by several trends that have the potential to
drive returns in various sectors. Those trends include the technology
revolution, consolidation in the financial services industries, and the aging
population.
The technology revolution allows companies to improve efficiency and
productivity. These improvements should drive future earnings growth and
support rising stock prices for companies that take advantage of new
technologies. Likewise, consolidation in the financial services industry will
allow large financial companies to take advantage of economies of scale and
global economic growth, and potentially boost future earnings and stock prices.
Meanwhile, the aging of the baby-boom generation means increased demand for the
products and services of companies that cater to older consumers, such as
health-care firms.
*The Fund's portfolio composition is subject to change.
Past performance is no guarantee of future results. Investment return and net
asset value will fluctuate, so that investors' shares, when redeemed, may be
worth more or less than the original cost.
[PHOTO APPEARS HERE]
Ronald M. Clark
Senior Managing Director
Ronald M. Clark leads the team of experienced and knowledgeable investment
professionals who oversee the management of the Growth Fund, the equity
investments of the Diversified Assets Fund and various other domestic and
global equity portfolios. Mr. Clark has nearly three decades of professional
investment experience.
Mr. Clark began his career as an investment analyst with Mutual of New York,
and joined Allianz Life Insurance Company of North America as Chief Investment
Officer in 1973. Along with his primary role as Senior Managing Director of
equity investments, Mr. Clark serves on the Investment Policy Committee for
Allianz Worldwide. He also provides senior level oversight of real estate
investments and corporate finance activities.
Mr. Clark obtained both undergraduate and graduate degrees from the University
of Wisconsin.
4
<PAGE>
Growth Fund Review
- --------------------------------------------------------------------------------
Fund Objective
The Growth Fund, which commenced operations on November 9, 1999, seeks to
provide long-term growth of capital by investing primarily in shares of larger
companies primarily traded on U.S. exchanges. The Fund utilizes a bottom-up
fundamental analysis and balances growth opportunities and less aggressive
investments to manage risk.
[LINE GRAPH]
GROWTH FUND S&P 500 INDEX
11/9/99 10,000 10,000
11/99 10,160 10,203
12/99 10,852 10,691
Average Annual Total Return as of December 31, 1999
<TABLE>
<CAPTION>
Since
Inception
1 Month (11/9/99)
- ---------------------------------
<S> <C> <C>
Growth Fund 6.81% 8.52%
- ---------------------------------
S&P 500 Index 5.89% 6.91%
- ---------------------------------
</TABLE>
The Fund's performance is compared to the S&P 500 Index, an unmanaged index
that represents the performance of the large-capitalization equity market. The
index does not reflect the deduction of fees associated with a mutual fund,
such as investment management and fund accounting fees. The Fund's performance
reflects the deduction of fees for these value-added services. Investors cannot
invest directly in an index, although they can invest in the underlying
securities.
The total return of the Fund does not reflect the effect of any insurance
charges or the annual maintenance fee. Such charges and expenses would reduce
the performance quoted. Past performance is no guarantee of future results. The
investment return and net asset value will fluctuate, so that investors'
shares, when redeemed, may be worth more or less than the original cost.
5
<PAGE>
Fixed Income Fund
- --------------------------------------------------------------------------------
How did the Fund perform from inception on November 9, 1999, to
December 31, 1999?
The Fund produced a total return of -1.79%, compared to -1.23% for the Fund's
benchmark, the Lehman Brothers Government/Corporate Bond Index.
What were conditions in the bond market during the period from the Fund's
inception through December 31, 1999?
Interest rates rose steadily during November and December of 1999. Investors
feared that stronger-than-expected economic growth would prompt the Fed
to raise short-term rates to ward off inflation. In fact, the Fed did raise
rates once in November by one quarter of a percentage point.
How did you position the Fund in that environment?
During the Fund's first few weeks of operation, we structured the portfolio to
address the market conditions that bond investors were likely to experience. We
took advantage of what we view as relatively high long-term yields to establish
the Fund's average duration at 5.85 years by the end of the period, versus 5.30
years for the Fund's benchmark.
What sectors of the bond market did you favor during the period?
Given the continuing strength of the U.S. economy and recovering overseas
markets the fundamental credit strength of high quality bond issuers appears
attractively priced versus U.S. Government Securities. As a result, we decided
to overweight the corporate sector in the Fund's portfolio, which benefited the
Fund's performance. We also overweighted mortgage-backed securities due to the
attractive yields available from such issues.
The Fund's sector allocation as of December 31, 1999 was as follows: corporate
bonds (49.3% of assets); mortgage-backed securities (21.1%); asset-backed
securities (4.7%); U.S. Treasuries (16%); foreign government bonds (2.6%); and
the remainder in cash and cash equivalents.*
What was the credit rating of the Fund's portfolio?
The overall rating was high, at AA. That rating is due largely to the Fund's
overweighting in mortgage-backed securities, which are rated AAA. We did find
opportunities among select A-rated corporate bonds. The extra yield available
from such lower-rated issues was enough to compensate for those issues' modest
additional credit risk--especially given the strong economic environment.*
How will you manage the Fund going forward?
As anticipated, the strong economic growth forced the Fed to raise interest
rates again at the beginning of February. In our opinion, that should slow the
economy, allowing bond yields to decline during 2000.
We believe the yield curve will probably flatten, reducing the yield advantage
of longer-term issues. We will continue to position the Fund with a relatively
long average maturity in anticipation of eventual rate declines, and we will
also continue to overweight corporate bonds and mortgage-backed issues, given
the attractive yields on such securities. We will continue to look for
opportunities across the bond market to provide attractive returns to
shareholders.
*The Fund's portfolio composition is subject to change.
Past performance is no guarantee of future results. Investment return and net
asset value will fluctuate, so that investors' shares, when redeemed, may be
worth more or less than the original cost.
[PHOTO APPEARS HERE]
Gary Brown
Senior Managing Director
Gary Brown leads the team of experienced and knowledgeable investment
professionals who oversee the management of the Fixed Income Fund, the fixed
income investments of the Diversified Assets Fund and other fixed income
portfolios. He brings 24 years of investment experience to the management of
the Funds.
Prior to joining Allianz of America in 1991, Mr. Brown served as Managing
Director with CIGNA Investments. During his tenure, he was responsible for the
company's public taxable and tax-exempt bond portfolios, as well as fixed
income mutual funds and institutional client portfolios. His professional
career also includes investment management and research positions with other
money management and insurance companies, where he gained broad experience
managing portfolios of government, corporate, mortgage-backed, high-yield and
convertible securities and a wide range of derivative products. In addition to
his primary role as Senior Managing Director, he serves on the Investment
Policy Committee for Allianz Worldwide.
Mr. Brown earned both his bachelor's and master's degrees from Drexel
University.
6
<PAGE>
Fixed Income Fund Review
- --------------------------------------------------------------------------------
Fund Objective:
The Fund, which commenced operations on November 9, 1999, seeks to maximize
total return and generate current income. It primarily invests in a combination
of U.S. dollar-denominated fixed-income securities, including government bonds,
corporate bonds, asset-backed securities, mortgage-backed securities and
municipal securities with an average maturity between 5 and 13 years when
weighted to the Fund's holdings. The Fund utilizes a consistent and disciplined
process consisting of global market analysis, risk profiling and fundamental
analysis.
[LINE GRAPH]
LEHMAN BROTHERS GOVERNMENT/
FIXED INCOME FUND CORPORATE BOND INDEX
11/9/99 10,000 10,000
11/99 9,883 9,938
12/99 9,821 9,877
Average Annual Total Return as of December 31, 1999
<TABLE>
<CAPTION>
Since
Inception
1 Month (11/9/99)
- -------------------------------------------------
<S> <C> <C>
Fixed Income Fund -0.62% -1.79%
- -------------------------------------------------
Lehman Brothers
Government/Corporate Bond
Index -0.61% -1.23%
- -------------------------------------------------
</TABLE>
The Fund's performance is measured against the Lehman Brothers
Government/Corporate Bond Index, an unmanaged index that is generally comprised
of U.S. Treasury issues, debt of U.S. Government agencies, corporate debt
guaranteed by the U.S. Government and all publicly issued, fixed-rate,
nonconvertible, investment-grade, dollar-denominated, SEC-registered corporate
debt. The index does not reflect the deduction of fees associated with a mutual
fund, such as investment management and fund accounting fees. The Fund's
performance reflects the deduction of fees for these value-added services.
Investors cannot invest directly in an index, although they can invest in the
underlying securities.
The total return of the Fund does not reflect the effect of any insurance
charges or the annual maintenance fee. Such charges and expenses would reduce
the performance quoted. Past performance is no guarantee of future results. The
investment return and net asset value will fluctuate, so that investors'
shares, when redeemed, may be worth more or less than the original cost.
7
<PAGE>
Diversified Assets Fund
- --------------------------------------------------------------------------------
How did the Fund perform from inception on November 9, 1999, to December 31,
1999?
The Fund produced a total return of 2.81%, compared to -0.58% and 1.41% for the
Fund's benchmarks, the Lehman Brothers Intermediate Government/
Corporate Bond Index and the Diversified Assets Customized Blended Index*,
respectively.
What were the conditions in the stock and bond markets during the period from
the Fund's inception through December 31, 1999?
The stock market performed well during the period, although its returns were
powered by extremely large gains from a small number of stocks. Technology
shares performed especially well, as investors favored tech companies'
potential for future earnings growth. The S&P 500 Index/1/ gained 6.91% during
the period.
Bond yields rose steadily during November and December of 1999. Investors
feared that the strong economy would force the Fed to raise short-term rates to
prevent inflation. In fact, the Fed did raise rates in November by one quarter
of a percentage point.
How did you structure the Fund's stock and bond holdings in that environment?
Our bottom-up stock-selection style led us to good opportunities in various
sectors of the stock market. We invested in retailer Home Depot (0.92% of the
Fund's net assets), Northern Trust Company (0.31%) in the financial services
sector and computer hardware maker Sun Microsystems (1.05%) in the technology
sector.**
The average maturity of the fixed income portion of the portfolio was 9.7 years
as of December 31, 1999. That relatively long average maturity allowed us to
lock in additional yields. We also overweighted corporate bonds, which provided
significantly higher yields than government bonds. The average credit rating of
the Fund's fixed income holdings finished the period at AA.**
How will you manage the Fund going forward?
In our opinion, stock market returns should revert to levels closer to
historical norms. In this environment, we will rely upon fundamental stock
analysis to identify investments that have the potential to outperform the
market. We will also bear in mind trends such as the technology revolution and
consolidation among financial services companies that could benefit investors
in those sectors.
As anticipated, the Fed raised interest rates early in February to slow the
economic growth rate and to attempt to ward off inflation. We will continue to
position the Fund's fixed-income holdings with a relatively long average
maturity to lock in attractive yields for shareholders when rates eventually
fall. We will also continue to overweight corporate bonds to pick up the
relatively high yields on those securities.
*The Diversified Assets Customized Blended Index is an index created by Allianz
of America, Inc. consisting of several securities market indices including 65%
of Lehman Brothers Intermediate Government/Corporate Bond Index, 25% of the S&P
500 Index and 10% of the 90-day Treasury Bill.
/1/The S&P 500 Index is an unmanaged index that represents the performance of
the large capitalization equity market. Investors cannot invest directly in an
index, although they can invest in the underlying securities.
**The Fund's portfolio composition is subject to change.
Past performance is no guarantee of future results. Investment return and net
asset value will fluctuate, so that investors' shares, when redeemed, may be
worth more or less than the original cost.
[PHOTO APPEARS HERE]
Gary Brown
Senior Managing Director
Gary Brown leads the team of experienced and knowledgeable investment
professionals who oversee the management of the Fixed Income Fund, the fixed
income investments of the Diversified Assets Fund and other fixed income
portfolios. He brings 24 years of investment experience to the management of
the Funds.
[PHOTO APPEARS HERE]
Ronald M. Clark
Senior Managing Director
Ronald M. Clark leads the team of experienced and knowledgeable investment
professionals who oversee the management of the Growth Fund, the equity
investments of the Diversified Assets Fund and various other domestic and
global equity portfolios. Mr. Clark has nearly three decades of professional
investment experience.
8
<PAGE>
Diversified Assets Fund Review
- --------------------------------------------------------------------------------
Fund Objective:
The Diversified Assets Fund, which commenced operations on November 9, 1999,
seeks to provide total return consistent with the reduction of long-term
volatility by investing approximately 65% of its assets in fixed income
securities, 25% in stocks and 10% in money market instruments. The Fund
actively manages the asset class mix using a consistent and disciplined process
consisting of a review of current economic activity, risk profiling, and a
fundamental analysis of individual securities.
[LINE GRAPH]
DIVERSIFIED ASSETS
DIVERSIFIED LEHMAN BROTHERS GOVERNMENT/ CUSTOMIZED
ASSETS FUND CORPORATE BOND INDEX BLENDED INDEX
11/9/99 10,000 10,000 10,000
11/99 10,040 10,011 9,975
12/99 10,281 10,141 9,942
Average Annual Total Return as of December 31, 1999
<TABLE>
<CAPTION>
Since
Inception
1 Month (11/9/99)
- -------------------------------------------------
<S> <C> <C>
Diversified Assets Fund 2.40% 2.81%
- -------------------------------------------------
Lehman Brothers Intermediate
Government/Corporate Bond
Index -0.33% -0.58%
- -------------------------------------------------
Diversified Assets Customized
Blended Index 1.30% 1.41%
- -------------------------------------------------
</TABLE>
The Fund's performance is compared to the Lehman Brothers Intermediate
Government/Corporate Bond Index, an unmanaged index that is generally comprised
of U.S. Treasury issues, publicly issued debt of U.S. Government agencies,
corporate debt guaranteed by the U.S. Government and all publicly issued, fixed
rate, non-convertible, investment-grade, dollar-denominated, SEC-registered
corporate debt. The Fund is also compared to the Diversified Assets Customized
Blended Index, a blended index created by Allianz of America, Inc. consisting
of 65% of the Lehman Brothers Intermediate Government/Corporate Bond Index, 25%
of the S&P 500 Index and 10% of the 90-day Treasury Bill. These indices do not
reflect the deduction of fees associated with a mutual fund, such as investment
management and fund accounting fees. The Fund's performance reflects the
deduction of fees for these value-added services. Investors cannot invest
directly in an index, although they can invest in the underlying securities.
The total return of the Fund does not reflect the effect of any insurance
charges or the annual maintenance fee. Such charges and expenses would reduce
the performance quoted. Past performance is no guarantee of future results. The
investment return and net asset value will fluctuate, so that investors'
shares, when redeemed, may be worth more or less than the original cost.
9
<PAGE>
USALLIANZ VARIABLE INSURANCE PRODUCTS TRUST
Growth Fund
Schedule of Portfolio Investments
December 31, 1999
<TABLE>
<CAPTION>
Market
Shares Value
------ -----------
Common Stocks (97.7%)
<C> <S> <C>
Aerospace/Defense (2.1%)
1,710 Cordant Technologies, Inc................................ $ 56,430
2,000 Honeywell International, Inc............................. 115,375
1,000 United Technologies Corp................................. 65,000
-----------
236,805
-----------
Banking/Financial Services (14.4%)
700 American Express Co...................................... 116,374
1,800 Associates First Capital Corp............................ 49,388
1,700 Bank of America Corp..................................... 85,319
45 Berkshire Hathaway, Inc., Class B*....................... 82,350
5,400 Citigroup, Inc........................................... 300,037
1,700 Fannie Mae............................................... 106,144
2,700 Fleet Boston Financial Corp.............................. 93,994
2,025 Legg Mason, Inc.......................................... 73,406
810 Lehman Brothers Holdings, Inc............................ 68,597
2,700 Mellon Financial Corp.................................... 91,969
1,125 Merrill Lynch & Co....................................... 93,938
2,000 Northern Trust Corp...................................... 106,000
700 Providian Financial Corp................................. 63,744
1,800 State Street Corp........................................ 131,512
4,050 Wells Fargo Co........................................... 163,771
-----------
1,626,543
-----------
Beverages (1.1%)
1,000 Coca-Cola Co............................................. 58,250
1,700 PepsiCo, Inc............................................. 59,925
-----------
118,175
-----------
Biotechnology (1.5%)
1,800 Amgen, Inc.*............................................. 108,113
1,350 Chiron Corp.*............................................ 57,206
-----------
165,319
-----------
Chemicals (0.6%)
1,305 Praxair, Inc............................................. 65,658
-----------
Computers (12.4%)
2,300 Cisco Systems, Inc.*..................................... 246,388
1,800 International Business Machines
Corp.................................................... 194,400
4,000 Microsoft Corp.*......................................... 466,999
4,500 Sun Microsystems, Inc.*.................................. 348,469
300 Yahoo!, Inc.*............................................ 129,806
-----------
1,386,062
-----------
Electric Utilities (1.8%)
2,700 AES Corp.*............................................... 201,825
-----------
Electrical Equipment (4.0%)
2,925 General Electric Co...................................... 452,644
-----------
Electronics (9.2%)
1,125 Altera Corp.*............................................ 55,758
1,700 Applied Materials, Inc.*................................. 215,369
</TABLE>
<TABLE>
<CAPTION>
Market
Shares Value
------ -----------
Common Stocks, continued
<C> <S> <C>
Electronics, continued
2,000 Applied Power, Inc....................................... $ 73,500
3,600 Intel Corp............................................... 296,324
720 Lam Research Corp.*...................................... 80,325
1,000 Micron Technology, Inc.*................................. 77,750
720 Novellus Systems, Inc.*.................................. 88,223
1,530 Texas Instruments, Inc................................... 148,219
-----------
1,035,468
-----------
Food (0.2%)
300 Wrigley (WM.) JR Co...................................... 24,881
-----------
Health Care (1.5%)
4,700 Medtronic, Inc........................................... 171,256
-----------
Household (3.6%)
1,350 Clorox Co................................................ 68,006
1,300 Estee Lauder Companies, Inc., Class A.................... 65,569
1,755 Gillette Co.............................................. 72,284
1,000 Johnson & Johnson........................................ 93,125
1,000 Procter & Gamble Co...................................... 109,563
-----------
408,547
-----------
Insurance (1.3%)
1,300 American International Group, Inc........................ 140,563
-----------
Investment Companies (1.8%)
1,400 S&P Depositary Receipt................................... 205,625
-----------
Manufacturing (1.0%)
1,000 AptarGroup, Inc.......................................... 25,125
1,350 Illinois Tool Works, Inc................................. 91,209
-----------
116,334
-----------
Media (2.5%)
1,000 Gannett Co., Inc......................................... 81,563
2,000 Omnicom Group............................................ 200,000
-----------
281,563
-----------
Oil/Gas (7.4%)
1,800 BP Amoco plc, ADR........................................ 106,763
2,700 Burlington Resources, Inc................................ 89,269
3,320 Exxon Mobil Corp......................................... 267,467
2,300 Petroleum Geo-Services A/S, ADR*......................... 40,969
2,300 R & B Falcon Corp.*...................................... 30,475
1,305 Royal Dutch Petroleum Co., ADR........................... 78,871
1,700 Schlumberger Ltd......................................... 95,625
2,000 Stolt Comex Seaway SA, ADR*.............................. 22,125
329 Transocean Sedco Forex, Inc.............................. 11,087
2,475 Unocal Corp.............................................. 83,067
-----------
825,718
-----------
Paper/Forest Products (0.7%)
1,700 Mead Corp................................................ 73,844
-----------
</TABLE>
See accompanying notes to financial statements.
10
<PAGE>
USALLIANZ VARIABLE INSURANCE PRODUCTS TRUST
Growth Fund
Schedule of Portfolio Investments, Continued
December 31, 1999
<TABLE>
<CAPTION>
Market
Shares Value
------ -----------
Common Stocks, continued
<C> <S> <C>
Pharmaceuticals (6.7%)
1,575 Biochem Pharma, Inc.*.................................... $ 34,256
3,150 Bristol-Myers Squibb Co.................................. 202,191
2,700 Merck & Co., Inc......................................... 181,069
5,130 Pfizer, Inc.............................................. 166,404
2,300 Schering-Plough Corp..................................... 97,031
900 Warner-Lambert Co........................................ 73,744
-----------
754,695
-----------
Retail/Wholesale (8.6%)
1,755 Costco Wholesale Corp.*.................................. 160,144
1,800 CVS Corp................................................. 71,888
700 Dayton-Hudson Corp....................................... 51,406
4,500 Home Depot, Inc.......................................... 308,530
2,700 McDonald's Corp.......................................... 108,844
3,150 Office Depot, Inc.*...................................... 34,453
3,300 Wal-Mart Stores, Inc..................................... 228,113
-----------
963,378
-----------
Services (2.4%)
3,700 Automatic Data Processing, Inc........................... 199,337
1,000 DeVry, Inc.*............................................. 18,625
540 InterWorld Corp.*........................................ 46,103
-----------
264,065
-----------
</TABLE>
<TABLE>
<CAPTION>
Market
Shares Value
------ -----------
Common Stocks, continued
<C> <S> <C>
Telecommunications (12.2%)
2,300 ADC Telecommunications, Inc.*............................ $ 166,894
4,000 AT&T Corp................................................ 202,999
2,700 Bell Atlantic Corp....................................... 166,219
2,700 Lucent Technologies, Inc................................. 201,994
700 Nextel Communications, Inc., Class A*.................... 72,188
1,700 SBC Communications, Inc.................................. 82,875
3,375 Sprint Corp.............................................. 227,179
1,035 US West, Inc............................................. 74,520
2,300 Winstar Communications, Inc.*............................ 172,213
-----------
1,367,081
-----------
Tobacco (0.3%)
1,350 Philip Morris Cos., Inc.................................. 31,303
-----------
Travel/Entertainment (0.4%)
990 Carnival Corp............................................ 47,334
-----------
Total Common Stocks
(Cost $10,130,140)--97.7% 10,964,686
-----------
Money Market Mutual Funds (2.2%)
242,889 Valiant Sweep Account.................................... 242,889
-----------
Total Money Market Mutual Funds 242,889
-----------
Total Investments
(Cost $10,373,029) (a)--99.9% 11,207,575
Other assets in excess of liabilities--0.1% 5,987
-----------
Total Net Assets--100.0% $11,213,562
===========
</TABLE>
- --------
* Non-income producing security.
ADR--American Depository Receipt.
(a) Represents cost for federal tax purposes and differs from value by net
unrealized appreciation as follows:
<TABLE>
<S> <C>
Unrealized appreciation....... $1,146,555
Unrealized depreciation....... (312,009)
----------
Net unrealized appreciation... $ 834,546
==========
</TABLE>
See accompanying notes to financial statements.
11
<PAGE>
USALLIANZ VARIABLE INSURANCE PRODUCTS TRUST
Fixed Income Fund
Schedule of Portfolio Investments
December 31, 1999
<TABLE>
<CAPTION>
Principal Market
Amount Value
--------- ----------
<C> <S> <C>
Corporate Bonds (49.3%)
Aerospace/Defense (3.4%)
$400,000 Raytheon Co., 6.40%, 12/15/18............................ $ 333,316
----------
Autos (6.1%)
200,000 Delphi Automotive Systems Corp., 6.125%, 05/01/04........ 189,376
400,000 Ford Motor Co., 9.00%, 09/15/01.......................... 413,259
----------
602,635
----------
Banking/Financial Services (15.6%)
400,000 Associates Corp., 6.75%, 07/15/01........................ 399,186
250,000 Bank of America Corp., 6.625%, 06/15/04.................. 244,307
400,000 Household Finance Corp., 6.50%, 11/15/08................. 369,731
200,000 Inter-American Development Bank, 6.75%, 07/15/27......... 183,231
400,000 Merrill Lynch & Co., 6.50%, 07/15/18..................... 348,038
----------
1,544,493
----------
Beverages (2.5%)
250,000 Diageo Capital plc, 6.625%, 06/24/04..................... 244,634
----------
Electric Utilities (2.2%)
250,000 Virginia Electric & Power, 5.73%, 11/25/08............... 219,658
----------
Oil/Gas (2.3%)
250,000 Conoco, Inc., 6.35%, 04/15/09............................ 231,307
----------
Paper/Forest Products (3.6%)
400,000 Weyerhaeuser Co., 6.95%, 10/01/27........................ 359,540
----------
Retail/Wholesale (2.6%)
250,000 Wal-Mart Stores, Inc., 7.50%, 05/15/04................... 255,229
----------
Telecommunications (4.6%)
250,000 AT&T Corp., 5.625%, 03/15/04............................. 237,019
250,000 US West Capital Funding, Inc., 6.875%, 07/15/28.......... 219,112
----------
456,131
----------
Transportation (2.5%)
250,000 CSX Corp., 7.00%, 09/15/02............................... 247,978
----------
Travel/Entertainment (3.9%)
400,000 Walt Disney Co., 6.75%, 03/30/06......................... 390,970
----------
Total Corporate Bonds 4,885,891
----------
</TABLE>
<TABLE>
<CAPTION>
Principal Market
Amount Value
--------- ----------
<C> <S> <C>
Asset Backed Securities (4.7%)
$250,000 Chemical Master Credit Card Trust I, 5.98%, 09/15/08..... $ 237,613
240,000 Discover Card Master Trust I, 6.05%, 08/18/08............ 227,746
----------
Total Asset Backed Securities 465,359
----------
Commercial Paper (2.5%)
Pharmaceuticals (2.5%)
250,000 Glaxo Wellcome, plc, 6.05%, 02/04/00..................... 248,572
----------
Total Commercial Paper 248,572
----------
Money Market Mutual Funds (2.3%)
226,326 Valiant Sweep Account.................................... 226,326
----------
Total Money Market Mutual Funds 226,326
----------
U.S. Government Agency Mortgages (18.7%)
Federal National Mortgage Association
466,019 Pool #447135, 6.50%, 11/01/29............................ 439,369
373,630 Pool #503222, 6.50%, 06/01/29............................ 352,263
495,606 Pool #504173, 6.50%, 10/01/29............................ 467,264
632,345 Pool #517110, 6.50%, 11/01/29............................ 596,182
----------
Total U.S. Government Agency Mortgages 1,855,078
----------
U.S. Government Agency Debt (2.4%)
Federal Home Loan Mortgage Corporation
250,000 5.00%, 01/15/04.......................................... 233,785
----------
Total U.S. Government Agency Debt 233,785
----------
Foreign Government Bonds (2.6%)
250,000 Ontario (Province of), 7.625%, 06/22/04.................. 255,033
----------
Total Foreign Government Bonds 255,033
----------
U.S. Treasury Bonds (15.0%)
750,000 U.S. Treasury Bond, 9.25%, 02/15/16...................... 926,250
525,000 U.S. Treasury Bond, 7.50%, 11/15/16...................... 561,586
----------
Total U.S. Treasury Bonds 1,487,836
----------
U.S. Treasury Notes (1.0%)
100,000 U.S. Treasury Note, 6.625%, 05/15/07..................... 100,406
----------
Total U.S. Treasury Notes 100,406
----------
Total Investments (Cost $9,959,626) (a)--98.5% 9,758,286
----------
Other assets in excess of liabilities--1.5% 149,911
----------
Total Net Assets--100.0% $9,908,197
==========
</TABLE>
- --------
* Non-income producing security.
(a) Represents cost for federal tax purposes and differs from value by net
unrealized depreciation as follows:
<TABLE>
<S> <C>
Unrealized appreciation... $ --
Unrealized depreciation... (201,340)
---------
Net unrealized
depreciation.............. $(201,340)
=========
</TABLE>
See accompanying notes to financial statements.
12
<PAGE>
USALLIANZ VARIABLE INSURANCE PRODUCTS TRUST
Diversified Assets Fund
Schedule of Portfolio Investments
December 31, 1999
<TABLE>
<CAPTION>
Shares
or
Principal Market
Amount Value
--------- -----------
<C> <S> <C>
Corporate Bonds (31.6%)
Autos (4.3%)
$200,000 Delphi Automotive Systems Corp., 6.125%, 05/01/04...... $ 189,376
250,000 Ford Motor Co., 9.00%, 09/15/01........................ 258,287
-----------
447,663
-----------
Banking/Financial Services (8.7%)
250,000 Associates Corp., 6.75%, 07/15/01...................... 249,491
250,000 Bank of America Corp., 6.625%, 06/15/04................ 244,307
200,000 Chase Manhattan Corp., 6.375%, 04/01/08................ 185,480
250,000 Household Finance Corp., 6.50%, 11/15/08............... 231,082
-----------
910,360
-----------
Beverages (2.4%)
250,000 Diageo Capital plc, 6.625%, 06/24/04................... 244,634
-----------
Electric Utilities (2.1%)
250,000 Virginia Electric & Power, 5.73%, 11/25/08............. 219,658
-----------
Insurance (2.4%)
250,000 Hartford Life, Inc., 6.90%, 06/15/04................... 245,182
-----------
Oil/Gas (4.5%)
250,000 Conoco, Inc., 6.35%, 04/15/09.......................... 231,307
250,000 Enron Corp., 6.45%, 11/15/01........................... 247,022
-----------
478,329
-----------
Retail/Wholesale (2.5%)
250,000 Wal-Mart Stores, Inc., 7.50%, 05/15/04................. 255,229
-----------
Telecommunications (2.3%)
250,000 AT&T Corp., 5.625%, 03/15/04........................... 237,019
-----------
Transportation (2.4%)
250,000 CSX Corp., 7.00%, 09/15/02............................. 247,978
-----------
Total Corporate Bonds 3,286,052
-----------
Common Stocks (32.1%)
Aerospace/Defense (0.7%)
532 Cordant Technologies, Inc.............................. 17,556
600 Honeywell International, Inc........................... 34,613
300 United Technologies Corp............................... 19,500
-----------
71,669
-----------
Banking/Financial Services (4.8%)
200 American Express Co.................................... 33,250
560 Associates First Capital Corp.......................... 15,365
500 Bank of America Corp................................... 25,094
14 Berkshire Hathaway, Inc., Class B*..................... 25,620
1,680 Citigroup, Inc......................................... 93,344
</TABLE>
<TABLE>
<CAPTION>
Market
Shares Value
-------- -----------
<C> <S> <C>
Common Stocks, continued
Banking/Financial Services, continued
500 Fannie Mae.............................................. $ 31,219
840 Fleet Boston Financial Corp............................. 29,243
630 Legg Mason, Inc......................................... 22,838
252 Lehman Brothers Holdings, Inc........................... 21,341
840 Mellon Financial Corp................................... 28,613
350 Merrill Lynch & Co...................................... 29,225
600 Northern Trust Corp..................................... 31,800
200 Providian Financial Corp................................ 18,213
560 State Street Corp....................................... 40,914
1,260 Wells Fargo Co.......................................... 50,950
-----------
497,029
-----------
Beverages (0.3%)
300 Coca-Cola Co............................................ 17,475
500 PepsiCo, Inc............................................ 17,625
-----------
35,100
-----------
Biotechnology (0.8%)
1,000 Amgen, Inc.*............................................ 60,062
420 Chiron Corp.*........................................... 17,798
-----------
77,860
-----------
Chemicals (0.2%)
406 Praxair, Inc............................................ 20,427
-----------
Computers (4.2%)
700 Cisco Systems, Inc.*.................................... 74,988
630 International Business Machines Corp.................... 68,040
1,200 Microsoft Corp.*........................................ 140,099
1,400 Sun Microsystems, Inc.*................................. 108,412
100 Yahoo!, Inc.*........................................... 43,269
-----------
434,808
-----------
Electric Utilities (0.6%)
800 AES Corp.*.............................................. 59,800
-----------
Electrical Equipment (1.4%)
910 General Electric Co..................................... 140,823
-----------
Electronics (3.1%)
350 Altera Corp.*........................................... 17,347
500 Applied Materials, Inc.*................................ 63,344
600 Applied Power, Inc...................................... 22,050
1,120 Intel Corp.............................................. 92,189
224 Lam Research Corp.*..................................... 24,990
308 Micron Technology, Inc.*................................ 23,947
224 Novellus Systems, Inc.*................................. 27,447
476 Texas Instruments, Inc.................................. 46,113
-----------
317,427
-----------
Food (0.1%)
100 Wrigley (WM.) JR Co..................................... 8,294
-----------
</TABLE>
See accompanying notes to financial statements.
13
<PAGE>
USALLIANZ VARIABLE INSURANCE PRODUCTS TRUST
Diversified Assets Fund
Schedule of Portfolio Investments, Continued
December 31, 1999
<TABLE>
<CAPTION>
Market
Shares Value
-------- -----------
<C> <S> <C>
Common Stocks, continued
Health Care (0.5%)
1,400 Medtronic, Inc.......................................... $ 51,013
-----------
Household (1.2%)
420 Clorox Co............................................... 21,158
400 Estee Lauder Companies, Inc., Class A................... 20,175
546 Gillette Co............................................. 22,488
300 Johnson & Johnson....................................... 27,938
308 Procter & Gamble Co..................................... 33,745
-----------
125,504
-----------
Insurance (0.4%)
400 American International Group, Inc....................... 43,250
-----------
Manufacturing (0.3%)
300 AptarGroup, Inc......................................... 7,538
420 Illinois Tool Works, Inc................................ 28,376
-----------
35,914
-----------
Media (0.8%)
300 Gannett Co., Inc........................................ 24,469
600 Omnicom Group........................................... 60,000
-----------
84,469
-----------
Oil/Gas (2.4%)
560 BP Amoco plc, ADR....................................... 33,215
800 Burlington Resources, Inc............................... 26,450
996 Exxon Mobil Corp........................................ 80,239
700 Petroleum Geo-Services A/S, ADR*........................ 12,469
700 R & B Falcon Corp.*..................................... 9,275
406 Royal Dutch Petroleum Co., ADR.......................... 24,538
500 Schlumberger Ltd........................................ 28,125
600 Stolt Comex Seaway SA, ADR*............................. 6,638
97 Transocean Sedco Forex, Inc............................. 3,261
770 Unocal Corp............................................. 25,843
-----------
250,053
-----------
Paper/Forest Products (0.2%)
500 Mead Corp............................................... 21,719
-----------
Pharmaceuticals (2.2%)
490 Biochem Pharma, Inc.*................................... 10,658
980 Bristol-Myers Squibb Co................................. 62,903
812 Merck & Co., Inc........................................ 54,455
1,596 Pfizer, Inc............................................. 51,770
700 Schering-Plough Corp.................................... 29,531
280 Warner-Lambert Co....................................... 22,943
-----------
232,260
-----------
Retail/Wholesale (2.9%)
546 Costco Wholesale Corp.*................................. 49,823
560 CVS Corp................................................ 22,365
200 Dayton-Hudson Corp...................................... 14,688
1,386 Home Depot, Inc......................................... 95,027
840 McDonald's Corp......................................... 33,863
</TABLE>
<TABLE>
<CAPTION>
Shares
or
Principal Market
Amount Value
--------- ---------
<C> <S> <C>
Common Stocks, continued
Retail/Wholesale, continued
980 Office Depot, Inc.*...................................... $ 10,719
1,000 Wal-Mart Stores, Inc..................................... 69,124
---------
295,609
---------
Services (0.8%)
1,148 Automatic Data Processing, Inc........................... 61,848
300 DeVry, Inc.*............................................. 5,588
168 InterWorld Corp.*........................................ 14,343
---------
81,779
---------
Telecommunications (4.0%)
700 ADC Telecommunications, Inc.*............................ 50,794
1,200 AT&T Corp................................................ 60,899
840 Bell Atlantic Corp....................................... 51,713
800 Lucent Technologies, Inc................................. 59,850
210 Nextel Communications, Inc., Class A*.................... 21,656
500 SBC Communications, Inc.................................. 24,375
1,050 Sprint Corp.............................................. 70,677
322 US West, Inc............................................. 23,184
700 Winstar Communications, Inc.*............................ 52,413
---------
415,561
---------
Tobacco (0.1%)
420 Philip Morris Cos., Inc.................................. 9,739
---------
Travel/Entertainment (0.1%)
308 Carnival Corp............................................ 14,726
---------
Total Common Stocks 3,324,833
---------
Commercial Paper (7.2%)
Energy (1.9%)
$200,000 Equitable Resources, Inc., 5.88%, 01/18/00............... 199,445
---------
Pharmaceuticals (5.3%)
150,000 Pfizer, Inc., 5.80%, 01/21/00............................ 149,517
400,000 Pharmacia & Upjohn, Inc., 5.87%, 01/26/00................ 398,369
---------
547,886
---------
Total Commercial Paper 747,331
---------
Asset Backed Securities (4.0%)
250,000 Discover Card Master Trust, 6.20%, 05/16/06.............. 243,125
180,000 Fleet Credit Card Master Trust, 6.00%, 11/15/05.......... 175,723
---------
Total Asset Backed Securities 418,848
---------
Money Market Mutual Funds (3.6%)
369,288 Valiant Sweep Account, 5.34%, 01/04/00................... 369,288
---------
Total Money Market Mutual Funds 369,288
---------
</TABLE>
See accompanying notes to financial statements.
14
<PAGE>
USALLIANZ VARIABLE INSURANCE PRODUCTS TRUST
Diversified Assets Fund
Schedule of Portfolio Investments, Continued
December 31, 1999
<TABLE>
<CAPTION>
Principal Market
Amount Value
--------- -----------
<C> <S> <C>
Foreign Government Bonds (2.5%)
$250,000 Ontario (Province of), 7.625%, 06/22/04................ $ 255,033
-----------
Total Foreign Government Bonds 255,033
-----------
U.S. Treasury Notes (9.6%)
700,000 U.S. Treasury Note, 5.875%, 10/31/01................... 695,407
100,000 U.S. Treasury Note, 6.25%, 02/15/07.................... 98,406
200,000 U.S. Treasury Note, 6.50%, 08/15/05.................... 200,000
-----------
Total U.S. Treasury Notes 993,813
-----------
U.S. Government Agency Mortgages (6.4%)
Federal National Mortgage Association
707,718 Pool #504173, 6.50%, 10/01/29.......................... 667,246
-----------
Total U.S. Government Agency Mortgages 667,246
-----------
</TABLE>
<TABLE>
<CAPTION>
Principal Market
Amount Value
--------- -----------
<C> <S> <C>
U.S. Government Agency Debt (2.3%)
Federal Home Loan Mortgage Corporation
$250,000 5.00%, 01/15/04........................................ $ 233,785
-----------
Total U.S. Government Agency Debt 233,785
-----------
Total Investments
(Cost $10,119,333) (a)--99.3% 10,296,229
Other assets in excess of liabilities--0.7% 74,532
-----------
Total Net Assets--100.0% $10,370,761
===========
</TABLE>
- --------
* Non-income producing security.
ADR--American Depository Receipt.
(a) Represents cost for federal tax purposes and differs from value by net
unrealized appreciation as follows:
<TABLE>
<S> <C>
Unrealized appreciation.... $355,870
Unrealized depreciation.... (178,974)
--------
Net unrealized
appreciation............... $176,896
========
</TABLE>
See accompanying notes to financial statements.
15
<PAGE>
USALLIANZ VARIABLE INSURANCE PRODUCTS TRUST
Statements of Assets and Liabilities
December 31, 1999
<TABLE>
<CAPTION>
Growth Fixed Income Diversified
Fund Fund Assets Fund
----------- ------------ -----------
<S> <C> <C> <C>
ASSETS
Investments, at value (cost $10,373,029,
$9,959,626, $10,119,333).................. $11,207,575 $ 9,758,286 $10,296,229
Dividends and interest receivable.......... 8,649 149,633 77,718
Receivable from Investment Adviser......... 34,202 35,990 32,889
----------- ----------- -----------
Total Assets............................. 11,250,426 9,943,909 10,406,836
----------- ----------- -----------
LIABILITIES
Distribution fees payable.................. 3,750 3,529 3,589
Custody fees payable....................... 1,670 1,666 1,668
Administration fees payable................ 576 548 552
Other accrued liabilities.................. 30,868 29,969 30,266
----------- ----------- -----------
Total Liabilities........................ 36,864 35,712 36,075
----------- ----------- -----------
NET ASSETS................................. $11,213,562 $ 9,908,197 $10,370,761
=========== =========== ===========
Shares of beneficial interest outstanding
(unlimited shares authorized)............. 1,033,827 1,016,822 1,013,684
Net Asset Value, offering price and
redemption price per share................. $ 10.85 $ 9.74 $ 10.23
NET ASSETS CONSIST OF
Capital.................................... $10,351,171 $10,166,042 $10,137,993
Accumulated net realized gain/(loss)....... 27,845 (56,505) 55,872
Net unrealized appreciation/(depreciation)
on investments............................. 834,546 (201,340) 176,896
----------- ----------- -----------
TOTAL NET ASSETS......................... $11,213,562 $ 9,908,197 $10,370,761
=========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
16
<PAGE>
USALLIANZ VARIABLE INSURANCE PRODUCTS TRUST
Statements of Operations
For the Period Ended December 31, 1999 (a)
<TABLE>
<CAPTION>
Growth Fixed Income Diversified
Fund Fund Assets Fund
-------- ------------ -----------
<S> <C> <C> <C>
Investment Income:
Dividends..................................... $ 14,568 $ 2,468 $ 4,962
Interest...................................... 820 89,584 61,529
-------- --------- --------
Total Investment Income..................... 15,388 92,052 66,491
-------- --------- --------
Expenses:
Investment Advisory fees...................... 11,369 7,125 8,031
Administration fees........................... 7,151 7,123 7,128
Distribution fees............................. 3,750 3,529 3,589
Custodian fees................................ 1,670 1,666 1,668
Fund Accounting fees.......................... 493 708 1,031
Audit fees.................................... 11,740 12,193 12,026
Organization fees............................. 10,385 9,649 9,912
Printing fees................................. 5,885 5,468 5,617
Legal fees.................................... 2,885 2,680 2,753
Offering fees................................. 2,596 2,412 2,478
Other expenses................................ 1,236 1,195 1,235
-------- --------- --------
Total expenses before
waivers/reimbursements..................... 59,160 53,748 55,468
Less expenses waived/reimbursed............. (45,571) (43,116) (40,920)
-------- --------- --------
Total Net Expenses.......................... 13,589 10,632 14,548
-------- --------- --------
Net Investment Income......................... 1,799 81,420 51,943
-------- --------- --------
Net Realized Gain/(Loss) on Investments....... 27,855 (56,505) 56,166
Net change in unrealized
appreciation/(depreciation) on investments.... 834,546 (201,340) 176,896
-------- --------- --------
Net realized and unrealized gain/(loss) on
investments................................... 862,401 (257,845) 233,062
-------- --------- --------
Net increase/(decrease) in net assets
resulting from operations..................... $864,200 $(176,425) $285,005
======== ========= ========
</TABLE>
- --------
(a) From commencement of operations on November 9, 1999 to December 31, 1999.
See accompanying notes to financial statements.
17
<PAGE>
USALLIANZ VARIABLE INSURANCE PRODUCTS TRUST
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Growth Fixed Income Diversified
Fund Fund Assets Fund
--------------------- --------------------- ---------------------
Period Ended Period Ended Period Ended
December 31, 1999 (a) December 31, 1999 (a) December 31, 1999 (a)
--------------------- --------------------- ---------------------
<S> <C> <C> <C>
Operations:
Net investment income...... $ 1,799 $ 81,420 $ 51,943
Net realized gain/(loss) on
investments............... 27,855 (56,505) 56,166
Net change in unrealized
appreciation/(depreciation)
on investments............ 834,546 (201,340) 176,896
----------- ----------- -----------
Net increase/(decrease) in
net assets resulting from
operations................ 864,200 (176,425) 285,005
----------- ----------- -----------
Distributions to
Shareholders From:
Net investment income...... (1,809) (82,494) (52,237)
----------- ----------- -----------
Net decrease in net assets
resulting from
distributions............ (1,809) (82,494) (52,237)
----------- ----------- -----------
Shares of Beneficial
Interest:
Proceeds from shares
issued.................... 10,442,601 10,186,882 10,137,993
Proceeds from dividends
reinvested................ -- 2,674 --
Cost of shares redeemed.... (91,430) (22,440) --
----------- ----------- -----------
Net increase in net assets
from shares of beneficial
interest................. 10,351,171 10,167,116 10,137,993
----------- ----------- -----------
Total increase in net
assets...................... 11,213,562 9,908,197 10,370,761
Net Assets:
Beginning of period........ -- -- --
----------- ----------- -----------
End of period.............. $11,213,562 $ 9,908,197 $10,370,761
=========== =========== ===========
</TABLE>
- --------
(a) From commencement of operations on November 9, 1999 to December 31, 1999.
See accompanying notes to financial statements.
18
<PAGE>
USALLIANZ VARIABLE INSURANCE PRODUCTS TRUST
Notes to Financial Statements
December 31, 1999
1.Organization
The USAllianz Variable Insurance Products Trust (the "Trust") was organized
as a Delaware business trust on July 13, 1999. The Trust is a diversified
open-end management investment company registered under the Investment
Company Act of 1940, as amended, (the "1940 Act"). The Trust consists of
five series, the Money Market Fund, the Fixed Income Fund, the Diversified
Assets Fund, the Growth Fund and the Global Opportunities Fund (collectively
the "Funds" and individually a "Fund"). The Money Market Fund and the Global
Opportunities Fund became active on February 1, 2000. The Trust is
authorized to issue an unlimited number of shares. Shares of the Funds are
offered through the variable annuity contracts and variable life insurance
policies offered through the separate accounts of participating insurance
companies.
2.Significant Accounting Policies
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts and disclosures in the
financial statements. Actual amounts could differ from those estimates. The
following is a summary of significant accounting policies consistently
followed by the Trust in the preparation of its financial statements.
Security Valuation
Portfolio securities listed on a national exchange or exchanges for which
market quotations are available are valued at their last quoted sale price
on each business day. If there is no such reported sale, the most recently
quoted bid price is used for long securities and the ask price is used for
securities sold short. Debt obligations with sixty days or less remaining
until maturity are valued at their amortized cost. Unlisted securities for
which market quotations are readily available are valued at the most recent
quoted bid price for long securities and the ask price is used for
securities sold short. Other assets and securities for which no quotation is
readily available are valued at fair value as determined in good faith by
the Trustees or persons acting on the behalf of the Trustees. These persons
may use available market quotations, employ electronic data processing
techniques and/or a matrix system to determine valuations.
Security Transactions and Related Investment Income
Security transactions are accounted for on the trade date, with realized
gain or loss on the sale of investments determined by using the identified
cost method. Corporate actions (including cash dividends) are recorded on
the ex-date or after the ex-date as the Fund becomes aware of such action,
net of any non-refundable tax withholdings. Interest income (including
amortization of premium and accretion of discount) is recorded as earned.
Dividends and Distributions
Dividends and distributions to shareholders are recorded on the ex-dividend
date. Distributions are made on a tax basis which may differ from generally
accepted accounting principles. These differences are primarily due to
differing treatments for redemptions-in-kind and wash sales for book and tax
purposes. Permanent book and tax basis differences will result in
reclassifications to capital accounts.
Dividends and distributions to shareholders which exceed net investment
income and net realized capital gains for financial reporting purposes but
not for tax purposes are reported as dividends in excess of net investment
income or distributions in excess of net realized gains. To the extent they
exceed net investment income and net realized gains for tax purposes, they
are reported as distributions of capital.
19
<PAGE>
USALLIANZ VARIABLE INSURANCE PRODUCTS TRUST
Notes to Financial Statements, Continued
December 31, 1999
As of December 31, 1999, the following reclassifications have been made to
increase (decrease) such accounts with offsetting adjustments made to
capital:
<TABLE>
<CAPTION>
Accumulated
(Distributions in excess of) Undistributed Net
Undistributed Net Realized Gain/(Loss)
Investment Income on Investments
---------------------------- --------------------
<S> <C> <C>
Fixed Income Fund........... 1,074 --
Diversfied Assets Fund...... 294 (294)
Growth Fund................. 10 (10)
</TABLE>
Organizational Expenses
All costs incurred by the Trust in connection with the organization of the
Funds and the initial public offering of shares of the Funds, principally
professional fees and printing, were paid on behalf of the Trust by Allianz
of America, Inc.
3.Management, Administration, Fund Accounting Agreements
Allianz of America, Inc., (the "Investment Adviser") provides advisory and
management services to the Funds under separate management contracts. The
Investment Adviser is entitled to a fee, computed daily and paid monthly, at
the annual rate of 0.50% for the Fixed Income Fund, 0.55% for the
Diversified Assets Funds and 0.75% for the Growth Fund of each Fund's
average net assets. The Investment Adviser has voluntarily agreed to waive
fees and reimburse the Funds to limit the annual expenses to 0.75% for the
Fixed Income Fund, 1.00% for the Diversified Assets Fund and 0.90% for the
Growth Fund of each Fund's average net assets. For the period ended December
31, 1999, the amount of such waivers totaled $7,125, $8,031 and $11,369 for
the Fixed Income Fund, Diversified Assets Fund and the Growth Fund,
respectively. For the period ended December 31, 1999, the amount of such
reimbursements totaled $35,991, $32,889 and $34,202 for the Fixed Income
Fund, Diversified Assets Fund and the Growth Fund, respectively.
BISYS Fund Services Ohio, Inc. ("BISYS" or the "Administrator"), a wholly-
owned subsidiary of The BISYS Group, Inc., serves as the Trust's
administrator, transfer agent, fund accountant and assists the Trust in all
aspects of its administration and operation. The Administrator is entitled
to a fee, computed daily and paid monthly, and is reimbursed for certain
out-of pocket expenses incurred. The amount of such payments for the period
ended December 31, 1999 totaled $7,123, $7,128 and $7,151 for the Fixed
Income Fund, the Diversified Assets Fund and the Growth Fund, respectively.
The Trust has adopted a distribution and service plan in conformance with
Rule 12b-1. Pursuant to this plan, each Fund is authorized to pay certain
fees for the sale and distribution of its shares and services provided to
its shareholders at an annual rate not to exceed 0.25% of the Fund's average
daily net assets. The amount of such payments totaled $3,529, $3,589 and
$3,750 for the Fixed Income Fund, the Diversified Assets Fund and the Growth
Fund, respectively, for the period ended December 31, 1999.
4.Federal Income Taxes
It is each Fund's policy to comply with the requirements of the Internal
Revenue Code under Subchapter M, applicable to regulated investment
companies, and to distribute all of its taxable income, including any net
realized gain on investments, to its shareholders. Therefore, no provision
is made for federal income taxes.
Capital losses incurred after October 31st, within a Fund's fiscal year, are
deemed to arise on the first business day of the following fiscal year for
tax purposes. The following Funds have incurred and will elect to defer such
capital losses:
<TABLE>
<CAPTION>
Post-
October
Losses
-------
<S> <C>
Fixed Income Fund.................................................... $56,505
Diversified Assets Fund.............................................. --
Growth Fund.......................................................... --
</TABLE>
20
<PAGE>
USALLIANZ VARIABLE INSURANCE PRODUCTS TRUST
Notes to Financial Statements, Continued
December 31, 1999
5.Security Purchases and Sales
For the period ended December 31, 1999, purchases and sales of securities
(excluding short-term securities) were as follows:
<TABLE>
<CAPTION>
Purchases Sales
----------- ----------
<S> <C> <C>
Fixed Income Fund..................................... $14,486,410 $5,518,241
Diversified Assets Fund............................... 13,632,466 4,686,371
Growth Fund........................................... 10,634,782 532,497
</TABLE>
6.Trustee Fees
The unaffiliated Trustees of the Trust each receive a $2,000 meeting fee for
each meeting of the Trustees of the Trust attended and receive reimbursement
of out-of-pocket expenses incurred in connection with attendance at such
meetings.
7.Sales and Redemptions of Shares
Transactions in shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
Period Ended December 31, 1999 (a)
--------------------------------------
Fixed Diversified
Income Assets Growth
Fund Fund Fund
----------- -------------------------
<S> <C> <C> <C>
Shares Sold........................... 1,018,811 1,013,684 1,042,783
Issued upon reinvestment of
distributions......................... 268 -- --
Shares redeemed....................... (2,257) -- (8,956)
----------- ----------- -----------
Net increase.......................... 1,016,822 1,013,684 1,033,827
</TABLE>
(a) From commencement of operations on November 9, 1999 to December 31,
1999.
21
<PAGE>
USALLIANZ VARIABLE INSURANCE PRODUCTS TRUST
Financial Highlights
<TABLE>
<CAPTION>
Growth Fund
-----------
Period Ended
December 31, 1999 (a)
---------------------
<S> <C>
Net Asset Value, Beginning of Period..................... $ 10.00
-------
Income from Investment Operations:
Net investment income................................... --
Net realized and unrealized gain on investments......... 0.85
-------
Total from Investment Operations........................ 0.85
-------
Distributions to shareholders from:
Net investment income................................... -- *
-------
Total Distributions to Shareholders..................... --
-------
Net Asset Value, End of Period........................... $ 10.85
=======
Total Return............................................. 8.52%**
Ratios to Average Net Assets/Supplemental Data:
Net Assets, end of period (000).......................... $11,214
Net investment loss before waivers/reimbursements........ (2.89%)***
Net investment income net of waivers/reimbursements...... 0.12%***
Expenses before waivers/reimbursements................... 3.90%***
Expenses net of waivers/reimbursements................... 0.90%***
Portfolio turnover rate.................................. 5.27%
</TABLE>
- --------
(a) From commencement of operations on November 9, 1999 to December 31, 1999.
* Distributions from net investment income were less than one cent per
share.
** Total return for periods less than one year is not annualized.
*** Annualized.
See accompanying notes to financial statements.
22
<PAGE>
USALLIANZ VARIABLE INSURANCE PRODUCTS TRUST
Financial Highlights
<TABLE>
<CAPTION>
Fixed Income Fund
-----------------
Period Ended
December 31, 1999 (a)
---------------------
<S> <C>
Net Asset Value, Beginning of Period..................... $10.00
------
Income from Investment Operations:
Net investment income................................... 0.08
Net realized and unrealized loss on investments......... (0.26)
------
Total from Investment Operations........................ (0.18)
------
Distributions to shareholders from:
Net investment income................................... (0.08)
------
Total Distributions to Shareholders..................... (0.08)
------
Net Asset Value, End of Period........................... $ 9.74
======
Total Return............................................. (1.79%)*
Ratios to Average Net Assets/Supplemental Data:
Net Assets, end of period (000).......................... $9,908
Net investment income before waivers/reimbursements...... 2.69%**
Net investment income net of waivers/reimbursements...... 5.71%**
Expenses before waivers/reimbursements................... 3.77%**
Expenses net of waivers/reimbursements................... 0.75%**
Portfolio turnover rate.................................. 55.81%
</TABLE>
- --------
(a) From commencement of operations on November 9, 1999 to December 31, 1999.
* Total return for periods less than one year is not annualized.
** Annualized.
See accompanying notes to financial statements.
23
<PAGE>
USALLIANZ VARIABLE INSURANCE PRODUCTS TRUST
Financial Highlights
<TABLE>
<CAPTION>
Diversified Assets Fund
-----------------------
Period Ended
December 31, 1999 (a)
---------------------
<S> <C>
Net Asset Value, Beginning of Period................... $ 10.00
-------
Income from Investment Operations:
Net investment income................................. 0.05
Net realized and unrealized gain on investments....... 0.23
-------
Total from Investment Operations...................... 0.28
-------
Distributions to shareholders from:
Net investment income................................. (0.05)
-------
Total Distributions to Shareholders................... (0.05)
-------
Net Asset Value, End of Period......................... $ 10.23
=======
Total Return........................................... 2.81%*
Ratios to Average Net Assets/Supplemental Data:
Net Assets, end of period (000)........................ $10,371
Net investment income before waivers/reimbursements.... 0.75%**
Net investment income net of waivers/reimbursements.... 3.56%**
Expenses before waivers/reimbursements................. 3.80%**
Expenses net of waivers/reimbursements................. 1.00%**
Portfolio turnover rate................................ 52.17%
</TABLE>
- --------
(a) From commencement of operations on November 9, 1999 to December 31, 1999.
* Total return for periods less than one year is not annualized.
** Annualized.
See accompanying notes to financial statements.
24
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Shareholders and Board of Trustees of
USAllianz Variable Insurance Products Trust:
We have audited the accompanying statements of assets and liabilities of
USAllianz Variable Insurance Products Trust (Growth Fund, Fixed Income Fund,
and Diversified Assets Fund) including the schedules of portfolio investments,
as of December 31, 1999, and the related statements of operations, statements
of changes in net assets and the financial highlights for each of the periods
indicated herein. These financial statements and the financial highlights are
the responsibility of the management of The USAllianz Variable Insurance
Products Trust. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included verification of securities
owned as of December 31, 1999, by confirmation with the custodian. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the aforementioned portfolios comprising The USAllianz Variable Insurance
Products Trust as of December 31, 1999, the results of their operations, the
changes in their net assets and the financial highlights for each of the
periods indicated herein, in conformity with generally accepted accounting
principles.
KPMG LLP
Columbus, Ohio
February 22, 2000
25
<PAGE>
[LOGO]
USAllianz Funds
The USAllianz VIP Funds are distributed by BISYS Fund Services. These funds are
not FDIC insured
ANNRP (1799 2/00)
