FVF *A98
Supplement Dated January 15, 1999
to the Prospectuses Dated May 1, 1998
of
FRANKLIN(R) VALUEMARK(R) II, III & IV
Flexible Payment Variable Annuities
Allianz Life Variable Account B and
Preferred Life Variable Account C
I. YEAR 2000 Allianz Life and Preferred Life have initiated programs to ensure
that all of the computer systems utilized to provide services and administer
policies will function properly in the year 2000. An assessment of the total
expected costs specifically related to the year 2000 conversion has been
completed; the total amounts to be expensed over the next two years are not
expected to have a significant effect on either Allianz Life's or Preferred
Life's financial position or results of operations. Allianz Life and Preferred
Life believe they have taken steps that are reasonably designed to address the
potential failure of computer systems used by their service providers and to
ensure their year 2000 program is completed on a timely basis.
II. The shares of Franklin Valuemark Funds, in which the Contracts invest, have
been renamed as Class 1 shares. No other changes were made to the Class 1
shares.
III. The following changes are made to the sections entitled "Trust Annual
Expenses" or "Franklin Valuemark Funds' Annual Expenses" in the prospectus:
a) The following chart restates information about certain Portfolios, as
indicated below:
Management Total
and Portfolio Other Annual
Portfolio Administration Fees Expenses Expenses
- -------------------------------------------------------------------------------
Zero Coupon Fund - 20005 .60% .03% .63%
Zero Coupon Fund - 20055 .62% .03% .65%
Zero Coupon Fund - 20105 .62% .03% .65%
b) The footnotes are restated as follows:
4For the year ended December 31, 1997, Franklin Advisers, Inc. ("Advisers")
agreed in advance to waive a portion of its management fees and, if
necessary, to pay certain expenses of the Fund. With this reduction,
management fees and total annual expenses, including management and portfolio
administration fees, paid by the Portfolio represented .43% and .45% of the
Portfolio's average net assets, respectively. The voluntary expense reduction
was discontinued by Advisers effective January 1, 1999.
5For the year ended December 31, 1997, Advisers agreed in advance to waive a
portion of its management fees and, if necessary, to pay certain expenses of
the Fund. With this reduction, management fees and total annual expenses,
including management and portfolio administration fees, represented .37% and
.40% of each Portfolio's average net assets, respectively. The voluntary
expense reduction was discontinued by Advisers effective January 1, 1999.
c) The Examples for certain Portfolios are restated, as indicated below:
Franklin Valuemark II Examples
If the Contract is fully surrendered at the end of the applicable time period
and no prior surrenders have occurred, the Contract Owner would have incurred
the following expenses on a $1,000 investment, assuming a 5% rate of return
on assets compounded annually:
1 Year 3 Years 5 Years 10 Years
- ------------------------------------------------------------------------------
Zero Coupon Fund - 2000 $64 $89 $118 $246
Zero Coupon Fund - 2005 $64 $89 $119 $248
Zero Coupon Fund - 2010 $64 $89 $119 $248
If the Contract is not surrendered at the end of the applicable time period and
no prior surrenders have occurred or is annuitized, the Contract Owner would
have incurred the following expenses on a $1,000 investment, assuming a 5%
annual return on assets compounded annually:
1 Year 3 Years 5 Years 10 Years
- -------------------------------------------------------------------------------
Zero Coupon Fund - 2000 $22 $67 $114 $246
Zero Coupon Fund - 2005 $22 $67 $115 $248
Zero Coupon Fund - 2010 $22 $67 $115 $248
Franklin Valuemark III Examples
If the Contract is fully surrendered at the end of the applicable time period
and no prior surrenders have occurred, the Contract Owner would have incurred
the following expenses on a $1,000 investment, assuming a 5% rate of return
on assets compounded annually:
1 Year 3 Years 5 Years 10 Years
- -------------------------------------------------------------------------------
Zero Coupon Fund - 2000 $73 $89 $118 $246
Zero Coupon Fund - 2005 $73 $89 $118 $248
Zero Coupon Fund - 2010 $73 $89 $118 $248
If the Contract is not surrendered at the end of the applicable time period and
no prior surrenders have occurred or is annuitized, the Contract Owner would
have incurred the following expenses on a $1,000 investment, assuming a 5%
annual return on assets compounded annually:
1 Year 3 Years 5 Years 10 Years
- -------------------------------------------------------------------------------
Zero Coupon Fund - 2000 $22 $67 $114 $246
Zero Coupon Fund - 2005 $22 $67 $115 $248
Zero Coupon Fund - 2010 $22 $67 $115 $248
Franklin Valuemark IV Examples
You would pay the following expenses on a $1,000 investment, assuming a 5%
annual return on your money if you surrender your contract at the end of each
time period:
1 Year 3 Years 5 Years 10 Years
- ------------------------------------------------------------------------------
Zero Coupon Fund - 2000 $83 $120 $153 $255
Zero Coupon Fund - 2005 $83 $121 $154 $257
Zero Coupon Fund - 2010 $83 $121 $154 $257
You would pay the following expenses on a $1,000 investment, assuming a 5%
annual return on your money, if your Contract is not surrendered or is
annuitized:
1 Year 3 Years 5 Years 10 Years
- -------------------------------------------------------------------------------
Zero Coupon Fund - 2000 $23 $69 $119 $255
Zero Coupon Fund - 2005 $23 $70 $120 $257
Zero Coupon Fund - 2010 $23 $70 $120 $257
